SOURCE: Intrinsyc Technologies Corporation

Intrinsyc Technologies Corporation

November 12, 2015 16:00 ET

Intrinsyc Reports Quarterly Revenue Growth of 18% and Annual Growth of 25%

Revenue Increased to US$3.4 Million With Adjusted EBITDA(1) of US$324,118

VANCOUVER, BC--(Marketwired - November 12, 2015) - Intrinsyc Technologies Corporation (TSX: ITC) ("Intrinsyc" or the "Company"), a leading provider of solutions for the development of intelligent connected devices, today announced its financial results for the third quarter ended September 30, 2015. Revenue was US$3.4 million in the third quarter of fiscal 2015 which was an increase of 25% over the third quarter of 2014 and an increase of 18% from US$2.9 million in the prior quarter of fiscal 2015. The Company achieved adjusted EBITDA of US$324,118. Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS").

"The signing of several new development projects in the second quarter led to significant revenue growth from engineering services in the third quarter. In addition, we achieved increased hardware sales and overall order backlog," stated Tracy Rees, President and Chief Executive Officer, Intrinsyc Technologies Corporation. "Intrinsyc continues to execute on a fundamental shift in our business from solely an engineering services company to a product realization company. For our clients it means a single source provider from concept through production that they can trust to deliver high quality integrated products; on-schedule, and with a shared-success business model. For our investors, it means greater share value derived from a more attractive scalable revenue business model. Further evidence of the company's positive momentum is our recent selection by the Canadian Innovation Exchange ("CIX") as one of Canada's Top 20 Most Innovative Public Technology Companies."

The Company made progress with several new client projects signed, new products developed, and expansion of sales channels; including the following business highlights:

Business Highlights

  • To accelerate growth, the Company expanded its executive leadership team and began increased investment in several areas over the next few quarters, including hiring engineering, sales and marketing personnel, the expansion of its facilities, and purchase of engineering equipment.
  • In August 2015, the Company announced that it had signed a franchise agreement with Arrow Electronics Inc., whereby Arrow would begin selling Intrinsyc's Open-Q 410 System on Module ("SOM").
  • In August 2015, the Company announced that it had received initial purchase orders from clients that are expected to be significant revenue contributors in FY 2016.
  • In September 2015, the Company announced that it will manufacture and distribute the Qualcomm Snapdragon Flight board featuring the Qualcomm Snapdragon 801 processor.
  • As of September 30, 2015 the Company has 25-30 companies that are working through Intrinsyc or have begun development independently to incorporate Intrinsyc's Open-Q SOMs into their products.
  • Subsequent to the quarter end, the Company received a purchase order for Open-Q System on Modules valued at US$737,500. This is a repeat order from a previously announced client and represents the planned deliveries for January to May, 2016. Future orders are expected from this client. This is the largest order to date for the Company's computing modules.

Financial Highlights

Three Month Comparative Results

The Company reported revenue of US$3.4 million, up 25% over the same period in the prior year of US$2.7 million and up 18% over the US$2.9 million in the prior quarter of fiscal 2015. The increase in revenue was due to increased revenue from the sale of Intrinsyc hardware products as well as its product development engineering services.

Gross margin(2) was 38%, which was higher than the 36% gross margin in the same period in the prior year but lower than the 41% gross margin in the previous quarter of fiscal 2015. Gross margin improvement over the prior year period was attributable to the improvement in engineering productivity and the reduced cost basis of engineering services due to lower value of Canadian currency versus the United States currency, and a reduction from hardware revenue. The decline in gross margin over the prior period was primarily due to the increase of hardware revenue.

Adjusted EBITDA was as follows:

       
  Three months ended
September 30,
2015
Three months ended
June 30,
2015
Three months ended
September 30,
2014
Operating income $213,929 $160,967 $ 41,267
Add: revenue recognized as interest income as per IFRS 33,750 33,750 -
Add back: Other operating expenses(3) 76,439 98,298 78,336
Adjusted EBITDA $324,118 $293,015 $119,603
    

The Company had a net loss of US$20,603 compared to a net loss of US$77,776 in the same period in the prior year and net income of US$266,359 in the prior quarter.

Nine Month Comparative Results

The Company reported revenue of US$8.5 million compared to US$7.5 million for the nine months ended September 30, 2014.

Gross margin was 42% for the nine months ended September 30, 2015 compared to gross margin of 38% for the nine months ended September 30, 2014. Gross margin improvement over the prior year period was attributable to the reduction of hardware revenue, and improvement in cost basis of engineering services due to lower value of Canadian currency versus the United States currency.

Adjusted EBITDA was as follows:

     
  Nine months ended
September 30,
2015
Nine months ended
September 30,
2014
Operating income $379,184 $ 153.686
Add: revenue recognized as interest income as per IFRS 101.250 -
Add back: Other operating expenses 257.275 181.834
Adjusted EBITDA $737,709 335,520
   

The Company had a net loss of US$82,579 during the nine months ended September 30, 2015 compared to a net loss of US$37,633 in the prior fiscal year period.

Financial Position as at September 30, 2015

Working capital(4) as of September 30, 2015 was US$9.0 million (which included cash and cash equivalents of US$5.7 million and short term investments of US$1.2 million). This is compared to net working capital of US$8.8 million as of December 31, 2014 (which included cash and cash equivalents of US$4.3 million and short-term investments of US$2.5 million).

Financial Statements and Management Discussion & Analysis

Please see the audited consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for more details. The unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2015 and related MD&A have been reviewed and approved by Intrinsyc's Audit Committee and Board of Directors. Intrinsyc recognizes that the majority of its investors are now accessing Intrinsyc's corporate and financial information either through pushed news services, directly from www.intrinsyc.com or SEDAR. Thus, Intrinsyc has prepared this truncated news release to alert investors to its results and that a more detailed explanation and analysis is readily available in the MD&A. These reports have been filed on SEDAR at www.sedar.com and also posted at www.intrinsyc.com.

Conference call

The Company will hold a conference call to discuss its fiscal third quarter 2015 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today. On the call, Tracy Rees, Chief Executive Officer and George Reznik, Chief Financial Officer, will discuss the financial results announced. This conference call may be accessed, toll-free, by dialing 1-800-952-4972, and internationally by dialing 1-416-340-9432 approximately 10 minutes prior to the start of the call. This conference line is operator assisted and an access PIN is not required. The conference call will also be broadcast live over the Internet and available for replay on the Company's Investor Relations Conference Calls web page (http://www.intrinsyc.com/company/investors/). Analysts and investors are invited to participate on the call. Questions may be submitted to invest@intrinsyc.com prior to the call.

Non-IFRS Measures

The following and preceding discussion of financial results includes reference to Gross Margin, Adjusted EBITDA and Working Capital, which are all non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluating the operating performance of the Company. Adjusted EBITDA is defined as operating income (loss) inclusive of revenue reclassified as interest income (as per IFRS) less other operating expenses. The measure is provided as a proxy for the cash earnings from the operations of the business as operating loss for the Company includes non-cash amortization and depreciation expense and share-based compensation which are classified as other operating expenses. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.

Forward-Looking Statements

This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information may include financial and other projections as well as statements regarding the Company's future plans, objectives, performance, revenues, growth, profits, operating expenses or the company's underlying assumptions. The words "may", "would", "could", "will", "likely", "expect," "anticipate," "intend", "plan", "forecast", "project", "estimate" and "believe" or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Company's actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: the need to develop, integrate and deploy software solutions to meet the Company's customer's requirements; the possibility of development or deployment difficulties or delays; a customer's decision to cancel or fail to proceed with a commitment to purchase units of the Company's products contained in an executed purchase order; the dependence on the Company's customer's satisfaction; the timing of entering into significant contracts; customers' continued commitment to the deployment of the Company's solutions; reliance on products manufactured by other companies for resale or distribution and reliance on third-party suppliers; the performance of the global economy and growth in software industry sales; market acceptance of the Company's products and services; the success of certain business combinations engaged in by the Company or by its competitors; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to international expansion; concentration of sales; international operations and sales; dependence upon key personnel and hiring; reliance on a limited number of suppliers; industry growth; competition; intellectual property; product defects and product liability; currency exchange rate risk; and other factors described in the Company's reports filed on SEDAR, including its Annual Information Form and financial report for the year ended December 31, 2014. This list is not exhaustive of the factors that may affect the Company's forward-looking information.

These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

About Intrinsyc Technologies Corporation

Intrinsyc Technologies is a product development company that provides comprehensive and tailored solutions that enable the development and production of next-generation intelligent connected devices. Solutions span the development life cycle from concept to production and help device makers and technology suppliers create compelling differentiated products with faster time-to-market. Intrinsyc is publicly traded (TSX: ITC) and is headquartered in Vancouver, BC, Canada.

(1) Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Adjusted EBITDA referenced here relates to operating income (loss) inclusive of revenue reclassified as interest income (as per IFRS) less other operating expenses.

(2) Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross margin referenced here relates to revenues less cost of sales.

(3) Other operating expenses comprise of depreciation, amortization and stock-based compensation.

(4) Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Working capital is defined as current assets less current liabilities.

Contact Information

  • For more information, please contact:

    George Reznik
    Chief Financial Officer
    Intrinsyc Technologies Corporation
    Email: greznik@intrinsyc.com
    Phone: +1-604-678-3734