SOURCE: Intrinsyc Technologies Corporation

Intrinsyc Technologies Corporation

March 23, 2016 16:47 ET

Intrinsyc Reports Quarterly Revenue Growth of 57% Over Prior Year

Quarterly Revenue Increased to US$4.0 Million With Adjusted EBITDA(1) of US$965 Thousand

VANCOUVER, BC--(Marketwired - March 23, 2016) - Intrinsyc Technologies Corporation (TSX: ITC) (OTC: ISYRF) ("Intrinsyc" or the "Company"), a leading provider of solutions for the development of intelligent connected devices, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2015. Intrinsyc reports fourth quarter revenue of US$4.0 million versus US$2.6M in the fourth quarter of 2014, an increase of 57%. Intrinsyc achieved adjusted EBITDA of US$965,194 in the fourth quarter of fiscal 2015, with net income of US$805,532 and earnings per share of US$0.04. For the 2015 fiscal year, Intrinsyc reports revenue of US$12.5 million compared to US$10.1 million, an increase of 25%. Intrinsyc achieved adjusted EBITDA of US$1.7 million during fiscal 2015 with net income of US$722,773 and earnings per share of US$0.03. Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards ("IFRS").

"Our outstanding results in the fourth quarter capped off another year of revenue growth and improved financial performance," stated Tracy Rees, President and Chief Executive Officer, of Intrinsyc. "We witnessed the positive results from our strategic transformation to a product realization company offering comprehensive solutions from product design to production; with revenue increasing in every quarter, culminating with very strong revenue and financial performance in the fourth quarter. As mentioned in our January 14, 2016 press release announcing preliminary results, we achieved outstanding margin contribution from our engineering services due to high utilization and productivity, as well as lower labour cost due to a decline in the value of the Canadian dollar against the US dollar. To continue our momentum we plan to introduce several additional embedded computing products in 2016, including development kits, vertical market reference designs, and production-ready embedded computing modules. In addition, we are expanding our product design and development capabilities with new engineering centers in Boulder, Colorado and Taipei, Taiwan."

The Company made progress with several new client projects signed and new products developed including the following business highlights:

Quarterly Business Highlights

  • Signed an amendment to an existing supply agreement that increases the purchase commitment by Stream TV from US$3.0 million to US$4.5 million, with products, services, or royalties to be purchased on or before March 31, 2016. In addition, a secured convertible promissory note issued to the Company by Stream TV has been amended to remove the conversion feature and to extend the maturity date from December 31, 2015 to June 30, 2016.
  • Signed two product design and development agreements and a supply agreement with production order for Intrinsyc's Open-Q 805 SOM, in aggregate the agreements and order exceed US$1 million. 
  • Received the largest production hardware order to date for Open-Q™ 805 SOMs in the amount of US$737,500. Future orders are expected from this client.
  • As of December 30, 2015, the Company has over 25 companies that are currently working to incorporate Intrinsyc's Open-Q SOMs into their products, with six companies in commercial production.

Financial Highlights

Three Month Comparative Results

The Company reported revenue of US$4.0 million, up 57% over the same period in the prior year of US$2.6 million and up 19% over the US$3.4 million in the prior quarter of fiscal 2015. The increase in revenue was due to increased revenue from the sale of product development engineering services, as well as hardware products.

Gross margin was 49%, which was higher than the 41% gross margin in the same period in the prior year than the 38% gross margin in the previous quarter of fiscal 2015. Gross margin improvement over the prior year period was attributable to the margin contribution from our engineering services due to high utilization and productivity, as well as lower labour cost due to a decline in the value of the Canadian dollar against the US dollar, and revenue mix. 

Adjusted EBITDA was as follows:

       
  Three months ended
December 31,
2015
Three months ended
September 30,
2015
Three months ended
December 31,
2014
Operating income (loss) US$814,767 US$213,929 (US$73,287)
Add: revenue recognized as interest income as per IFRS 33,750 33,750 33,750
Add back: Other operating expenses 116,677 76,439 104,368
Adjusted EBITDA US$965,194 US$324,118 US$ 64,831
       

The Company had net income of US$805,352 in the three months ended December 31, 2015, compared to a net loss of US$136,035 in the same period in the prior year and a net loss of US$20,603 in the prior quarter.

Annual Comparative Results

The Company reported revenue of US$12.5 million in fiscal 2015 compared to US$10.1 million for the prior year ended December 31, 2014. 

Gross margin was 44% for the year ended December 31, 2015 compared to gross margin of 39% for the prior year ended December 31, 2014. Gross margin improvement over the prior year period was attributable to high utilization and productivity, as well as lower labour cost due to a decline in the value of the Canadian dollar against the US dollar and revenue mix. Adjusted EBITDA was as follows:

     
  Year ended
December 31, 2015
Year ended
December 31, 2014
Operating income US$1,193,951 US$ 80,399
Add: revenue recognized as interest income as per IFRS 135,000 33,750
Add back: Other operating expenses 373,952 286,202
Adjusted EBITDA US$1,702,903 US$400,351
     

The Company had net income of US$722,773 during the year ended December 31, 2015 compared to a net loss of US$173,668 in the prior fiscal year period.

Financial Position as at December 31, 2015

Working capital as of December 31, 2015 was US$9.8 million (which included cash and cash equivalents of US$5.9 million and short term investments of US$1.1 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 audited consolidated financial statements for the three months and year ended December 31, 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 fourth quarter and full year 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.

(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. 

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, 2015. 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 Corporation is a product development company that provides comprehensive and tailored solutions that enable the development and production of next-generation embedded and IoT 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)(OTC: ISYRF) and is headquartered in Vancouver, BC, Canada.

Contact Information

  • For more information, please contact:

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