SOURCE: Intrinsyc Technologies Corporation

Intrinsyc Technologies Corporation

August 10, 2016 16:00 ET

Intrinsyc Reports Quarterly Revenue Growth of 68% Over Prior Year

Quarterly Revenue Increased to US$4.8 Million With Net Income of US$599,868 and Earnings per Share of US$0.03

VANCOUVER, BC--(Marketwired - August 10, 2016) - Intrinsyc Technologies Corporation (TSX: ITC) (OTC: ISYRF) ("Intrinsyc" or the "Company"), a leading provider of solutions for the development of embedded and IoT products, today announced its financial results for the second quarter of fiscal 2016 ended June 30, 2016. Intrinsyc achieved annual revenue growth of 68% in the second quarter of fiscal 2016 over the prior year, with sequential growth of 12%. Revenue was US$4.8 million representing an increase from US$2.9 million in the second quarter of fiscal 2015, and US$4.3 million in the previous quarter. Intrinsyc achieved net income of US$599,868 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").

"Intrinsyc had another quarter of impressive revenue growth, with higher revenue coming from both the software and services segment and embedded computing hardware segment which included a sizable follow-on order from one of our largest customers," said Tracy Rees, Chief Executive Officer, Intrinsyc. "We benefitted from our recent employee hiring as we were able to meet the client demand for engineering services inclusive of achievement of critical mass in our new Boulder, CO engineering operation, leading to higher services revenue in the quarter, while still having the necessary resources to invest in product development to generate future sales opportunities."

The Company made progress with new client projects signed, clients completing development and entering into production phase, as well as expanding our ability to deliver future client projects and proprietary products; including the following business highlights:

Quarterly Business Highlights

  • Announced a new client for the Company's Open-Q™ SOM. Delivery of embedded computing modules, valued at more than $250,000, initially were expected to ship in the third quarter, however they were delivered in the second quarter.
  • The Company signed two agreements with an existing client that are valued at $985,000 and cover the Company's Field Programmable Gate Array ("FPGA") design and development services.
  • A customer of the Company encountered financial difficulty resulting in Adjusted EBITDA and Net Income being reduced by $97,000.
  • Announced that the arrangements with Stream TV were further amended, to increase the purchase commitment to $6,000,000 in Intrinsyc products, services and royalties to be generated on or before December 30, 2016. In addition, the secured promissory note, valued at USD$1.5 million, has been further amended to extend the maturity date from June 30, 2016 to December 30, 2016.
  • Over the first half of the year, increased employee headcount by 30%, boosting engineering capabilities and capacity for client project delivery, as well as proprietary product development.
  • Expanded engineering operations and achieved critical mass for operations in Boulder, CO with commencement of revenue generating client projects and began establishment of an additional engineering office in Taipei, Taiwan.
  • Participated in several key industry conferences throughout the quarter in North America including: ESC Boston, IoT Devcon, Qualcomm Automotive Showcase and Xponential 2016 as well as Wavefront's 2016 Internet of Things Roadshow. The Company frequently exhibits at these events as an invited guest of our strategic technology partners.
  • As of June 30, 2016, the Company had more than thirty (30) companies that are currently incorporating Intrinsyc's Open-Q™ embedded computing modules into their products, with eight (8) of those companies in commercial production.

Financial Highlights

Three Month Comparative Results

The Company reported revenue of US$4.8 million, up 68% over the same period in the prior year of US$2.9 million and up 12% over the US$4.3 million in the first quarter of fiscal 2016. The increase in revenue was due to increased revenue from the sale of product development engineering services, as well as hardware products.

The Company had net income of US$599,868 in the three months ended June 30, 2016, compared to net income of US$266,359 in the same period in the prior year and net income of US$490,738 in the prior quarter.

Gross margin(1) in the second quarter of fiscal 2016 was 38%, which was slightly lower than the 41% gross margin in the same period in the prior year but consistent with the gross margin in the previous first quarter of fiscal 2016. Reduction in gross margin over the same period in the prior year was due to several factors, including; the temporary increased engagement of third party contractors, increased Vancouver facilities expansion costs, ramp up of the Company's new engineering center in Boulder, CO, increased labor cost due to the recent strengthening in the value of the Canadian dollar against the US dollar, the cancellation of an client project in-process due to their financial challenges, and the increased sales of embedded computing products to a single client at less than typical margins. Adjusted EBITDA(2) was as follows:

       
   Three months ended
June 30, 2016
 Three months ended
March 31, 2016
 Three months ended
June 30, 2015
Operating income  $395,013  $308,040  $160,967
Add: revenue recognized as interest income as per IFRS   33,750   33,750   33,750
Add back: Other operating expenses   116,637   119,240   98,298
Adjusted EBITDA  $545,400  $461,030  $293,015
          

Six Month Comparative Results

The Company reported revenue of US$9.1 million, up 77% over the same period in the prior year of US$5.1 million. The increase in revenue was due to increased revenue from the sale of product development engineering services, as well as hardware products.

The Company had net income of US$1,090,606 in the six months ended June 30, 2016, compared to a net loss of US$61,976 in the same period in the prior year.

Gross margin for the six months ended June 30, 2016 was 38%, which was lower than the 44% gross margin in the same period in the prior year. Reduction in gross margin over the same period in the prior year was due to several factors, including; the temporary increased engagement of third party contractors, increased Vancouver facilities expansion costs, ramp up of the Company's new engineering center in Boulder, CO, increased labor cost due to the recent strengthening in the value of the Canadian dollar against the US dollar, the cancellation of an client project in-process due to their financial challenges, and the increased sales of embedded computing products to a single client at less than typical margins. Adjusted EBITDA was as follows:

     
   Six months ended
June 30, 2016
 Six months ended
June 30, 2015
Operating income  $703,053  $165,255
Add: revenue recognized as interest income as per IFRS   67,500   67,500
Add back: Other operating expenses   235,877   180,836
Adjusted EBITDA  $1,006,430  $413,591
       

Financial Position as at June 30, 2016

Working capital(3) as of June 30, 2016 was US$11.1 million (which included cash and cash equivalents of US$4.9 million and short term investments of US$2.3 million). This is compared to net working capital of US$9.8 million as of December 31, 2015 (which included cash and cash equivalents of US$5.9 million and short-term investments of US$1.1 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 and six months ended June 30, 2016 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 year 2016 second quarter 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 EBITDA, 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. EBITDA is defined as operating income (loss) less other operating expenses. Adjusted EBITDA is defined as operating income (loss) inclusive of revenue reclassified as interest income (as per IFRS) less other operating expenses. Both measures are provided as a proxy for the cash earnings from the operations of the business as operating income (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. There could be variability in future financial performance based upon the timing of our Client's product deployment and other factors.

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 and hardware 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.

(1) 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.

(2) 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.

(3) 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 W. Reznik, CA, CBV
    Chief Financial Officer
    Intrinsyc Technologies Corporation
    Email: Email contact

    Phone: +1-604-678-3734