Miranda Technologies Inc.

Miranda Technologies Inc.

August 05, 2010 06:00 ET

Miranda Reports Second Quarter 2010 Results

MONTREAL, QUEBEC--(Marketwire - Aug. 5, 2010) - Miranda Technologies Inc. (TSX:MT), a global developer, manufacturer and marketer of high-performance hardware and software for the television broadcast industry, today reported results for the second quarter ended June 30, 2010.

Financial Highlights: Q2 2010 versus Q2 2009

  • Revenues of $32.1 million, up 3% from $31.1 million in 2009; excluding the impact of foreign exchange, sales increased 18%

  • EBITDA(1) up 125% to $6.0 million, versus $2.7 million in 2009

  • Net income up 173% to $3.5 million or 15 cents per fully diluted share, compared to net income of $1.3 million or 6 cents per share in 2009

  • Gross margin as a percentage of sales at 60%, versus 61% in 2009

Second quarter revenues were $32.1 million, or 3% higher than last year and 11% better than the first quarter of 2010. Excluding the impact of foreign exchange, sales were up 18% over 2009, driven by stronger sales in both the United States and International markets. Gross margins came in at 60% of sales, the highest level seen in recent quarters. Net income grew by 173% over 2009 to $3.5 million or 15 cents per share. Compared to Q2 2009, operating expenses for the quarter were positively impacted by foreign exchange gains and higher research and development tax credits. Cash levels continue to be strong with cash, cash equivalents and temporary investments totalling $50.8 million at quarter end. During the quarter, the Company began purchasing shares for cancellation under its normal course issuer bid (NCIB) and an automatic securities purchase plan was also launched in connection with the program. The current NCIB was originally announced in August 2009.

"Quarterly sales momentum continues to build, with order intake levels strengthening significantly over the first quarter of 2010," commented Strath Goodship, Miranda's President and Chief Executive Officer. This includes a noticeable uptick in the USA, where broadcast markets have been particularly hard hit by the economic downturn. "At the same time we are seeing heightened sales of higher-margin products, including routers, which positively impacts customer and product mix, along with gross margins."

Some of the notable sales wins in recent months include Discovery (Singapore), ERTU (Egypt), HBO (US), KBS (Korea), Korea Telecom, MTV (Hungary), NBC Connecticut, Sky Italia (Italy), Televisa (Mexico), Tianjin TV (China) and Verizon (US). Several orders were also completed in connection with the 2010 Soccer World Cup, including those to Globosat (Brazil), Rede Bandeirantes (Brazil) and Televisa (Mexico).

"We are taking a number of steps to build on our momentum while our market rapidly evolves, including the hiring of Kevin Joyce in the newly created position of Chief Sales and Marketing Officer," added Mr. Goodship. Mr. Joyce has a track record of success most recently with Eastman Kodak where he was Vice President, Worldwide Sales and Marketing of the $1.2 billion Digital Printing Solutions Group. The accelerating demand for higher quality, over more outlets at a lower operating cost, something that started impacting the print industry several years ago, is beginning to take hold in television. Mr. Joyce's experience should help the Company capitalize on these changes.

(1) Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. See comment on non-GAAP financial measures which follows.

Year-over-year quarterly operating review: Q2 2010 versus Q2 2009


Revenues totalled $32.1 million for the quarter, up 3% versus 2009. Excluding foreign exchange, quarterly sales were up 18% over 2009.

Sales in International markets and the United States were up 11% and 10% respectively over 2009, while sales in Canada were down 60%. Canada, the United States and Other Countries generated 4%, 43% and 53% of quarterly sales, respectively.

Gross Margin

Gross margin as a percentage of sales was 60% for the quarter, down one percentage point from last year, but up from levels seen in the past three quarters largely due to favourable changes in customer and product mix.

Operating Expenses

Selling, General & Administrative expenses (SG&A) were up 8% versus 2009, to $11.7 million. The increase is largely due to provisions for incentive plans. SG&A as a percentage of sales increased by two percentage points over last year to 37%.

Research and Development (R&D) investments were down 5% from 2009, coming in at $5.5 million, versus $5.8 million last year. R&D as a percentage of sales was 17%, down from 19% last year, but in line with levels seen for full year 2009.

R&D tax credits were $1.9 million for the quarter, up from $0.3 million last year. Excluding one- time changes, R&D tax credits for the second quarter of 2010 and 2009 were $1.3 million and $1.0 million respectively.

A foreign exchange gain of $1.1 million was recorded for the quarter, versus a loss of $0.5 million in 2009. The gain largely reflects the impact of a weaker Canadian dollar in the translation of foreign currencies.

Net Income and EBITDA

Net income for the quarter was up 173% to $3.5 million or 15 cents per fully diluted share, compared to $1.3 million and 6 cents per share respectively in 2009.

EBITDA grew by 125% over 2009 to $6.0 million. EBITDA as a percentage of sales also improved significantly, coming in at 19%, versus 9% in 2009.

Liquidity and Capital Resources

Operating activities generated $1.8 million of cash flows during the quarter, compared to $3.4 million last year. Cash, cash equivalents and temporary investments stood at $50.8 million at quarter end, down $1.6 million from $52.4 at the end of March 2010. During the quarter, a total of $2.6 million was used to purchase 536,800 of the Company's shares for cancellation under the NCIB program.


"Looking to the second half of 2010, we expect overall business conditions in each of our markets to strengthen, in conjunction with a gradually improving global economy," commented Mr. Goodship. "We remain focused on capitalizing on improving markets by offering best-in- class solutions with compelling value, while at the same time targeting acquisition opportunities. This, combined with a solid balance sheet, should place us in a strong position to grow the business and drive profitable growth. We look forward to a gradual return to improved spending by broadcasters."

Conference call

Miranda Technologies Inc. (TSX:MT) will hold a conference call with financial analysts to present its second quarter 2010 results on Thursday, August 5, 2010, at 9:00 a.m. (ET). Media and other interested parties are invited to join the conference call in listen-only mode.

DATE: Thursday, August 5, 2010
TIME: 9:00 a.m. Eastern Time
CALL: (416) 981-9001 (for all Toronto and overseas participants)
  (800) 954-0584 (for all other North American callers)
  (Please dial in 15 minutes before the conference begins)
WEBCAST: On line at www.miranda.com or www.marketwire.com.

The webcast of the conference call will be available for a period of 90 days at www.miranda.com and www.marketwire.com. A recording of the conference call will also be available from 11:00 a.m. on Thursday, August 5, 2010 to 11:59 PM on Thursday, August 12, 2010 and can be accessed by dialling 1-800-558-5253 and entering the pass code 21476026# on your telephone keyboard.

Non-GAAP Financial Measures

We use EBITDA (earnings before interest, taxes, depreciation and amortization) to compare our operating results from one period to another. EBITDA is not an earnings measure recognized by GAAP and does not carry standard prescribed significance for GAAP. Our method for calculating EBITDA may differ from that used by other companies under the same designation. The reader is advised that EBITDA should not be substituted for determining net income as an indicator of operating results in line with GAAP, neither for cash flows from operating and investing activities as a measure of liquidity and cash flows. Please refer to the reconciliation of net income to EBITDA in the following table.

Reconciliation of Net Income to EBITDA

  Quarters ended June 30,  
(in thousands of Canadian dollars) 2010   2009  
Net income 3,468   1,271  
Interest (income) expense (30 ) 362  
Income taxes expense (recovery) 570   (830 )
Amortization of property, plant & equipment 946   847  
Amortization of intangible assets 1,068   1,022  
EBITDA 6,022   2,672  

Forward-looking Statements

This media release contains forward-looking statements reflecting Miranda's objectives, estimates and expectations. Such statements may be marked by the use of verbs such as "believe", "anticipate", "estimate", "looking ahead" and "expect", as well as the use of the conditional or future tense. By their very nature, such statements involve risks and uncertainties. Consequently, results could differ materially from the Company's expectations. Risks that could cause results to differ materially from Miranda's expectations are discussed under the heading Risk Factors in the Company's Annual Information Form, which is available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release represent Miranda's current expectations and, accordingly, are subject to change. However, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statement, whether as a result of new information or events or otherwise, unless required to do so by the applicable securities legislation.

About Miranda

Miranda Technologies Inc. (TSX:MT) develops, manufactures and markets high-performance hardware and software for the television broadcast industry. Its solutions are purchased by content creators, broadcasters, specialty channels and television service providers to enable and enhance the transition to a complex multi-channel digital and HD broadcast environment. This equipment allows customers to generate additional revenue while reducing costs through more efficient distribution and management of content as well as the automation of previously manual processes. Miranda employs approximately 570 people at its Montreal headquarters and in its facilities located in Wallingford (UK), Grass Valley (California, USA), Paris (France), Tokyo (Japan), Zaltbommel (Netherlands), Dubai (United Arab Emirates), Beijing (China) and Hong Kong. Miranda is listed on the Toronto Stock Exchange. For more information, please visit www.miranda.com.

Consolidated Balance Sheets
June 30, 2010 and December 31, 2009
(In thousands of Canadian dollars)
    June 30, December 31,
    2010 2009
    (Unaudited) (Audited)
Current assets:    
  Cash and cash equivalents $30,783 $29,264
  Temporary investments 19,980 19,904
  Accounts receivable 20,227 24,955
  Inventories 17,416 14,512
  Income taxes and tax credits receivable 4,148 5,808
  Prepaid expenses 1,279 1,552
  Future income taxes 148 979
    93,981 96,974
Tax credits receivable 5,431 1,870
Property, plant and equipment 30,276 30,725
Intangible assets 18,098 20,234
Goodwill 20,562 20,562
    $168,348 $170,365
Liabilities and Shareholders' Equity    
Current liabilities:    
  Accounts payable and accrued charges $16,486 $16,261
  Deferred revenue 2,090 2,327
  Income taxes payable 1,017 1,239
  Current portion of long-term debt 10 9
    19,603 19,836
Deferred revenue 3,283 3,601
Long-term debt 138 136
Future income taxes 9,678 10,489
Shareholders' equity:    
  Share capital 100,740 103,165
  Contributed surplus 4,623 4,491
  Retained earnings 30,283 28,647
    135,646 136,303
    $168,348 $170,365
Consolidated Statements of Income and Comprehensive Income
Three-month and six-month periods ended June 30, 2010 and 2009
(In thousands of Canadian dollars, except per share amounts)
    Three-month period
ended June 30
  Six-month period
ended June 30
    2010   2009   2010   2009  
Sales $32,066   $31,063   $61,039   $64,273  
Cost of sales 12,692   12,238   24,951   25,812  
    19,374   18,825   36,088   38,461  
Operating expenses:                
  Selling, general and                
  administrative 11,714   10,846   22,096   23,252  
  Research and development 5,484   5,795   11,245   11,838  
  Research and development                
  tax credits (1,899 ) (301 ) (3,127 ) (1,784 )
  Interest (income) expense (30 ) 362   (42 ) 483  
  Foreign exchange (gain) loss (1,061 ) 508   850   (123 )
  Stock-based compensation 36   133   132   423  
  Other stock-based compensation 24   19   5   58  
  Amortization of intangible assets 1,068   1,022   2,136   2,133  
    15,336   18,384   33,295   36,280  
Income before income taxes 4,038   441   2,793   2,181  
Income tax expense (recovery):                
  Current 184   (348 ) 918   482  
  Future 386   (482 ) 75   (659 )
    570   (830 ) 993   (177 )
Net income and                
comprehensive income $3,468   $1,271   $1,800   $2,358  
Earnings per share:                
  Basic $0.15   $0.06   $0.08   $0.10  
  Diluted 0.15   0.06   0.08   0.10  
Consolidated Statements of Cash Flows
Three-month and six-month periods ended June 30, 2010 and 2009
(In thousands of Canadian dollars)
    Three-month period
ended June 30
  Six-month period
ended June 30
    2010   2009   2010   2009  
Cash flows from operating activities:                
  Net income $3,468   $1,271   $1,800   $2,358  
  Adjustments for:                
    Amortization of property, plant and equipment 946   847   1,806   1,709  
    Amortization of intangible assets 1,068   1,022   2,136   2,133  
    Stock-based compensation 36   133   132   423  
    Future income taxes expenses (recovery) 386   (482 ) 75   (659 )
    Change in fair value of financial instruments   77     77  
    Effect of foreign exchange rates on long-term monetary assets and liabilities (202 ) (1,890 ) (50 ) (1,042 )
    Effect of foreign exchange rates on cash and cash equivalents (408 ) 120   210   562  
    5,294   1,098   6,109   5,561  
  Net change in non-cash balances related to operations (3,525 ) 2,308   413   1,744  
    1,769   3,406   6,522   7,305  
Cash flows from financing activities:                
  Repayment of long-term debt (1 ) (730 ) (3 ) (1,466 )
  Redemption of shares (2,589 ) (1,476 ) (2,589 ) (3,390 )
    (2,590 ) (2,206 ) (2,592 ) (4,856 )
Cash flows from investing activities:                
  Net (increase) decrease in temporary investments (76 ) 2,000   (76 ) 2,047  
  Restricted cash       25,000  
  Additions to property, plant and equipment (1,178 ) (1,691 ) (2,125 ) (2,835 )
  Business acquisition, excluding cash adjustment   (64 )   (64 )
    (1,254 ) 245   (2,201 ) 24,148  
Effect of foreign exchange rates on cash and cash equivalents 408   (120 ) (210 ) (562 )
Net (decrease) increase in cash and cash equivalents (1,667 ) 1,325   1,519   26,035  
Cash and cash equivalents, beginning of period 32,450   71,159   29,264   46,449  
Cash and cash equivalents, end of period $30,783   $72,484   $30,783   $72,484  
Cash and cash equivalents are comprised of:                
  Cash $27,533   $52,599   $27,533   $52,599  
  Cash equivalents 3,250   19,885   3,250   19,885  
    $30,783   $72,484   $30,783   $72,484  

Contact Information

  • Miranda Technologies Inc.
    Investors and Media
    Mario Settino
    Chief Financial Officer