Miranda Technologies Inc.
TSX : MT

Miranda Technologies Inc.

November 12, 2010 06:00 ET

Miranda Reports Third Quarter 2010 Results

MONTREAL, QUEBEC--(Marketwire - Nov. 12, 2010) - Miranda Technologies Inc. (TSX:MT), a worldwide provider of infrastructure, playout and monitoring systems for the broadcast and cable/satellite/IPTV industries, today reported results for the third quarter ended September 30, 2010. 

Financial Highlights: Q3 2010 versus Q3 2009

  • Revenues up 19% to $37.7 million, compared to $31.8 million in 2009

  • Net income up 520% to $6.6 million or 30 cents per fully diluted share, compared to net income of $1.1 million or 5 cents per share in 2009

  • EBITDA(1) up 167% to $8.8 million, versus $3.3 million in 2009 

  • Acquired OmniBus on September 8, 2010 for $43.4 million, contributing quarterly revenue of $1.9 million and net income of $0.2 million

Third quarter sales came in at $37.7 million, up 19% from $31.8 million last year. On September 8, 2010, Omnibus Systems Limited ("OmniBus"), a leading developer of IT based playout solutions, was acquired for $43.4 million, including acquisition costs of $2.8 million and net of cash acquired of $7.9 million. This resulted in additional sales of $1.9 million for the quarter. Excluding OmniBus, sales were up 13% over last year or 21% on a constant dollar basis. 

Gross margins remained healthy at 58% of sales. Net income was up 520% over 2009 to $6.6 million or 30 cents per share. Quarterly results were positively impacted by the resolution of previous years' matters, resulting in an additional $2.4 million of R&D tax credits and a $1.3 million reduction in income taxes. 

"Our third quarter results reflect the success of new products and the steady improvements we are seeing in broadcast markets," commented Strath Goodship, Miranda's President and Chief Executive Officer. "Sales grew in all regions, allowing us to deliver a robust bottom line." 

"We are excited about our prospects, particularly with the addition of OmniBus and the opportunity the acquisition brings to our customers and shareholders," continued Mr. Goodship. "We recently exhibited at the International Broadcasting Convention, a leading international forum for the electronic media industry, where we were encouraged by the positive reaction of customers to the OmniBus purchase. We are now uniquely placed to help customers transition to more efficient operations, by offering the best fit of hardware and software playout solutions to suit their individual requirements. 

(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: Q3 2010 versus Q3 2009 Revenue

Revenues totalled $37.7 million for the quarter, up 19% over 2009. The acquisition of OmniBus, completed September 8, 2010, resulted in additional sales of $1.9 million for the period. Excluding this, organic revenues were $35.8 million for the quarter, up 13% over last year or 21% on a constant currency basis. 

Revenues increased in all geographies, with Canada, the United States and Other Countries, growing 68%, 26% and 10%, respectively over the prior year. Canada, the United States and Other Countries generated 7%, 41% and 52% of quarterly sales, respectively.

Gross Margin

Gross margin as a percentage of sales was 58% for the quarter, up three percentage points over 2009. Margins for 2009 were impacted by various adjustments; when they are excluded, the quarterly gross margin would have been 58% in both periods.

Operating Expenses

Selling, General & Administrative expenses (SG&A) were up 15% over 2009, to $11.2 million. The increase is largely due to the acquisition of OmniBus and higher provisions for incentive plans. SG&A as a percentage of sales was unchanged over 2009, coming in at 30%. 

Research and Development (R&D) investments came in at $6.1, up from $5.1 million last year, largely due to the addition of OmniBus during the quarter. Quarterly R&D as a percentage of sales was 16%, unchanged from 2009. 

R&D tax credits totalled $3.7 million for the quarter, up from $1.2 million in 2009. The increase is mainly due to the resolution of previous years' matters in the amount of $2.4 million. Excluding this, R&D tax credits for the quarter were $1.3 million, growing slightly over last year.

EBITDA, Income Taxes and Net Income

EBITDA was $8.8 million, up 167% from $3.3 million in 2009. EBITDA as a percentage of sales also improved significantly to 23%, versus 10% last year. 

During the quarter, the Company recorded a $1.3 million recovery in income taxes due to the resolution of matters relating to prior years. This resulted in an income tax recovery of $45 thousand, compared to an expense of $329 thousand in 2009.

Net income for the quarter grew 520% to $6.6 million or 30 cents per fully diluted share, compared to $1.1 million and 5 cents per share respectively in 2009. Net income was up 152% over last year when excluding the resolution of items related to prior years associated with R&D tax credits ($2.4 million) and income taxes ($1.3 million), along with $0.2 million of income associated with OmniBus.

Liquidity and Capital Resources

Operating activities generated $3.3 million of cash flows during the quarter, compared to $1.0 million last year. Cash, cash equivalents and temporary investments were $32.0 million at quarter end, down from $50.8 million at the end of June 2010. During the quarter, $18.4 million of cash was used to partially finance the OmniBus acquisition and an additional $3.1 million was used to purchase 588,050 of the Company's shares for cancellation under the normal course issuer bid (NCIB) program, which ended August 25, 2010. Since announcing the NCIB program in August 2009, the Company purchased 1.1 million shares for cancellation, at a total cost of $5.7 million and an average price of $5.03 per share.

Outlook

"Looking ahead, we are encouraged by the steady improvement in U.S. broadcast markets and strong customer interest we are seeing across our product lines," commented Mr. Goodship. "Our strategic focus on offering best-in-class solutions with compelling value puts us in a strong position to grow faster than the overall broadcast market. We remain committed to driving profitable growth, both organically and through acquisitions, and with a strong balance sheet we are well placed to capitalize on improving market conditions."

Conference call

Miranda Technologies Inc. (TSX: MT) will hold a conference call with financial analysts to present its third quarter 2010 results on Friday, November 12, 2010, at 9:00 a.m. (ET). Media and other interested parties are invited to join the conference call in listen-only mode.

DATE:  Friday, November 12, 2010
   
TIME:  9:00 a.m. Eastern Time
   
CALL: (416) 981-9000 (for all Toronto and overseas participants)
  (800) 768-3395 (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 Friday, November 12, 2010 to 11:59 PM on Friday, November 19, 2010 and can be accessed by dialling1-800-558-5253 and entering the pass code 21485059# 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

(in thousands of Canadian dollars) Quarters ended September 30,  
  2010   2009  
Net income 6,632   1,070  
Interest expense (income) 2   (42 )
Income taxes (recovery) expense (45 ) 329  
Amortization of property, plant & equipment 972   859  
Amortization of intangible assets 1,197   1,069  
EBITDA 8,758   3,285  

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) is a worldwide provider of infrastructure, playout and monitoring systems for the broadcast and cable/satellite/IPTV industries. Its solutions enable and enhance the transition to a multi-channel digital and HD broadcast environment. With this equipment, customers can generate additional revenue while reducing their costs through more efficient distribution and management of their content. In September 2010, Miranda acquired OmniBus Systems Limited, the Loughborough UK-based pioneer of IT-based media management and delivery solutions for television and Internet broadcasters. Miranda employs approximately 680 people at its Montreal headquarters and in its facilities located in Wallingford and Loughborough (UK), Denver (Colorado, USA), Grass Valley (California, USA), Paris (France), Tokyo (Japan), Zaltbommel (Netherlands), Dubai (United Arab Emirates), Kuala Lumpur (Malaysia), Singapore, Beijing (China) and Hong Kong. Miranda is listed on the Toronto Stock Exchange. For more information, please visit www.miranda.com.

MIRANDA TECHNOLOGIES INC.
Consolidated Balance Sheets
 
September 30, 2010 and December 31, 2009
(In thousands of Canadian dollars)
  September 30, December 31,
    2010   2009
  (Unaudited)   (Audited)
Assets        
 
Current assets:        
  Cash and cash equivalents $ 27,008 $ 29,264
  Temporary investments   4,990   19,904
  Accounts receivable   29,026   24,955
  Inventories   20,180   14,512
  Income taxes and tax credits receivable   3,741   5,808
  Prepaid expenses   1,561   1,552
  Future income taxes   491   979
    86,997   96,974
 
Tax credits receivable   9,756   1,870
Property, plant and equipment   33,188   30,725
Intangible assets   41,507   20,234
Goodwill   48,300   20,562
 
  $ 219,748 $ 170,365
 
Liabilities and Shareholders' Equity        
 
Current liabilities:        
  Accounts payable and accrued charges $ 26,303 $ 16,261
  Deferred revenue   5,088   2,327
  Income taxes payable   1,130   1,239
  Current portion of long-term debt   3,109   9
    35,630   19,836
 
Deferred revenue   3,510   3,601
Long-term debt   23,218   136
Future income taxes   17,779   10,489
 
Shareholders' equity:        
  Share capital   98,101   103,165
  Contributed surplus   4,661   4,491
  Retained earnings   36,502   28,647
  Accumulated other comprehensive income   347  
    139,611   136,303
 
  $ 219,748 $ 170,365
         
         
MIRANDA TECHNOLOGIES INC.
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
 
Three-month and nine-month periods ended September 30, 2010 and 2009
(In thousands of Canadian dollars, except per share amounts)
 
    Three-month period ended     Nine-month period ended  
        September 30         September 30  
    2010     2009     2010     2009  
   
Sales $ 37,749   $ 31,768   $ 98,788   $ 96,041  
   
Cost of sales   15,723     14,373     40,674     40,185  
    22,026     17,395     58,114     55,856  
   
Operating expenses:                        
  Selling, general and administrative     11,152     9,671     33,248     32,923  
  Research and development     6,123     5,107     17,368     16,945  
  Research and development tax credits     (3,720 )   (1,156 )   (6,847 )   (2,940 )
  Interest expense (income)     2     (42 )   (40 )   441  
  Foreign exchange loss     591     981     1,441     858  
  Stock-based compensation     38     125     170     548  
  Other stock-based compensation 56     241     61     299  
  Amortization of intangible assets 1,197     1,069     3,333     3,202  
    15,439     15,996     48,734     52,276  
   
Income before income taxes   6,587     1,399     9,380     3,580  
   
Income tax (recovery) expense:                        
  Current   (33 )   588     885     1,070  
  Future   (12 )   (259 )   63     (918 )
    (45 )   329     948     152  
   
Net income   6,632     1,070     8,432     3,428  
   
Other comprehensive income, net of income taxes:                        
  Foreign exchange gain adjustment on translation of self-sustaining foreign operations   347         347      
   
Comprehensive income $ 6,979   $ 1,070   $ 8,779   $ 3,428  
   
Earnings per share:                        
  Basic $ 0.30   $ 0.05   $ 0.37   $ 0.15  
  Diluted   0.30     0.05     0.37     0.15  
                           
                           
MIRANDA TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(Unaudited)
 
Three-month and nine-month periods ended September 30, 2010 and 2009
(In thousands of Canadian dollars)
 
    Three-month period ended     Nine-month period ended  
        September 30         September 30  
    2010     2009     2010     2009  
   
Cash flows from operating activities:                        
  Net income $ 6,632   $ 1,070   $ 8,432   $ 3,428  
  Adjustments for:                        
    Amortization of property, plant and equipment   972     859     2,778     2,568  
    Amortization of intangible assets   1,197     1,069     3,333     3,202  
    Stock-based compensation   38     125     170     548  
    Future income taxes (recovery) expenses   (12 )   (259 )   63     (918 )
    Change in fair value of financial instruments       (79 )       (2 )
    Effect of foreign exchange rates on long-term monetary assets and liabilities   138     (1,576 )   88     (2,618 )
    Effect of foreign exchange rates on cash and cash equivalents   (10 )   1,088     108     1,539  
      8,955     2,297     14,972     7,747  
  Net change in non-cash balances related to operations   (5,634 )   (1,260 )   (5,221 )   484  
    3,321     1,037     9,751     8,231  
Cash flows from financing activities:                        
  Increase in long-term debt   25,000         25,000      
  Repayment of long-term debt   (15 )   (20,303 )   (18 )   (21,769 )
  Issuance of shares   17         17      
  Redemption of shares   (3,069 )   -     (5,658 )   (3,390 )
    21,933     (20,303 )   19,341     (25,159 )
Cash flows from investing activities:                        
  Net decrease in temporary investments   14,990     -     14,914     2,047  
  Restricted cash               25,000  
  Additions to property, plant and equipment   (587 )   (3,777 )   (2,712 )   (6,612 )
  Business acquisition, excluding cash acquired   (43,442 )   -     (43,442 )   (64 )
    (29,039 )   (3,777 )   (31,240 )   20,371  
Effect of foreign exchange rates on cash and cash equivalents   10     (1,088 )   (108 )   (1,539 )
   
Net (decrease) increase in cash and cash equivalents   (3,775 )   (24,131 )   (2,256 )   1,904  
Cash and cash equivalents, beginning of period   30,783     72,484     29,264     46,449  
   
Cash and cash equivalents, end of period $ 27,008   $ 48,353   $ 27,008   $ 48,353  
   
Cash and cash equivalents are comprised of:                        
  Cash $ 23,507   $ 48,353   $ 23,507   $ 48,353  
  Cash equivalents   3,501         3,501      
   
  $ 27,008   $ 48,353   $ 27,008   $ 48,353  

Supplemental information:

Acquisition of fixed assets financed by accounts payable of $769 as at December 31, 2009.

Contact Information

  • Miranda Technologies Inc.
    Mario Settino
    Chief Financial Officer
    514-333-1772