VICTORIA, BRITISH COLUMBIA--(Marketwire - Dec. 9, 2011) - Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology in the broadband equipment market, today reported financial results for the fiscal 2012 first quarter ended September 30, 2011. All figures are in Canadian dollars and in accordance with International Financial Reporting Standards ("IFRS") unless otherwise stated.
| SUMMARY OF OPERATING RESULTS | ||||||
| (CAD dollars in millions except percentage and per share data) |
Q1 2012 |
Q4 2011 |
Q1 2011 |
|||
| Revenue | 20.0 | 21.1 | 26.3 | |||
| Gross Margin | 37 | % | 34 | % | 38 | % |
| EBITDA | 1.7 | (2.1 | ) | 6.2 | ||
| Net (loss) / income | (0.7 | ) | (2.3 | ) | 1.8 | |
| (Loss) / earnings per share | (0.03 | ) | (0.10 | ) | 0.08 | |
| (based on weighted average number shares outstanding) | ||||||
| Cash and cash equivalents | 7.8 | 5.1 | (4.9 | ) | ||
Vecima's first quarter fiscal 2012 revenue of $20.0 million decreased 5% as compared to the fourth quarter of fiscal 2011 due primarily to further weakening in Vecima's legacy product orders.
"In spite of the decrease in sales, the Company's gross margin in the quarter improved, rising to 37% from 34% in Q4 FY2011. We also saw strong improvement in our EBITDA compared to last quarter. This mainly reflects the expense reduction measures the Company took earlier in the calendar year and better production efficiency we achieved this quarter," said Dr. Surinder Kumar, CEO of Vecima. "There are many encouraging signs that point to improvement in Vecima's results in the coming quarters."
Vecima's loss per share narrowed from the fourth quarter of fiscal 2011 to the first quarter of fiscal 2012, despite posting lower revenue in Q1.
The Company's cash position was $7.8 million at quarter end, up from $5.1 million at the end of the fourth quarter of FY2011.
In fiscal 2011, Vecima announced the $8.0 million sale of 3.5 GHz radio spectrum and continues to expect the deal to close before December 31, 2011.
"Our drive to profitability is showing positive momentum," noted Dr. Kumar, "and we will continue to focus on order execution and containing expenses."
FINANCIAL HIGHLIGHTS OF RECENTLY INTRODUCED PRODUCTS
Sales from these products may fluctuate from quarter to quarter depending on customer demand and the timing of customer purchase decisions. However, over a longer time horizon, the Company expects to see positive trending revenue.
Terrace A
Compared to Q4 FY2011, revenue from Terrace A, the first member of Vecima's Terrace family of products, increased by 33%.
OEM QAM Module
While the quarter over quarter revenue from this product declined by 22%, sales have risen by 92% since the first quarter of 2011.
FINANCIAL HIGHLIGHTS OF NEW PRODUCTS
These new products are in the initial stage of market introduction and sales orders are expected to ramp up over the next four quarters.
TerraceQAM
We continued to make good progress in concluding approval testing of the second phase of TerraceQAM with our lead MSO customer in Q1.
Concierge
While sales for Concierge have not yet ramped up, we have been optimizing the product's final design in response to customer testing and feedback.
Fleet Management
We shipped our fleet management product in Q1 and the first customer continued to perform field trials and conduct its initial launch in multiple fleets.
FINANCIAL HIGHLIGHTS OF LEGACY PRODUCTS
Over the quarter, combined revenue for our OEM return path demodulator product and CableVista declined by more than $3.0 million.
FINANCIAL HIGHLIGHTS OF BROADBAND WIRELESS AND SERVICE SEGMENT
Broadband wireless revenue for the three months ended September 31, 2011 was $2.7 million, an increase of 97% over Q4 of fiscal 2011.
YourLink revenue was $3.2 million for Q1 FY2012, compared to $3.3 million last quarter.
OUTLOOK
Revenue for fiscal 2012 is expected to be in the $90 million to $100 million range. Vecima is also on track to deliver gross profit margin at the top end of our targeted 30% to 40% range. The Company will diligently monitor operating expenses and prudently add additional resources as necessary to meet our revenue growth objectives and ensure operational profitability.
CONFERENCE CALL
A conference call and live audio webcast will be held on December 9, 2011 at 1 p.m. ET to discuss the Company's first quarter results. Vecima's unaudited condensed interim consolidated financial statements and management's discussion and analysis for the three months ended September 30, 2011 are available under the Company's profile at www.SEDAR.com, and at http://www.vecima.com/financials_ir.php.
To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-5340. The webcast will be available in real time at http://services.choruscall.com/links/vecima111209.html and it will be archived on the Vecima web site: http://www.vecima.com/events_ir.php.
About Vecima Networks
Vecima Networks Inc. (TSX:VCM) designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Vecima's hardware products incorporate original embedded software to meet the complex requirements of next-generation, high-speed digital networks. Service providers use Vecima's solutions to deliver services to a converging worldwide broadband market, including what are commonly known as "triple play" (voice, video and data) and "quadruple play" (voice, video, data and wireless) services. Vecima's solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects the system directly to end users, commonly referred to as "the last mile", by overcoming the bottleneck resulting from insufficient carrying capacity in legacy, last mile infrastructures. Vecima's products are directed at two principal markets: Converged Wired Solutions and Broadband Wireless. The Company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fibre to the home and IP video. More information is available at our website at www.vecima.com.
Forward-Looking Statements
Certain statements in this press release may constitute forward-looking statements within the meaning of applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These statements include but are not limited to statements regarding management's intentions, belief or current expectations with respect to market and general economic conditions, future sales and revenue expectations, future costs and operating performance. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, and/or are beyond our control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include, but are not limited to, the current significant general economic uncertainty and credit and financial market volatility and the distinctive characteristics of Vecima's operations and industry and customer demand that may have a material impact on, or constitute risk factors in respect of Vecima's future financial performance, as set forth under the heading "Risk Factors" in the Company's Annual Information Form dated September 28, 2011, a copy of which is available at www.sedar.com. In addition, although the forward-looking statements in this press release are based on what management believes are reasonable assumptions, such assumptions may prove to be incorrect. Consequently, readers should not place undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Vecima disclaims any intention or obligation to update or revise any forward-looking statements, as a result of new information, future events or otherwise, except as required by law.
| VECIMA NETWORKS INC. | |||||||
| CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||||
| (unaudited - in thousands of Canadian dollars) | |||||||
| September 30, | June 30, | July 1, | |||||
| 2011 | 2011 | 2010 | |||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 7,771 | $ | 5,095 | $ | - | |
| Marketable securities | 4 | 4 | 795 | ||||
| Accounts receivable | 13,996 | 16,001 | 27,999 | ||||
| Income tax receivable | 4,879 | 4,879 | 2,754 | ||||
| Inventories | 32,776 | 32,526 | 36,702 | ||||
| Current portion of leases receivable | - | 239 | 281 | ||||
| Prepaid expenses | 862 | 836 | 864 | ||||
| Other current assets | - | 12 | 12 | ||||
| 60,288 | 59,592 | 69,407 | |||||
| Leases receivable | - | - | 214 | ||||
| Property, plant and equipment | 31,986 | 32,474 | 35,879 | ||||
| Intangible assets | 11,470 | 11,538 | 12,180 | ||||
| Investment tax credit asset | 26,874 | 25,805 | 24,829 | ||||
| Deferred tax asset | 16,949 | 16,737 | 12,665 | ||||
| $ | 147,567 | $ | 146,146 | $ | 155,174 | ||
| Liabilities | |||||||
| Current liabilities | |||||||
| Bank indebtedness | $ | - | $ | - | $ | 5,934 | |
| Accounts payable and accrued liabilities | 12,052 | 10,632 | 14,509 | ||||
| Provisions | 1,098 | 695 | 550 | ||||
| Deferred revenue | 2,458 | 2,313 | 2,452 | ||||
| Current portion of long-term debt | 3,896 | 3,958 | 250 | ||||
| 19,504 | 17,598 | 23,695 | |||||
| Non-current liabilities | |||||||
| Other long-term liabilities | 498 | 528 | 25 | ||||
| Provisions | 1,369 | 1,125 | 1,065 | ||||
| Long-term debt | - | - | 3,958 | ||||
| 21,371 | 19,251 | 28,743 | |||||
| Shareholders' equity | |||||||
| Share capital | 34,482 | 34,482 | 34,482 | ||||
| Contributed surplus | 2,700 | 2,678 | 2,511 | ||||
| Retained earnings | 89,014 | 89,735 | 89,438 | ||||
| 126,196 | 126,895 | 126,431 | |||||
| $ | 147,567 | $ | 146,146 | $ | 155,174 | ||
| VECIMA NETWORKS INC. | ||||||
| CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited - in thousands of Canadian dollars except net income per share data) | ||||||
| Three months ended September 30, |
||||||
| 2011 | 2010 | |||||
| Sales | $ | 19,981 | $ | 26,333 | ||
| Cost of sales | 12,677 | 16,235 | ||||
| Gross margin | 7,304 | 10,098 | ||||
| Research and development | 2,764 | 2,832 | ||||
| Sales and marketing | 1,182 | 1,446 | ||||
| General and administrative | 5,040 | 4,741 | ||||
| Stock-based compensation | 22 | 52 | ||||
| Other (income) | (310 | ) | (1,463 | ) | ||
| 8,698 | 7,608 | |||||
| Operating (loss) income | (1,394 | ) | 2,490 | |||
| Finance cost | 136 | 119 | ||||
| Finance income | 534 | 203 | ||||
| (Loss) income before income taxes | (996 | ) | 2,574 | |||
| Income tax (recovery) expense | (275 | ) | 740 | |||
| Net (loss) income and comprehensive (loss) income | $ | (721 | ) | $ | 1,834 | |
| Net (loss) income per share | ||||||
| Basic and diluted | $ | (0.03 | ) | $ | 0.08 | |
| Weighted average number of Common Shares outstanding - basic and diluted | 22,316,767 |
22,316,767 |
||||
| VECIMA NETWORKS INC. | ||||||||||
| CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY | ||||||||||
| (unaudited - in thousands of Canadian dollars except net income per share data) | ||||||||||
| Share | Contributed | Retained | ||||||||
| Capital | Surplus | Earnings | Total | |||||||
| Balance as at July 1, 2010 | $ | 34,482 | $ | 2,511 | $ | 89,438 | $ | 126,431 | ||
| Net income and comprehensive income | - | - | 1,834 | 1,834 | ||||||
| Share-based payment expense | - | 55 | - | 55 | ||||||
| Balance as at September 30, 2010 | $ | 34,482 | $ | 2,566 | $ | 91,272 | $ | 128,320 | ||
| Balance as at June 30, 2011 | $ | 34,482 | $ | 2,678 | $ | 89,735 | $ | 126,895 | ||
| Net loss and comprehensive income | - | - | (721 | ) | (721 | ) | ||||
| Share-based payment expense | - | 22 | - | 22 | ||||||
| Balance as at September 30, 2011 | $ | 34,482 | $ | 2,700 | $ | 89,014 | $ | 126,196 | ||
| VECIMA NETWORKS INC. | |||||||
| CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (unaudited - in thousands of Canadian dollars) | |||||||
| Three months ended | |||||||
| September 30, | |||||||
| 2011 | 2010 | ||||||
| Cash flows from operating activities | |||||||
| Net (loss) income and comprehensive (loss) income | $ | (721 | ) | $ | 1,834 | ||
| Add (deduct) items not requiring cash | |||||||
| Gain on the sale of property, plant and equipment | (13 | ) | (1,519 | ) | |||
| Gain on the sale of intangible assets | (79 | ) | - | ||||
| Amortization of property, plant and equipment | 1,283 | 1,406 | |||||
| Amortization of deferred development costs | 1,240 | 2,038 | |||||
| Amortization of finite-life intangible assets | 41 | 36 | |||||
| Stock-based compensation | 22 | 52 | |||||
| Deferred tax asset | 63 | 270 | |||||
| Interest expense | 136 | 119 | |||||
| Income tax (recovery) expense | (275 | ) | 740 | ||||
| Increase in other long-term liabilities | 244 | 68 | |||||
| Increase in provisions | 640 | 15 | |||||
| Increase in investment tax credit asset | (1,069 | ) | (1,023 | ) | |||
| Net change in non-cash working capital relating to operations | 3,271 | (28 | ) | ||||
| Interest paid | (129 | ) | (111 | ) | |||
| 4,654 | 3,897 | ||||||
| Cash flows used in investing activities | |||||||
| Purchase of property, plant and equipment | (921 | ) | (1,131 | ) | |||
| Proceeds from the sale of property, plant and equipment | 139 | 750 | |||||
| Proceeds from the sale of intangible assets | 150 | - | |||||
| Deferred development costs, net of investment tax credits | (1,270 | ) | (2,429 | ) | |||
| Purchase of finite-life intangible assets | (14 | ) | (8 | ) | |||
| (1,916 | ) | (2,818 | ) | ||||
| Cash flows used in financing activities | |||||||
| Repayment of long-term debt | (62 | ) | (59 | ) | |||
| (62 | ) | (59 | ) | ||||
| Increase in cash during the period | 2,676 | 1,020 | |||||
| Cash (bank indebtedness), beginning of period | 5,095 | (5,934 | ) | ||||
| Cash (bank indebtedness), end of period | $ | 7,771 | $ | (4,914 | ) | ||
Contact Information:
Susan Enefer
Investor Relations Officer
250-881-1982
invest@vecima.com
www.vecima.com