SOURCE: ViXS Systems Inc.

ViXS Systems Inc.

June 10, 2015 16:01 ET

ViXS Reports First Quarter 2016 Results

34% Revenue Growth and 65% Comprehensive Loss Improvement Year-Over-Year

TORONTO, ON--(Marketwired - June 10, 2015) - ViXS Systems Inc. (TSX: VXS), a pioneer and leader in media processing solutions, reported its first quarter results for the period ending April 30, 2015 today. All results are reported under International Financial Reporting Standards ("IFRS") and in U.S. dollars, unless otherwise specified. ViXS reported Q1FY16 revenue of $10.0 million, total comprehensive loss of $(1.8) million and non-IFRS net loss of $(1.4) million.

Q1FY16 Financial Summary

  • Revenue of $10.0 million, a 34% increase over the same quarter last year and a $1.3 million decrease from the previous quarter.
  • Gross margin of 47.1%, a 4.9% point increase over the same quarter last year but a 2.1% point sequential decrease.
  • IFRS Comprehensive loss of $(1.8) million, a 65% year-over-year improvement compared a loss of $(5.1) million and a 53% sequential improvement from a loss of $(3.8) million in the previous quarter.
  • Non-IFRS net loss of $(1.4) million, a 72% year-over-year improvement compared to a loss of $(4.9) million and a 28% sequential improvement from a loss of $(2.0) million in the previous quarter.
  • $12.1 million of cash and equivalents, with no outstanding bank debt.

Customer, Product and Corporate Announcements

  • Imagine Communications employs ViXS' XCodePro in its SelenioNext all-in-one TV Everywhere solution.
  • Leading hotel brand commences trials of ViXS' Ethernet-over-Coax product with deployments anticipated during the second half of this fiscal year.
  • XCodePro 370 Decoder launches, integrating new features including High Dynamic Range (HDR) and 12-bit color.
  • Next Generation Golden Reference Decoder launches, a tool for the broadcast industry to test, validate, debug and deploy Ultra HD HDR content.
  • New General Counsel, Michael Michalyshyn, joins VIXS' management team.

"Q1 was a good start to fiscal 2016 with the company’s quarterly comprehensive loss significantly narrowing and with year-over-year revenue growth of 34%,” said Peter Currie, Chairman of ViXS Systems, Inc. "ViXS is currently undergoing an important transition that will allow the company to realize its full potential as the leader in media processing solutions. Over the past quarter, the Board has identified several outstanding candidates for the role of CEO whom we believe can increase shareholder returns for ViXS. The board and members of the senior management team are working closely together to ensure the company is moving forward."

Q1 FY2016 Results

Revenues for the first quarter of fiscal 2016 were $10.0 million, a 34% increase from the first quarter of fiscal 2015. Revenues declined from the previous quarter by $1.3 million due to quarterly fluctuations in our next generation products and seasonal softness in older products.

Gross margin for the first quarter of fiscal 2016 was 47.1%, which represents a 2.1% point decrease from the previous quarter due to higher volume sales of our lower margin XConnex products. Gross margin increased by 4.9% points year-over-year due to higher sales volumes. Product margin which excludes the effects of amortization, support contracts, SDKs, non-recurring inventory and variances was 45.7%.

Total operating expenses for the first quarter of fiscal 2016 decreased by $1.0 million to $6.7 million. Research & Development (R&D) spending increased slightly to $4.1 million compared to $4.0 million in the previous quarter. Selling, general and administrative expenses for the first quarter decreased by $1.1 million compared to previous quarter due to the non-recurring provision on a financial asset taken in the prior quarter, a one-time reduction in royalty expense in the current quarter, and continued controls over discretionary items.

IFRS Comprehensive loss for the first quarter of fiscal 2016 was $(1.8) million, or a loss of $(0.03) per share basic. This is a 53% improvement compared to a loss of $(3.8) million in the previous quarter and a $3.3 million, or 65% improvement from the $(5.1) million loss in the first quarter of fiscal 2015. In addition to the lower operating expenses, the sequential change in comprehensive loss was also impacted by a positive foreign exchange impact in the current quarter and offset by one-time legal fees.

Non-IFRS net loss for the current quarter (as defined in the Non-IFRS Financial Measures section) totalled $(1.4) million, 28% improvement as compared to a $(2.0) million loss in the previous quarter and a $3.5 million decrease from the $(4.9) million loss in the first quarter of fiscal 2015. This continued year-over-year decrease in non-IFRS net loss from operations reflects higher volumes, better product mix, and cost efficiencies we continue to implement in our operations.

ViXS finished the quarter with total cash and cash equivalents of $12.1 million with no bank debt outstanding as of April 30, 2015, and an $8 million undrawn line of credit at the end of quarter.

For More Information

In conjunction with this announcement, ViXS management will be holding a conference call on Wednesday June 10, 2015, at 5:00 P.M. Eastern Time to discuss the Company's results for Q1 fiscal 2016.

FISCAL 1Q16 CONFERENCE CALL DETAILS:

DATE: Wednesday June 10, 2015
  
TIME: 5:00 P.M. EST
  
DIAL IN NUMBER: Local / International: 416-850-9144
North American Toll Free: 1-866-400-3310
  
REPLAY NUMBER: Local / International: 416-915-1035
North American Toll Free: 1-866-245-6755
Passcode: 15435
  
WEBCAST: http://public.viavid.com/index.php?id=114770
The webcast will be archived for 90 days
  
WEBSITE: To view the press release or any additional financial information, please visit the Investor Relations section of the ViXS website at: http://investor.vixs.com/investor-relations/

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth selected financial information derived from the Company's audited annual consolidated financial statements for the three months ended April 30, 2015, January 31, 2015 and April 30, 2014. The selected financial information was prepared in accordance with IFRS in a manner consistent with the Company's annual financial statements. The following information should be read in conjunction with these statements and the accompanying notes.

  Three Month Period Ended
  April 30, January 31, April 30,
Dollar amounts in U.S. dollars 2015 2015 2014
Amounts in thousands, except loss per share      
       
Revenue $9,962 $11,229 $7,441
 Cost of sales 5,273 5,708 4,305
Gross margin 4,689 5,521 3,136
Operating expenses      
 Research and development 4,104 4,026 4,255
 Selling, general and administrative 2,585 3,697 4,246
Total operating expenses (1) 6,689 7,723 8,501
Loss before finance costs and income and currency gains (2,000) (2,202) (5,365)
Other income (expense):      
 Finance costs (92) 217 (20)
 Finance income 22 19 24
 Currency gains 314 (1,686) 291
Total other income 244 (1,450) 295
Loss before taxes ($1,756) ($3,652) ($5,070)
 Income tax expense (10) (78) (13)
Loss for the period (1,766) (3,730) (5,083)
Item subject to reclassification      
 Exchange difference on translating foreign operations(5)
(34)
(30)
Comprehensive loss for the period ($1,771) ($3,764) ($5,113)
Loss per share attributed to common equity holders      
 Basic ($0.03) ($0.07) ($0.10)
 Diluted ($0.03) ($0.07) ($0.10)
Weighted average number of common shares outstanding      
 Basic 50,376 50,376 50,352
 Diluted 50,376 50,376 50,352
       
(1) Includes share-based transaction expense of:      
Research and development 163 55 345
Selling, general and administrative (214) 317 199
  ($51) $372 $544

BALANCE SHEET

  As at
April 30,
As at
January 31,
As at
April 30,
  2015 2015 2014
       
Cash and cash equivalents $12,131 $15,289 $19,667
Trade accounts receivable 3,811 4,104 7,045
Inventories 4,344 2,868 3,321
Total assets $32,770 $35,844 $40,706
       
Trade payables $8,742 $6,465 $1,776
Accrued liabilities 3,007 6,656 7,120
Deferred revenues 155 168 87
Total liabilities 15,273 16,525 12,782
Total liabilities and shareholders' equity $32,770 $35,844 $40,706

NON-IFRS FINANCIAL MEASURES

In addition to disclosing results in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"), the Company also provides supplementary non-IFRS financial measures as a method of evaluating the Company's performance. These non-IFRS measures are disclosed as a supplement to financial results prepared in accordance with IFRS in order to provide a further understanding of ViXS' results of operations from management's perspective. In particular, ViXS uses non-IFRS measures to provide investors with supplemental measures of its operating performance and highlight trends in its core business that may not otherwise be readily apparent solely from IFRS measures. ViXS management uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess ViXS' ability to meet its future capital expenditure and working capital requirements. ViXS believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers.

Non-IFRS net income (loss) is defined as total comprehensive income (loss) before share-based transaction expense, exchange difference related to translating foreign operations, unrealized currency gains/losses and non-recurring or one-time items such as: share offering costs, listing fees, convertible preferred share revaluation adjustment, fair value adjustment on warrant liability and provision for repayable government assistance. Non-IFRS net income (loss) does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies. Non-IFRS net income (loss) from operations should not be considered in isolation or as a substitute for comprehensive income (loss) prepared in accordance with IFRS.

ViXS has provided a comparison of comprehensive income (loss) to non-IFRS net loss in the following table:

  Three Month Period Ended
  April 30, January 31, April 30,
  2015 2015 2014
Comprehensive loss for the period ($1,771) ($3,764) ($5,113)
R&D adjustments      
 Stock-based compensation expense 163 55 345
 Provision for repayment of government assistance - - (111)
Selling, general and administrative      
 Stock based compensation expense (214) 317 199
 Legal fee settlement   (297) -
Other Income/Expense adjustments      
 Unrealized currency loss (gain) 419 1,701 (295)
Other adjustments      
 Exchange differences on translating foreign operations 5 34 30
Non-IFRS net loss ($1,398) ($1,954) ($4,945)

FORWARD LOOKING STATEMENTS

Statements in this press release that are not historical facts constitute "forward-looking statements" within the meaning of applicable securities laws. Such statements include, but are not limited to: statements regarding ViXS' projected revenues, gross margins, earnings, growth rates, the impact of new product design wins, market penetration and product plans. The use of terms such as "may", "anticipated", "expected", "projected", "targeting", "estimate", "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause ViXS' actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements.

Factors that could cause results or events to differ materially from current expectations express or implied by forward looking statements contained herein include, but are not limited to: our history of losses and the risks associated with not achieving or sustaining profitability; the Company's dependence on a limited number of customers for a substantial portion of revenues; fluctuating revenue and expense levels arising from changes in customer demand, sales cycles, product mix, average selling prices, manufacturing costs and timing of product introductions; risks associated with competing against larger and more established companies; competitive risks and pressures from further consoldiation amongst competitors, customers, and suppliers; market share risks and timing of revenue recognition associated with product transitions; risks associated with changing industry standards such as HEVC (High Efficiency Video Codec), HDR (High Dynamic Range) and Ultra HD resolution; risks related to intellectual property, including third party licensing or patent infringement claims; the loss of any of the Company's key personnel could seriously harm its business; risks associated with adverse economic conditions; delays in the launch of customer products; price re-negotiations by existing customers; the Company's dependence on a limited number of supply chain partners for the manufacture of itsproducts; and other factors discussed in the "Risk Factors" section of the Company's Annual Information Form dated May 7, 2015, a copy of which is available under the Company's profile on SEDAR at www.sedar.com. All forward-looking statements are qualified in their entirety by this cautionary statement. ViXS is providing this information as of the current date and does not undertake any obligation to update any forward-looking statements contained herein as a result of new information, future events or otherwise except as may be required by applicable securities laws.

About ViXS Systems Inc.
ViXS is the pioneer and market leader in designing revolutionary media processing semiconductor solutions for video over IP streaming solutions, with over 522 patents issued and pending worldwide, numerous industry awards for innovation, and over 33 million media processor shipped to date. ViXS is driving the transition to Ultra HD 4K across the entire content value chain by providing professional and consumer grade chipsets that support the new High Efficiency Video Coding (HEVC) standard up to Main 12 Profile, reducing bandwidth consumption by 50% while providing the depth of color and image clarity needed to take advantage of higher-resolution content. ViXS' XCodePro 300 family is ideal for Ultra HD 4K infrastructure equipment, and the XCode 6000 family of system-on-chip (SoC) products achieve unprecedented levels of integration that enable manufacturers to create cost-effective consumer entertainment devices.

ViXS is headquartered in Toronto, Canada with offices in Europe, Asia and North America. VIXS, the ViXS® logo, XCode®, XCodePro™, XConnex™ and Xtensiv™ are trademarks and/or registered trademarks of ViXS. Other trademarks are the property of their respective owners. For more information on ViXS, visit our website: www.vixs.com.

Contact Information

  • For further information, please contact:

    Charlie Glavin
    ViXS Systems Inc.
    T: +1 416 646-2000
    cglavin@vixs.com

    Investor Relations
    ViXS Systems Inc.
    T: 1 416 646-2000 ext. 3
    Ir@vixs.com