SOURCE: ViXS Systems Inc.

ViXS Systems Inc.

March 31, 2016 16:15 ET

ViXS Reports Fourth Quarter and Annual Fiscal 2016 Results

TORONTO, ON--(Marketwired - March 31, 2016) - ViXS Systems Inc. (TSX: VXS) a pioneer and leader in advanced media processing solutions, reported today its fourth quarter and fiscal 2016 results for the period ending January 31, 2016. All results are reported under International Financial Reporting Standards ("IFRS") and in U.S. dollars, unless otherwise specified.

Selected Financial Highlights

US$ 000s (except earnings per share) For the twelve Months ended January 31, 2016 For the twelve Months ended January 31, 2015 For the three Months ended January 31, 2016 For the three Months ended October 31, 2015 For the three Months ended January 31, 2015
Revenue $26,286 $38,416 $5,212 $5,138 $11,229
Gross Margin $10,256 $17,756 $1,266 $2,254 $5,521
Gross Profit Margin 39.0% 46.2% 24.3% 43.9% 49.2%
Comprehensive Loss $(11,644) $(15,558) $(3,677) $ (3,183) $(3,764)
Earnings per share -- basic $(0.23) $(0.31) $(0.07) $(0.06) $(0.07)
Cash and Equivalents $7,272 $15,289 $7,272 $4,758 $15,289
           

Q4FY16 Financial Summary

  • Revenues for the fourth quarter of fiscal 2016 totalled $5.2 million, up from $5.1 million in the third quarter of fiscal 2016. This modest increase was primarily due to higher shipments of XConnex products coupled with lower pricing for these MoCA-based products and expected seasonal weakness in other product families exiting the fourth quarter. Revenues decreased by $6.0 million from $11.2 million recognized a year ago due to a decline in XCode sales for end of life legacy products such as HD TV and consumer PC video products.
  • Gross margin for the fourth quarter of fiscal 2016 was 24.3%, down from the previous quarter's level of 43.9% due primarily to the higher mix of MoCA products sold at lower prices. As expected shipments of the company's XCode5000 and XC6000 products begin to ramp in the upcoming quarters, this better sales mix should generate a corresponding improvement in gross margins.
  • IFRS Comprehensive loss of $(3.7) million, or $(0.07) per share, compared to a loss of $(3.2) million or $(0.06) per share in the previous quarter and $(3.8) million or $(0.07) in the fourth quarter of fiscal 2015. This quarterly loss change was due mainly to higher operating expenses from the tape-out of our latest 28nm XCode 6800.

FY16 Financial Summary

  • Revenue of $26.3 million, compared to $38.4 million in the prior year. This decline in revenue in fiscal 2016 was mainly due to a decline in XCode sales for end of life legacy products such as HD TV and consumer PC video products, offset by a higher than expected product mix of XConnex sales plus higher XCodePro revenue.
  • Gross Margin of 39.0%, compared to 46.2% in the prior year. This decrease is mainly due to the impact of higher product mix from lower margin XConnex product sales.
  • IFRS Comprehensive loss totalled $(11.6) million, a $4.0 million improvement as compared to the $(15.6) million loss over the same period the previous year. Despite the lower revenue levels, the continued year-over-year decrease in net loss from operations reflects ongoing cost efficiencies to our operations that resulted in $10.7 million of lower operating expenses, in addition to less adverse impacts from realized and unrealized currency losses this year compared to fiscal 2015.

Customer, Product and Corporate Announcements

  • Significant OTA (Over-the-Air) design in activity across the globe, with design wins with major North American service provider and multiple OEM/ODMs in Asia Pacific;
  • Samples of XCode 6800 have been delivered to two lead customers in the Consumer segment with product launches anticipated during the upcoming Holiday season.
  • Design wins with multiple video delivery and Cloud segment OEMs for the XCodePro professional transcoder/decoder products with anticipated volume shipments towards the end of Fiscal 2017. These include two existing XCodePro customers launching new designs into the Cloud segment.
  • In the Capture market, a new target segment that supports consumers managing, editing and storing their growing video content, we are engaged with a top consumer brand to offer this capability in a new class of product for the holiday season. 
  • Successful Consumer Electronics Show with strong interest from companies across the globe in our products including; VIDITY, Ultra HD Blu-Ray Player, CordCutterTV Stick and XCodePro professional transcoder/decoder;
  • Closed two non-brokered private placements raising an aggregate gross proceeds of approximately $4.8 million ($CAD 6.9 million);

"This quarter we laid the groundwork for improved financial performance and growth," stated Sohail Khan, President and CEO of ViXS. "We are starting to see traction with our new strategy of focus on the Consumer, Capture and Cloud segments as demonstrated with our design win activities. Consequently, we expect to return to growth and higher normalized gross margins as the year progresses."

Following the release, management of the Company will host a conference call to discuss the financial results. 

FISCAL Q4-2016 AND ANNUAL CONFERENCE CALL DETAILS:

     
DATE:   Thursday March 31, 2016
     
TIME:   5:00 P.M. EST
     
DIAL IN NUMBER:   Local / International: 514-841-2157
North American Toll: Free: 1-866-215-5508 Passcode: 4210-4129
     
REPLAY NUMBER:   Local / International: 630-652-3042
North American Toll: Free: 1-888-843-7419
Passcode: 4210-4129
 
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 and fiscal years ended January 31, 2016 and January 31, 2015, as well as the Company's unaudited interim consolidated financial statements for the three months ended October 31, 2015. The selected financial information was prepared in accordance with IAS 34 in a manner consistent with the Company's annual financial statements. The following information should be read in conjunction with the Financial Statements and MD&A.

         
         
    Three-month Period Ended   Fiscal years ended
    January 31,   October 31,   January 31,   January 31,
Dollar amounts in U.S. dollars   2016   2015   2015   2016   2015
Amounts in thousands, except loss per share                    
                     
Revenue   $5,212   $5,138   $11,229   $26,286   $38,416
  Cost of sales   3,946   2,884   5,708   16,030   20,660
Gross margin   1,266   2,254   5,521   10,256   17,756
Operating expenses                    
  Research and development   3,211   3,215   4,026   13,228   16,605
  Selling, general and administrative   1,450   1,970   3,697   7,928   15,275
Total operating expenses   4,661   5,185   7,723   21,156   31,880
Loss before finance costs and income, currency losses   (3,395)   (2,931)   (2,202)   (10,900)   (14,124)
Other income (expense):                    
  Finance costs   (222)   (89)   217   (558)   127
  Finance income   24   3   19   57   84
  Currency losses   (71)   (173)   (1,686)   (204)   (1,461)
Total other income (expense)   (269)   (259)   (1,450)   (705)   (1,250)
Loss before taxes   ($3,664)   ($3,190)   ($3,652)   ($11,605)   ($15,374)
  Income tax expense   (10)   (4)   (78)   (29)   (105)
Net loss for the year   (3,674)   (3,194)   (3,730)   (11,634)   (15,479)
  Exchange difference on translating foreign operations   (3)   11   (34)   (10)   (79)
Comprehensive loss for the year   ($3,677)   ($3,183)   ($3,764)   ($11,644)   ($15,558)
Loss per share attributed to common equity holders                    
  Basic   ($0.07)   ($0.06)   ($0.07)   ($0.23)   ($0.31)
  Diluted   ($0.07)   ($0.06)   ($0.07)   ($0.23)   ($0.31)
Weighted average number of common shares outstanding                    
  Basic   50,961   50,377   50,376   50,961   50,370
  Diluted   50,961   50,377   50,376   50,961   50,370
                     
(1) Includes share-based transaction expense of:                    
Research and development   100   92   55   225   757
Selling, general and administrative   124   111   317   76   1,132
    $224   $203   $372   $301   $1,889
                     
                     
       
       
  As January 31, As at October 31, As at January 31,
in thousands of US Dollars 2016 2015 2015
       
Cash and cash equivalents $7,272 $4,758 $15,289
Trade accounts receivable 2,291 3,408 4,104
Inventories 2,151 3,339 2,868
Total assets $26,576 $24,386 $35,844
       
Trade payables 3,370 2,644 $6,465
Accrued liabilities 2,399 3,224 6,656
Deferred revenues 390 14 168
Total liabilities 16,206 12,958 16,525
Total liabilities and shareholders' equity $26,576 24,386 $35,844
       
       

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 loss is defined as total comprehensive 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 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 loss from operations should not be considered in isolation or as a substitute for comprehensive loss prepared in accordance with IFRS.

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

         
         
    Three Month Period Ended   Fiscal Years Ended
    January 31,   October 31,   January 31,   January 31,
(in thousands of U.S. dollars)   2016   2015   2015   2016   2015
Comprehensive loss for the period   ($3,677)   ($3,183)   ($3,764)   ($11,644)   ($15,559)
R&D adjustments                    
  Stock-based compensation expense   100   92   55   225   757
  Provision for repayment of government assistance   (22)   (47)   -   (901)   (419)
Selling, general and administrative                    
  Stock based compensation expense   124   111   317   76   1,132
  Legal fee settlement       40   (297)   40   (297)
Other Income/Expense adjustments                    
  Listing Fees   53   -   -   53   -
  Share offering costs       -   -       -
  Fair value adjustment on warranty liability                   -
  Unrealized currency loss (gain)   70   234   1,701   175   1,446
Other adjustments                    
  Convertible preferred share revaluation       -   -        
  Exchange differences on translating foreign operations   3   (11)   34   10   80
Non-IFRS net loss   ($3,349)   ($2,764)   ($1,954)   $11,966   ($12,860)
                     
                     

ViXS' annual audited financial statements and management's discussion & analysis ("MD&A"), for the three-month and twelve-month period ended January 31, 2016, are available via ViXS' website www.ViXS.com and will be available on SEDAR at www.sedar.com.

FORWARD LOOKING STATEMENTS

Certain statements in this press release which are not historical facts constitute forward-looking statements or information within the meaning of applicable securities laws ("forward-looking statements"). 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. Accordingly, there can be no assurance that forward-looking statements will prove to be accurate and readers are therefore cautioned not to place undue reliance upon any such forward-looking statements. 

Factors that could cause results or events to differ materially from current expectations expressed 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 its products, legal proceedings arising from the ordinary course of business; ability to raise needed capital; ongoing liquidity requirements;and other factors discussed in the "Risk Factors" section of the Company's Annual Information Form dated March 31, 2016, 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 a pioneer and market leader in designing revolutionary media processing semiconductor solutions for video over IP streaming solutions, with over 510 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. 
    +1 416 646-2000
    cglavin@vixs.com 

    Nicole Marchand
    Investor Relations, Consultant
    +1 416 646-2000 ext. 3
    ir@vixs.com