Vecima Reports Q1 Fiscal 2021 Results
- Revenue – $27.8M, Gross Margin – 47%, Cash Balance – $27.3M
- Grew Q1 Adjusted EBITDA 24% year-over-year to $2.2M
- Achieved record Q1 Entra sales of $5.2M, increasing $4.9M year-over-year and $3.1M (147%) sequentially
- Completed acquisition of Nokia’s cable access portfolio of DAA and EPON/DPoE solutions, creating industry’s most comprehensive next generation access ecosystem and significantly accelerating Vecima’s 10G technology timeline
VICTORIA, British Columbia–(BUSINESS WIRE)–
Vecima Networks Inc. (TSX:VCM) today reported financial results for the three months ended September 30, 2020.
FINANCIAL HIGHLIGHTS
|
(Canadian dollars in millions except percentages, employees, and per share data) |
Q1FY21 |
Q4FY20 |
|
Q1FY20 |
|
Revenue |
$27.8 |
$26.1 |
|
$20.1 |
|
Gross Margin |
47% |
49% |
|
52% |
|
Net Loss |
$(0.8) |
$(1.0) |
|
$(1.4) |
|
Loss Per Share1 |
$(0.04) |
$(0.05) |
|
$(0.06) |
|
Adjusted Loss Per Share1, 2, 3 |
$(0.04) |
$(0.06) |
|
$(0.06) |
|
Adjusted EBITDA2 |
$2.2 |
$3.8 |
|
$1.8 |
|
Cash and Short-term Investments |
$27.3 |
$34.5 |
|
$41.3 |
|
Employees4 |
456 |
377 |
|
366 |
|
1Based on weighted average number of shares outstanding. |
||||
“In a year in which we anticipate significant growth, we set the stage by increasing first quarter revenue by 38% to $27.8 million, our best quarterly result in over four years,” said Sumit Kumar, Vecima’s President and CEO. “Our strong topline results were accompanied by gross profit of $13.0 million and adjusted EBITDA of $2.2 million, which were both up 24% as compared to Q1 fiscal 2020.”
“In the Video and Broadband Solutions segment, sales of $13.5 million increased by a very significant 81% year-over-year. This was led by strong sales growth for our new Entra products as the distributed access architecture market kicked off. I am delighted to report that Entra revenues rose sharply to $5.2 million during the quarter, coming close to matching in just three months what we achieved in all of fiscal 2020. The Entra growth was driven by production deployments of our industry-leading Entra Remote PHY Node to our lead Tier 1 customer, as well as initial deployment-related Remote PHY Node purchases made by multiple additional operators. Sales of the Entra Interactive Video Controller (IVC) product also grew significantly, and our newly acquired DAA portfolio, which includes Remote MAC-PHY and EPON/DPoE technologies, contributed approximately $1 million to first quarter Entra sales. Video and Broadband Solutions sales were further bolstered by a significant year-over-year increase in TerraceQAM commercial video sales during the period.”
“In our Content Delivery and Storage segment, we achieved solid revenue of $13.0 million in what is traditionally the seasonally slowest quarter for this segment,” added Mr. Kumar. “CDS sales were up 15% year-over-year as we consolidated the major new business wins of fiscal 2020. We also added two new customer wins during the quarter, securing an additional two IPTV conversions. Our MediaScaleX solutions are now in use by over 100 cable companies, telcos and broadcasters worldwide, translating into a vast base for the future given that most of these customers are just starting their migration to IPTV and scale subscriber uptake remains ahead of Vecima and our customers.”
BUSINESS HIGHLIGHTS
Video and Broadband Solutions (VBS)
- The VBS segment delivered exceptional growth as anticipated with first quarter revenue growing 81% year-over-year and 29% quarter-over-quarter as customers began the transition to next generation networks using platforms across Vecima’s portfolio.
Entra Family
- Deployments of next generation Entra DAA products, tied to the earliest stages of the DAA market, contributed sales of $5.2 million, increasing $4.9 million year-over-year and $3.1 million (147%) sequentially. In the first quarter of fiscal 2021 alone, Vecima achieved 98% of the Entra sales we realized in the full fiscal 2020 period.
- Production deployments of the industry-leading, multi-core interoperable Entra Remote PHY Node increased at the lead Tier 1 customer and deployment-related purchases were initiated at multiple additional MSOs in the first quarter. Combined with the Entra Remote MAC-PHY Node and 10G EPON solutions, Entra DAA platforms have now been sold to over a dozen operators in five continents.
- Vecima’s global engagements for the broader Entra portfolio have widened to include 46 MSOs, including operators in the US, Canada, CALA, EMEA, and APAC. This includes over 40 operators that are either in lab trial, field trial, or live deployment phases across the globe.
- On August 7, 2020, Vecima significantly expanded and accelerated its Entra offering with the acquisition of Nokia’s cable access business. The acquired portfolio includes market-deployed Remote MAC-PHY, access controller and 10G EPON products, and has positioned Vecima as the industry’s leading provider of DAA technologies. Today, Vecima’s Entra offers the broadest full complement of access network solutions in the industry, spanning the varied needs of cable operators globally. In addition to a powerful suite of platforms and technology, the transaction brought Vecima new facilities in the US and China, and a talented team of over 80 employees that have joined the Company.
- Subsequent to quarter-end, Vecima was awarded the prestigious Chairman’s Advanced Technology Award in the Network Hardware category at the 2020 SCTE-ISBE Cable-Tec Expo. The awards were presented to an elite group of technology partners who are helping the cable industry bring the 10G platform to life by paving the way for cable to deliver residential internet speeds up to 10X faster than today’s network. The SCTE-ISBE chose to honour recipient companies that are laying the foundation for a host of applications that will change the ways we interact with one another and the world around us.
- On October 14, 2020, Vecima was honored with a BTR Diamond Technology Review Award for the Entra EN 2112 Access Node, one of the most compact and feature-rich nodes available today.
Commercial Video (Terrace) Family
- TerraceQAM sales grew to $4.2 million, up 120% from $1.9 million in Q1 fiscal 2020 and 25% from $3.3 million in Q4 fiscal 2020. The lead Tier 1 MSO continued to widen its extensive hospitality service platform, while preparing for migration to the next generation Terrace IQ system.
- Terrace family sales of $3.5 million provided ongoing contribution as Tier 1 customers neared full coverage leading up to the migration to next generation platforms.
- Subsequent to the quarter-end, Vecima was honored with a BTR Diamond Technology Review Award for the Terrace IQ Commercial Video Gateway. Terrace IQ enables seamless migration to next generation IP video delivery technologies with minimal hardware investments when migrating away from traditional architectures.
Content Delivery and Storage (CDS)
- CDS segment sales increased to $13.0 million in Q1, a 15% increase from Q1 fiscal 2020.
- Vecima won two new customers for its MediaScaleX IPTV solutions, securing an additional two IPTV conversions during the quarter.
- The migration to IPTV technologies, including IP Linear broadcast , “over the top”, Video on Demand, start-over/catch-up TV, & cloud DVR, continued in full force across Vecima’s global customer base, driving increased capacity and network utilization. Record-high IPTV streaming levels were delivered by MediaScaleX networks across nearly all customers.
- Vecima provided the IP streaming solution for a Tier 2 operator’s 8K Ultra HD resolution delivery, a first-of-its-kind service in North America.
- Major feature enhancements were rolled out across the customer base in the first quarter including advances in DRM, Dynamic Ad Insertion, resiliency to external network issues, and virtualization.
Telematics
- The Telematics segment increased engagement with municipal government customers, with two expansions totaling over 300 subscribers.
- Vecima continued to penetrate the moveable assets market, securing four new customers and approximately 100 additional subscribers in the restoration industry, where vehicles are monitored using GPS beacons and valuable moveable assets are monitored through Bluetooth Low Energy (BLE) tags.
“We believe the momentum achieved in the first quarter is just the start of what’s in store for fiscal 2021,” added Mr. Kumar. “We anticipate continued ramp in Entra DAA sales, particularly in the second half as our lead customers transition to scale deployment and a broader set of MSOs initiate field deployments of DAA to respond to network capacity pressures being seen globally. Our newly acquired Remote MAC-PHY and EPON/DPoE solutions are already performing well and the build-up of overall market activity we see with the combined portfolio is very exciting and fully in line with our expectations after having created the industry’s best access network product lineup. We will continue to leverage the strong opportunities provided by these leading products in the once-in-a-lifetime network upgrade they cover. In our Content Delivery and Storage segment, we continue to anticipate measured sales growth in FY2021 as we consolidate the record-setting customer wins of last year and IPTV usage continues to increase rapidly in households globally.”
“As we move forward, we remain highly confident in our view that fiscal 2021 will be a breakthrough year for Vecima. The move to DAA and IPTV is underway and we are ideally positioned with an unmatched portfolio of industry-leading, next generation solutions and platforms,” said Mr. Kumar.
As previously reported, Vecima’s Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on December 21, 2020 to shareholders of record as at November 27, 2020.
CONFERENCE CALL
A conference call and live audio webcast will be held today, November 12, 2020 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, 2020 are available under the Company’s profile at www.SEDAR.com, and at www.vecima.com/financials/.
To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-9020. The webcast will be available in real time at http://services.choruscall.ca/links/vecima20201112.htmland will bearchived on the Vecima website athttps://vecima.com/investor-relations/earnings-call-archive/.
About Vecima Networks
Vecima Networks Inc. is a global leader focused on developing integrated hardware and scalable software solutions for broadband access, content delivery, and telematics. We enable the world’s leading innovators to advance, connect, entertain, and analyze. We build technologies that transform content delivery and storage, enable high‑capacity broadband network access, and streamline data analytics. For more information, please visit our website at www.vecima.com.
Adjusted EBITDA and Adjusted Earnings / (Loss) Per Share
Adjusted EBITDA and Adjusted Earnings / (Loss) Per Share do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. Accordingly, investors are cautioned that Adjusted EBITDA or Adjusted Earnings / (Loss) Per Share should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company’s financial performance or as a measure of its liquidity and cash flows. For a reconciliation of Adjusted EBITDA or Adjusted Earnings / (Loss) Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the first quarter of fiscal 2021.
Forward-Looking Statements
This news release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information is generally identifiable by use of the words “believes”, “may”, “plans”, “will”, “anticipates”, “intends”, “could”, “estimates”, “expects”, “forecasts”, “projects” and similar expressions, and the negative of such expressions. Forward-looking information in this news release includes the following statements: We set the stage for a year where we plan significant growth; our MediaScaleX solutions are now in use by over 100 cable companies, telcos and broadcasters worldwide, translating into a vast base for the future given that most of these customers are just starting their migration to IPTV and scale subscriber uptake remains ahead of Vecima and our customers; the VBS segment delivered exceptional growth as anticipated; the acquired portfolio has positioned Vecima as the industry’s leading provider of DAA technologies; Vecima’s Entra offers the broadest full complement of access network solutions in the industry, spanning the varied needs of cable operators globally; we believe the momentum achieved in the first quarter is just the start of what’s in store for fiscal 2021; we anticipate continued ramp in Entra DAA sales, particularly in the second half as our lead customers transition to scale deployment and a broader set of MSOs initiate field deployments of DAA to respond to network capacity pressures being seen globally; our newly acquired Remote MAC-PHY and EPON/DPoE solutions are already performing well and the build-up of overall market activity we see with the combined portfolio is very exciting and fully in line with our expectations after having created the industry’s best access network product lineup; we will continue to leverage the strong opportunities provided by these leading products in the once-in-a-lifetime network upgrade they cover; in our Content Delivery and Storage segment, we continue to anticipate measured sales growth in FY2021 as we consolidate the record-setting customer wins of last year and IPTV usage continues to increase rapidly in households globally; as we move forward, we remain highly confident in our view that fiscal 2021 will be a breakthrough year for Vecima; the move to DAA and IPTV is underway and we are ideally positioned with an unmatched portfolio of industry-leading, next generation solutions and platforms.
A more complete discussion of the risks and uncertainties facing Vecima is disclosed under the heading “Risk Factors” in the Company’s Annual Information Form dated September 24, 2020, as well as the Company’s continuous disclosure filings with Canadian securities regulatory authorities available at www.sedar.com. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Vecima disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.
|
VECIMA NETWORKS INC. |
|||||||
|
As at |
|
|
September 30, 2020 |
|
June 30, 2020 |
||
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
10,432 |
$ |
17,350 |
|
|
Short-term investments |
|
|
|
16,910 |
|
17,165 |
|
|
Accounts receivable |
|
|
|
23,058 |
|
24,908 |
|
|
Income tax receivable |
|
|
|
362 |
|
333 |
|
|
Inventories |
|
|
|
21,337 |
|
17,212 |
|
|
Prepaid expenses |
|
|
|
1,707 |
|
2,051 |
|
|
Contract assets |
|
|
|
704 |
|
646 |
|
|
Total current assets |
|
|
|
74,510 |
|
79,665 |
|
|
Non-current assets |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
14,539 |
|
11,801 |
|
|
Right-of-use assets |
|
|
|
3,620 |
|
4,010 |
|
|
Goodwill |
|
|
|
15,594 |
|
15,487 |
|
|
Intangible assets |
|
|
|
70,189 |
|
69,200 |
|
|
Other long-term assets |
|
|
|
1,246 |
|
1,301 |
|
|
Investment tax credits |
|
|
|
24,732 |
|
24,374 |
|
|
Deferred tax assets |
|
|
|
4,870 |
|
4,460 |
|
|
Total assets |
|
|
$ |
209,300 |
$ |
210,298 |
|
|
Liabilities and shareholders’ equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
$ |
17,391 |
$ |
17,105 |
|
|
Provisions |
|
|
|
1,285 |
|
492 |
|
|
Income tax payable |
|
|
|
3 |
|
130 |
|
|
Deferred revenue |
|
|
|
4,776 |
|
4,960 |
|
|
Other current liabilities |
|
|
|
1,245 |
|
– |
|
|
Current portion of long-term debt |
|
|
|
1,752 |
|
1,698 |
|
|
Total current liabilities |
|
|
|
26,452 |
|
24,385 |
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
Provisions |
|
|
|
412 |
|
400 |
|
|
Deferred revenue |
|
|
|
698 |
|
602 |
|
|
Deferred tax liability |
|
|
|
7 |
|
536 |
|
|
Long-term debt |
|
|
|
4,132 |
|
4,613 |
|
|
Total liabilities |
|
|
|
31,701 |
|
30,536 |
|
|
Shareholders’ equity |
|
|
|
|
|
|
|
|
Share capital |
|
|
|
3,556 |
|
3,161 |
|
|
Reserves |
|
|
|
3,975 |
|
3,838 |
|
|
Retained earnings |
|
|
|
168,582 |
|
170,665 |
|
|
Accumulated other comprehensive income |
|
|
|
1,486 |
|
2,098 |
|
|
Total shareholders’ equity |
|
|
|
177,599 |
|
179,762 |
|
|
Total liabilities and shareholders’ equity |
|
|
$ |
209,300 |
$ |
210,298 |
|
|
|
|
|
|
|
|
|
|
|
VECIMA NETWORKS INC. |
||||||||||
|
|
|
Three months ended September 30, |
||||||||
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
|
Sales |
|
|
|
|
|
$ |
27,844 |
$ |
20,112 |
|
|
Cost of Sales |
|
|
|
|
|
|
14,836 |
|
9,638 |
|
|
Gross Profit |
|
|
|
|
|
|
13,008 |
|
10,474 |
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
|
|
|
|
6,343 |
|
5,068 |
|
|
Sales and marketing |
|
|
|
|
|
|
3,209 |
|
3,746 |
|
|
General and administrative |
|
|
|
|
|
|
4,791 |
|
3,981 |
|
|
Share-based compensation |
|
|
|
|
|
|
239 |
|
17 |
|
|
Other (income) expense |
|
|
|
|
|
|
(3) |
|
(10) |
|
|
Total operating expenses |
|
|
|
|
|
|
14,579 |
|
12,802 |
|
|
Operating loss |
|
|
|
|
|
|
(1,571) |
|
(2,328) |
|
|
Finance income |
|
|
|
|
|
|
161 |
|
208 |
|
|
Foreign exchange (loss) gain |
|
|
|
|
|
|
(225) |
|
298 |
|
|
Loss before income taxes |
|
|
|
|
|
|
(1,635) |
|
(1,822) |
|
|
Income tax recovery |
|
|
|
|
|
|
(797) |
|
(438) |
|
|
Net loss |
|
|
|
|
|
$ |
(838) |
$ |
(1,384) |
|
|
Other comprehensive (loss) income |
|
|
|
|
|
|
|
|
|
|
|
Item that may be subsequently reclassed to net income |
|
|
|
|
|
|||||
|
Exchange differences on translating foreign operations |
|
|
|
(612) |
|
223 |
||||
|
Comprehensive loss |
|
|
|
|
|
$ |
(1,450) |
$ |
(1,161) |
|
|
Net loss per share |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
$ |
(0.04) |
$ |
(0.06) |
|
|
Diluted |
|
|
|
|
|
$ |
(0.04) |
$ |
(0.06) |
|
|
Weighted average number of common shares |
|
|
|
|
|
|
|
|
||
|
Shares outstanding – basic |
|
|
|
22,482,015 |
22,370,087 |
|||||
|
Shares outstanding – diluted |
|
|
|
|
22,482,015 |
22,370,087 |
||||
|
|
||||||||||
|
VECIMA NETWORKS INC. |
|||||||||||||||||
|
|
|
Share |
|
Reserves |
|
Retained |
|
Accumulated |
|
Total |
|
||||||
|
Balance as at June 30, 2019 |
$ |
1,916 |
$ |
4,104 |
$ |
173,898 |
$ |
1,010 |
$ |
180,928 |
|||||||
|
Net loss |
|
– |
|
– |
|
(1,384) |
|
– |
|
(1,384) |
|||||||
|
Other comprehensive income |
|
– |
|
– |
|
– |
|
223 |
|
223 |
|||||||
|
Dividends |
|
– |
|
– |
|
(1,231) |
|
– |
|
(1,231) |
|||||||
|
Share-based payment expense |
|
– |
|
17 |
|
– |
|
– |
|
17 |
|||||||
|
Balance as at September 30, 2019 |
$ |
1,916 |
$ |
4,121 |
$ |
171,283 |
$ |
1,233 |
$ |
178,553 |
|||||||
|
Balance as at June 30, 2020 |
$ |
3,161 |
$ |
3,838 |
$ |
170,665 |
$ |
2,098 |
$ |
179,762 |
|||||||
|
Net loss |
|
– |
|
– |
|
(838) |
|
– |
|
(838) |
|||||||
|
Other comprehensive loss |
|
– |
|
– |
|
– |
|
(612) |
|
(612) |
|||||||
|
Dividends |
|
– |
|
– |
|
(1,245) |
|
– |
|
(1,245) |
|||||||
|
Shares issued by exercising options |
|
395 |
|
(102) |
|
– |
|
– |
|
293 |
|||||||
|
Share-based payment expense |
|
– |
|
239 |
|
– |
|
– |
|
239 |
|||||||
|
Balance as at September 30, 2020 |
$ |
3,556 |
$ |
3,975 |
$ |
168,582 |
$ |
1,486 |
$ |
177,599 |
|||||||
|
VECIMA NETWORKS INC. |
|||||||||
|
|
Three months ended September 30, |
||||||||
|
|
|
|
|
|
|
2020 |
|
2019 |
|
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
|
|
$ |
(838) |
$ |
(1,384) |
|
|
Adjustments for non-cash items: |
|
|
|
|
|
|
|
|
|
|
Loss on sale of property, plant and equipment |
|
|
|
|
|
2 |
|
14 |
|
|
Depreciation and amortization |
|
|
|
|
|
3,542 |
|
3,496 |
|
|
Share-based compensation |
|
|
|
|
|
239 |
|
17 |
|
|
Income tax (recovery) expense |
|
|
|
|
|
(577) |
|
526 |
|
|
Deferred income tax recovery |
|
|
|
|
|
(220) |
|
(964) |
|
|
Interest expense |
|
|
|
|
|
59 |
|
80 |
|
|
Interest income |
|
|
|
|
|
(88) |
|
(222) |
|
|
Net change in working capital |
|
|
|
|
|
1,348 |
|
(1,193) |
|
|
Decrease in other long-term assets |
|
|
|
|
|
43 |
|
6 |
|
|
Increase in provisions |
|
|
|
|
|
11 |
|
– |
|
|
Increase in investment tax credits |
|
|
|
|
|
(41) |
|
(38) |
|
|
Income tax paid |
|
|
|
|
|
(125) |
|
(22) |
|
|
Interest received |
|
|
|
|
|
88 |
|
222 |
|
|
Interest paid |
|
|
|
|
|
(10) |
|
(80) |
|
|
Cash provided by operating activities |
|
|
|
|
|
3,433 |
|
458 |
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net |
|
|
|
|
|
(449) |
|
(444) |
|
|
Purchase of short-term investments |
|
|
|
|
|
(84) |
|
(200) |
|
|
Proceeds from sale of short-term investments |
|
|
|
|
|
339 |
|
1,400 |
|
|
Deferred development costs |
|
|
|
|
|
(3,448) |
|
(2,650) |
|
|
Business acquisition |
|
|
|
|
|
(6,401) |
|
– |
|
|
Cash used in investing activities |
|
|
|
|
|
(10,043) |
|
(1,894) |
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Proceeds from government grants |
|
|
|
|
|
– |
|
31 |
|
|
Principal payments of lease liabilities |
|
|
|
|
|
(375) |
|
(332) |
|
|
Repayment of long-term debt |
|
|
|
|
|
(63) |
|
(83) |
|
|
Issuance of shares through exercised options |
|
|
|
|
|
293 |
|
– |
|
|
Cash used in financing activities |
|
|
|
|
|
(145) |
|
(384) |
|
|
Net decrease in cash and cash equivalents |
|
|
|
|
|
(6,755) |
|
(1,820) |
|
|
Effect of change in exchange rates on cash |
|
|
|
|
|
(163) |
|
(51) |
|
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
17,350 |
|
19,834 |
|
|
Cash and cash equivalents, end of period |
|
|
|
|
$ |
10,432 |
$ |
17,963 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005294/en/
Vecima Networks
Investor Relations – 250-881-1982
[email protected]
KEYWORDS: North America Canada
INDUSTRY KEYWORDS: Telecommunications Software Audio/Video Hardware TV and Radio Technology VoIP Entertainment
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