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Vecima Reports Q1 Fiscal 2013 Results

Date : 11/13/2012 @ 6:30PM
Source : Marketwired
Stock : Vecima Networks Inc. (VCM)
Quote : 8.4  0.0 (0.00%) @ 5:45PM
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Vecima Reports Q1 Fiscal 2013 Results

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Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology in the broadband equipment market, today reported financial results for the three months ended September 30, 2012. All figures are in Canadian dollars and in accordance with International Financial Reporting Standards ("IFRS") unless otherwise stated.


FINANCIAL HIGHLIGHTS

---------------------------------------------------------------------------
(CAD dollars in millions except percentages,                               
 headcount, and per share data)                  Q1FY2013 Q4FY2012 Q1FY2012
---------------------------------------------------------------------------
Revenue                                              24.9     28.7     20.0
---------------------------------------------------------------------------
Gross Margin                                          40%      38%      37%
---------------------------------------------------------------------------
EBITDA(1)                                             8.4      4.5      1.7
---------------------------------------------------------------------------
Adjusted EBITDA(1) (removes gains on sale of                               
 assets and stock-based compensation)                 4.5      4.5      1.6
---------------------------------------------------------------------------
Net income or (loss)                                  5.3      1.7     (0.7)
---------------------------------------------------------------------------
Earnings or (Loss) per share                                               
(based on weighted average number shares                                   
 outstanding)                                       $0.24    $0.07   ($0.03)
---------------------------------------------------------------------------
Cash and marketable securities                       25.7     19.5      7.8
---------------------------------------------------------------------------
Headcount                                             619      624      603
---------------------------------------------------------------------------
(1) EBITDA is not a recognized measure under IFRS and, accordingly,        
    investors are cautioned that EBITDA should not be construed as an      
    alternative to net income, determined in accordance with IFRS, as an   
    indicator of our financial performance or as a measure of our liquidity
    and cash flows. For a reconciliation of EBITDA and adjusted EBITDA,    
    investors should refer to Management's Discussion and Analysis for the 
    current quarter.                                                       
---------------------------------------------------------------------------

"Vecima is encouraged by the strong results in gross margin and cash flow generated through operations. These improvements were achieved despite the decrease in revenue from a strong fourth quarter in our last fiscal year," said Dr. Surinder Kumar, CEO of Vecima.

Vecima's Q1 revenue was $24.9 million, gross margin improved to 40%, EBITDA increased from $4.5 to $8.4 million and adjusted EBITDA was $4.5 million. Gross margin improved because of the increased efficiency and higher sales in new products.

As announced in July 2012, Vecima sold a parcel of non-serviced land in Saskatoon and received proceeds of approximately $4.0 million. The Company also sold a small number of radio spectrum licenses for $0.4 million in Q1.


MSO BUSINESS SERVICES

Terrace Family

--  Sales increased 7% to $8.7 million compared to $8.1 million in Q4 of
    FY12. Vecima continues to see consistent uptake of its TC1200, TC1000
    and TC600 products by its MSO customers. 
--  Revenue from TC600 increased over the last three quarters indicating
    further adoption of this product by new and existing MSO customers. 

Terrace QAM

--  Sales increased 30% from $4.1 million in Q4 of FY12 to $5.3 million
    this quarter. Vecima expects continued strong sales through the fiscal
    year. 
--  Terrace QAM is attractive to MSO customers because it enables new
    service revenue in the hospitality sector which includes Tier 1 hotels
    and resorts. 

CABLE HEADEND

OEM QAM Modules

--  As anticipated, sales dropped from $4.5 million to $1.1 million. Sales
    are expected to decline in fiscal 2013 as the product moves towards end
    of life. 
--  Next generation solutions in the cable headend will include technology
    for which Vecima and its partner, a leading integrated circuit
    manufacturer, have secured the design win. The solution is for a Tier 1
    vendor's next generation broadband access platform. 

OEM Return Path Demodulator and CableVista

--  Sales of these legacy products declined from Q4 FY12 to Q1 FY13. Sales
    for our OEM return path demodulator dropped from $2.9 million to $1.6
    million; while CableVista sales declined from $2.0 million to $1.1
    million. A flattening out and then gradual decline in the sales of
    these products, which are in the late stage of their product lifecycle,
    is expected over the next 1-2 years. 
--  As previously announced, Vecima has executed an agreement with a
    prominent digital video access equipment vendor for a custom designed
    platform that interfaces to a large, currently deployed base of
    subscriber devices. Vecima expects the product to start shipping in
    production volume in the last quarter of this fiscal year. 

FLEET MANAGEMENT

--  During the period, we signed a supply agreement with our lead customer. 
--  We currently have over 400 active, paying subscribers on our FleetLynx
    service platform. We have shipped over 1100 subscriber modems. 
--  Potential customers are actively evaluating the system solution's
    capabilities and feature set after in-person demonstrations. Outside of
    our lead customer, these organizations have more than ten thousand
    vehicles under management. 

BROADBAND WIRELESS

--  Sales decreased approximately 13% from $2.6 million in Q4 of FY12 to
    $2.3 million this period. Weakness in sales of both BWIN and WiMAX
    products were responsible for most of the revenue drop. 
--  Software defined radio (SDR) sales remained relatively flat quarter
    over quarter. 

YOURLINK

--  Revenue remained flat at $3.1 million from Q4 FY12 to Q1 FY13. 

CONFERENCE CALL

A conference call and live audio webcast will be held on November 13, 2012 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, 2012 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.ca/links/vecima121113.html and will be archived on the Vecima website at 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, 2012, 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,
                                                        2012           2012
---------------------------------------------------------------------------
Assets                                                                     
Current assets                                                             
  Cash and cash equivalents                         $ 11,723       $ 19,549
  Marketable securities                               14,008              -
  Accounts receivable                                 19,747         23,818
  Income tax receivable                               13,621         13,600
  Inventories                                         30,787         29,663
  Prepaid expenses                                     1,481          1,076
---------------------------------------------------------------------------
                                                      91,367         87,706
Non-current assets                                                         
  Property, plant and equipment                       27,608         28,158
  Assets held for resale                                   -            385
  Intangible assets                                   11,506         10,819
  Investment tax credit asset                         31,394         30,384
  Deferred tax asset                                   3,899          5,129
---------------------------------------------------------------------------
                                                   $ 165,774      $ 162,581
---------------------------------------------------------------------------
                                                                           
Liabilities                                                                
Current liabilities                                                        
  Accounts payable and accrued liabilities          $ 12,446       $ 13,653
  Provisions                                             891            974
  Income tax payable                                       -            806
  Deferred revenue                                     1,205          1,311
  Current portion of long-term debt                      250            250
---------------------------------------------------------------------------
                                                      14,792         16,994
Non-current liabilities                                                    
  Other long-term liabilities                            488            342
  Provisions                                           1,504          1,522
  Long-term debt                                       3,417          3,479
---------------------------------------------------------------------------
                                                      20,201         22,337
---------------------------------------------------------------------------
                                                                           
Shareholders' equity                                                       
  Share capital                                       34,484         34,482
  Reserves                                             2,778          2,761
  Retained earnings                                  108,311        103,001
---------------------------------------------------------------------------
                                                     145,573        140,244
---------------------------------------------------------------------------
                                                   $ 165,774      $ 162,581
---------------------------------------------------------------------------


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,
                                                        2012           2011
---------------------------------------------------------------------------
                                                                           
Sales                                               $ 24,872       $ 19,981
Cost of sales                                         14,829         12,677
---------------------------------------------------------------------------
Gross margin                                          10,043          7,304
---------------------------------------------------------------------------
                                                                           
Operating expenses                                                         
Research and development                               1,898          2,764
Sales and marketing                                    1,026          1,182
General and administrative                             4,461          5,040
Stock-based compensation                                  17             22
Other (income)                                        (4,155)          (310)
---------------------------------------------------------------------------
                                                       3,247          8,698
---------------------------------------------------------------------------
Operating income (loss)                                6,796         (1,394)
Finance costs                                            235            136
Finance income                                            39            534
---------------------------------------------------------------------------
Income (loss) before income taxes                      6,600           (996)
Income tax expense (recovery)                          1,290           (275)
---------------------------------------------------------------------------
Net income and total comprehensive income            $ 5,310         $ (721)
---------------------------------------------------------------------------
                                                                           
Net income per share                                                       
Basic                                                 $ 0.24        $ (0.03)
Diluted                                               $ 0.24        $ (0.03)
                                                                           
Weighted average number of Common                                          
  Shares outstanding - basic                      22,317,339     22,316,767
  Shares outstanding - diluted                    22,382,537     22,316,767


VECIMA NETWORKS INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(unaudited - in thousands of Canadian dollars)

                                     Share              Retained           
                                   Capital   Reserves   Earnings      Total
---------------------------------------------------------------------------
                                                                           
Balance as at June 30, 2011       $ 34,482    $ 2,678   $ 89,735  $ 126,895
                                                                           
Net income and total                                                       
 comprehensive income                    -          -       (721)      (721)
Share-based payment expense              -         22          -         22
---------------------------------------------------------------------------
Balance as at September 30,                                                
 2011                             $ 34,482    $ 2,700   $ 89,014  $ 126,196
---------------------------------------------------------------------------
                                                                           
Balance as at June 30, 2012       $ 34,482    $ 2,761  $ 103,001  $ 140,244
                                                                           
Net income and total                                                       
 comprehensive income                    -          -      5,310      5,310
Shares issued by exercising                                                
 options                                 2          -                     2
Share-based payment expense              -         17          -         17
---------------------------------------------------------------------------
Balance as at September 30,                                                
 2012                             $ 34,484    $ 2,778  $ 108,311  $ 145,573
---------------------------------------------------------------------------


VECIMA NETWORKS INC.
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited - in thousands of Canadian dollars)

                                                         Three months ended
                                                               September 30,
                                                        2012           2011
---------------------------------------------------------------------------
Cash flows from operating activities                                       
Net income                                           $ 5,310         $ (721)
Add (deduct) items not requiring cash                                      
  Gain on the sale of property, plant and                                  
   equipment                                          (3,590)           (13)
  Gain on sale of intangible assets                     (353)           (79)
  Depreciation of property, plant and                                      
   equipment                                           1,175          1,283
  Amortization of deferred development costs             555          1,240
  Amortization of finite-life intangible                                   
   assets                                                 37             41
  Stock-based compensation                                17             22
  Deferred income tax expense                          1,230           (212)
  Interest expense                                        58            136
  Interest income                                        (40)           (25)
Increase in other long-term liabilities                  146            (30)
Increase in provisions                                  (101)           640
Increase in investment tax credit asset                 (182)          (134)
Net change in non-cash working capital                                     
 relating to operations                                  393          3,545
Interest paid                                            (46)          (129)
Interest received                                         37             25
Income tax paid                                                            
---------------------------------------------------------------------------
                                                       4,646          5,589
---------------------------------------------------------------------------
Cash flows provided by investing activities                                
Purchase of property, plant and equipment               (638)          (921)
Proceeds from the sale of property, plant and                              
 equipment                                             3,988            139
Proceeds from the sale of intangible assets              363            150
Purchase of marketable securities                    (14,008)             -
Deferred development costs                            (2,114)        (2,205)
Purchase of indefinite and finite-life                                     
 intangible assets                                        (3)           (14)
---------------------------------------------------------------------------
                                                     (12,412)        (2,851)
---------------------------------------------------------------------------
Cash flows used in financing activities                                    
Proceeds from shares issued through exercised                              
 options                                                   2              -
Repayment of long-term debt                              (62)           (62)
---------------------------------------------------------------------------
                                                         (60)           (62)
---------------------------------------------------------------------------
                                                                           
Increase in cash during the year                      (7,826)         2,676
Cash and cash equivalents (bank                                            
 indebtedness), beginning of year                     19,549          5,095
---------------------------------------------------------------------------
Cash and cash equivalents, end of year              $ 11,723        $ 7,771
---------------------------------------------------------------------------

Contacts: Vecima Networks Inc. Investor Relations 250-881-1982invest@vecima.com www.vecima.com



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