Vecima Networks Inc. (TSX: VCM) today reported financial results for the three and six months ended December 31, 2022.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except percentages, employees, and per share data) |
Q2FY23 |
Q1FY23 |
|
Q2FY22 |
Revenue |
$76.2 |
$73.4 |
|
$43.6 |
Gross Margin |
47.3% |
45.9% |
|
50.1% |
Net Income (Loss) |
$8.1 |
$9.5 |
|
$1.5 |
Earnings (Loss) Per Share1 |
$0.35 |
$0.41 |
|
$0.06 |
Adjusted Earnings (Loss) Per Share1,2,3,4 |
$0.35 |
$0.41 |
|
$0.06 |
Adjusted EBITDA2 |
$15.8 |
$17.2 |
|
$7.4 |
Cash and Cash Equivalents5 |
($8.1) |
$(2.5) |
|
$10.3 |
Employees |
627 |
607 |
|
497 |
1 Based on weighted average number of shares outstanding. 2 Adjusted Earnings Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. See "Adjusted EBITDA and Adjusted Earnings (Loss) Per Share" below. 3 Earnings and Adjusted Earnings Per Share include non-cash share-based compensation of $0.8 million or $0.03 per share for the three months ended December 31, 2022, and $0.1 million or $nil per share for the three months ended December 31, 2021. The non-cash share-based compensation primarily reflects certain performance-based vesting thresholds achieved under the Company's Performance Share Unit Plan. 4 Earnings and Adjusted Earnings Per Share include foreign exchange loss of $0.1 million or $nil per share for the three months ended December 31, 2022, and foreign exchange loss of $0.1 million or $nil per share for the three months ended December 31, 2021. 5 Cash and Cash Equivalents is net of revolving line of credit balance in the Company's Consolidated Financial Statements. |
"Our second quarter performance exceeded our expectations with consolidated sales up 75% year-over-year to a new quarterly record of $76.2 million. Importantly this was also 4% growth over the high-water mark we achieved of 22.5% sequential growth in the first quarter of fiscal 2023," said Sumit Kumar, President and CEO of Vecima.
"We set a new revenue record for both Entra and the Video and Broadband Solutions segment as deliveries of our EntraOptical Fiber Access solutions continued to ramp up. We entered Q2 anticipating level quarterly revenues as we rebalanced Entra orders following Q1's exceptionally strong deliveries across our DAA portfolio. Adding to our Q2 results was 13% sequential quarterly growth in our Content Delivery and Storage segment as we supported IPTV network expansions with a number of existing customers."
"We paired our strong topline performance with adjusted EBITDA of $15.8 million and adjusted earnings per share of $0.35, which were up 113% and 483% year-over-year, respectively. We have now achieved year-to-date Adjusted EBITDA of $33.0 million and adjusted earnings per share of $0.76, exceeding in just six months what we accomplished in all of last year."
"These results illustrate not just the remarkable demand momentum building for our next-generation DAA and IPTV solutions, but also our success in leveraging our financial and supply chain strengths to successfully and profitably meet our customer needs. During the second quarter we further bolstered our financial position with a successful equity raise and financed growth-fueling working capital that will help us respond to the even stronger demand profile we see for our Entra DAA and IPTV solutions in the second half and beyond," said Mr. Kumar. "We were also very pleased to see that the response to the equity offering was met with significant demand leading to the private placement upsizing and that investors have a clear thesis on our growth strategy and our responses to market demand and supply chain factors."
BUSINESS HIGHLIGHTS
Financial and Corporate Highlights
Video and Broadband Solutions (VBS)
DAA (Entra Family)
Commercial Video (Terrace Family)
Content Delivery and Storage (CDS)
Telematics
"Communities and the operators that support them are on a path to building the fast, reliable, and ubiquitous broadband connections that will usher in a new generation of networks, networks that we believe are the very foundation of global progress. Vecima's anticipation of this movement along with our steadfast investments to develop leading portfolios of cable and fiber access technology and solutions that deliver this very connectivity are paying dividends, today and tomorrow. With scale deployment ramping up with multiple customers in parallel, and a vast pipeline of customer purchase orders and forecasts providing excellent visibility, we anticipate the strong growth experienced in the first half will continue to build in the second half of fiscal 2023 and beyond," said Mr. Kumar. "We have positioned ourselves for ongoing success by increasing our investment in working capital in tandem with market demand, particularly in the form of raw material and finished goods inventories, to support this growth."
"In our Content Delivery and Storage segment, our large base of IPTV customers is providing an inbuilt platform for growth as operators begin to initiate IPTV network expansions. While we continue to anticipate moderate sales growth for this segment in fiscal 2023, over the medium-to-longer term we see significantly higher growth potential as IPTV gains momentum and as demand for our newer open caching solutions continues to build."
"Overall, we remain highly confident in Vecima's ability to capture the major and multi-year opportunities in the fast-growing DAA and IPTV markets," 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 March 27, 2023 to shareholders of record as at February 24, 2023.
CONFERENCE CALL
A conference call and live audio webcast will be held today, February 9, 2023 at 1 p.m. ET to discuss the Company's second quarter results. Vecima's unaudited interim condensed consolidated financial statements and management's discussion and analysis for the three and six months ended December 31, 2022 are available under the Company's profile at www.SEDAR.com, and at https://vecima.com/investor-relations/financial-reports/.
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/vecima2023q2.html and will be archived on the Vecima website at https://vecima.com/investor-relations/earnings-call-archive/
About Vecima Networks
Vecima Networks Inc. (TSX: VCM) is leading the global evolution to the multi-gigabit, content-rich networks of the future. Our talented people deliver future-ready software, services, and integrated platforms that power broadband and video streaming networks, monitor and manage transportation, and transform experiences in homes, businesses, and everywhere people connect. We help our customers evolve their networks with cloud-based solutions that deliver ground-breaking speed, superior video quality, and exciting new services to their subscribers. There is power in connectivity ? it enables people, businesses, and communities to grow and thrive. Learn more 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 second quarter of fiscal 2023.
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: our second quarter performance exceeded our expectations; we entered Q2 anticipating level quarterly revenues as we rebalanced Entra orders; these results illustrate not just the remarkable demand momentum building; we further bolstered our financial position that will help us respond to the even stronger demand profile we see for our Entra DAA and IPTV solutions in the second half and beyond; we were also very pleased to see that the response to the equity offering was met with significant demand leading to the private placement upsizing and that investors have a clear thesis on our growth strategy and our responses to market demand and supply chain factors; Vecima responds to high demand for its next-generation solutions; customers are ordering Entra products, with order sizes increasing as broader DAA deployment continues; communities and the operators that support them are on a path to building the fast, reliable, and ubiquitous broadband connections that will usher in a new generation of networks, networks that we believe are the very foundation of global progress; Vecima's anticipation of this movement along with our steadfast investments to develop leading portfolios of cable and fiber access technology and solutions that deliver this very connectivity are paying dividends, today and tomorrow; with scale deployment ramping up with multiple customers in parallel, and a vast pipeline of customer purchase orders and forecasts providing excellent visibility, we anticipate the strong growth experienced in the first half will continue to build in the second half of fiscal 2023 and beyond; we have positioned ourselves for ongoing success by increasing our investment in working capital in tandem with market demand, particularly in the form of raw material and finished goods inventories, to support this growth; our large base of IPTV customers is providing an inbuilt platform for growth as operators begin to initiate IPTV network expansions; we continue to anticipate moderate sales growth for this segment in fiscal 2023; over the medium-to-longer term we see significantly higher growth potential as IPTV gains momentum and as demand for our newer open caching solutions continues to build; we remain highly confident in Vecima's ability to capture the major and multi-year opportunities in the fast-growing DAA and IPTV markets."
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 22, 2022, 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. |
|||||||
Interim Condensed Consolidated Statements of Financial Position |
|||||||
(unaudited ? in thousands of Canadian dollars) |
|||||||
As at |
|
|
|
December 31,
|
|
June 30,
|
|
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
3,267 |
$ |
12,902 |
|
Accounts receivable |
|
|
|
62,198 |
|
49,655 |
|
Income tax receivable |
|
|
|
177 |
|
693 |
|
Inventories |
|
|
|
92,698 |
|
49,608 |
|
Prepaid expenses and other current assets |
|
|
|
16,190 |
|
7,302 |
|
Contract assets |
|
|
|
961 |
|
1,335 |
|
Total current assets |
|
|
|
175,491 |
|
121,495 |
|
Non-current assets |
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
16,305 |
|
16,483 |
|
Right-of-use assets |
|
|
|
2,746 |
|
2,626 |
|
Goodwill |
|
|
|
15,253 |
|
14,813 |
|
Intangible assets |
|
|
|
80,401 |
|
75,917 |
|
Other long-term assets |
|
|
|
1,335 |
|
1,440 |
|
Investment tax credits |
|
|
|
22,213 |
|
23,041 |
|
Deferred tax assets |
|
|
|
5,106 |
|
6,793 |
|
Total assets |
|
|
$ |
318,850 |
$ |
262,608 |
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Revolving line of credit |
|
|
$ |
11,391 |
$ |
- |
|
Accounts payable and accrued liabilities |
|
|
|
61,220 |
|
48,172 |
|
Provisions |
|
|
|
619 |
|
659 |
|
Income tax payable |
|
|
|
- |
|
182 |
|
Deferred revenue |
|
|
|
11,043 |
|
12,129 |
|
Current portion of long-term debt |
|
|
|
2,086 |
|
1,782 |
|
Total current liabilities |
|
|
|
86,359 |
|
62,924 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Provisions |
|
|
|
423 |
|
366 |
|
Deferred revenue |
|
|
|
5,230 |
|
4,465 |
|
Deferred tax liability |
|
|
|
6 |
|
6 |
|
Long-term debt |
|
|
|
14,670 |
|
15,115 |
|
Total liabilities |
|
|
|
106,688 |
|
82,876 |
|
Shareholders' equity |
|
|
|
|
|
|
|
Share capital |
|
|
|
23,482 |
|
7,935 |
|
Reserves |
|
|
|
3,028 |
|
3,141 |
|
Retained earnings |
|
|
|
184,032 |
|
168,923 |
|
Accumulated other comprehensive income (loss) |
|
|
|
1,620 |
|
(267) |
|
Total shareholders' equity |
|
|
|
212,162 |
|
179,732 |
|
Total liabilities and shareholders' equity |
|
|
$ |
318,850 |
$ |
262,608 |
|
VECIMA NETWORKS INC. |
||||||||||||
Interim Condensed Consolidated Statements of Comprehensive Income |
||||||||||||
(unaudited - in thousands of Canadian dollars, except per share amounts) |
||||||||||||
|
|
Three months |
Six months |
|||||||||
Periods ended December 31, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||
Sales |
|
$ |
76,212 |
$ |
43,587 |
$ |
149,659 |
$ |
75,982 |
|||
Cost of sales |
|
|
40,167 |
|
21,767 |
|
79,873 |
|
38,460 |
|||
Gross profit |
|
|
36,045 |
|
21,820 |
|
69,786 |
|
37,522 |
|||
Operating expenses |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
|
10,341 |
|
8,352 |
|
21,046 |
|
16,360 |
|||
Sales and marketing |
|
|
6,619 |
|
4,554 |
|
12,923 |
|
8,655 |
|||
General and administrative |
|
|
7,522 |
|
5,498 |
|
13,116 |
|
10,184 |
|||
Share-based compensation |
|
|
815 |
|
65 |
|
913 |
|
753 |
|||
Other expense |
|
|
22 |
|
13 |
|
43 |
|
19 |
|||
Total operating expenses |
|
|
25,319 |
|
18,482 |
|
48,041 |
|
35,971 |
|||
Operating income |
|
|
10,726 |
|
3,338 |
|
21,745 |
|
1,551 |
|||
Finance expense |
|
|
(554) |
|
(46) |
|
(755) |
|
(88) |
|||
Foreign exchange (loss) gain |
|
|
(138) |
|
(111) |
|
1,164 |
|
996 |
|||
Income before income taxes |
|
|
10,034 |
|
3,181 |
|
22,154 |
|
2,459 |
|||
Income tax expense |
|
|
1,895 |
|
1,708 |
|
4,503 |
|
244 |
|||
Net income |
|
$ |
8,139 |
$ |
1,473 |
$ |
17,651 |
$ |
2,215 |
|||
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|||
Item that may be subsequently reclassed to net income |
|
|
|
|
|
|
|
|
||||
Exchange differences on translating foreign operations |
$ |
(482) |
$ |
(110) |
$ |
1,887 |
$ |
807 |
||||
Comprehensive income |
|
$ |
7,657 |
$ |
1,363 |
$ |
19,538 |
$ |
3,022 |
|||
Net income per share |
|
|
|
|
|
|
|
|
|
|||
Basic |
|
$ |
0.35 |
$ |
0.06 |
$ |
0.76 |
$ |
0.10 |
|||
Diluted |
|
$ |
0.35 |
$ |
0.06 |
$ |
0.76 |
$ |
0.10 |
|||
Weighted average number of common shares |
|
|
|
|
|
|
|
|
|
|||
Shares outstanding ? basic |
|
|
23,312,997 |
|
23,076,376 |
|
23,208,753 |
|
23,065,194 |
|||
Shares outstanding ? diluted |
|
|
23,341,563 |
|
23,110,051 |
|
23,237,020 |
|
23,102,412 |
|||
VECIMA NETWORKS INC. | |||||||||||||||
Interim Condensed Consolidated Statements of Changes in Equity |
|||||||||||||||
(unaudited - in thousands of Canadian dollars) |
|||||||||||||||
|
|
|
Share
|
|
Reserves |
|
Retained
|
|
Accumulated
|
|
|
Total |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Balance as at June 30, 2021 |
|
$ |
7,299 |
$ |
3,407 |
$ |
165,312 |
$ |
(1,098) |
|
$ |
174,920 |
|||
Net income |
|
|
- |
|
- |
|
2,215 |
|
- |
|
|
2,215 |
|||
Other comprehensive income |
|
|
- |
|
- |
|
- |
|
807 |
|
|
807 |
|||
Dividends |
|
|
- |
|
- |
|
(2,538) |
|
- |
|
|
(2,538) |
|||
Shares issued by exercising options |
|
|
439 |
|
(110) |
|
- |
|
- |
|
|
329 |
|||
PSUs settled in common shares |
|
|
976 |
|
(976) |
|
- |
|
- |
|
|
- |
|||
Withholding taxes on PSUs |
|
|
(1,073) |
|
- |
|
- |
|
- |
|
|
(1,073) |
|||
Share-based payment expense |
|
|
- |
|
753 |
|
- |
|
- |
|
|
753 |
|||
Balance as at December 31, 2021 |
|
$ |
7,641 |
$ |
3,074 |
$ |
164,989 |
$ |
(291) |
|
$ |
175,413 |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Balance as at June 30, 2022 |
|
$ |
7,935 |
$ |
3,141 |
$ |
168,923 |
$ |
(267) |
|
$ |
179,732 |
|||
Net income |
|
|
- |
|
- |
|
17,651 |
|
- |
|
|
17,651 |
|||
Other comprehensive income |
|
|
- |
|
- |
|
- |
|
1,887 |
|
|
1,887 |
|||
Dividends |
|
|
- |
|
- |
|
(2,542) |
|
- |
|
|
(2,542) |
|||
Common share issuance |
|
|
15,926 |
|
- |
|
- |
|
- |
|
|
15,926 |
|||
Shares issued by exercising options |
|
|
60 |
|
(12) |
|
- |
|
- |
|
|
48 |
|||
PSUs settled in common shares |
|
|
1,014 |
|
(1,014) |
|
- |
|
- |
|
|
- |
|||
Withholding taxes on PSUs |
|
|
(1,453) |
|
- |
|
- |
|
- |
|
|
(1,453) |
|||
Share-based payment expense |
|
|
- |
|
913 |
|
- |
|
- |
|
|
913 |
|||
Balance as at December 31, 2022 |
|
$ |
23,482 |
$ |
3,028 |
$ |
184,032 |
$ |
1,620 |
|
$ |
212,162 |
|||
VECIMA NETWORKS INC. | ||||||||||||
Interim Condensed Consolidated Statements of Cash Flows |
||||||||||||
(unaudited - in thousands of Canadian dollars) |
||||||||||||
|
|
|
Three months |
|
Six months |
|||||||
Periods ended December 31, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|||
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
8,139 |
$ |
1,473 |
$ |
17,651 |
$ |
2,215 |
|||
Adjustments for non-cash items: |
|
|
|
|
|
|
|
|
|
|||
Loss on sale of property, plant and equipment |
|
|
18 |
|
13 |
|
27 |
|
18 |
|||
Depreciation and amortization |
|
|
4,416 |
|
4,142 |
|
9,166 |
|
8,460 |
|||
Share-based compensation |
|
|
815 |
|
65 |
|
913 |
|
753 |
|||
Income tax expense (recovery) |
|
|
700 |
|
(13) |
|
2,648 |
|
481 |
|||
Deferred income tax expense (recovery) |
|
|
1,195 |
|
1,721 |
|
1,855 |
|
(237) |
|||
Interest expense |
|
|
557 |
|
46 |
|
769 |
|
96 |
|||
Interest income |
|
|
(2) |
|
- |
|
(12) |
|
(8) |
|||
Net change in working capital |
|
|
(26,635) |
|
(5,085) |
|
(51,001) |
|
(13,710) |
|||
Increase in other long-term assets |
|
|
4 |
|
(123) |
|
146 |
|
(83) |
|||
Decrease in provisions |
|
|
(76) |
|
(679) |
|
(60) |
|
(656) |
|||
Increase in investment tax credits |
|
|
(32) |
|
(33) |
|
(72) |
|
(60) |
|||
Income tax paid |
|
|
(806) |
|
(140) |
|
(776) |
|
(415) |
|||
Interest paid |
|
|
(524) |
|
(9) |
|
(699) |
|
(19) |
|||
Interest received |
|
|
5 |
|
2 |
|
15 |
|
10 |
|||
Cash provided by (used in) operating activities |
|
|
(12,226) |
|
1,380 |
|
(19,430) |
|
(3,155) |
|||
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
Capital expenditures, net |
|
|
(364) |
|
(2,036) |
|
(1,251) |
|
(2,956) |
|||
Deferred development costs |
|
|
(5,226) |
|
(3,692) |
|
(10,807) |
|
(7,765) |
|||
Cash used in investing activities |
|
|
(5,590) |
|
(5,728) |
|
(12,058) |
|
(10,721) |
|||
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|||
Principal repayments of lease liabilities |
|
|
(443) |
|
(380) |
|
(822) |
|
(787) |
|||
Repayment of long-term debt |
|
|
(100) |
|
(83) |
|
(167) |
|
(125) |
|||
Dividends paid |
|
|
(2,542) |
|
(2,538) |
|
(2,542) |
|
(2,538) |
|||
Proceeds from common share issuance |
|
|
15,926 |
|
- |
|
15,926 |
|
- |
|||
Issuance of shares through exercised options |
|
|
- |
|
- |
|
49 |
|
329 |
|||
Withholding taxes on PSUs |
|
|
(1,409) |
|
- |
|
(1,453) |
|
(1,073) |
|||
Cash provided by (used in) financing activities |
|
|
11,432 |
|
(3,001) |
|
10,991 |
|
(4,194) |
|||
Net decrease in cash and cash equivalents |
|
|
(6,384) |
|
(7,349) |
|
(20,497) |
|
(18,070) |
|||
Effect of change in exchange rates on cash |
|
|
748 |
|
(227) |
|
(529) |
|
(498) |
|||
Cash and cash equivalents, beginning of year |
|
|
(2,488) |
|
17,917 |
|
12,902 |
|
28,909 |
|||
Cash and cash equivalents, end of year (1) |
|
$ |
(8,124) |
$ |
10,341 |
$ |
(8,124) |
$ |
10,341 |
|||
(1) Cash and cash equivalents is net of the revolving line of credit balance reflected in the Company's Consolidated Statements of Financial Position. |
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