International Datacasting Corporation Announces Fiscal 2015 First Quarter Results

OTTAWA, ONTARIO--(Marketwired - Jun 10, 2014) - International Datacasting Corporation ("IDC") (IDC.TO), a global leader in digital content distribution solutions for the world's premiere broadcasters, today announced its financial results for the first quarter of Fiscal 2015 ended April 30^th, 2014. All amounts in this release are in Canadian dollars unless otherwise stated.

Financial Highlights:

(in thousands, except for gross margin and net loss per share)

			Three months ending April 30,
			2014					2013
Revenues:					GM					GM
	Products	$	1,938		34	%	$	4,026		53	%
	Services		892		42	%		1,341		44	%
Total revenues		$	2,830				$	5,367
Gross profit		$	1,023		36	%	$	2,710		50	%
Operating expenses		$	2,586				$	2,811
Adjusted EBITDA (Loss) (1)		$	(1,206	)			$	64
Net loss		$	(1,566	)			$	(102	)
Net loss per share		$	(0.03	)			$	(0.00	)

(1)	Adjusted EBITDA is a non-GAAP financial measure. The reconciliation of Adjusted EBITDA to Net Loss is provided at the end of this release.

First Quarter Results

Revenues totaled $2.8 million for the first quarter of Fiscal 2015, 47% lower than the prior year's first quarter. The decrease from the year earlier quarter was primarily due to lower revenues from data and radio products, in addition to the non-renewal of the Canadian Forces Radio and Television service which ended on March 31^st, 2014.

In the quarter, IDC's product revenues were lower than expected primarily because three customer orders that had been expected to be achieved in the quarter were deferred. One of the three orders has shipped in May, and the other two are expected to be completed in the second or the third quarter.

In addition, IDC closed several support agreements with customers, contributing to an increase of 75% in deferred revenues to $0.8 million. This revenue will be recognized in future quarters.

Gross profit for the first quarter of Fiscal 2015 declined to $1.0 million or 36% gross margin, compared to $2.7 million or 50% gross margin in the comparable prior period. The decrease was driven primarily by restructuring activities charged to cost of sales during the first quarter of Fiscal 2015 and software upgrades delivered to a large customer at substantial higher margins during the first quarter of Fiscal 2014. Net of these factors, overall product margins were slightly less in the first quarter of Fiscal 2015 due to the lower revenue base (resulting in fixed manufacturing overheads representing a larger percentage of sales).

IDC's Adjusted EBITDA loss was $1.2 million in the quarter, as compared to $1.6 million in the fourth quarter of Fiscal 2014 and $2.2 million in the third quarter of Fiscal 2014. The reduced loss compared to the fourth quarter was due to significantly lower operating costs, partially offset by lower revenues. In the first quarter of Fiscal 2014, Adjusted EBITDA was close to breakeven.

At April 30, 2014, IDC's working capital was $5.6 million, including $2.2 million in cash. Steven Archambault, CFO, commented, "While working capital has been consumed during Q1 Fiscal 2015, we remain confident that this will stabilize by midyear based on the current sales pipeline for Q2 and Q3. We continue to make good progress in reducing our worldwide cost structure to achieve breakeven results with $4.5 million in quarterly revenues."

Looking beyond the first quarter, IDC is continuing to pursue its action plan in order to improve performance. Recent highlights include the following:

• IDC restructured its business to reduce costs, simplify organizational structure, and consolidate certain parts of its activities in Ottawa. This was reflected in significantly lower operating expenses in the first quarter, despite $0.3 million of restructuring costs.
  
  

• Two new products, the TITAN 3 and LASER MPS, were launched in April at the National Association of Broadcasters show. Since the announcement, the TITAN 3 development has been completed and the product has shipped both for customer trials and for revenue generating orders during the current quarter, which is ahead of our planned schedule. The LASER MPS development continues with the objective of achieving initial customer trials during the third quarter of Fiscal 2015 and revenue in the fourth quarter of Fiscal 2015.
  
  

Doug Lowther, IDC's President and CEO, stated, "While revenue in the first quarter was below our expectations, we made excellent progress in restructuring our business for lower costs and in launching two new products that we believe will lead to enhanced competitiveness and revenues later in the year. We remain confident that IDC will reach profitability by the end of the current Fiscal year."

For further information on IDC's first quarter Fiscal 2014 results, refer to the audited consolidated financial statements and Management's Discussion and Analysis that will be available on SEDAR (www.sedar.com) after the Toronto Stock Exchange closes on June 10, 2014. The MD&A also provides a detailed update on IDC's progress against our action plan for improved business performance.

Management Conference Call

This announcement will be followed by a conference call at 8:30 a.m. ET on Wednesday, June 11, 2014 to discuss the results. Mr. Doug Lowther, International Datacasting Corporation's President and CEO, cordially invites all interested parties to participate in the conference call.

CONFERENCE CALL DETAILS:

DATE: Wednesday June 11, 2014

TIME: 8:30 a.m. ET

DIAL-IN NUMBERS: 613-233-1979 / 1-888-789-9572

PARTICIPANT CODE: 9325564

INSTANT REPLAY: 1-800-408-3053 Passcode: 5509645 Available until June 13, 2014 10:00 a.m. ET

WEBCAST: A live audio webcast of the conference call will be available at the following link: http://www.gowebcasting.com/5583. This webcast will be archived here for 365 days. Please connect to the website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to access the webcast.

About International Datacasting Corporation:

International Datacasting Corporation (IDC.TO) is a global leader in digital content distribution for the world's premiere broadcasters in radio, television, data and digital cinema. IDC's products and solutions are in demand for radio and television networks, targeted ad insertion, digital cinema, 3D live events, satellite news gathering, sports contribution, VOD, and IPTV. IDC is headquartered in Ottawa, Canada, with regional offices in Arnhem, the Netherlands and in San Diego, California. For more information visit: www.datacast.com.

Forward-Looking Statements:

This press release contains certain information that may constitute "forward-looking information" and/or "forward-looking statements" within the meaning of applicable Canadian securities laws including, without limitation, management's beliefs with respect to strategy, efficiencies, results and costs savings in Fiscal 2015, management's expectations with respect to customer acceptance of, and the receipt of orders for, the company's products, and management's expectations with respect to the impact of new personnel and a restructured sales force. All forward-looking information and forward-looking statements are necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies. The material assumptions used to develop the forward looking-statements made in this release include anticipated cost savings resulting from the initiatives taken by IDC under its action plan, anticipated impact of senior personnel, consolidation of operations and restructuring of the sales force, management's perceptions of current conditions and expected future developments, expectations regarding future shipments of IDC products, management's knowledge of the current credit, interest rate and liquidity conditions affecting IDC as well as other considerations that are believed to be appropriate in the circumstances.

All statements other than statements which are reporting results as well as statements of historical fact are forward-looking statements that may involve a number of known and unknown risks, uncertainties and other factors; many of which are beyond the ability of IDC to control or predict.

Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "design", "plan or "project" or the negative of these words or other variations on these words or comparable terminology. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties that might cause actual results to differ materially include, but are not limited to: competitive developments; risks associated with IDC's growth; expectations regarding new product initiatives and timing, including the STAR Pro Audio™ Solution, LASER™ Targeted Ad Insertion Platform, Digital Tattoo™ DTH Over IP Gateway and TITAN 3 Video Encoder; a lengthy and variable sales cycle for IDC's products and services; any difficulties with integrating acquired product lines into IDC's business and/or manufacturing procedures; any difficulties or disputes with IDC's subcontractors, contract manufacturers and suppliers; IDC's dependence on the development and growth of the satellite services market; a lengthy and variable sales cycle for IDC's products and services; IDC's reliance on a small number of customers for a large percentage of its revenue; expectations with respect to the sufficiency of its financial resources and liquidity; regulatory risks and intellectual property infringement. Further, any incorrect identification of, or failure or delay in identifying, areas that require attention in IDC's business as part of the company's strategic review, or inability to successfully address areas requiring increased focus in accordance with IDC's action plan, could materially adversely affect the company's business, financial conditions, and results of operations as well as other key indicators.

More detailed information about potential factors that could affect IDC's financial and business results is included in the public documents IDC files from time to time with Canadian securities regulatory authorities and which are available on SEDAR at www.sedar.com, including, without limitation, IDC's Annual Information Form and MD&A for the year ended January 31, 2014, each dated April 29, 2014.

Except as expressly required by applicable law, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements are provided to assist external stakeholders in understanding IDC's expectations as at the date of this release and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on such statements.

INTERNATIONAL DATACASTING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Canadian dollars)

		April 30, 2014			January 31, 2014
ASSETS
Current Assets
	Cash	$	2,171,940		$	2,734,655
	Short-term investments		50,000			72,500
	Accounts receivable		2,688,621			3,289,596
	Inventories		3,399,168			3,793,347
	Other assets		272,945			438,268
Total Current Assets			8,582,674			10,328,366
Non-Current Assets
	Capital assets		507,656			536,057
Total Non-Current Assets			507,656			536,057
TOTAL ASSETS		$	9,090,330		$	10,864,423
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
	Accounts payable	$	817,525		$	1,159,025
	Accrued liabilities		993,708			1,545,234
	Customer deposits		36,281			30,654
	Deferred revenue - current portion		593,871			349,870
	Provisions		492,107			254,575
	Current tax liability		7,482			9,496
Total Current Liabilities			2,940,974			3,348,854
Non-Current Liabilities
	Deferred tax liability		15,269			14,551
	Deferred revenue		243,537			129,568
Total Non-Current Liabilities			258,806			144,119
TOTAL LIABILITIES			3,199,780			3,492,973
Shareholders' Equity
	Capital stock		23,640,073			23,637,259
	Contributed surplus		3,483,762			3,401,345
	Accumulated other comprehensive loss		(229,729	)		(229,729	)
	Accumulated deficit		(21,003,556	)		(19,437,425	)
TOTAL SHAREHOLDERS' EQUITY			5,890,550			7,371,450
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	9,090,330		$	10,864,423

INTERNATIONAL DATACASTING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED APRIL 30, 2014 and 2013

(Canadian dollars, except for share data)

		April 30, 2014			April 30, 2013
REVENUE
Products		$	1,937,937		$	4,025,773
Services			891,825			1,341,036
	Total revenue		2,829,762			5,366,809
COST OF REVENUE			1,807,105			2,656,810
GROSS PROFIT			1,022,657			2,709,999
OPERATING EXPENSES
Selling, general and administrative			1,160,119			1,789,714
Research and development, net of investment tax credits			1,406,751			1,033,741
Foreign exchange loss (gain)			18,789			(12,239	)
	Total operating expenses		2,585,659			2,811,216
OPERATING LOSS BEFORE OTHER ITEMS			(1,563,002	)		(101,217	)
Interest income			4,624			21,028
Interest expense			-			(1,182	)
LOSS BEFORE INCOME TAXES			(1,558,378	)		(81,371	)
Income tax expense:
	Current		(7,035	)		(21,004	)
	Deferred		(718	)		-
NET LOSS		$	(1,566,131	)	$	(102,375	)
OTHER COMPREHENSIVE LOSS, NET OF TAXES
Change in fair value of available-for-sale investments			-			9,660
	Total other comprehensive loss, net of taxes		-			9,660
COMPREHENSIVE LOSS		$	(1,566,131	)	$	(92,715	)
NET LOSS PER SHARE
	Basic	$	(0.03	)	$	(0.00	)
	Diluted	$	(0.03	)	$	(0.00	)
	Weighted average number of shares outstanding - basic		58,505,804			57,705,990
	Weighted average number of shares outstanding - diluted		58,505,804			57,705,990

INTERNATIONAL DATACASTING CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED APRIL 30, 2014 and 2013

(Canadian dollars)

		April 30, 2014			April 30, 2013
OPERATING ACTIVITIES
Net loss		$	(1,566,131	)	$	(102,375	)
Add items not requiring an outlay of cash:
	Depreciation and amortization		38,644			165,175
	Deferred tax adjustments		718			-
	Unrealized (gain) loss on derivatives		(8,945	)		26,619
	Stock-based compensation		82,417			6,101
			(1,453,297	)		95,520
Net change in non-cash working capital:
	Accounts receivable		600,975			597,661
	Inventories		394,179			(182,265	)
	Other assets		174,268			(158,995	)
	Accounts payable and accrued liabilities		(890,212	)		(276,450	)
	Customer deposits		5,627			(265,074	)
	Deferred revenue		357,970			197,055
	Provisions		237,532			25,930
	Current tax liability		(2,014	)		(13,484	)
Net cash provided by (applied to) operating activities			(574,972	)		19,898
INVESTING ACTIVITIES
Redemption of short-term investment			22,500			-
Purchase of capital assets			(10,243	)		(99,129	)
Net cash applied to investing activities			12,257			(99,129	)
FINANCING ACTIVITIES
Repayments of obligations under capital leases			-			(2,999	)
Issuance of common shares, net of issue costs			-			231,000
Net cash provided by financing activities			-			228,001
Net increase (decrease) in cash during the period			(562,715	)		148,770
CASH - Beginning of period			2,734,655			4,943,025
CASH - End of period		$	2,171,940		$	5,091,795

International Datacasting Corporation

Non-GAAP Financial Measure Reconciliation

Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

FOR THE THREE MONTHS ENDED APRIL 30, 2014 and 2013

(Canadian dollars)

			April 30, 2014			April 30, 2013
Net loss reported under IFRS (unaudited)			$	(1,566,131	)	$	(102,375	)
	Add (subtract):
		Restructuring expense		318,650			-
		Depreciation expense		38,814			165,175
		Interest expense		-			1,182
		Other income tax expense		7,753			21,004
		Net investment income		(4,624	)		(21,028	)
Adjusted EBITDA (Loss)			$	(1,205,538	)	$	63,958

In this release, IDC has presented Adjusted EBITDA, which is a "non-GAAP financial measure" and accordingly it is not an earnings measure recognized by IFRS and does not carry standard prescribed significance. Moreover, IDC's method for calculating Adjusted EBITDA may differ from that used by other companies using the same designation. Accordingly, we caution readers that Adjusted EBITDA (Loss) should not be substituted for determining net income (loss) as an indicator of operating results or as a substitution for cash flows from operating and investing activities.

We believe Adjusted EBITDA is a meaningful and useful financial metric to investors and analysts for measuring and predicting its operating performance by excluding income taxes, depreciation and amortization as well as unusual and/or non-recurring charges as noted in the above table.