International Datacasting Corporation Announces Second Quarter Fiscal 2014 Results

Marketwired

OTTAWA, ONTARIO--(Marketwired - Sept. 5, 2013) - International Datacasting Corporation ("IDC") (IDC.TO), a global leader in digital content distribution solutions for the world's premiere broadcasters, announced its financial results today for the first half and second quarter ended July 31, 2013. All amounts in this release are in Canadian dollars unless otherwise stated.

Financial Highlights:

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

   
  Three months ending July 31,     Six months ending July 31,  
  2013     2012     2013     2012  
Revenues (1):         GM             GM             GM             GM  
  Products $ 3,575     43 %   $ 4,704     47 %   $ 7,601     48 %   $ 7,784     44 %
  Services   1,147     51 %     1,271     47 %     2,280     49 %     2,246     42 %
  Systems Project   131     65 %     308     48 %     340     40 %     5,944     21 %
Total revenues $ 4,853           $ 6,283           $ 10,221           $ 15,974        
                                                       
Gross profit $ 2,203     45 %   $ 2,938     47 %   $ 4,913     48 %   $ 5,622     35 %
Operating expenses $ 2,586           $ 3,223           $ 5,397           $ 6,108        
Adjusted EBITDA (Loss) (2) $ (222 )         $ 428           $ (158 )         $ 601        
Net loss $ (409 )         $ (305 )         $ (511 )         $ (512 )      
Net loss per share $ (0.01 )         $ (0.01 )         $ (0.01 )         $ (0.01 )      

(1) The breakdown of revenues is based on revised operating segments.

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

For the second quarter of Fiscal 2014, total revenues were $4.9 million, a decrease of 23% or $1.4 million from the prior period. The total gross margin for the quarter declined to 45% from 47% for the comparable prior period, primarily due to lower volume of sales to cover current manufacturing-related overhead costs.

For the first half of Fiscal 2014, total revenues were $10.2 million, compared to $16.0 million for the same period in Fiscal 2013. The decrease of $4.8 million or 36% was driven substantially by lower sales within the Systems Project segment as a result of the completion of the Direct-to-Home Broadcasting project in Kenya. The total gross margin improvement was largely due to change in business mix with higher margins earned from Products and Services segments.

"The impact of reduced revenues on profitability was mitigated by strength in our Digital Cinema business, as well as by effective cost controls," said Doug Lowther, CEO of International Datacasting. "IDC remains the market leader in satellite delivery of Cinema content and we estimate that we support 70% of the sites that are deployed worldwide."

Operating Expenses decreased by $0.6 million or 20% to $2.6 million in the current quarter and decreased by $0.7 million or 17% to $5.4 million for the first half of Fiscal 2014 compared to prior periods. The significant cost savings were largely due to unusual charges incurred in the second quarter of Fiscal 2013 with respect to the dissident shareholder proxy contest and the failed acquisition transaction.

IDC incurred an Adjusted EBITDA loss of $0.2 million for both the second quarter and first half of Fiscal 2014, compared to income of $0.4 million and $0.6 million for the same prior periods, respectively. At July 31, 2013, IDC's working capital ratio improved to 3.7 to 1 and had liquid assets of $5.6 million. "Cash management continues to be a focus for the Company and our balance sheet remains solid," said Rick Clements, CFO of International Datacasting.

For further information on IDC's first quarter results, refer to the unaudited interim condensed 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 September 5, 2013.

Financial Summary and Conference Call

This announcement will be followed by a Management conference call at 8:30 a.m. ET on Friday, September 6, 2013, to discuss the results, and to respond to questions from investors.

Mr. Doug Lowther, President and CEO of IDC, cordially invites all interested parties to participate in the conference call.

CONFERENCE CALL DETAILS

CONFERENCE DATE: Friday September 6, 2013

CONFERENCE TIME: 8:30 a.m. ET

DIAL-IN NUMBERS: 613-233-1979 / 866-696-5910

PARTICIPANT CODE: 1045890

WEBCAST: A live audio webcast of the conference call will be available at the following link: http://www.gowebcasting.com/4811. 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 offers a broad portfolio of advanced solutions including the STAR Pro Audio™ Solution, LASER™ Targeted Ad Insertion Platform, and the Digital Tattoo™ DTH Over IP Gateway. 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. The company has installations in over 100 countries and service offices in Thailand and Singapore, and an international network of value-added partners and resellers.

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. 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. 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", "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 and Digital Tattoo™ DTH Over IP Gateway; 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.

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 MD&A for the year ended January 31, 2013, dated April 29, 2013.

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  
AS AT JULY 31, 2013 and JANUARY 31, 2013  
(Canadian dollars)  
   
    July 31, 2013     January 31, 2013  
ASSETS                
Current Assets                
  Cash   $ 5,528,813     $ 4,943,025  
  Short-term investments     75,000       75,000  
  Available-for-sale investments     -       1,986,510  
  Accounts receivable     5,218,929       6,145,251  
  Inventories     3,376,835       2,449,121  
  Other assets     929,567       443,519  
Total Current Assets     15,129,144       16,042,426  
                 
Non-Current Assets                
  Other assets     -       28,215  
  Capital assets     1,128,913       1,312,544  
  Deferred taxes     2,800,000       2,800,000  
Total Non-Current Assets     3,928,913       4,140,759  
                 
TOTAL ASSETS   $ 19,058,057     $ 20,183,185  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current Liabilities                
  Accounts payable   $ 1,784,994     $ 1,842,762  
  Accrued liabilities     1,150,782       1,842,544  
  Customer deposits     35,545       363,936  
  Deferred revenue - current portion     589,801       433,480  
  Provisions     478,787       440,167  
  Current tax liability     27,864       19,326  
Total Current Liabilities     4,067,773       4,942,215  
                 
Non-Current Liabilities                
  Deferred tax liability     15,558       23,063  
  Deferred revenue     55,916       55,277  
Total Non-Current Liabilities     71,474       78,340  
                 
TOTAL LIABILITIES     4,139,247       5,020,555  
                 
Shareholders' Equity                
  Capital stock     23,637,259       23,406,259  
  Contributed surplus     3,286,006       3,263,245  
  Accumulated other comprehensive loss     (229,729 )     (243,209 )
  Accumulated deficit     (11,774,726 )     (11,263,665 )
TOTAL SHAREHOLDERS' EQUITY     14,918,810       15,162,630  
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 19,058,057     $ 20,183,185  
                 
                 
   
INTERNATIONAL DATACASTING CORPORATION  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
AND COMPREHENSIVE LOSS  
FOR THE PERIODS ENDED JULY 31, 2013 and 2012  
(Canadian dollars, except for share data)  
   
    Three months ended     Six months ended  
    July 31, 2013     July 31, 2012     July 31, 2013     July 31, 2012  
                                 
REVENUE   $ 4,853,402     $ 6,284,050     $ 10,220,211     $ 15,975,151  
                                 
COST OF REVENUE     2,650,009       3,346,321       5,306,819       10,353,489  
                                 
GROSS PROFIT     2,203,393       2,937,729       4,913,392       5,621,662  
                                 
OPERATING EXPENSES                                
Selling, general and administrative     1,507,504       2,249,297       3,297,218       3,966,379  
Research and development, net of investment tax credits     1,087,536       896,520       2,121,277       2,147,944  
Foreign exchange loss (gain)     (9,291 )     76,831       (21,530 )     (6,694 )
  Total operating expenses     2,585,749       3,222,648       5,396,965       6,107,629  
                                 
OPERATING LOSS BEFORE OTHER ITEMS     (382,356 )     (284,919 )     (483,573 )     (485,967 )
Realized gain (loss) on sale of investments     (25,344 )     1,580       (25,344 )     (27,220 )
Investment income     13,185       20,459       34,213       44,975  
Interest expense     -       (8,220 )     (1,182 )     (9,322 )
                                 
LOSS BEFORE INCOME TAXES     (394,515 )     (271,100 )     (475,886 )     (477,534 )
Income tax recovery (expense):                                
  Current     (21,676 )     (7,184 )     (42,680 )     (7,953 )
  Deferred     7,505       (26,283 )     7,505       (26,283 )
                                 
NET LOSS   $ (408,686 )   $ (304,567 )   $ (511,061 )   $ (511,770 )
Other comprehensive loss     -       -       -       -  
                                 
COMPREHENSIVE LOSS   $ (408,686 )   $ (304,567 )   $ (511,061 )   $ (511,770 )
                                 
                                 
NET LOSS PER SHARE                                
  Basic   $ (0.01 )   $ (0.01 )   $ (0.01 )   $ (0.01 )
  Diluted   $ (0.01 )   $ (0.01 )   $ (0.01 )   $ (0.01 )
                                   
  Weighted average number of shares outstanding - basic     58,484,642       58,368,425       58,101,769       58,376,369  
  Weighted average number of shares outstanding - diluted     58,484,642       58,368,425       58,101,769       58,376,369  
                                 
                                 
   
INTERNATIONAL DATACASTING CORPORATION  
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
FOR THE PERIODS ENDED JULY 31, 2013 and 2012  
(Canadian dollars)  
   
    Three months ended     Six months ended  
    July 31, 2013     July 31, 2012     July 31, 2013     July 31, 2012  
                                 
OPERATING ACTIVITIES                                
Net loss   $ (408,686 )   $ (304,567 )   $ (511,061 )     (511,770 )
Add items not requiring an outlay of cash:                                
  Depreciation and amortization     160,157       140,792       325,332       278,490  
  Deferred taxes     (7,505 )     26,283       (7,505 )     26,283  
  Fair value losses on investments at fair value through profit and loss     -       -       -       27,220  
  Realized loss (gain) on sale of short-term investment     25,344       (1,580 )     25,344       -  
  Unrealized losses (gains) on derivatives     (58,643 )     28,061       (32,024 )     13,569  
  Stock-based compensation     16,660       13,896       22,761       21,292  
                                 
      (272,673 )     (97,115 )     (177,153 )     (144,916 )
Net change in non-cash working capital:                                
  Accounts receivable     328,661       (1,026,263 )     926,322       (1,198,501 )
  Inventories     (745,449 )     166,653       (927,714 )     766,302  
  Other assets     (266,814 )     (39,496 )     (425,809 )     84,534  
  Accounts payable and accrued liabilities     (470,081 )     402,869       (746,531 )     351,467  
  Customer deposits     (63,317 )     758,209       (328,391 )     273,784  
  Deferred revenue     (40,095 )     (258,164 )     156,960       (331,006 )
  Provisions     12,690       (293,003 )     38,620       (185,682 )
  Current tax liability     22,022       -       8,538       -  
Net cash applied to operating activities     (1,495,056 )     (386,310 )     (1,475,158 )     (384,018 )
                                 
INVESTING ACTIVITIES                                
Purchase of capital assets     (42,572 )     (44,257 )     (141,701 )     (112,151 )
Proceeds from sale of available-for-sale investments     1,974,646       -       1,974,646       -  
Purchase of short-term investment     -       (75,000 )     -       (75,000 )
Net cash provided by (applied to) investing activities     1,932,074       (119,257 )     1,832,945       (187,151 )
                                 
FINANCING ACTIVITIES                                
Repayments of obligations under capital leases     -       (9,493 )     (2,999 )     (18,793 )
Issue of common shares, net of issue costs     -       -       231,000       4,480  
Repurchase of common shares, net of costs     -       (107 )     -       (16,124 )
Net cash provided by (applied to) financing activities     -       (9,600 )     228,001       (30,437 )
                                 
Net increase (decrease) in cash during the period     437,018       (515,167 )     585,788       (601,606 )
                                 
CASH - Beginning of period     5,091,795       4,828,327       4,943,025       4,914,766  
                                 
CASH - End of period   $ 5,528,813     $ 4,313,160     $ 5,528,813     $ 4,313,160  
                                 
                                 
   
International Datacasting Corporation  
Non-GAAP Financial Measure Reconciliation  
Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)  
For the periods ended July 31, 2013 and 2012  
(Canadian dollars)  
   
    Three months ended     Six months ended  
    July 31, 2013     July 31, 2012     July 31, 2013     July 31, 2012  
                                 
Net loss reported under IFRS   $ (408,686 )   $ (304,567 )   $ (511,061 )   $ (511,770 )
Add (subtract):                                
  Depreciation expense     160,157       140,792       325,332       278,490  
  Dissident shareholder expense     -       403,439       -       403,439  
  Restructuring expense     -       (30,741 )     -       191,288  
  Incremental external business acquisition expense     -       199,670       -       213,940  
  Interest expense     -       8,220       1,182       9,322  
  Income tax expense     14,171       33,467       35,175       34,236  
  Net investment loss (income)     12,159       (22,039 )     (8,869 )     (17,755 )
                                 
Adjusted EBITDA (Loss)   $ (222,199 )   $ 428,241     $ (158,241 )   $ 601,190  
                                 

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 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 interest expense and income, income taxes, depreciation and amortization as well as unusual and/or non-recurring charges as noted in the above table. 

Contact:
International Datacasting Corporation
Rick Clements
Chief Financial Officer
613-596-4120
rclements@datacast.com
www.datacast.com

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