International Datacasting Corporation Announces Second Quarter Fiscal 2014 Results

Marketwired

OTTAWA, ONTARIO--(Marketwired - Sep 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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