International Datacasting Corporation Announces Third Quarter Fiscal 2014 Results
OTTAWA, ONTARIO--(Marketwired - Dec 10, 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 nine months and third quarter ended October 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 October 31, | Nine months ending October 31, | ||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||
Revenues (1) | GM | GM | GM | GM | |||||||||||||||
Products | $ | 1,490 | 24 | % | $ | 6,005 | 43 | % | $ | 9,091 | 44 | % | $ | 13,789 | 43 | % | |||
Services | 1,043 | 46 | % | 1,039 | 53 | % | 3,323 | 48 | % | 3,285 | 45 | % | |||||||
Systems Project | - | 67 | (11 | %) | 340 | 40 | % | 6,012 | 21 | % | |||||||||
Total revenues | $ | 2,533 | $ | 7,111 | $ | 12,754 | $ | 23,086 | |||||||||||
Gross profit | $ | 839 | 33 | % | $ | 3,105 | 44 | % | $ | 5,752 | 45 | % | $ | 8,727 | 38 | % | |||
Operating expenses | $ | 3,140 | $ | 2,552 | $ | 8,537 | $ | 8,660 | |||||||||||
Adjusted EBITDA (Loss) (2) | $ | (2,184 | ) | $ | 782 | $ | (2,342 | ) | $ | 1,371 | |||||||||
Net income (loss) | $ | (2,259 | ) | $ | 543 | $ | (2,770 | ) | $ | 31 | |||||||||
Net income (loss) per share | $ | (0.04 | ) | $ | 0.01 | $ | (0.05 | ) | $ | 0.00 | |||||||||
(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 third quarter of Fiscal 2014, total revenues were $2.5 million, a decrease of 64% or $4.6 million from the prior period. The total gross margin for the quarter declined to 33% from 44% for the comparable prior period, primarily due to a lower volume of sales to cover current manufacturing-related overhead costs.
For the first three quarters of Fiscal 2014, total revenues were $12.8 million, compared to $23.1 million for the same period in Fiscal 2013. The decrease of $10.3 million or 45% 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 and from lower Products revenue across all product lines. Total gross profit declined by $3.0 million in the first three quarters of Fiscal 2014 compared to the same period in Fiscal 2013. Gross margins improved largely due to a change in business mix, as the Products and Services segments generated higher margins than the completed Systems Project.
Commenting on the results, Doug Lowther, IDC's President and CEO stated, "While our run-rate business remained on par for the quarter, our failure to close major deals in the quarter resulted in lower than expected revenues. As a result, we took steps to improve our market coverage, and have completed a top-down review of our product portfolio, market positioning and actions to improve performance. We remain committed to growing our business and to building a world class company."
Operating expenses increased $0.6 million or 23% to $3.1 million in the current quarter primarily due to higher marketing costs and increased research and development expenses. For the nine month period ended October 31, 2013, operating expenses decreased $0.1 million or 1% to $8.5 million largely due to non-recurring general and administration expenses incurred in the second quarter of FY 2013 relating to the dissident shareholder proxy contest and the failed acquisition transaction.
IDC incurred a net loss of $2.2 million for the third quarter and $2.8 million for the first three quarters of Fiscal 2014, compared to net income of $0.5 million and breakeven for the same prior periods, respectively. At October 31, 2013, IDC's working capital ratio was 3.3 to 1, and the Company had liquid assets of $4.1 million.
"As previously announced, IDC has made significant organizational changes in order to strengthen its leadership team," added Lowther. "These changes, along with IDC's strategic review and resulting action plans are intended to improve performance, reduce costs and maximize working capital."
For further information on IDC's third 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 December 10, 2013.
Financial Summary and Conference Call
This announcement will be followed by a Management conference call at 8:30 a.m. ET on Wednesday, December 11, 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: Wednesday, December 11, 2013
CONFERENCE TIME: 8:30 a.m. ET
DIAL-IN NUMBERS: 613-233-1979 / 888-789-9572
PARTICIPANT CODE: 6142941
WEBCAST: A live audio webcast of the conference call will be available at the following link: http://www.gowebcasting.com/5135. 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 OCTOBER 31, 2013 and JANUARY 31, 2013 | ||||||||
(Canadian dollars) | ||||||||
October 31, 2013 | January 31, 2013 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 3,928,507 | $ | 4,943,025 | ||||
Short-term investments | 162,000 | 75,000 | ||||||
Available-for-sale investments | - | 1,986,510 | ||||||
Accounts receivable | 3,676,961 | 6,145,251 | ||||||
Inventories | 4,560,702 | 2,449,121 | ||||||
Other assets | 582,304 | 443,519 | ||||||
Total Current Assets | 12,910,474 | 16,042,426 | ||||||
Non-Current Assets | ||||||||
Other assets | 17,826 | 28,215 | ||||||
Capital assets | 1,024,293 | 1,312,544 | ||||||
Deferred taxes | 2,800,000 | 2,800,000 | ||||||
Total Non-Current Assets | 3,842,119 | 4,140,759 | ||||||
TOTAL ASSETS | $ | 16,752,593 | $ | 20,183,185 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 1,747,001 | $ | 1,842,762 | ||||
Accrued liabilities | 1,242,182 | 1,842,544 | ||||||
Customer deposits | 17,444 | 363,936 | ||||||
Deferred revenue - current portion | 440,256 | 433,480 | ||||||
Provisions | 495,574 | 440,167 | ||||||
Current tax liability | 668 | 19,326 | ||||||
Total Current Liabilities | 3,943,125 | 4,942,215 | ||||||
Non-Current Liabilities | ||||||||
Deferred tax liability | 12,237 | 23,063 | ||||||
Deferred revenue | 88,719 | 55,277 | ||||||
Total Non-Current Liabilities | 100,956 | 78,340 | ||||||
TOTAL LIABILITIES | 4,044,081 | 5,020,555 | ||||||
Shareholders' Equity | ||||||||
Capital stock | 23,637,259 | 23,406,259 | ||||||
Contributed surplus | 3,334,876 | 3,263,245 | ||||||
Accumulated other comprehensive loss | (229,729 | ) | (243,209 | ) | ||||
Accumulated deficit | (14,033,894 | ) | (11,263,665 | ) | ||||
TOTAL SHAREHOLDERS' EQUITY | 12,708,512 | 15,162,630 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 16,752,593 | $ | 20,183,185 | ||||
INTERNATIONAL DATACASTING CORPORATION | |||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||
AND COMPREHENSIVE INCOME (LOSS) | |||||||||||||
FOR THE PERIODS ENDED OCTOBER 31, 2013 and 2012 | |||||||||||||
(Canadian dollars, except for share data) | |||||||||||||
Three months ended | Nine months ended | ||||||||||||
October 31, 2013 | October 31, 2012 | October 31, 2013 | October 31, 2012 | ||||||||||
REVENUE | $ | 2,533,510 | $ | 7,111,096 | $ | 12,753,721 | $ | 23,086,247 | |||||
COST OF REVENUE | 1,694,467 | 4,006,235 | 7,001,286 | 14,359,724 | |||||||||
GROSS PROFIT | 839,043 | 3,104,861 | 5,752,435 | 8,726,523 | |||||||||
OPERATING EXPENSES | |||||||||||||
Selling, general and administrative | 1,946,453 | 1,628,968 | 5,243,671 | 5,595,347 | |||||||||
Research and development, net of investment tax credits | 1,202,367 | 914,360 | 3,323,644 | 3,062,304 | |||||||||
Foreign exchange loss (gain) | (9,197 | ) | 8,967 | (30,727 | ) | 2,273 | |||||||
Total operating expenses | 3,139,623 | 2,552,295 | 8,536,588 | 8,659,924 | |||||||||
OPERATING INCOME (LOSS) BEFORE OTHER ITEMS | (2,300,580 | ) | 552,566 | (2,784,153 | ) | 66,599 | |||||||
Realized loss on sale of investments | - | - | (25,344 | ) | (27,220 | ) | |||||||
Investment income | 11,836 | 2,614 | 46,049 | 47,589 | |||||||||
Interest expense | - | (1,827 | ) | (1,182 | ) | (11,149 | ) | ||||||
INCOME (LOSS) BEFORE INCOME TAXES | (2,288,744 | ) | 553,353 | (2,764,630 | ) | 75,819 | |||||||
Income tax recovery (expense): | |||||||||||||
Current | 26,255 | (10,782 | ) | (16,425 | ) | (18,735 | ) | ||||||
Deferred | 3,321 | - | 10,826 | (26,283 | ) | ||||||||
NET INCOME (LOSS) | $ | (2,259,168 | ) | $ | 542,571 | $ | (2,770,229 | ) | $ | 30,801 | |||
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES | |||||||||||||
Change in fair value of available-for-sale investments | - | (3,820 | ) | - | (3,820 | ) | |||||||
Other comprehensive loss | - | (3,820 | ) | - | (3,820 | ) | |||||||
COMPREHENSIVE INCOME (LOSS) | $ | (2,259,168 | ) | $ | 538,751 | $ | (2,770,229 | ) | $ | 26,981 | |||
NET EARNINGS (LOSS) PER SHARE | |||||||||||||
Basic | $ | (0.04 | ) | $ | 0.01 | $ | (0.05 | ) | $ | 0.00 | |||
Diluted | $ | (0.04 | ) | $ | 0.01 | $ | (0.05 | ) | $ | 0.00 | |||
Weighted average number of shares outstanding - basic | 58,484,642 | 57,502,268 | 58,230,796 | 58,082,876 | |||||||||
Weighted average number of shares outstanding - diluted | 58,484,642 | 57,506,101 | 58,230,796 | 58,089,327 | |||||||||
INTERNATIONAL DATACASTING CORPORATION | |||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
FOR THE PERIODS ENDED OCTOBER 31, 2013 and 2012 | |||||||||||||
(Canadian dollars) | |||||||||||||
Three months ended | Nine months ended | ||||||||||||
October 31, 2013 | October 31, 2012 | October 31, 2013 | October 31, 2012 | ||||||||||
OPERATING ACTIVITIES | |||||||||||||
Net loss | $ | (2,259,168 | ) | $ | 542,571 | $ | (2,770,229 | ) | 30,801 | ||||
Add items not requiring an outlay of cash: | |||||||||||||
Depreciation and amortization | 116,675 | 122,739 | 442,007 | 401,229 | |||||||||
Deferred taxes | (3,321 | ) | 17,537 | (10,826 | ) | 43,820 | |||||||
Realized loss on sale of available-for-sale investments | - | 111,727 | 25,344 | 27,220 | |||||||||
Unrealized losses on derivatives | 57,200 | - | 25,176 | 125,296 | |||||||||
Stock-based compensation | 48,870 | 21,452 | 71,631 | 42,744 | |||||||||
(2,039,744 | ) | 816,026 | (2,216,897 | ) | 671,110 | ||||||||
Net change in non-cash working capital: | |||||||||||||
Accounts receivable | 1,541,968 | (250,873 | ) | 2,468,290 | (1,449,374 | ) | |||||||
Inventories | (1,183,867 | ) | 547,296 | (2,111,581 | ) | 1,313,598 | |||||||
Other assets | 297,413 | 31,894 | (128,396 | ) | 116,428 | ||||||||
Accounts payable and accrued liabilities | 28,231 | 3,790 | (718,300 | ) | 355,257 | ||||||||
Customer deposits | (18,101 | ) | (782,773 | ) | (346,492 | ) | (508,989 | ) | |||||
Deferred revenue | (116,742 | ) | 252,902 | 40,218 | (78,104 | ) | |||||||
Provisions | 16,787 | (50,937 | ) | 55,407 | (236,619 | ) | |||||||
Current tax liability | (27,196 | ) | - | (18,658 | ) | 26,283 | |||||||
Net cash provided by (applied to) operating activities | (1,501,251 | ) | 567,325 | (2,976,409 | ) | 209,590 | |||||||
INVESTING ACTIVITIES | |||||||||||||
Purchase of capital assets | (12,055 | ) | (13,291 | ) | (153,756 | ) | (125,443 | ) | |||||
Proceeds from sale of available-for-sale investments | - | 2,309,580 | 1,974,646 | 2,309,580 | |||||||||
Purchase of short-term investment | (87,000 | ) | - | (87,000 | ) | (75,000 | ) | ||||||
Purchase of available-for-sale investments | - | (1,999,990 | ) | (1,999,990 | ) | ||||||||
Net cash provided by (applied to) investing activities | (99,055 | ) | 296,299 | 1,733,890 | 109,147 | ||||||||
FINANCING ACTIVITIES | |||||||||||||
Repayments of obligations under capital leases | - | (9,036 | ) | (2,999 | ) | (27,829 | ) | ||||||
Issue of common shares, net of issue costs | - | - | 231,000 | 4,481 | |||||||||
Repurchase of common shares, net of costs | - | - | - | (16,124 | ) | ||||||||
Net cash provided by (applied to) financing activities | - | (9,036 | ) | 228,001 | (39,472 | ) | |||||||
Net increase (decrease) in cash during the period | (1,600,306 | ) | 854,588 | (1,014,518 | ) | 279,265 | |||||||
CASH - Beginning of period | 5,528,813 | 4,313,160 | 4,943,025 | 4,914,766 | |||||||||
CASH - End of period | $ | 3,928,507 | $ | 5,167,748 | $ | 3,928,507 | $ | 5,194,031 | |||||
International Datacasting Corporation | ||||||||||||||
Non-GAAP Financial Measure Reconciliation | ||||||||||||||
Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) | ||||||||||||||
For the periods ended October 31, 2013 and 2012 | ||||||||||||||
(Canadian dollars) | ||||||||||||||
Three months ended | Nine months ended | |||||||||||||
October 31, 2013 | October 31, 2012 | October 31, 2013 | October 31, 2012 | |||||||||||
Net income (loss) reported under IFRS | $ | (2,259,168 | ) | $ | 542,571 | $ | (2,770,229 | ) | $ | 30,801 | ||||
Add (subtract): | ||||||||||||||
Depreciation expense | 116,675 | 122,739 | 442,007 | 401,229 | ||||||||||
Income tax expense (recovery) | (29,576 | ) | 10,782 | 5,599 | 45,018 | |||||||||
Interest expense | - | 1,827 | 1,182 | 11,149 | ||||||||||
Net investment income | (11,836 | ) | (2,614 | ) | (20,705 | ) | (20,369 | ) | ||||||
Dissident shareholder expense | - | 10,000 | - | 401,229 | ||||||||||
Restructuring expense | - | 96,377 | - | 287,665 | ||||||||||
Incremental external business acquisition expense | - | - | - | 213,940 | ||||||||||
Adjusted EBITDA (Loss) | $ | (2,183,905 | ) | $ | 781,682 | $ | (2,342,146 | ) | $ | 1,370,662 | ||||
In this release, IDC has presented Adjusted EBITDA (Loss), 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 (Loss) 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 (Loss) 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.
