Vecima Reports Q4 and Fiscal 2016 Year-End Results
Annual Revenue & Adjusted EBITDA increase by 19% and 30%
Cash Balance Increases to Record $74.1 M
VICTORIA BC – (September 26, 2016) – Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology in the broadband equipment market, today reported financial results for the three and twelve months ended June 30, 2016.
“Fiscal 2016 was an extraordinary year for Vecima,”said Sumit Kumar, Vecima Networks’ President and CEO. “We generated strong year-over-year growth in revenue and adjusted EBITDA as we met the needs of tier one cable MSO customers across numerous product lines and platforms. In particular, our Terrace Family, TerraceQAM and Digital Video Access Platform (DVAP) products had banner years as we supported our customers’ network evolutions with well-received product solutions.”
“I’m pleased to report that our full-year results set new records for the company and were at the high end of our guided range for revenue, gross margin and adjusted EBITDA, beating our initial guidance earlier in the year which was revised upwards.”
“We achieved our highest-ever cash balance of $74.1 Million, a significant achievement given the major investments we made during the year to strengthen our business and support future growth. These investments included ramping up R&D spending on next-generation solutions, including our new DOCSIS 3.1 distributed access solution, Entra, which positions us for the cable industry’s upcoming major shift in network architecture. We also expanded our presence in the fleet telematics market, financing our February 2016 acquisition of Contigo Systems with cash. And we invested $2.2 million in the upgrade of the YourLink network, net of the grant.”
Vecima’s fourth quarter 2016 results were in line with expectations:
- Video and Broadband Solutions sales of $20.5 million in the fourth quarter were on par with the $20.5 million in Q4 2015
- YourLink sales were virtually unchanged at $2.5 million in the fourth quarter versus $2.6 million in Q4 last year
- Telematics sales increased significantly to $1.4 million in Q4 fiscal 2016 compared to $0.2 million in Q4 2015, reflecting the newly acquired Contigo operations
The cable industry is currently undergoing a major shift under the new DOCSIS 3.1 standard. Released by CableLabs, DOCSIS 3.1 supports very fast data transmission with 10 Gigabits per second (Gbps) download speeds and 1Gbps upload speeds, comparable to the bandwidth provided by fiber optic connections without incurring the high costs of fiber to the home. Cable operators globally are starting to embrace DOCSIS 3.1 as an evolution of DOCSIS technology. The new standard also provides a flexible migration for cable operators, with the ability for DOCSIS 3.1 modems to coexist with older versions and build on top of the previously deployed capacity. The higher efficiency of DOCSIS 3.1 technology also enables significant cost per bit reductions relative to DOCSIS 3.0 network solutions.
Vecima is currently engaged in a period of intense focus on next-generation solutions as it prepares for the DOCSIS 3.1 transition. The Company is confident that its product timelines and feature sets are well aligned with customer needs and introduced its new gigabit speed broadband access platform, Entra, at the INTX conference in May 2016. Vecima also recently announced its new Bravura platform for multi-screen IP-based delivery of SD, HD and 4K Ultra-HD Premium content.
“We are very well positioned as we enter fiscal 2017 where both the industry as a whole and Vecima will transition,” said Mr. Kumar. “We have strong, established relationships with the cable industry’s largest operators and a robust R&D program that is closely aligned with our customers’ needs and with the significant opportunities arising in broadband access and IP video. During this evolutionary period, we expect sales to temporarily pull back but overall financial performance to remain very strong. We are clear sighted about the future and our strong financial position enables us to pursue opportunities both organically and through acquisition as we execute on our longer-term strategy which will reignite growth.”
As previously reported, the Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on November 2, 2016 to shareholders of record on October 12, 2016.
OUTLOOK FOR FISCAL 2017
As noted previously, with the industry in transition we expect demand for our legacy products to slow in fiscal 2017. As sales for our next generation products are currently forecasted to begin towards the end of fiscal 2017, we expect overall 2017 revenue and adjusted EBITDA to be lower than in fiscal 2016.
Vecima’s outlook for fiscal 2017, which is based on our current visibility into customer demand both domestically and internationally, is:
- Sales in the range of $85.0 million to $95.0 million;
- Gross margins in the range of 54% to 58%; and
- Adjusted EBITDA in the range of $23 million and $28 million.
A conference call and live audio webcast will be held today, September 26, 2016 at 1 p.m. ET to discuss the Company’s fourth quarter and year-end results. Vecima’s audited consolidated financial statements and management’s discussion and analysis for the three months and year ended June 30, 2016 are available under the Company’s profile at www.sedar.com, and at www.vecima.com/financials.
To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-9020. The webcast will be available in real time at services.choruscall.ca/links/vecima20160926.html and will be archived on the Vecima website at www.vecima.com/shareholder-events.
About Vecima Networks
Vecima Networks Inc. (TSX:VCM) is a globally recognized leader in creating breakthrough technology solutions that empower network service providers to connect people and enterprises to information and entertainment worldwide. Vecima products for the cable industry allow service providers a cost-effective Last Mile Solution® for both video and broadband access, especially in the demanding business services market segment. Vecima also provides fleet managers the key information and analytics they require to optimally manage their business under the Contigo, Nero Global Tracking, and FleetLynx brands. More information is available at our website at www.vecima.com.
Adjusted EBITDA and Adjusted Earnings Per Share
Adjusted EBITDA and Adjusted Earnings 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 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 Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the fourth quarter and year-end of fiscal 2016.
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 but is not limited to statements that in fiscal 2017 we believe that our current cash and short-term investments of $74.1 million and anticipated cash flow from operations will be sufficient to meet our working capital requirements and capital expenditure requirements for the foreseeable future. We believe our growth may be tied to the: development of next generation platforms such as Entra (currently in development); from strategic acquisitions; and from platform enhancements for customers. We believe that there could be decreased demand for our legacy products compared to fiscal 2016; and that overall revenue and adjusted EBITDA could be lower than in fiscal 2016.
In connection with the forward-looking information contained in this news release, we have made numerous assumptions, regarding, among other things: the present or potential value of our core technologies, business operations and asset holdings; we are able to continue our relationships with a few key customers; we are able to deliver products associated with key contracts; we can manage our business and growth successfully; we can meet customers’ requirements for manufacturing capacity; we are able to develop new products and enhance its existing products; we can expand current distribution channels and can develop new distribution channels; we are able to recruit and retain management and other qualified personnel crucial to our business; we are not required to change our pricing models to compete successfully; our third party suppliers and contract manufacturers upon which we rely continue to meet our needs; our intellectual property is not infringed upon; we are not subject to warranty or product liability claims that harm our business; we are able to successfully implement acquisitions; we are able to manage risks associated with our international operations; currency fluctuations do not adversely affect us; growth in our key markets continues; we are able to adapt to technological change, new products and standards; we are not subject to increased competition that has an adverse effect on our business; continued growth in the converged wired solutions market; we are not subject to competition from new or existing technologies that adversely affect our business; we are not subject to any material new government regulation of our products; and, no third parties allege that we infringe on their intellectual property. While we consider these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies.
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 26, 2016, 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.