Vecima Reports Q1 Fiscal 2017 Results
Net Income and EPS Increase Sequentially from Q4 2016
Entra receives 4.5 out of 5 diamonds from Broadband Technology Report
VICTORIA, BC – (November 10, 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 months ended September 30, 2016.
“We achieved solid first quarter operating performance with bottom line results exceeding Q4 2016 levels and our cash balance growing by $8.7 million to a record $82.8 million,” said Sumit Kumar, Vecima Networks’ President and CEO. “As anticipated, while our industry remains in transition, our current products continue to perform well. Of particular note, Terrace QAM sales significantly exceeded Q4 2016 levels after rebounding from the timing related pull back in Q4. Entra, our next generation broadband platform, received a 4.5 diamond rating by the Broadband Technology Report in September, an accolade that reinforces the positive feedback we have received from customers and the industry at large.”
In line with expectations, total sales of $23.4 million, were down 9% from $25.8 million in Q1 2016. Sequentially, total sales decreased by $1.0 million from Q4 2016.
- Video and Broadband Solutions sales of $19.5 million were 16% lower year-over-year
- YourLink sales were unchanged at $2.5 million in the first quarter of fiscal 2017, compared to Q1 2016
- First quarter Telematics sales increased significantly to $1.4 million, from $0.2 million in Q1 2016, reflecting the positive impact of the Contigo Systems acquisition
Vecima continues to make excellent progress on Entra, its new DOCSIS 3.1 distributed access solution, which positions Vecima for the cable industry’s upcoming major shift in network architecture. Initial feedback from Tier One customers has been encouraging with Entra’s high Ethernet capacity, full support for legacy digital video, and distributed architectural approach generating significant customer interest. In September, Vecima for the first time demonstrated multi-gigabit broadband speeds using DOCSIS 3.1 at the SCTE Cable-Tec Expo. Vecima remains on track to move Entra into lab and field trials in 2017.
Normal Course Issuer Bid and Dividend
Subsequent to the quarter end, on October 25th, Vecima filed a notice of intention with the Toronto Stock exchange (the ‘TSX”) to acquire for cancellation, by way of normal course issuer bid, up to 600,000 Common Shares of the Company. This represents approximately 2.7% of the issued and outstanding Shares and approximately 9.7% of the total public float of Vecima. “Given our book value of $172 million, $82.8 million of cash, our pristine balance sheet, proven product portfolio and highly promising R&D direction, Vecima’s significant underlying value is not accurately reflected in our current share price in our view and caused us to take this action,” said Mr. Kumar.
As previously reported, Vecima’s Board of Directors have declared a quarterly dividend of $0.055 per share. The dividend will be payable on December 20, 2016 to shareholders of record on November 24, 2016.
OUTLOOK FOR FISCAL 2017
Based on current visibility into customer demand both domestically and internationally, Vecima’s outlook for fiscal 2017 remains unchanged and anticipates:
- Sales in the range of $85.0 million to $95.0 million
- Gross margins in the range of 54% to 58%
- Adjusted EBITDA in the range of $23 million to $28 million
A conference call and live audio webcast will be held today, November 10, 2016 at 1 p.m. ET to discuss the Company’s first quarter results. Vecima’s unaudited consolidated financial statements and management’s discussion and analysis for the three months ended September 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/vecima20161110.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, NEROglobal, 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 first quarter of fiscal 2017.
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 include the following statements: Vecima continues to make excellent progress on Entra; positions Vecima for the cable industry’s upcoming major shift in network architecture; initial feedback on Entra is encouraging and has generated significant customer interest; Vecima remains on track to move Entra into lab and field trails in 2017; Vecima’s significant underlying value is not accurately reflected in our current share price; the dividend payable on December 20, 2016 to shareholders of record as at November 24, 2016; current visibility into customer demand both domestically and internationally; and the financial outlook for 2017.
In connection with the forward-looking information contained in this news release, Vecima has made numerous assumptions, regarding, among other things: we will continue to pay dividends; that MSOs continue to upgrade to their infrastructure; that Vecima is able to continue its relationships with its few large customers; we are able to develop new products for customers; competition that serves the same market(s) will not have an adverse effect on the business; we are able to adapt to technological changes – designing to new standards and competing with new products; third party contractors are able to deliver on time and budget; we will be able to deliver based on the terms of our key contracts; currency fluctuations do not adversely affect Vecima; larger cable operator budgets are not static; suppliers will provide parts in a timely fashion; Vecima manages its business and its growth successfully; Vecima does not experience production capacity constraints; and the rationalization of operations could cause our operating results to fluctuate. While Vecima considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause Vecima’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Known risk factors include, among others: future quarterly dividends will be subject to approval of the Board of Directors; Vecima derives a substantial part of its revenue from a few large customers; Vecima may be unable to deliver products associated with key contracts; failure to manage Vecima’s business or its growth successfully may adversely affect its operating results; if Vecima cannot meet customers’ requirements for manufacturing capacity, sales may suffer; our inability to adapt to technological change, new products and standards could harm our business; if Vecima is required to change its pricing models to compete successfully, Vecima’s margins and operating results may be adversely affected; competition from new or existing technologies may adversely affect Vecima’s business; Vecima’s reliance on third-party suppliers and contract manufacturers reduces its control over its performance; currency fluctuations may adversely affect Vecima; the budgeting cycles of larger cable operators can also result in quarter-to-quarter variability in customer orders, while availability of parts and production capacity can influence the timing of product deliveries; and our operating results are expected to fluctuate.
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.