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  • FY 2020 Revenue – $96.4M, Gross Margin 54%, Cash Balance: $34.5M
  • Grew full-year Adjusted EBITDA to $18.3M, an increase of 123%
  • Achieved record FY2020 Content Delivery and Storage results and growth, with segment revenue growing 32% and gross profit increasing 38% year-over-year
  • Captured next generation Entra family sales of $5.3M in Fiscal 2020, including $2.1M in Q4 2020 representing only the very start of the major DAA market ahead for the company
  • Acquired Nokia’s cable access portfolio of DAA and EPON/DPoE solutions subsequent to year-end, creating the industry’s most comprehensive next generation access ecosystem, significantly accelerating Vecima’s 10G technology timeline and catapulting Vecima to the leading DAA vendor position

VICTORIA, British Columbia–(BUSINESS WIRE)–Vecima Networks Inc. (TSX:VCM) today reported financial results for the three months and fiscal year ended June 30, 2020.

FINANCIAL HIGHLIGHTS

(Canadian dollars in millions except percentages, employees, and per share data)

Q4FY20

Q4FY19

 

FY2020

FY2019

Revenue

$26.1

$20.7

 

$96.4

$85.0

Gross Margin

49%

49%

 

54%

53%

Net (Loss) Income

$(1.0)

$(3.0)

 

$1.8

$(3.5)

(Loss) Earnings per Share1

$(0.05)

$(0.13)

 

$0.08

$(0.15)

Adjusted (Loss) Earnings per Share1,2,3

$(0.06)

$(0.08)

 

$0.06

$(0.09)

Adjusted EBITDA2

$3.8

$0.3

 

$18.3

$8.2

Cash and Short-term Investments

$34.5

$44.4

 

$34.5

$44.4

Employees

377

364

 

377

364

1Based on weighted average number of shares outstanding.

2Adjusted Earnings Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. See “Adjusted EBITDA and Adjusted Earnings (Loss) Per Share” below.

3Starting in Q4 fiscal 2019, we have changed our definition and calculation of Adjusted Earnings Per Share. For a reconciliation of Adjusted Earnings Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the year ended June 30,2020.

 

“Fiscal 2020 was an extraordinary year for Vecima as our financial performance soared, we built significant momentum for our next generation Distributed Access Architecture (DAA) and IPTV solutions, and we cemented our industry leadership in the DAA space with a strategic technology acquisition that closed shortly after year-end,” said Sumit Kumar, Vecima Networks’ President and CEO. “Significantly, we made these strides while navigating the challenges of the COVID-19 pandemic, an achievement that speaks volumes about the commitment and talents of the Vecima team, and underscores our role in providing essential telecommunications infrastructure that the world increasingly depends upon.”

“Financially, fiscal 2020 revenues of $96.4 million and fourth quarter revenues of $26.1 million were our best in four years, led by outstanding growth performance from our Content Delivery and Storage (CDS) segment. Full-year CDS segment revenues increased 32% year-over-year to a record $55.2 million, driven by an expanding global base of service providers that are using our MediaScaleX solutions to power their evolution to IPTV. Our CDS segment captured 13 new IPTV customers during fiscal 2020, including three in the fourth quarter, and by year’s end, we were actively selling to over 100 customers worldwide. Importantly, this was highly profitable growth, with CDS segment gross profit climbing 38% year-over-year to a record $31.7 million. This, in turn, helped to drive FY2020 consolidated gross profit of $52.3 million and Adjusted EBITDA of $18.3 million, a year-over-year increase of 17% and 123% respectively.”

“In our Video and Broadband Solutions (VBS) segment, we accomplished the critical objective of bringing our next generation Entra family of DAA products to market during the year. I am elated to report we achieved material revenue of $5.3 million from our Entra portfolio, secured our first major Tier 1 DAA customer contract, and in the fourth quarter, completed initial product deployments of our industry-leading, multi-core interoperable Entra Remote PHY nodes. Subsequent to year-end, we further advanced our position in the DAA market with our acquisition of Nokia’s cable access business, including market-ready Remote MAC-PHY, access controller, and 10Gig EPON products. By consolidating the industry’s leading DAA products and IP, Vecima has emerged as the prime holder of DAA technology in the industry.”

BUSINESS HIGHLIGHTS

Video and Broadband Solutions

  • Entra Family

    • Deployments of next generation Entra DAA products tied to the earliest stages of the market contributed full-year sales of $5.3 million and Q4 sales of $2.1 million, up significantly from $1.2 million and $0.6 million, respectively, in the same periods of fiscal 2019
    • Vecima’s lead Tier 1 customer began first in-field service group deployments of the Company’s industry-leading, multi-core interoperable Entra Remote PHY node in Q4. Vecima has received orders covering multiple geographies and markets within the Tier 1 customer’s footprint
    • Multiple products within Vecima’s broad Entra DAA ecosystem were purchased by a wide group of MSOs as the industry kicked off on the network evolution to distributed access architecture throughout the year
    • Through the course of FY20 Vecima continued to build out a powerful and unparalleled portfolio of Entra platforms that are making DAA a reality as the industry sets off on the associated major network infrastructure upgrade. Highlights included:

      • the Entra EN8124 node, doubling downstream and upstream capacity in a single Remote PHY node;
      • the Entra Interactive Video Controller, providing essential two-way connectivity to interactive set-top boxes in a DAA architecture;
      • major releases of the Entra RPM, which has proven a critical configuration service assurance and monitoring platform; and
      • the paired Entra LQA and VQM products that maintain legacy video services in a DAA environment that are material to MSO revenues.
    • Subsequent to year-end on August 7, Vecima significantly expanded and accelerated its Entra offering by closing an acquisition of Nokia’s cable access portfolio of Access Controller, Remote MAC-PHY and 10G EPON/DPoE products. Vecima now offers the broadest full complement of access network solutions in the industry, spanning the varied needs of cable operators globally
    • Combined with the expansion the Company drove in Fiscal 20, the market acceleration and broader scope achieved with the Nokia cable access portfolio acquisition has increased Vecima’s global engagements for Entra across a wide spectrum of operators encompassing multiple tiers, geographies and access network profiles. Vecima now has engagements for access network technologies with 41 operators, including 27 operators that are either in lab trial, field trial, or live deployment phases across the globe
  • Commercial Video Family

    • Increased full-year TerraceQAM sales by 93% and Q4 sales by 98% year-over-year as the lead Tier 1 MSO widened its extensive hospitality services platform, while preparing for migration to the next generation TerraceIQ system
    • Terrace family sales of $16.3 million in Fiscal 20 continued to provide ongoing contribution as Tier 1 customers neared full coverage leading up to the migration to the TerraceIQ next generation platforms
    • Continued to progress development of the TerraceIQ platform, supporting the intent of customers to upgrade their widely deployed ecosystems of the Terrace and TerraceQAM products as networks move to IPTV

Content Delivery and Storage

  • Generated record annual segment sales with revenue increasing 32% to $55.2 million year-over-year. Q4 sales grew 14% to $14.3 million
  • Secured 13 new customers for Vecima’s MediaScaleX IPTV products, including three new customers in Q4 and bringing to 34 the number of operators now using Vecima products to deliver IPTV. Achieved an additional two new customer wins subsequent to year-end
  • Further increased deployments of IPTV solutions with cable operators, telcos and broadcasters around the world, selling to over 100 customers in fiscal 2020 representing a combined operator footprint of over 132 million subscribers
  • Established all-time record for services revenue, reflecting the large number of new deployments and the high-value services offered by the CDS team
  • Signed agreement to supply CDN to a Tier 1 MSO operating across Latin America and the Caribbean in Q1 for its IPTV network
  • Robust sales uptake in Q2 of a major software release upgrade by a world top-five MSO where MediaScaleX is deployed to provide on-demand video across over 75% of the operator’s footprint
  • Revenue from outside North America grew to a record high of 37%, highlighting our geographic diversification and emerging strength in Latin America
  • Responded to major increases in capacity utilization across all networks due to increased demand related to COVID-19 by delivering higher capacity across a number of customer deployments
  • Set the stage for FY2021 by securing largest order in CDS segment’s history. Under the agreement, Vecima will provide a full refresh of a Tier 1 APAC customer’s Origin, Storage and CDN platform over the course of several quarters

Telematics

  • Continued rollout of previously announced City of Saskatoon fleet management solution, as well as expansions with other municipal government customers
  • Continued penetration of moveable assets market, adding 21 new customers in FY2020, including four in Q4

“As we move into FY2021, Vecima is now positioned to achieve strong sales growth for our Entra DAA products, particularly in the latter half of the year as we transition to scale deployment with our lead customers and to initial field deployment with a broader set of cable customers, while concurrently leveraging our newly acquired Remote MAC-PHY and EPON products. In our CDS segment, we anticipate measured sales growth in FY2021 as we consolidate the record-setting business wins of fiscal 2020, including two additional customer wins since year-end, and continue to build the business.”

“Overall, we anticipate a very strong fiscal 2021 for Vecima as our multi-year investment, development, and strategic acquisition strategy continues to bear fruit,” concluded Mr. Kumar.

As previously reported, Vecima’s Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on November 2, 2020 to shareholders of record as at October 9, 2020.

CONFERENCE CALL

A conference call and live audio webcast will be held today, September 24, 2020 at 1 p.m. ET to discuss the Company’s fourth quarter and full-year results. Vecima’s consolidated financial statements and management’s discussion and analysis for the year ended June 30, 2020 are available under the Company’s profile at www.SEDAR.com, and at www.vecima.com/financial-reports/.

To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-9020. The webcast will be available in real time at http://services.choruscall.ca/links/vecima20200924.html and will be archived on the Vecima website at https://vecima.com/investor-relations/earnings-call-archive/.

About Vecima Networks

Vecima Networks Inc. is a global leader focused on developing integrated hardware and scalable software solutions for broadband access, content delivery, and telematics. We enable the world’s leading innovators to advance, connect, entertain, and analyze. We build technologies that transform content delivery and storage, enable high-capacity broadband network access, and streamline data analytics. For more information, please visit our website at www.vecima.com.

Adjusted EBITDA and Adjusted (Loss) Earnings Per Share

Adjusted EBITDA and Adjusted (Loss) 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 (Loss) 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 (Loss) Earnings Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the year ended June 30, 2020.

Forward-Looking Statements

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 the following statements: we built significant momentum for our next generation Distributed Access Architecture (DAA) and IPTV solutions; we cemented our industry leadership in the DAA space with a strategic technology acquisition; we further advanced our position in the DAA market; by consolidating the industry’s leading DAA products and IP, Vecima has emerged as the prime holder of DAA technology in the industry; Vecima continued to build out a powerful and unparalleled portfolio of Entra platforms that are making DAA a reality; Vecima significantly expanded and accelerated its Entra offering; continued to progress development of the TerraceIQ platform, supporting the intent of customers to upgrade their widely deployed ecosystems of the Terrace and TerraceQAM products as networks move to IPTV; as we move into FY2021, Vecima is now positioned to achieve strong sales growth for our Entra DAA products, particularly in the latter half of the year, as we transition to scale deployment with our lead customers and to initial field deployment with a broader set of cable customers, while concurrently leveraging our newly acquired Remote MAC-PHY and EPON products; in our CDS segment, we anticipate measured sales growth in FY2021 as we consolidate the record-setting business wins of fiscal 2020, including two additional customer wins since year-end, and continue to build the business; overall, we anticipate a very strong fiscal 2021 for Vecima as our multi-year investment, development, and strategic acquisition strategy continues to bear fruit.

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 24, 2020, 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.

 

VECIMA NETWORKS INC.

Consolidated Statements of Financial Position

(in thousands of Canadian dollars)

As at

 

 

June 30, 2020

 

 

June 30, 2019

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,350

 

$

19,834

Short-term investments

 

 

17,165

 

 

24,569

Accounts receivable

 

 

24,908

 

 

15,154

Income tax receivable

 

 

333

 

 

437

Inventories

 

 

17,212

 

 

12,724

Prepaid expenses

 

 

2,051

 

 

2,235

Contract assets

 

 

646

 

 

187

Total current assets

 

 

79,665

 

 

75,140

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

 

11,801

 

 

12,526

Right-of-use assets

 

 

4,010

 

 

Goodwill

 

 

15,487

 

 

15,131

Intangible assets

 

 

69,200

 

 

67,887

Other long-term assets

 

 

1,301

 

 

1,017

Investment tax credits

 

 

24,374

 

 

24,355

Deferred tax assets

 

 

4,460

 

 

4,714

Total assets

 

$

210,298

 

$

200,770

Liabilities and shareholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

17,105

 

$

11,699

Provisions

 

 

492

 

 

804

Income tax payable

 

 

130

 

 

55

Deferred revenue

 

 

4,960

 

 

4,046

Current portion of long-term debt

 

 

1,698

 

 

250

Total current liabilities

 

 

24,385

 

 

16,854

Non-current liabilities

 

 

 

 

 

 

Provisions

 

 

400

 

 

332

Deferred revenue

 

 

602

 

 

763

Deferred tax liability

 

 

536

 

 

324

Long-term debt

 

 

4,613

 

 

1,729

Total liabilities

 

 

30,536

 

 

20,002

Shareholders’ equity

 

 

 

 

 

 

Share capital

 

 

3,161

 

 

1,916

Reserves

 

 

3,838

 

 

4,104

Retained earnings

 

 

170,665

 

 

173,738

Accumulated other comprehensive income

 

 

2,098

 

 

1,010

Total shareholders’ equity

 

 

179,762

 

 

180,768

Total liabilities and shareholders’ equity

 

$

210,298

 

$

200,770

 

 

 

 

 

 

 

 

VECIMA NETWORKS INC.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands of Canadian dollars, except per share amounts)

 

 

 

Years ended June 30,

 

 

2020

 

 

2019

Sales

 

$

96,416

 

$

85,032

Cost of Sales

 

 

44,112

 

 

40,155

Gross Profit

 

 

52,304

 

 

44,877

Operating expenses

 

 

 

 

 

 

Research and development

 

 

22,173

 

 

18,973

Sales and marketing

 

 

14,048

 

 

14,112

General and administrative

 

 

16,280

 

 

16,596

Restructuring costs

 

 

 

 

2,176

Share-based compensation

 

 

59

 

 

112

Other (income) expense

 

 

(479)

 

 

(418)

Total operating expenses

 

 

52,081

 

 

51,551

Operating income (loss)

 

 

223

 

 

(6,674)

Finance income

 

 

633

 

 

879

Foreign exchange gain (loss)

 

 

1,340

 

 

(66)

Income (loss) before income taxes

 

 

2,196

 

 

(5,861)

Income tax expense (recovery)

 

 

390

 

 

(2,402)

Net income (loss)

 

$

1,806

 

$

(3,459)

Other comprehensive income (loss)

 

 

 

 

 

 

Exchange differences on translating foreign operations

 

 

1,088

 

 

(67)

Comprehensive income (loss)

 

$

2,894

 

$

(3,526)

Net income (loss) per share

 

 

 

 

 

 

Basic

 

$

0.08

 

$

(0.15)

Diluted

 

$

0.08

 

$

(0.15)

Weighted average number of common shares

 

 

 

 

 

 

Shares outstanding – basic

 

22,411,612

 

22,362,031

Shares outstanding – diluted

 

22,444,806

 

22,362,031

 

VECIMA NETWORKS INC.

Consolidated Statements of Change in Equity

(in thousands of Canadian dollars)

 

 

 

Share

capital

 

 

Reserves

 

 

Retained

earnings

 

 

Accumulated

other

comprehensive

income

 

 

Total

Balance as at June 30, 2018

 

$

1,756

 

$

4,041

 

$

182,309

 

$

1,077

 

$

189,183

Net loss

 

 

 

 

 

 

(3,459)

 

 

 

 

(3,459)

Other comprehensive loss

 

 

 

 

 

 

 

 

(67)

 

 

(67)

Dividends

 

 

 

 

 

 

(4,920)

 

 

 

 

(4,920)

Shares repurchased and cancelled

 

 

(2)

 

 

 

 

(192)

 

 

 

 

(194)

Shares issued by exercising options

 

 

162

 

 

(49)

 

 

 

 

 

 

113

Share-based payment expense

 

 

 

 

112

 

 

 

 

 

 

112

Balance as at June 30, 2019

 

$

1,916

 

$

4,104

 

$

173,738

 

$

1,010

 

$

180,768

Balance as at June 30, 2019

 

$

1,916

 

$

4,104

 

$

173,738

 

$

1,010

 

$

180,768

IFRS 16 transition impact

 

 

 

 

 

 

160

 

 

 

 

160

Adjusted balance, June 30, 2019

 

$

1,916

 

$

4,104

 

$

173,898

 

$

1,010

 

$

180,928

Net income

 

 

 

 

 

 

1,806

 

 

 

 

1,806

Other comprehensive income

 

 

 

 

 

 

 

 

1,088

 

 

1,088

Dividends

 

 

 

 

 

 

(4,932)

 

 

 

 

(4,932)

Shares repurchased and cancelled

 

 

(2)

 

 

 

 

(107)

 

 

 

 

(109)

Shares issued by exercising options

 

 

1,247

 

 

(325)

 

 

 

 

 

 

922

Share-based payment expense

 

 

 

 

59

 

 

 

 

 

 

59

Balance as at June 30, 2020

 

$

3,161

 

$

3,838

 

$

170,665

 

$

2,098

 

$

179,762

 

VECIMA NETWORKS INC.

Consolidated Statements of Cash Flows

(in thousands of Canadian dollars)

 

 

 

Years ended June 30,

 

 

2020

 

 

2019

OPERATING ACTIVITIES

 

 

 

 

 

 

Net income (loss)

 

$

1,806

 

$

(3,459)

Adjustments for non-cash items:

 

 

 

 

 

 

(Gain) loss on sale of property, plant and equipment

 

 

(455)

 

 

82

Gain on sale of intangible assets

 

 

 

 

(202)

Depreciation and amortization

 

 

16,175

 

 

11,670

Share-based compensation

 

 

59

 

 

112

Income tax expense

 

 

(51)

 

 

70

Deferred income tax expense (recovery)

 

 

441

 

 

(2,472)

Interest expense

 

 

297

 

 

200

Interest income

 

 

(728)

 

 

(1,047)

Net change in working capital

 

 

(7,315)

 

 

3,672

Decrease in other long-term assets

 

 

(267)

 

 

(3)

(Decrease) increase in provisions

 

 

(274)

 

 

265

Increase in investment tax credits

 

 

(201)

 

 

(67)

Income tax received

 

 

173

 

 

2,413

Income tax paid

 

 

(485)

 

 

(741)

Interest received

 

 

728

 

 

1,047

Interest paid

 

 

(70)

 

 

(98)

Cash provided by operating activities

 

 

9,833

 

 

11,442

INVESTING ACTIVITIES

 

 

 

 

 

 

Capital expenditures, net

 

 

(1,117)

 

 

(2,727)

Purchase of short-term investments

 

 

(6,083)

 

 

(2,007)

Proceeds from sale of short-term investments

 

 

13,487

 

 

24,098

Deferred development costs

 

 

(12,250)

 

 

(16,057)

Business acquisition

 

 

 

 

(823)

Cash (used in) provided by investing activities

 

 

(5,963)

 

 

2,484

FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from government grants

 

 

98

 

 

221

Principal payments of lease liabilities

 

 

(1,675)

 

 

Repayment of long-term debt

 

 

(271)

 

 

(250)

Repurchase and cancellation of shares

 

 

(109)

 

 

(194)

Dividends paid

 

 

(4,932)

 

 

(4,920)

Issuance of shares through exercised options

 

 

922

 

 

113

Cash used in financing activities

 

 

(5,967)

 

 

(5,030)

Net (decrease) increase in cash and cash equivalents

 

 

(2,097)

 

 

8,896

Effect of change in exchange rates on cash

 

 

(387)

 

 

(96)

Cash and cash equivalents, beginning of period

 

 

19,834

 

 

11,034

Cash and cash equivalents, end of period

 

$

17,350

 

$

19,834

 

Contacts

Vecima Networks
Investor Relations – 250-881-1982

[email protected]

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