~ Quarter highlights include strong
revenue growth, cash flow from operations, and new product launches
~
VANCOUVER, CANADA, May 15, 2017 /CNW/ - Avigilon Corporation
("Avigilon" or the "Company") (TSX: AVO), provider of
trusted security solutions, today reported financial results for
the three months ended March 31,
2017. All figures are in United
States ("US") dollars unless otherwise stated.
First Quarter 2017 Highlights
- Revenue of $80.3 million,
compared with $69.9 million in Q1
2016.
- Revenue growth of 15% continues to outpace that of the
industry.
- Strong cash flow from operations of $8.4
million, an increase of $12.5
million over Q1 2016.
- Gross profit* of $40.7 million,
compared with $39.7 million in Q1
2016.
- Strong gross margin percentage* of 51%.
- Adjusted EBITDA* of $9.4 million,
compared with $8.9 million in Q1
2016.
- Diluted Adjusted EPS* of $0.07,
compared with $0.09 in Q1 2016.
- Total operating expenses decreased as a percentage of revenue
compared to Q1 2016.
- Launched version 6 of Avigilon Control Center (ACC) video
management software.
- Launched Avigilon Appearance Search video analytics technology
and announced two upcoming powerful enhancements – Avigilon Face
and Vehicle Appearance Search.
- Continued the expansion of the H4 camera line.
"Marking our 37th consecutive quarter of year over
year revenue growth, in Q1 we increased cash flow from operations
by $12.5 million and reported strong
gross margins," said Alexander
Fernandes, Avigilon's Founder, President, Chief Executive
Officer and Chairman of the Board. "In addition to strong revenue
and operating results, we launched innovative new products and led
the industry with powerful video analytics."
"Subsequent to quarter end, we promoted James Henderson to Chief Operating Officer and
entered into an agreement to sell and lease back our downtown
Vancouver office tower for
expected gross proceeds of CAD $107.5
million. These actions demonstrate our commitment to
unlocking value across the business as we focus on increasing
profitability."
Detailed Financial Review
Avigilon reported Q1 2017 revenue of $80.3 million, an increase of 15% over revenue of
$69.9 million in Q1 2016. On a
constant currency basis, revenue in Q1 2017 grew 16% compared to
the same period in 2016. Gross profit increased $1.0 million from $39.7
million in Q1 2016 to $40.7
million in Q1 2017. The increases in revenue and gross
profit for Q1 2017 compared to Q1 2016 reflect increased unit
volume due to greater customer adoption in existing markets,
further penetration of target regions, the ongoing success of the
H4 camera platform, new product introductions, and broader adoption
of video analytics.
Gains in operating leverage, expressed as a percentage of
revenue, include:
- Sales and marketing expenses decreased from 26% in Q1 2016 to
23% in Q1 2017;
- General and administrative ("G&A") expenses
decreased from 16% in Q1 2016 to 15% in Q1 2017; and
- Total operating expenses decreased from 54% in Q1 2016 to 51%
in Q1 2017.
Management expects the Company's total operating expenses as a
percentage of revenue to continue to decrease year over year as the
Company focuses on increasing profitability, and benefits from
efficiencies arising from previous investments and economies of
scale.
Sales and marketing expenses in Q1 2017 were $18.8 million compared with $17.9 million in Q1 2016. The increase in sales
and marketing expenses for Q1 2017 reflects investments to expand
the Company's global sales and marketing team and initiatives,
which management believes will drive continued revenue growth.
G&A expenses in Q1 2017 were $11.9
million, compared with $11.4
million in Q1 2016. G&A expenses for Q1 2017 were
impacted by non-cash expenses and non-recurring costs.
Research and development ("R&D") expenses, net of
related income tax credits and capitalized development costs, were
$4.5 million in Q1 2017, compared
with $4.0 million in Q1 2016. Gross
R&D expenses were $8.0 million in
Q1 2017 (10% of revenue), compared with $7.1
million in Q1 2016 (10% of revenue). The investment in
R&D is consistent with the Company's ongoing plan to enhance
and expand upon its product offerings and intellectual property
portfolio.
Amortization and depreciation in Q1 2017 were $6.1 million, compared with $4.5 million in Q1 2016. The increase in
amortization and depreciation was primarily due to previous
investments in, among other things, R&D, our patent portfolio,
and our new enterprise resource planning system that was
implemented in 2016.
Total operating expenses for Q1 2017 were $41.4 million, an increase of 9% compared with
$37.8 million in Q1 2016, primarily
due to the respective items noted above.
IFRS net loss for Q1 2017 was $1.0
million, compared with net income of $1.4 million in Q1 2016. IFRS loss per share in
Q1 2017 were $0.02 (basic and
diluted), compared with earnings per share in Q1 2016 of
$0.03 (basic and diluted). Net loss
for Q1 2017 was impacted by increases in non-cash expenses and
non-recurring costs.
Adjusted EBITDA increased to $9.4
million in Q1 2017, primarily due to increased revenue and
gross profit as a result of strong unit volume from the ongoing
success of the H4 camera platform, new product introductions, and
broader adoption of video analytics.
Adjusted Earnings* and diluted Adjusted EPS for Q1 2017 were
$3.2 million and $0.07, respectively, compared with $3.8 million and $0.09, respectively, in Q1 2016. Q1 2017 results
were impacted by increases in non-cash amortization and
depreciation, investments to expand the Company's sales and
marketing initiatives, and investments in R&D.
As at March 31, 2017, Avigilon had
net working capital of $98.6 million,
including cash and cash equivalents of $25.2
million. Net cash from operating activities for Q1 2017 was
$8.4 million, an increase of
$12.5 million compared to Q1
2016.
As at March 31, 2017, the Company
had 43,768,494 common shares issued and outstanding. The weighted
average number of common shares issued and outstanding for the
quarter was approximately 43.7 million basic and approximately 45.0
million diluted. The Company's primary uses of cash-on-hand in Q1
2017 included, but was not limited to, renovations to the Company's
downtown Vancouver office tower
and associated land, additions to sales and demonstration
equipment, and additions to capitalized development costs.
Conference Call
Avigilon has scheduled a conference call to discuss these
results on Monday, May 15, 2017,
beginning at 5:00 p.m. ET
(2:00 p.m. PT). To access the live
call, dial 1-888-231-8191 or +1 647-427-7450, or view the webcast
at http://ir.avigilon.com or http://bit.ly/2ocAvLX. A replay will
be available for 90 days on the Company's website, and for one week
by dialing 1-855-859-2056 or +1 416-849-0833, reference number
9062794.
This news release is qualified in its entirety by the Company's
consolidated financial statements for the three months ended
March 31, 2017 and 2016 and the
associated Management's Discussion & Analysis respecting the
same period, which can be downloaded from the Avigilon website at
http://ir.avigilon.com or from the Company's profile on SEDAR at
http://www.sedar.com.
*Non-IFRS and Additional IFRS Financial Measures
In addition to results reported in accordance with International
Financial Reporting Standards ("IFRS"), Management uses
certain non-IFRS and additional IFRS financial measures as
supplemental indicators of its financial and operating performance.
Non-IFRS financial measures include "Adjusted EBITDA", "Adjusted
Earnings", and "Adjusted Earnings per Share" ("Adjusted
EPS"). Additional IFRS financial measures include "gross
profit" and "gross margin percentage". Management believes that
these supplementary financial measures reflect the Company's
ongoing business in a manner that allows for meaningful
period-to-period comparisons and analysis of business trends.
The Company defines Adjusted EBITDA as earnings before deducting
share-based payments, foreign exchange gain or loss, business
acquisition-related costs, restructuring costs, non-recurring legal
costs, non-recurring lease termination costs, amortization,
depreciation, revaluation gain on contingent consideration
receivable, interest, and taxes. Management believes that Adjusted
EBITDA to be a useful measure, as it provides an indication of the
operational results of our business.
The Company defines Adjusted Earnings as earnings before
share-based payments, foreign exchange gain or loss, business
acquisition-related costs, financing costs, restructuring costs,
non-recurring legal costs, non-recurring lease termination costs,
amortization of acquired intangibles, revaluation gain on
contingent consideration receivable, and related tax effects.
Adjusted EPS is calculated as Adjusted Earnings divided by the
basic or diluted weighted average shares outstanding and does not
represent actual earnings per share attributable to shareholders.
Management believes that the disclosure of Adjusted Earnings and
Adjusted EPS allows investors to evaluate the operational and
financial performance of the Company's ongoing business using the
same evaluation measures that management uses, and is therefore a
useful indicator of the Company's performance or expected
performance of recurring operations. Please refer to the Company's
consolidated financial statements for the three months ended
March 31, 2017 and 2016 and the
reconciliation table within the associated Management's Discussion
& Analysis respecting the same period.
The Company defines gross profit as revenue less cost of sales,
and gross margin percentage as gross profit divided by revenue.
Management considers gross profit and gross margin percentage to be
key measures as they demonstrate the Company's profitability and
its ability to cover its operating expenses from normal
operations.
Non-IFRS and additional IFRS financial measures do not have
standardized meanings prescribed by IFRS, and other companies may
calculate these measures differently. The presentation of non-IFRS
and additional IFRS financial measures is intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS.
About Avigilon
Avigilon Corporation provides trusted security solutions to the
global market. Avigilon designs, develops, and manufactures video
analytics, network video management software and hardware,
surveillance cameras, and access control solutions. To learn more
about Avigilon, visit avigilon.com.
© 2017, Avigilon Corporation. All rights reserved. AVIGILON, the
AVIGILON logo, AVIGILON APPEARANCE SEARCH, AVIGILON CONTROL CENTER,
ACC, and TRUSTED SECURITY SOLUTIONS are trademarks of Avigilon
Corporation.
For further information:
Darren Seed
Vice President, Capital Markets & Communications
T: (604) 629-5182
investors@avigilon.com
Forward-Looking Statements
Certain information and
statements in this news release contain and constitute
forward-looking information or forward-looking statements as
defined under applicable securities laws (collectively,
"forward-looking statements"). Forward-looking statements normally
contain words like 'believe', 'expect', 'anticipate', 'plan',
'intend', 'continue', 'estimate', 'may', 'will', 'should',
'ongoing' and similar expressions, and within this news release
include, without limitation, and any statements
(express or implied) respecting: Avigilon's future
plans, strategies, and objectives; projected growth,
revenues, gross margin percentage, profitability,
expenses, capital expenditures, and earnings; anticipated
enhancement and expansion of product offerings, intellectual
property portfolio, and associated R&D plans; and expected
investment and expansion of infrastructure. Forward-looking
statements are provided for the purpose of presenting
information about management's current expectations and plans
relating to the future and allowing investors and others to get a
better understanding of our anticipated financial position, results
of operations and operating environment. Readers are cautioned that
such information may not be appropriate for other purposes.
Forward-looking statements are not guarantees of future
performance, actions, or developments and are based on
expectations, assumptions and other factors that management
currently believes are relevant, reasonable and appropriate in the
circumstances. The material expectations, assumptions and other
factors used in developing the forward-looking statements set out
herein include or relate to the following, without limitation:
Avigilon will be able to successfully execute its plans, strategies
and objectives; the business and economic conditions
affecting Avigilon's operations will continue substantially in
their current state, including with respect to industry conditions,
general levels of economic activity, regulations, taxes, interest
rates, and foreign exchange rates; there will be no adverse
material changes to Avigilon's key personnel, facilities,
production capabilities, supply chain, sales channels, reseller
network, or contractual arrangements; Avigilon will be able to
leverage its past investments to support growth and focus on
increasing profitability; Avigilon will be able to successfully
manage cash flow, operating expenses, interest expenses, capital
expenditures, working capital, and credit, liquidity, and market
risks; future financing will be available to Avigilon on favorable
terms when and if required; Avigilon will keep pace with or outpace
the growth, direction, and technological advancement in its
industry; industry data and projections obtained from external
sources are accurate and reliable; Avigilon will be able to design,
develop, and manufacture new products and enhance its existing
product lines; Avigilon will be able to enhance and expand its
intellectual property portfolio; Avigilon will continue to generate
revenues from patent licensing; Avigilon will be able to
successfully integrate businesses, intellectual property, products,
and technologies that it may acquire, if any; Avigilon will not
face any material unexpected costs related to product liability or
warranties; Avigilon's protection of its intellectual property
against third party infringement or misappropriation is sufficient
and its products and technology do not materially infringe third
party intellectual property rights; Avigilon will be able to obtain
necessary third party licenses on favorable terms; Avigilon will
not become involved in unexpected material litigation or otherwise
subject to materially adverse claims; Avigilon's plans
respecting the pricing of its products and services will proceed in
substantially their present form; and Avigilon will be able to
achieve greater economies of scale and cost savings from previous
investments in infrastructure and in its global sales and marketing
teams.
Although management believes that the forward-looking
statements are reasonable, actual results could be substantially
different due to the risks and uncertainties associated with and
inherent to Avigilon's business, as more particularly described in
the "Risk Factors" section of Avigilon's Annual Information Form
dated February 28, 2017,
which is available under Avigilon's profile on SEDAR at
www.sedar.com. Additional material risks and uncertainties
applicable to the forward-looking statements set out herein
include, but are not limited to: unexpected changes to accounting
policies, accounting standards or internal controls and procedures
over financial reporting; and unforeseen events, developments or
factors causing any of the aforesaid expectations, assumptions and
other factors ultimately being inaccurate or irrelevant. Although
Avigilon has attempted to identify important factors that could
cause actual actions, events, or results to differ materially from
those contained in any forward-looking statement, there may be
other factors that cause actions, events or results not to be as
anticipated, predicted, estimated, or intended. Many of these
factors are beyond the control of Avigilon. Accordingly, readers
should not place undue reliance on forward-looking
statements.
Avigilon undertakes no obligation to reissue or update any
forward-looking statements as a result of new information or events
after the date hereof except as may be required by law. All
forward-looking statements contained in this news release are
qualified by this cautionary statement.
SOURCE Avigilon Corporation