- Revenue continues to climb to a record $73.4M, up 127% YoY
and 22% QoQ
- Record Adjusted EBITDA of $17.2M, up 296% YoY and 55%
QoQ
- EPS of $0.41 up 14 times YoY and 156% QoQ
- Entra Family DAA sales further rise to $53.0M, up 192% YoY
and 32% QoQ
- CDS segment sales up 63% YoY and 19% QoQ
Vecima Networks Inc. (TSX: VCM) today reported financial results
for the three months ended September 30, 2022.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except
percentages, employees, and per share data)
Q1FY23
Q4FY22
Q1FY22
Revenue
$73.4
$60.0
$32.4
Gross Margin
45.9%
47.5%
48.5%
Net Income
$9.5
$3.5
$0.7
Earnings Per Share1
$0.41
$0.16
$0.03
Adjusted Earnings Per Share1,2,3,4,5
$0.41
$0.19
$0.03
Adjusted EBITDA2
$17.2
$11.1
$4.3
Cash and Cash Equivalents6
$(2.5)
$12.9
$17.9
Employees
607
592
492
1 Based on weighted average number of
shares outstanding.
2 Adjusted 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.
3 Starting in Q4 fiscal 2019, we have
changed our definition and calculation of Adjusted Earnings Per
Share. For a reconciliation of Adjusted Earnings (Loss) Per Share,
investors should refer to Vecima’s Management’s Discussion and
Analysis for the first quarter of fiscal 2023.
4 Adjusted Earnings Per Share includes
non-cash share-based compensation of $0.1 million or $nil per share
for the three months ended September 30, 2022. The non-cash
share-based compensation primarily reflects certain
performance-based vesting thresholds achieved under the Company’s
Performance Share Unit Plan.
5 Adjusted Earnings Per Share includes
foreign exchange gain of $1.3 million or $0.06 per share for the
three months ended September 30, 2022.
6 Cash and Cash Equivalents includes bank
overdraft
“Fiscal 2023 got off to an exceptional start as record high
demand for our next-generation Entra DAA products, together with
strong performance across all of our product families, drove the
best quarterly top-line and Adjusted EBITDA results in Vecima’s
history,” said Sumit Kumar, Vecima’s President and Chief Executive
Officer. “Consolidated sales heightened again, to $73.4 million, a
year-over-year gain of 127%, and we paired this with all-time best
Adjusted EBITDA of $17.2 million and strong earnings per share of
$0.41.”
“In our Video and Broadband Solutions (VBS) segment, we
comprehensively met the needs of Tier 1 customers undertaking
larger-scale DAA deployments to achieve a near tripling of Entra
sales year-over-year. This growth was even higher than expected and
reflects not only the timing of our customers’ DAA rollouts, but
our own success in leveraging our inventory investments and supply
chain strengths to address our customers’ pressing needs for fiber
and cable access rollouts. Adding to our success was year-over-year
growth in Commercial Video sales, which together with our record
Entra performance, contributed to VBS segment sales climbing 151%
to a remarkable $61.0 million year-over-year.”
“Our Content Delivery and Storage segment also turned in strong
performance with first quarter sales growing 63% year-over-year as
we added a new customer for our IPTV and Video on Demand products,
carried out expansions with existing customers, and benefited from
favorable order timing as compared to last year.”
“We are proud of our first quarter results and the tremendous
effort put in by Vecima’s teams to respond to our customers’
rollout plans. While we anticipate a balancing of Entra shipping
growth across the first two quarters following the record
deliveries we achieved in Q1, including some pull-ins to support
customers, we are on track to meet or exceed our expectations for
significant Entra revenue growth in fiscal 2023 as DAA deployments
continue to gain momentum,” said Mr. Kumar.
BUSINESS HIGHLIGHTS
Financial and Corporate Highlights
- Achieved a new quarterly sales record with first quarter sales
climbing 127% to $73.4 million, from $32.4 million in Q1 fiscal
2022
- Gross profit increased 115% to $33.7 million, up from $15.7
million last year
- Adjusted EBITDA grew 296% to a record $17.2 million, from $4.3
million in the prior-year period
- EPS and Adjusted EPS increased 14 times to $0.41 per share,
from $0.03 per share in Q1 fiscal 2022
- Ended the first quarter in strong financial position with
working capital of $66.8 million at September 30, 2022, compared to
$58.6 million at June 30, 2022
Video and Broadband Solutions (VBS)
- Generated exceptional segment sales growth with Q1 VBS sales
climbing 151% to $61.0 million year-over-year and 23%
quarter-over-quarter from the $49.4 million in Q4 fiscal 2022
DAA (Entra Family)
- Deployments of next-generation Entra DAA products rose 192%
year-over-year to $53.0 million and 32% to $40.0 million
quarter-over-quarter
- Notable DAA achievements in Q1 fiscal 2023 included:
- An increase in total customer engagements to 95 MSOs worldwide,
from 77 a year earlier. Forty-nine of these customers are ordering
Entra products, with order sizes increasing as broader DAA
deployment is continuing
- Customers engaged for cable access now number 57
- Customers engaged for fiber access or both access technologies
now number 38
- Significant market adoption of Vecima’s next-generation fiber
and cable access solutions with deployments at eight of the twelve
largest cable operators in North America. The Vecima DAA solutions
being deployed by these top operators include Remote PHY and Remote
MACPHY cable access nodes and 10G-EPON shelf and Remote OLT
(Optical Line Terminal) fiber access
- Continued to hold the majority market share, globally, for
fiber-to-the-home (FTTH) 10G-EPON Remote OLT and DAA Remote MACPHY
nodes
- Expanded Vecima’s PON portfolio with the launch of the Entra
EXS1610 All-PON 10G shelf solution, which broadly supports widely
deployed PON standards including both XGS-PON and 10G-EPON. This
new platform enables service providers to shorten the time to
market for fiber- to-the-home solutions and provides Vecima with
access to a vast new addressable market valued at close to $2
billion globally
- Demonstrated 10G-capable multi-gigabit symmetrical speed DOCSIS
4.0 in partnership with a leading global Tier 1 operator. This
multi-vendor demonstration, which showcased an extension to 1.8 GHz
cable frequencies, highlighted the massive capacity available
through incremental upgrades to the cable access network with DAA
nodes
- Announced next-generation Remote PHY Device (RPD), the ERM322
module, a fully interoperable Remote PHY solution available for
both Vecima’s leading cable access platforms and to extend the life
of widely deployed, third-party cable access nodes
Commercial Video (Terrace Family)
- Grew Q1 Commercial Video sales by 19% to $7.3 million, from
$6.1 million in Q1 fiscal 2022
- Grew Terrace family sales to $3.0 million in Q1, from $1.4
million in Q1 fiscal 2022
- Generated Terrace QAM sales of $4.3 million in Q1 fiscal 2023,
as compared to $4.8 million in Q1 fiscal 2022
- Launched new Community Cache solution combining MediaScale and
Terrace products to empower operators to efficiently increase
bandwidth for data services, utilize the latest IPTV user
interfaces, and support legacy video delivery, particularly suited
to use cases such as multi-dwelling units. Using the Community
Cache solution, a live linear broadcast IPTV channel only has to be
delivered from the network once rather than for each individual
viewer, saving considerable network bandwidth
Content Delivery and Storage (CDS)
- Grew CDS sales to $11.0 million in Q1 fiscal 2023, from $6.8
million in Q1 fiscal 2022 and $9.2 million in Q4 fiscal 2022
- Achieved an additional telco win for IPTV linear and Video on
Demand (VOD)
- Began Phase 2 expansion of IPTV deployment with a Tier 2 telco
provider in the U.S., broadening the network’s footprint to give a
larger subscriber base access to state-of-the-art, live, on-demand,
and cloud DVR streaming services
- Continued coverage expansion with a large Tier 1 customer in
CALA, with MediaScale solutions now deployed across nine countries
in the customer’s network
- Announced Blue Stream Fiber will deploy Vecima community cache
solution with MediaScale MicroCache to help reclaim video bandwidth
to fuel broadband speeds
- Released Origin 5.1, increasing redundancy and resiliency
options for deploying linear services, broadening support for
Multi-DRM scenarios, and expanding support for service providers
looking to increase audio profiles available with their payTV
content
- Released Cache 6.0 providing support for linear dynamic ad
insertion, increasing cache efficiency for Common Encryption (CENC)
use cases, and expanding deployment options for public and private
cloud scenarios
Telematics
- Generated additional deployments in high-value verticals,
including municipal government and moveable asset customers
- Achieved our best quarter to date for additions of new moveable
asset customers, adding 12 new subscribers to the NERO asset
tracking platform, and significantly increasing the number of
moveable assets being monitored to over 28,000 units
- Achieved strong gross margin percentage of 66.1%
“Vecima’s outlook remains extremely compelling,” added Mr.
Kumar. “In the DAA market, we are already global leaders in the
10G-EPON Remote OLT and DAA Remote MACPHY node categories. We
expect demand for our products, as well as our broader portfolio of
Entra DAA cable and fiber access solutions, will continue to
escalate as our customers ramp scale deployment and newer customers
transition to field deployment. Simultaneously, we are positioning
to lead the next phase of DAA expansion with our significant
advances in 10G-capable DOCSIS 4.0.”
“In our Content Delivery and Storage segment, demand for our
IPTV and open caching solutions continues to build. We anticipate
moderate growth for the CDS segment in fiscal 2023, with higher
growth potential over the medium-to-longer term as IPTV gains
momentum and as our newer open caching solutions become an
important new driver of CDS performance.”
“We reiterate our caution that global supply chain challenges
could continue to constrain or impact our revenue growth. Higher
expediting costs related to the supply chain challenges could also
impact gross margin performance as we experienced in the first
quarter. We are maintaining higher-than-normal inventories of
finished goods and raw material to address these challenges and
have increased our investment in working capital in support of this
strategy,” said 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 December 19, 2022 to shareholders of record as
at November 25, 2022.
CONFERENCE CALL
A conference call and live audio webcast will be held today,
November 10, 2022 at 2 p.m. ET to discuss the Company’s first
quarter results. Vecima’s unaudited interim condensed consolidated
financial statements and management’s discussion and analysis for
the three months ended September 30, 2022 are available under the
Company’s profile at www.SEDAR.com, and at
https://vecima.com/investor-relations/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/vecima2023q1.html and will be
archived on the Vecima website at
https://vecima.com/investor-relations/earnings-call-archive/
About Vecima Networks
Vecima Networks Inc. (TSX: VCM) is leading the global evolution
to the multi-gigabit, content-rich networks of the future. Our
talented people deliver future-ready software, services, and
integrated platforms that power broadband and video streaming
networks, monitor and manage transportation, and transform
experiences in homes, businesses, and everywhere people connect. We
help our customers evolve their networks with cloud-based solutions
that deliver ground-breaking speed, superior video quality, and
exciting new services to their subscribers. There is power in
connectivity – it enables people, businesses, and communities to
grow and thrive. Learn more at www.vecima.com.
Adjusted EBITDA and Adjusted Earnings (Loss) Per
Share
Adjusted EBITDA and Adjusted Earnings (Loss) 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 (Loss) 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 (Loss) Per Share, investors should
refer to Vecima’s Management’s Discussion and Analysis for the
first quarter of fiscal 2023.
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 comprehensively met the needs of Tier 1
customers undertaking larger-scale DAA deployments; this growth was
even higher than expected and reflects not only the timing of our
customers’ DAA rollouts, but our own success in leveraging our
inventory investments and supply chain strengths to address our
customers’ pressing needs for fiber and cable access rollouts;
while we anticipate a balancing of Entra shipping growth across the
first two quarters, following the record deliveries we achieved in
Q1, including some pull-ins to support customers, we are on track
to meet or exceed our expectations for significant Entra revenue
growth in fiscal 2023 as DAA deployments continue to gain momentum;
Vecima’s outlook remains extremely compelling; we expect demand for
our products, as well as our broader portfolio of Entra DAA cable
and fiber access solutions, will continue to escalate as our
customers ramp scale deployment and newer customers transition to
field deployment; we are positioning to lead the next phase of DAA
expansion with our significant advances in 10G-capable DOCSIS 4.0;
demand for our IPTV and open caching solutions continues to build;
we anticipate moderate growth for the CDS segment in fiscal 2023,
with higher growth potential over the medium-to-longer term as IPTV
gains momentum and as our newer open caching solutions become an
important new driver of CDS performance; we reiterate our caution
that global supply chain challenges could continue to constrain or
impact our revenue growth; higher expediting costs related to the
supply chain challenges could also impact gross margin performance
as we experienced in the first quarter; we are maintaining
higher-than-normal inventories of finished goods and raw material
to address these challenges and have increased our investment in
working capital in support of this strategy.
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 22, 2022, 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.
Interim Condensed Consolidated
Statements of Financial Position
(unaudited – in thousands of Canadian
dollars)
As at
September 30, 2022
June 30, 2022
Assets
Current assets
Cash and cash equivalents
$
4,344
$
12,902
Accounts receivable
64,179
49,655
Income tax receivable
426
693
Inventories
66,635
49,608
Prepaid expenses and other current
assets
14,366
7,302
Contract assets
1,161
1,335
Total current assets
151,111
121,495
Non-current assets
Property, plant and equipment
16,861
16,483
Right-of-use assets
3,027
2,626
Goodwill
15,363
14,813
Intangible assets
79,164
75,917
Other long-term assets
1,332
1,440
Investment tax credits
21,374
23,041
Deferred tax assets
6,321
6,793
Total assets
$
294,553
$
262,608
Liabilities and shareholders’
equity
Current liabilities
Bank overdraft
$
6,832
$
-
Accounts payable and accrued
liabilities
62,400
48,172
Provisions
709
659
Income tax payable
-
182
Deferred revenue
10,991
12,129
Current portion of long-term debt
2,152
1,782
Dividend payable
1,271
-
Total current liabilities
84,355
62,924
Non-current liabilities
Provisions
377
366
Deferred revenue
4,278
4,465
Deferred tax liability
6
6
Long-term debt
15,092
15,115
Total liabilities
104,108
82,876
Shareholders’ equity
Share capital
8,001
7,935
Reserves
3,178
3,141
Retained earnings
177,164
168,923
Accumulated other comprehensive income
(loss)
2,102
(267)
Total shareholders’ equity
190,445
179,732
Total liabilities and shareholders’
equity
$
294,553
$
262,608
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Comprehensive Income (Loss)
(unaudited - in thousands of Canadian
dollars, except per share amounts)
Three months ended September
30,
2022
2021
Sales
$
73,447
$
32,395
Cost of sales
39,706
16,693
Gross profit
33,741
15,702
Operating expenses
Research and development
10,705
8,008
Sales and marketing
6,304
4,101
General and administrative
5,594
4,686
Share-based compensation
98
688
Other expense
21
6
Total operating expenses
22,722
17,489
Operating income (loss)
11,019
(1,787)
Finance expense
(201)
(42)
Foreign exchange gain
1,302
1,107
Income (loss) before income
taxes
12,120
(722)
Income tax expense (recovery)
2,608
(1,464)
Net income
$
9,512
$
742
Other comprehensive income
Item that may be subsequently reclassed
to net income
Exchange differences on translating
foreign operations
$
2,369
$
916
Comprehensive income
$
11,881
$
1,658
Net income per share
Basic
$
0.41
$
0.03
Diluted
$
0.41
$
0.03
Weighted average number of common
shares
Shares outstanding – basic
23,104,507
23,054,011
Shares outstanding – diluted
23,132,401
23,095,102
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Changes in Equity
(unaudited - in thousands of Canadian
dollars)
Share capital
Reserves
Retained earnings
Accumulated other
comprehensive (loss) income
Total
Balance as at June 30, 2021
$
7,299
$
3,407
$
165,312
$
(1,098)
$
174,920
Net income
-
-
742
-
742
Other comprehensive income
-
-
-
916
916
Dividends
-
-
(1,269)
-
(1,269)
Shares issued by exercising options
439
(110)
-
-
329
PSUs settled in common shares
976
(976)
-
-
-
Withholding taxes on PSUs
(1,073)
-
-
-
(1,073)
Share-based payment expense
-
688
-
-
688
Balance as at September 30,
2021
$
7,641
$
3,009
$
164,785
$
(182)
$
175,253
Balance as at June 30, 2022
$
7,935
$
3,141
$
168,923
$
(267)
$
179,732
Net income
-
-
9,512
-
9,512
Other comprehensive income
-
-
-
2,369
2,369
Dividends
-
-
(1,271)
-
(1,271)
Shares issued by exercising options
61
(12)
-
-
49
PSUs settled in common shares
49
(49)
-
-
-
Withholding taxes on PSUs
(44)
-
-
-
(44)
Share-based payment expense
-
98
-
-
98
Balance as at September 30,
2022
$
8,001
$
3,178
$
177,164
$
2,102
$
190,445
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Cash Flows
(unaudited – in thousands of Canadian
dollars)
Three months ended September
30,
2022
2021
OPERATING ACTIVITIES
Net income
$
9,512
$
742
Adjustments for non-cash items:
Loss on sale of property, plant and
equipment
9
5
Depreciation and amortization
4,750
4,318
Share-based compensation
98
688
Income tax expense
1,948
494
Deferred income tax expense (recovery)
660
(1,958)
Interest expense
212
50
Interest income
(10)
(8)
Net change in working capital
(24,366)
(8,625)
Increase in other long-term assets
142
40
Decrease in provisions
16
23
Increase in investment tax credits
(40)
(27)
Income tax received (paid)
30
(275)
Interest received
10
8
Interest paid
(175)
(9)
Cash used in operating
activities
(7,204)
(4,534)
INVESTING ACTIVITIES
Capital expenditures, net
(887)
(920)
Deferred development costs
(5,581)
(4,074)
Cash used in investing
activities
(6,468)
(4,994)
FINANCING ACTIVITIES
Principal repayments of lease
liabilities
(379)
(407)
Repayment of long-term debt
(67)
(42)
Issuance of shares through exercised
options
49
329
Withholding taxes on PSUs
(44)
(1,073)
Cash used in financing
activities
(441)
(1,193)
Net decrease in cash and cash
equivalents
(14,113)
(10,721)
Effect of change in exchange rates on
cash
(1,277)
(271)
Cash and cash equivalents, beginning of
year
12,902
28,909
Cash and cash equivalents, end of year
(1)
$
(2,488)
$
17,917
(1) Cash and cash equivalents includes
bank overdraft
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221110005414/en/
Vecima Networks Investor Relations - 250-881-1982
invest@vecima.com
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