- Revenue of $76.2M (+75% YoY); Gross Profit of $36.0M (+65%
YoY); Gross Margin of 47.3%
- Q2 EPS increases to $0.35 from $0.06 YoY; First-half EPS
climbs to $0.76 from $0.10
- Adjusted EBITDA up 113% YoY to $15.8M; First-half Adjusted
EBITDA up 180% to $33.0M
- Q2 Entra Family DAA sales expand 202% YoY to $55.7M
Vecima Networks Inc. (TSX: VCM) today reported financial results
for the three and six months ended December 31, 2022.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions
except percentages, employees, and per share data)
Q2FY23
Q1FY23
Q2FY22
Revenue
$76.2
$73.4
$43.6
Gross Margin
47.3%
45.9%
50.1%
Net Income (Loss)
$8.1
$9.5
$1.5
Earnings (Loss) Per Share1
$0.35
$0.41
$0.06
Adjusted Earnings (Loss) Per
Share1,2,3,4
$0.35
$0.41
$0.06
Adjusted EBITDA2
$15.8
$17.2
$7.4
Cash and Cash Equivalents5
($8.1)
$(2.5)
$10.3
Employees
627
607
497
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 Earnings and Adjusted Earnings
Per Share include non-cash share-based compensation of $0.8 million
or $0.03 per share for the three months ended December 31, 2022,
and $0.1 million or $nil per share for the three months ended
December 31, 2021. The non-cash share-based compensation primarily
reflects certain performance-based vesting thresholds achieved
under the Company’s Performance Share Unit Plan.
4 Earnings and Adjusted Earnings
Per Share include foreign exchange loss of $0.1 million or $nil per
share for the three months ended December 31, 2022, and foreign
exchange loss of $0.1 million or $nil per share for the three
months ended December 31, 2021.
5 Cash and Cash Equivalents is
net of revolving line of credit balance in the Company’s
Consolidated Financial Statements.
“Our second quarter performance exceeded our expectations with
consolidated sales up 75% year-over-year to a new quarterly record
of $76.2 million. Importantly this was also 4% growth over the
high-water mark we achieved of 22.5% sequential growth in the first
quarter of fiscal 2023,” said Sumit Kumar, President and CEO of
Vecima.
“We set a new revenue record for both Entra and the Video and
Broadband Solutions segment as deliveries of our EntraOptical Fiber
Access solutions continued to ramp up. We entered Q2 anticipating
level quarterly revenues as we rebalanced Entra orders following
Q1’s exceptionally strong deliveries across our DAA portfolio.
Adding to our Q2 results was 13% sequential quarterly growth in our
Content Delivery and Storage segment as we supported IPTV network
expansions with a number of existing customers.”
“We paired our strong topline performance with adjusted EBITDA
of $15.8 million and adjusted earnings per share of $0.35, which
were up 113% and 483% year-over-year, respectively. We have now
achieved year-to-date Adjusted EBITDA of $33.0 million and adjusted
earnings per share of $0.76, exceeding in just six months what we
accomplished in all of last year.”
“These results illustrate not just the remarkable demand
momentum building for our next-generation DAA and IPTV solutions,
but also our success in leveraging our financial and supply chain
strengths to successfully and profitably meet our customer needs.
During the second quarter we further bolstered our financial
position with a successful equity raise and financed growth-fueling
working capital that will help us respond to the even stronger
demand profile we see for our Entra DAA and IPTV solutions in the
second half and beyond,” said Mr. Kumar. “We were also very pleased
to see that the response to the equity offering was met with
significant demand leading to the private placement upsizing and
that investors have a clear thesis on our growth strategy and our
responses to market demand and supply chain factors.”
BUSINESS HIGHLIGHTS
Financial and Corporate Highlights
- Achieved a new quarterly revenue record with second quarter
sales climbing 75% to $76.2 million, from $43.6 million in Q2
fiscal 2022
- Gross profit climbed 65% to a record $36.0 million, up from
$21.8 million last year
- EPS and Adjusted EPS increased six times to $0.35 per share,
from $0.06 per share in Q2 fiscal 2022
- Adjusted EBITDA grew 113% to $15.8 million, from $7.4 million
in the prior-year period
- In December, successfully completed a common share offering,
raising gross proceeds of approximately $17.0 million. Proceeds of
the offering were used to support working capital requirements as
Vecima responds to high demand for its next-generation
solutions
- Ended the second quarter in strong financial position with
working capital of $89.1 million at December 31, 2022, compared to
$58.6 million at June 30, 2022
Video and Broadband Solutions (VBS)
- The VBS segment delivered record performance of $62.3 million,
up 129% year-over-year and 2% higher than the exceptionally strong
performance achieved in Q1 fiscal 2023
DAA (Entra Family)
- Deployments of next-generation Entra DAA products rose to a
record $55.7 million, up 202% year-over-year and 5%
quarter-over-quarter as customers continued to increase rollout of
next-generation distributed access architecture
- Key DAA achievements in Q2 fiscal 2023 included:
- An increase in total customer engagements to 101 MSOs
worldwide, from 80 a year earlier. Fifty of these customers are
ordering Entra products, with order sizes increasing as broader DAA
deployment continues
- Customers engaged for cable access now number 57
- Customers engaged for fiber access or both access technologies
now number 44
- Achieved an exceptional quarter for Vecima’s fiber-access DAA
solutions, leveraging supply chain strengths to support scale
rollouts of EntraOptical Fiber Access solutions, particularly for
broadly-funded rural broadband expansions
- Reached a major fiber milestone with a Tier 1 operator in the
US, deploying more than 20,000 10G PON (Passive Optical Network)
ports of Vecima’s Entra Fiber Access portfolio
- VBS services revenues increased 62% YoY and 6%
quarter-over-quarter
Commercial Video (Terrace
Family)
- Generated Commercial Video sales of $6.5 million, as compared
to $8.7 million in Q2 fiscal 2022 and $7.3 million in Q1 fiscal
2023, as customers prepare to transition to next-generation
platforms
- Reached the 25,000-property milestone for Terrace family of
products, which services hotels, enterprises and commercial sites
throughout the Americas
Content Delivery and Storage (CDS)
- Achieved Q2 CDS sales of $12.4 million, a decrease of 17% from
$15.0 million in Q2 fiscal 2022 and an increase of 13% from $11.0
million generated in Q1 fiscal 2023
- Undertook major IPTV expansions with existing customers:
- Grew IPTV deployment with a Tier 2 cable operator in the
Midwestern 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 on the IPTV fabric, while further
migrating from legacy QAM-based video services
- Expanded capacity of IPTV services with a fiber service
provider in the Southeastern U.S. where Vecima’s full MediaScale
portfolio is used as the operator’s flagship video offering to
households and multiple dwelling units
- Undertook major network capacity expansion at a leading fiber
service provider that covers several markets across the United
States with a full suite of IPTV services in multi-tenant and
multi-dwelling communities
- Initiated digital ad insertion (DAI) sales with multiple
customers, paving the way for operators to improve monetization of
IP Linear Services
- Supported the record traffic experienced by operators during
the FIFA World Cup Qatar 2022™
- A major Tier 1 service provider in Latin America achieved
record video streaming viewership and performance during the World
Cup using Vecima’s MediaScale unified streaming video solution
- Introduced a new proactive monitoring system and associated
service, which successfully achieved 100% uptime for all
participating operators during the World Cup
- In collaboration with the Streaming Video Technology Alliance
(SVTA) and the Open Caching Testbed Initiative, completed the
world’s first successful multi-tenant test of an SVTA Open Caching
standards-compliant system using our MediaScale Open CDN
system
Telematics
- Awarded new municipal contract with a British Columbia-based
municipality, resulting in an award of approximately 100 vehicle
subscriptions, including winter operations vehicles
- Achieved best quarter to date for additions of new moveable
asset customers, including adding 12 customers for the NERO asset
tracking platform, over 200 additional subscriptions booked, and
asset tracking-related telematics subscriptions now representing
approximately 7.5% of total subscriptions
- Significantly increased the number of moveable assets being
monitored to over 35,000 units, an over 200% increase in the last
seven quarters
- Achieved gross margin percentage of 67.6%
“Communities and the operators that support them are on a path
to building the fast, reliable, and ubiquitous broadband
connections that will usher in a new generation of networks,
networks that we believe are the very foundation of global
progress. Vecima’s anticipation of this movement along with our
steadfast investments to develop leading portfolios of cable and
fiber access technology and solutions that deliver this very
connectivity are paying dividends, today and tomorrow. With scale
deployment ramping up with multiple customers in parallel, and a
vast pipeline of customer purchase orders and forecasts providing
excellent visibility, we anticipate the strong growth experienced
in the first half will continue to build in the second half of
fiscal 2023 and beyond,” said Mr. Kumar. “We have positioned
ourselves for ongoing success by increasing our investment in
working capital in tandem with market demand, particularly in the
form of raw material and finished goods inventories, to support
this growth.”
“In our Content Delivery and Storage segment, our large base of
IPTV customers is providing an inbuilt platform for growth as
operators begin to initiate IPTV network expansions. While we
continue to anticipate moderate sales growth for this segment in
fiscal 2023, over the medium-to-longer term we see significantly
higher growth potential as IPTV gains momentum and as demand for
our newer open caching solutions continues to build.”
“Overall, we remain highly confident in Vecima’s ability to
capture the major and multi-year opportunities in the fast-growing
DAA and IPTV markets,” 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 March 27, 2023 to shareholders of record as at
February 24, 2023.
CONFERENCE CALL
A conference call and live audio webcast will be held today,
February 9, 2023 at 1 p.m. ET to discuss the Company’s second
quarter results. Vecima’s unaudited interim condensed consolidated
financial statements and management’s discussion and analysis for
the three and six months ended December 31, 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/vecima2023q2.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
second 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: our second quarter performance exceeded our
expectations; we entered Q2 anticipating level quarterly revenues
as we rebalanced Entra orders; these results illustrate not just
the remarkable demand momentum building; we further bolstered our
financial position that will help us respond to the even stronger
demand profile we see for our Entra DAA and IPTV solutions in the
second half and beyond; we were also very pleased to see that the
response to the equity offering was met with significant demand
leading to the private placement upsizing and that investors have a
clear thesis on our growth strategy and our responses to market
demand and supply chain factors; Vecima responds to high demand for
its next-generation solutions; customers are ordering Entra
products, with order sizes increasing as broader DAA deployment
continues; communities and the operators that support them are on a
path to building the fast, reliable, and ubiquitous broadband
connections that will usher in a new generation of networks,
networks that we believe are the very foundation of global
progress; Vecima’s anticipation of this movement along with our
steadfast investments to develop leading portfolios of cable and
fiber access technology and solutions that deliver this very
connectivity are paying dividends, today and tomorrow; with scale
deployment ramping up with multiple customers in parallel, and a
vast pipeline of customer purchase orders and forecasts providing
excellent visibility, we anticipate the strong growth experienced
in the first half will continue to build in the second half of
fiscal 2023 and beyond; we have positioned ourselves for ongoing
success by increasing our investment in working capital in tandem
with market demand, particularly in the form of raw material and
finished goods inventories, to support this growth; our large base
of IPTV customers is providing an inbuilt platform for growth as
operators begin to initiate IPTV network expansions; we continue to
anticipate moderate sales growth for this segment in fiscal 2023;
over the medium-to-longer term we see significantly higher growth
potential as IPTV gains momentum and as demand for our newer open
caching solutions continues to build; we remain highly confident in
Vecima’s ability to capture the major and multi-year opportunities
in the fast-growing DAA and IPTV markets.”
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
December 31, 2022
June 30, 2022
Assets
Current assets
Cash and cash equivalents
$
3,267
$
12,902
Accounts receivable
62,198
49,655
Income tax receivable
177
693
Inventories
92,698
49,608
Prepaid expenses and other current
assets
16,190
7,302
Contract assets
961
1,335
Total current assets
175,491
121,495
Non-current assets
Property, plant and equipment
16,305
16,483
Right-of-use assets
2,746
2,626
Goodwill
15,253
14,813
Intangible assets
80,401
75,917
Other long-term assets
1,335
1,440
Investment tax credits
22,213
23,041
Deferred tax assets
5,106
6,793
Total assets
$
318,850
$
262,608
Liabilities and shareholders’
equity
Current liabilities
Revolving line of credit
$
11,391
$
-
Accounts payable and accrued
liabilities
61,220
48,172
Provisions
619
659
Income tax payable
-
182
Deferred revenue
11,043
12,129
Current portion of long-term debt
2,086
1,782
Total current liabilities
86,359
62,924
Non-current liabilities
Provisions
423
366
Deferred revenue
5,230
4,465
Deferred tax liability
6
6
Long-term debt
14,670
15,115
Total liabilities
106,688
82,876
Shareholders’ equity
Share capital
23,482
7,935
Reserves
3,028
3,141
Retained earnings
184,032
168,923
Accumulated other comprehensive income
(loss)
1,620
(267)
Total shareholders’ equity
212,162
179,732
Total liabilities and shareholders’
equity
$
318,850
$
262,608
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Comprehensive Income
(unaudited - in thousands of Canadian
dollars, except per share amounts)
Three months
Six months
Periods ended December 31,
2022
2021
2022
2021
Sales
$
76,212
$
43,587
$
149,659
$
75,982
Cost of sales
40,167
21,767
79,873
38,460
Gross profit
36,045
21,820
69,786
37,522
Operating expenses
Research and development
10,341
8,352
21,046
16,360
Sales and marketing
6,619
4,554
12,923
8,655
General and administrative
7,522
5,498
13,116
10,184
Share-based compensation
815
65
913
753
Other expense
22
13
43
19
Total operating expenses
25,319
18,482
48,041
35,971
Operating income
10,726
3,338
21,745
1,551
Finance expense
(554)
(46)
(755)
(88)
Foreign exchange (loss) gain
(138)
(111)
1,164
996
Income before income taxes
10,034
3,181
22,154
2,459
Income tax expense
1,895
1,708
4,503
244
Net income
$
8,139
$
1,473
$
17,651
$
2,215
Other comprehensive income
Item that may be subsequently reclassed
to net income
Exchange differences on translating
foreign operations
$
(482)
$
(110)
$
1,887
$
807
Comprehensive income
$
7,657
$
1,363
$
19,538
$
3,022
Net income per share
Basic
$
0.35
$
0.06
$
0.76
$
0.10
Diluted
$
0.35
$
0.06
$
0.76
$
0.10
Weighted average number of common
shares
Shares outstanding – basic
23,312,997
23,076,376
23,208,753
23,065,194
Shares outstanding – diluted
23,341,563
23,110,051
23,237,020
23,102,412
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
-
-
2,215
-
2,215
Other comprehensive income
-
-
-
807
807
Dividends
-
-
(2,538)
-
(2,538)
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
-
753
-
-
753
Balance as at December 31, 2021
$
7,641
$
3,074
$
164,989
$
(291)
$
175,413
Balance as at June 30, 2022
$
7,935
$
3,141
$
168,923
$
(267)
$
179,732
Net income
-
-
17,651
-
17,651
Other comprehensive income
-
-
-
1,887
1,887
Dividends
-
-
(2,542)
-
(2,542)
Common share issuance
15,926
-
-
-
15,926
Shares issued by exercising options
60
(12)
-
-
48
PSUs settled in common shares
1,014
(1,014)
-
-
-
Withholding taxes on PSUs
(1,453)
-
-
-
(1,453)
Share-based payment expense
-
913
-
-
913
Balance as at December 31, 2022
$
23,482
$
3,028
$
184,032
$
1,620
$
212,162
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Cash Flows
(unaudited - in thousands of Canadian
dollars)
Three months
Six months
Periods ended December 31,
2022
2021
2022
2021
OPERATING ACTIVITIES
Net income
$
8,139
$
1,473
$
17,651
$
2,215
Adjustments for non-cash items:
Loss on sale of property, plant and
equipment
18
13
27
18
Depreciation and amortization
4,416
4,142
9,166
8,460
Share-based compensation
815
65
913
753
Income tax expense (recovery)
700
(13)
2,648
481
Deferred income tax expense (recovery)
1,195
1,721
1,855
(237)
Interest expense
557
46
769
96
Interest income
(2)
-
(12)
(8)
Net change in working capital
(26,635)
(5,085)
(51,001)
(13,710)
Increase in other long-term assets
4
(123)
146
(83)
Decrease in provisions
(76)
(679)
(60)
(656)
Increase in investment tax credits
(32)
(33)
(72)
(60)
Income tax paid
(806)
(140)
(776)
(415)
Interest paid
(524)
(9)
(699)
(19)
Interest received
5
2
15
10
Cash provided by (used in) operating
activities
(12,226)
1,380
(19,430)
(3,155)
INVESTING ACTIVITIES
Capital expenditures, net
(364)
(2,036)
(1,251)
(2,956)
Deferred development costs
(5,226)
(3,692)
(10,807)
(7,765)
Cash used in investing
activities
(5,590)
(5,728)
(12,058)
(10,721)
FINANCING ACTIVITIES
Principal repayments of lease
liabilities
(443)
(380)
(822)
(787)
Repayment of long-term debt
(100)
(83)
(167)
(125)
Dividends paid
(2,542)
(2,538)
(2,542)
(2,538)
Proceeds from common share issuance
15,926
-
15,926
-
Issuance of shares through exercised
options
-
-
49
329
Withholding taxes on PSUs
(1,409)
-
(1,453)
(1,073)
Cash provided by (used in) financing
activities
11,432
(3,001)
10,991
(4,194)
Net decrease in cash and cash
equivalents
(6,384)
(7,349)
(20,497)
(18,070)
Effect of change in exchange rates on
cash
748
(227)
(529)
(498)
Cash and cash equivalents, beginning of
year
(2,488)
17,917
12,902
28,909
Cash and cash equivalents, end of year
(1)
$
(8,124)
$
10,341
$
(8,124)
$
10,341
(1) Cash and cash equivalents is net of
the revolving line of credit balance reflected in the Company’s
Consolidated Statements of Financial Position.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230209005315/en/
Vecima Networks Investor Relations - 250-881-1982
invest@vecima.com
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