- Revenue reaches another all-time high of $50.9M (up 60% YoY
and 17% QoQ)
- Gross Profit grows 67% YoY to a record $24.0M
- Gross Margin: 47%, Cash Balance: $10.6M
- Entra sales surge to $30.8M (up 142% YoY and 67% QoQ),
lifting Video and Broadband Solutions sales to $37.0M
- Employee Count Increases 10% QoQ
Vecima Networks Inc. (TSX: VCM) today reported financial results
for the three and nine months ended March 31, 2022.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except
percentages, employees, and per share data)
Q3FY22
Q2FY22
Q3FY21
Revenue
$50.9
$43.6
$31.9
Gross Margin
47.1%
50.1%
45.0%
Net Income
$3.0
$1.5
$2.2
Earnings Per Share1
$0.13
$0.06
$0.10
Adjusted Earnings Per Share1,2,3
$0.13
$0.06
$0.02
Adjusted EBITDA2,3
$8.1
$7.4
$2.0
Cash and Short-term Investments
$10.6
$10.3
$23.0
Employees
548
497
469
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 Adjusted EBITDA, Earnings and Adjusted
Earnings Per Share include foreign exchange loss of $0.54 million
or $(0.02) per share for the three months ended March 31, 2022, and
foreign exchange loss of $0.83 million or $(0.04) per share for the
three months ended March 31, 2021.
“Vecima’s remarkable growth trajectory continued in the third
quarter, with sales surging 60% year-over-year to $50.9 million and
gross profit climbing 67% to $24.0 million – once again, the best
quarterly sales and gross profit results in our history,” said
Sumit Kumar, Vecima’s President and Chief Executive Officer.
“Our record Q3 sales performance was led by our Video and
Broadband Solutions segment and another quarter of rapid growth for
our Entra Distributed Access Architecture (DAA) portfolio. At $30.8
million, Entra quarterly sales were up 142% year-over-year and 67%
quarter-over-quarter, as we drew from all across the comprehensive
Entra portfolio to support multiple customers ramping up broadband
access network deployment. Remarkably, quarterly sales of Entra
products have now surpassed what Vecima was achieving on a total
company-wide sales basis just five quarters ago, and we are still
in the early days of DAA adoption. There is much more to come from
Entra.”
“Our topline results were further supported by a very solid
quarter for our Content Delivery and Storage segment, which grew
sales 43% year-over-year to $12.5 million,” added Mr. Kumar.
“Our third quarter results were achieved in the midst of
unprecedented worldwide supply chain challenges. While we remain
highly effective in managing our supply chain to meet burgeoning
customer demand, higher expediting costs, together with foreign
exchange headwinds and a different product mix, constrained our
gross margin to 47%, slightly below our target range of 48%-52%,
but right in line with our guided short-term expectations as we
navigate the supply chain realities. With topline momentum
providing lift, we were successful in achieving adjusted EBITDA of
$8.1 million and EPS of $0.13 in a challenging environment.”
“We ended the quarter in a very strong financial with cash of
$10.6 million and working capital of $54.9 million. Our significant
financial resources are playing an important role in helping us
build the inventories we need to respond to our rapidly growing
backlog and meet very sharply rising demand for broadband in
partnership with our customers. Importantly, our strong balance
sheet also supports Vecima’s continued investment in innovation,
including our recent industry-leading work in demonstrating
multi-gig speed DOCSIS 4.0 and SVA standards-compliant Open
Caching. Not only are we fuelling the needs of customers today, we
are investing in the preeminent broadband and IPTV networks of
tomorrow,” said Mr. Kumar.
BUSINESS HIGHLIGHTS
Video and Broadband Solutions (VBS)
The VBS segment delivered exceptional growth and revenue
performance of $37.0 million, up 70% year-over-year and 36%
sequentially quarter-over-quarter as customers continued to scale
their transitions to next-generation networks using Vecima’s
platforms.
- DAA (Entra Family)
- Deployments of next-generation Entra DAA products grew to a
record $30.8 million, up $142% year-over-year and 67%
quarter-over-quarter
- Total customer engagements for Entra increased to 83 MSOs
worldwide, from 80 at the end of Q2 fiscal 2022. Forty-five of
these customers have now ordered Entra products, up from 43 last
quarter
- Liberty Latin America, a Tier 1 MSO operating across Latin
America and the Caribbean, chose to deploy Vecima’s Entra Remote
MACPHY DAA solution to deliver enhanced next-generation
ultra-broadband services to its customers
- Bluepeak, a cable operator providing faster, more reliable
internet to customers in the U.S. Midwest, selected Vecima to
provide next-generation Entra Remote MACPHY solutions for its
network
- Additional wins for the Entra Remote MACPHY DAA solution
included a Top 10 MSO in North America, in addition to other
operators
- Also won a new Entra Remote PHY deployment with a Tier 1 MSO in
the APAC region, in addition to continued scale deployment of our
Entra Remote PHY solution with multiple customers
- Continued to accelerate Vecima’s DAA technology lead
- On May 2, 2022, Vecima demonstrated greater than 8.9 Gbps
downstream and 6.2 Gbps upstream in a multi-vendor, real-world
network environment at CableLabs’ 10G Showcase. A first for the
cable industry, this significant achievement leverages the
next-generation DOCSIS 4.0 standard and Vecima’s Entra Remote
MACPHY node technology to provide multi-gig speeds bi-directionally
on an existing Hybrid Fiber Coax (HFC) network, paving the way for
cable operators to offer a true 10G service on existing networks
with a natural and cost-effective upgrade
- Together with Bluepeak, announced industry’s first cloud-based
DAA controller, another step in the journey to a cloud-driven,
intelligent and cost-effective set of virtualized services for
access networks
- Announced flexible MAC architecture (FMA) interoperability with
state-of-the-art Entra Remote MACPHY cable access solution. Vecima
continues to lead the industry in interoperability, which is
crucial to the success of DAA across cable and fiber access
- Continued innovation across the entire cable access, fiber
access, and commercial video product portfolio with the
introduction of several new software releases. The new releases
focus on broadening Vecima’s technology leadership as the Company
rapidly expands its footprint and fast-growing roster of
DAA-deploying customers and magnify the many benefits provided by
Vecima DAA
- Commercial Video (Terrace Family)
- Achieved Commercial Video sales of $6.2 million, as compared to
$8.6 million in Q3 2021 and $8.7 million in Q2 fiscal 2022
- Terrace QAM sales remained strong at $5.0 million as the lead
Tier 1 customer continued its scale hospitality program with the
platform while preparing for migration to TerraceIQ
- Terrace family sales contributed Q3 fiscal 2022 revenue of $1.1
million, compared to $3.8 million in Q2 fiscal 2022 and $1.4
million in Q1 fiscal 2022, as customers continued to transition
from Vecima’s legacy products to next-generation platforms, and in
some cases, completed multi-year densification projects with the
prior-generation solutions
Content Delivery and Storage (CDS)
- Generated strong CDS sales of $12.5 million, up 43% from $8.8
million in Q3 fiscal 2021, but below the record-setting $15.0
million achieved in Q2 fiscal 2022 when many deferred customer
projects started to accelerate
- Continued system expansion with multiple customers as operators
ramp up deployments to reap the benefits of IP video while rolling
out to more subscribers
- Breezeline (formerly Altantic Broadband), a Top 10 U.S. cable
operator, chose MediaScaleX to power its IPTV video delivery
solution and accelerate the next-generation TV experience to its
customers
- Secured four significant IPTV expansions with operators in the
U.S.
- Won an additional new Media ScaleX customer in the southeastern
U.S.
- Demonstrated Vecima’s Streaming Video Alliance (SVA)
standards-compliant Open Caching solution and significantly
progressed an engagement with a globally-leading Tier 1 streaming
customer. By leveraging Open Caching’s immense potential for cable
operators to broadly distribute internet-delivered streaming video
traffic from prominent streaming providers, Vecima is laying the
groundwork for a major shift to enhance the cable industry’s video
monetization model. Vecima can supply a combined technology,
software and business solution, all while materially improving the
quality of experience for viewers
- Extended support for ingest of Ultra-HD 4K high resolution
entertainment content, including live, time-shift and
Video-on-Demand content
- Added support for the latest, state-of-the-art NVMe flash
drives within Vecima’s MediaScaleX Storage solution, supporting
industry-leading speed and recording throughput efficiency per watt
and per dollar
- Shipped MediaScaleX Origin on new, more efficient servers,
further solidifying Vecima’s total cost of ownership advantage
Telematics
- Multiple additional deployments in high-value verticals, such
as municipal government and moveable asset customers
- Added nine new customers for the NERO asset tracking platform,
with the number of moveable assets being monitored rising
significantly to over 20,000 units
“As we move into the fourth quarter, we see continued escalation
of demand for our DAA solutions across both fiber and cable access.
The increasing number of customers ramping to scale deployment,
including those involved in the massive rural 10G broadband
expansion underway in the U.S., is contributing to a rapidly
growing backlog and giving us excellent visibility into future
demand levels for our DAA products. We expect our Entra momentum
and sales pace will continue to build, supported by the massive
capital investment currently being deployed by operators worldwide
as they seek to expand their network capacity and offerings,” added
Mr. Kumar.
“In our Content Delivery and Storage segment, demand for our
IPTV solutions remains robust and we anticipate another solid
quarter in Q4. On a full-year basis, we now anticipate single-digit
revenue growth from this segment in fiscal 2022.”
“We reiterate our caution that global supply chain challenges
have the potential to constrain our revenue growth and put
continued pressure on gross margins in the near-term. We have
significantly increased our inventories of finished goods and raw
material and boosted our investments in expediting working capital
to help us respond to our growing order backlog, and we are
leveraging our strong financial postion and excellent supplier
relationships to ensure we can continue translating demand into
results. This is a tremendously exciting time for Vecima as we
embark on the extraordinary and lengthy runway for growth we see in
the booming 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 June 13, 2022 to shareholders of record as at
May 20, 2022.
CONFERENCE CALL
A conference call and live audio webcast will be held today, May
12, 2022 at 1 p.m. ET to discuss the Company’s third quarter
results. Vecima’s unaudited interim condensed consolidated
financial statements and management’s discussion and analysis for
the three and nine months ended March 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/vecima20220512.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. Learn more at
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
third quarter of fiscal 2022.
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: Vecima’s remarkable growth trajectory
continued in the third quarter, once again, the best quarterly
sales and gross profit results in our history; we are still in the
early days of DAA adoption, there is much more to come from Entra;
our significant financial resources are playing an important role
in helping us build the inventories we need to respond to our
rapidly growing backlog and meet very sharply rising demand for
broadband in partnership with our customers; not only are we
fuelling the needs of customers today, we are investing in the
preeminent broadband and IPTV networks of tomorrow; Vecima is
paving the way for cable operators to offer a true 10G service;
Vecima continues to lead the industry in interoperability, which is
crucial to the success of DAA across cable and fiber access;
continued innovation across the entire cable access, fiber access,
and commercial video product portfolio with the introduction of
several new software releases; the new releases focus on broadening
Vecima’s technology leadership as the Company rapidly expands its
footprint and fast-growing roster of DAA-deploying customers and
magnify the many benefits provided by Vecima DAA; by leveraging
open caching’s immense potential for cable operators to broadly
distribute internet-delivered streaming video traffic from
prominent streaming providers, Vecima is laying the groundwork for
a major shift to enhance the cable industry’s video monetization
model; Vecima can supply a combined technology, software and
business solution, all while materially improving the quality of
experience for viewers; we see continued escalation of demand for
our DAA solutions across both fiber and cable access; the
increasing number of customers ramping to scale deployment is
giving us excellent visibility into future demand levels for our
DAA products; we expect our Entra momentum and sales pace will
continue to build, supported by the massive capital investment
currently being deployed by operators worldwide as they seek to
expand their network capacity and offerings; demand for our IPTV
solutions remains robust and we anticipate another solid quarter in
Q4; on a full-year basis, we now anticipate single digit revenue
growth from this segment in fiscal 2022; we reiterate our caution
that global supply chain challenges have the potential to constrain
our revenue growth and put continued pressure on gross margins in
the near-term; we have significantly increased our inventories of
finished goods and raw material and boosted our investments in
expediting working capital to help us respond to our growing order
backlog, and we are leveraging our strong financial position and
excellent supplier relationships to ensure we can continue
translating demand into results; this is a tremendously exciting
time for Vecima as we embark on the extraordinary and lengthy
runway for growth we see in the booming 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 23, 2021, 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
March 31, 2022
June 30, 2021
Assets
Current assets
Cash and cash equivalents
$
10,628
$
28,909
Accounts receivable
53,785
28,784
Income tax receivable
919
414
Inventories
35,967
15,578
Prepaid expenses
7,718
3,497
Contract assets
975
516
Total current assets
109,992
77,698
Non-current assets
Property, plant and equipment
15,968
13,854
Right-of-use assets
2,583
3,660
Goodwill
14,601
14,542
Intangible assets
75,425
72,224
Other long-term assets
1,415
1,267
Investment tax credits
24,093
24,344
Deferred tax assets
6,987
7,143
Total assets
$
251,064
$
214,732
Liabilities and shareholders’
equity
Current liabilities
Accounts payable and accrued
liabilities
$
39,331
$
22,259
Provisions
658
1,439
Income tax payable
32
454
Deferred revenue
13,451
7,137
Current portion of long-term debt
1,646
1,617
Total current liabilities
55,118
32,906
Non-current liabilities
Provisions
392
397
Deferred revenue
3,890
2,398
Deferred tax liability
4
4
Long-term debt
15,116
4,107
Total liabilities
74,520
39,812
Shareholders’ equity
Share capital
7,765
7,299
Reserves
3,111
3,407
Retained earnings
166,709
165,312
Accumulated other comprehensive loss
(1,041)
(1,098)
Total shareholders’ equity
176,544
174,920
Total liabilities and shareholders’
equity
$
251,064
$
214,732
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Comprehensive Income (Loss)
(unaudited – in thousands of Canadian
dollars, except per share amounts)
Three months
Nine months
Periods ended March 31,
2022
2021
2022
2021
Sales
$
50,872
$
31,861
$
126,854
$
88,857
Cost of Sales
26,914
17,535
65,374
47,187
Gross Profit
23,958
14,326
61,480
41,670
Operating expenses
Research and development
8,796
7,520
25,156
20,829
Sales and marketing
4,682
3,644
13,337
10,095
General and administrative
6,083
4,357
16,267
13,610
Share-based compensation
64
267
817
1,716
Other expense (income)
215
(50)
234
(50)
Total operating expenses
19,840
15,738
55,811
46,200
Operating income (loss)
4,118
(1,412)
5,669
(4,530)
Finance (expense) income
(82)
(45)
(170)
120
Foreign exchange (loss) gain
(541)
(830)
455
(2,269)
Income (loss) before income
taxes
3,495
(2,287)
5,954
(6,679)
Income tax expense (recovery)
505
(2,692)
749
(3,059)
Net income (loss) from continuing
operations
2,990
405
5,205
(3,620)
Net income from discontinued
operations
-
1,784
-
1,854
Net income (loss)
$
2,990
$
2,189
$
5,205
$
(1,766)
Other comprehensive (loss)
income
Item that may be subsequently reclassed
to net income
Exchange differences on translating
foreign operations
(750)
(650)
57
(2,800)
Comprehensive income (loss)
$
2,240
$
1,539
$
5,262
$
(4,566)
Net income (loss) per share
Continuing operations - basic
$
0.13
$
0.02
$
0.23
$
(0.16)
Discontinued operations - basic
0.00
0.08
0.00
0.08
Total basic net income (loss) per
share
$
0.13
$
0.10
$
0.23
$
(0.08)
Continuing operations – diluted
$
0.13
$
0.02
$
0.23
$
(0.16)
Discontinued operations – diluted
0.00
0.08
0.00
0.08
Total diluted net income (loss) per
share
$
0.13
$
0.10
$
0.23
$
(0.08)
Weighted average number of common
shares
Shares outstanding - basic
23,080,725
22,867,226
23,070,328
22,806,145
Shares outstanding - diluted
23,116,959
22,905,761
23,107,218
22,806,145
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Change in Equity
(unaudited – in thousands of Canadian
dollars)
Share capital
Reserves
Retained earnings
Accumulated other
comprehensive (loss) income
Total
Balance as at June 30, 2020
$
3,161
$
3,838
$
170,665
$
2,098
$
179,762
Net loss
-
-
(1,766)
-
(1,766)
Other comprehensive loss
-
-
-
(2,800)
(2,800)
Dividends
-
-
(3,758)
-
(3,758)
Shares issued by exercising options
3,066
(793)
-
-
2,273
PSUs settled in common shares
713
-
-
-
713
Withholding taxes on PSUs
1,797
(2,564)
(767)
Share-based payment expense
-
1,716
-
-
1,716
Balance as at March 31, 2021
$
8,737
$
2,197
$
165,141
$
(702)
$
175,373
Balance as at June 30, 2021
$
7,299
$
3,407
$
165,312
$
(1,098)
$
174,920
Net income
-
-
5,205
-
5,205
Other comprehensive income
-
-
-
57
57
Dividends
-
-
(3,808)
-
(3,808)
Shares issued by exercising options
563
(137)
-
-
426
PSUs settled in common shares
976
(976)
-
-
-
Withholding taxes on PSUs
(1,073)
-
-
-
(1,073)
Share-based payment expense
-
817
-
-
817
Balance as at March 31, 2022
$
7,765
$
3,111
$
166,709
$
(1,041)
$
176,544
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Cash Flows
(unaudited – in thousands of Canadian
dollars)
Three months
Nine months
Periods ended March 31,
2022
2021
2022
2021
OPERATING ACTIVITIES
Net income (loss) from continuing
operations
$
2,990
$
405
$
5,205
$
(3,620)
Adjustments for non-cash items:
Loss (Gain) on sale of property, plant and
equipment
174
(40)
192
(32)
Depreciation and amortization
4,303
3,891
12,763
11,174
Share-based compensation
64
267
817
1,716
Income tax expense (recovery)
497
(125)
978
(471)
Deferred income tax (recovery) expense
8
(2,567)
(229)
(2,588)
Interest expense
89
56
185
169
Interest income
-
(10)
(8)
(157)
Net change in working capital
(11,349)
2,111
(25,059)
1,084
Decrease (Increase) in other long-term
assets
3
175
(80)
(119)
Increase in provisions
(124)
(147)
(780)
(104)
Increase in investment tax credits
(46)
(42)
(106)
(112)
Income tax received
-
-
164
174
Income tax paid
(248)
(252)
(827)
(746)
Interest received
-
9
10
157
Interest paid
(55)
(3)
(74)
(22)
Cash provided by discontinued
operations
(190)
482
(190)
651
Cash provided by (used in) operating
activities
(3,884)
4,210
(7,039)
7,154
INVESTING ACTIVITIES
Capital expenditures, net
(1,584)
(979)
(4,540)
(2,261)
Purchase of short-term investments
-
(154)
-
(295)
Proceeds from sale of short-term
investments
-
10,039
-
17,460
Deferred development costs
(5,129)
(3,845)
(12,894)
(10,916)
Business acquisition
-
530
-
(5,871)
Cash (used in) discontinued operations
-
2,533
-
2,323
Cash (used in) provided by investing
activities
(6,713)
8,124
(17,434)
440
FINANCING ACTIVITIES
Principal repayments of lease
liabilities
(421)
(352)
(1,208)
(1,177)
Repayment of long-term debt
(63)
(63)
(188)
(188)
Dividends paid
(1,270)
(1,258)
(3,808)
(3,758)
Proceeds from long-term debt
12,191
-
12,191
-
Proceeds from issuing shares
-
713
-
713
Issuance of shares through exercised
options
97
40
426
3,023
Withholding taxes on performance share
units
-
-
(1,073)
(750)
Cash used in discontinued operations
-
(22)
-
(64)
Cash used in financing activities
10,534
(942)
6,340
(2,201)
Net (decrease) increase in cash and cash
equivalents
(63)
11,392
(18,133)
5,393
Effect of change in exchange rates on
cash
350
723
(148)
241
Cash and cash equivalents, beginning of
period
10,341
10,869
28,909
17,350
Cash and cash equivalents, end of
period
$
10,628
$
22,984
$
10,628
$
22,984
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220512005358/en/
Vecima Networks Investor Relations - 250-881-1982
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