- Revenue of $78.3M (+54% YoY); Gross Profit of $34.1M (+42%
YoY); Gross Margin of 43.5%
- Q3 EPS increases to $0.18 from $0.13 YoY; Nine-month EPS
climbs to $0.94 from $0.23
- Adjusted EBITDA up 44% YoY to $11.7M; Nine-month Adjusted
EBITDA up 125% to $44.7M
- Q3 Entra Family DAA sales expand 104% YoY to $62.7M
Vecima Networks Inc. (TSX: VCM) today reported financial results
for the three and nine months ended March 31, 2023.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except
percentages, employees, and per share data)
Q3FY23
Q2FY23
Q3FY22
Revenue
$78.3
$76.2
$50.9
Gross Margin
43.5%
47.3%
47.1%
Net Income (Loss)
$4.5
$8.1
$3.0
Earnings (Loss) Per Share1
$0.18
$0.35
$0.13
Adjusted Earnings (Loss) Per
Share1,2,3,4
$0.18
$0.35
$0.13
Adjusted EBITDA2
$11.7
$15.8
$8.1
Cash and Cash Equivalents5
$(12.3)
$(8.1)
$10.6
Employees
642
627
548
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 $0.3 million or $0.01
per share for the three months ended March 31, 2023, and $0.1
million or $nil per share for the three months ended March 31,
2022. 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 gain (loss) of $0.2 million or $nil per
share for the three months ended March 31, 2023, and foreign
exchange gain (loss) of $(0.5) million or $(0.02) per share for the
three months ended March 31, 2022.
5 Cash and Cash Equivalents is net of
revolving line of credit balance in the Company’s Consolidated
Financial Statements.
“Our Q3 results represent another new high watermark in sales
after two straight years of rapid growth that have seen our
run-rate revenues more than double. Third quarter consolidated
sales climbed 54% year-over-year to a new high of $78.3 million.
Our results have continued to underscore the broad and enduring
strength of our market position and the depth and scope of our
next-generation DAA and IPTV product portfolios as we respond to
the wide-ranging needs of a large and growing base of global
customers,” said Sumit Kumar, President and CEO of Vecima.
“In our Video and Broadband Solutions segment, our highest
quarter of deliveries yet for EntraOptical products, together with
robust sales of our Entra Remote Phy nodes, helped drive new sales
heights for both Entra and the Video Broadband Solutions segment as
a whole. Our CDS segment also turned in a solid performance with
IPTV expansions with existing customers contributing to segment
revenues of $11.8 million.”
“On the bottom line, we grew Adjusted EBITDA 44% year-over-year
and achieved quarterly EPS of $0.18 while continuing to manage the
ongoing effects of a shifting landscape of supply chain challenges,
including elevated levels of freight, logistics costs and
inventory. Our gross margin percentage reflects these impacts in
conjunction with a product mix shift to the more volume-oriented
margin profile of some of our Cable Access products.”
“Going forward, we continue to expect our next-generation DAA
cable and fiber access products will be a major driver of further
long-term growth for Vecima. We also anticipate full-year FY23
revenue will well exceed the 50% growth we achieved in FY22.”
“However, we note that the macro environment is in transition,
from the very recent major constraints in the supply chain, to the
current landscape, where vendors that have managed the supply chain
highly effectively, like Vecima, have fulfilled strong deliveries
of products to fuel customers’ ongoing major network upgrade
projects. Over the coming quarters we anticipate that customers’
focus will temporarily shift from building up their product
pipelines, to managing their DAA rollout logistics and working
through existing inventories. This is likely to lead to short-term
softness in product deliveries to customers prior to an expected
return to growth driven by new programs and deployments, as well as
a normalization of customer demand, in calendar 2024.”
“We continue to be focused on navigating the current supply and
inventory dynamics, while leveraging our unparalleled portfolio of
cable and fiber access solutions, our strong working capital
position to support customer deployments, and our growing global
reach to capture additional market share and expand our lead in the
vast new DAA market. We are still in the early stages of broad
industry DAA adoption and continue to see a significant long-term
growth runway ahead for Vecima,” said Mr. Kumar.
“In our Content Delivery and Storage segment, demand for our
IPTV and open caching solutions continues to increase as IPTV
customers initiate network expansions. We anticipate a strong
finish to fiscal 2023, culminating in low double-digit
year-over-year sales growth for this segment. We continue to see
strong future growth potential as IPTV gains momentum and our newer
caching solutions become an important driver of CDS
performance.”
“Overall, we are highly confident in Vecima’s ability to capture
the major and multi-year opportunities in the compelling DAA and
IPTV markets over the long-term,” 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 19, 2023 to shareholders of record as at
May 26, 2023.
BUSINESS HIGHLIGHTS
Financial and Corporate Highlights
- Achieved a new quarterly revenue record with third quarter
sales climbing 54% to $78.3 million, from $50.9 million in Q3
fiscal 2022
- Gross profit climbed 42% to $34.1 million, up from $24.0
million in Q3 fiscal 2022
- Grew EPS and Adjusted EPS to $0.18 per share, from $0.13 per
share in Q3 fiscal 2022
- Adjusted EBITDA climbed 44% to $11.7 million, from $8.1 million
in the prior-year period
- Ended the third quarter in strong financial position with
working capital of $91.1 million at March 31, 2023, compared to
$58.6 million at June 30, 2022
Video and Broadband Solutions (VBS)
- The VBS segment delivered record performance of $64.8 million,
up 75% year-over-year and 4% higher than the exceptionally strong
performance achieved in Q2 fiscal 2023
DAA (Entra Family)
- Deployments of next-generation Entra DAA products rose to a
record $62.7 million, up 104% year-over-year and 13%
quarter-over-quarter as customers continued to increase their
rollout of next-generation distributed access architecture
- Key DAA achievements in Q3 fiscal 2023 included:
- An increase in total customer engagements to 106 MSOs
worldwide, from 83 a year earlier. To date, 50 of these customers
have ordered Entra products
- Customers engaged for cable access now number 60
- Customers engaged for fiber access or both access technologies
now number 46
- Achieved another 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
- Selected by Charter Communications to provide Entra ERM3
next-generation Remote PHY devices for this customer’s
enterprise-wide hybrid fiber coax (HFC) network evolution. The
Entra ERM3 RPD is expected to be used for a substantial portion of
Charter’s network upgrade
- Grew Vecima’s presence in Asia with a strategic Remote PHY win
with Kbro, the largest cable operator in Taiwan. Kbro selected
Vecima’s Entra EN2112 Compact Remote PHY (R-PHY) nodes as part of
its DAA solution to enable high-speed DOCSIS 3.1 services for
subscribers
- Recognized by Dell’Oro Group as the 2022 market share leader in
two key DAA categories: Remote Optical Line Terminals and Remote
MACPHY
- VBS services revenue increased 38% year-over-year and 7%
quarter-over-quarter
Commercial Video (Terrace
Family)
- Generated Commercial Video sales of $2.1 million, as compared
to $6.2 million in Q3 fiscal 2022 and $6.5 million in Q2 fiscal
2023, as customers prepare to transition to next-generation
platforms and as our newer DAA-driven commercial video solutions
are accounted for as part of Entra family sales
- Achieved a new milestone with Terrace and TerraceQAM bulk video
delivery reaching an estimated 25,000 hotels, enterprises and
commercial sites
Content Delivery and Storage (CDS)
- Achieved solid Q3 CDS sales of $11.8 million, as compared to
$12.5 million in Q3 fiscal 2022 and $12.4 million in Q2 fiscal
2023
- Undertook a major IPTV expansion with a top 10 U.S. cable
operator, growing the network 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
- Completed expansions with five additional IPTV customers, as
well as a special engineering project with a sixth customer
- Supported the record traffic experienced by operators using our
MediaScale streaming platform during Super Bowl LVII, delivering
100% uptime performance
- Announced a new compact, affordable legacy QAM video solution
suitable for smaller operators
- Subsequent to the quarter-end, established a partnership with
Cadent, the largest independent platform for advanced TV
advertising, to integrate Vecima’s MediaScale ™ streaming solution
with the Cadent Aperture platform. This integrated solution will
enable service providers to protect existing linear ad revenue as
they migrate to new IPTV platforms, while creating opportunities
for incremental revenue
- CDS service revenue increased to a record $5.6 million in the
quarter, a 31% increase year-over-year and a 9% increase
quarter-over-quarter
Telematics
- Continued penetration into target industry verticals for our
moveable asset solution, which monitors the location of valuable
assets in warehouses, on vehicles and customer work sites
- Achieved best quarter to date for additions of new moveable
asset customers, including adding 16 new customers for the NERO
asset tracking platform, over 300 additional subscriptions booked,
and asset tracking-related telematics subscriptions now
representing approximately 13% of total subscriptions
- Significantly increased the number of moveable assets being
monitored to over 40,000 units, an over 266% increase in the last
eight quarters
- In the municipal government market for vehicle monitoring
systems, continued roll out with a Canadian municipality for
approximately 100 vehicle subscriptions, including winter
operations vehicles
- Achieved year-to-date Telematics gross margin percentage of
66.2%
CONFERENCE CALL
A conference call and live audio webcast will be held today, May
11, 2023 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, 2023 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 results have continued to underscore the
broad and enduring strength of our market position and the depth
and scope of our next-generation DAA and IPTV product portfolios as
we respond to the wide-ranging needs of a large and growing base of
global customers; going forward, we continue to expect our
next-generation DAA cable and fiber access products will be a major
driver of further long-term growth for Vecima; we also anticipate
full-year FY23 revenue will well exceed the 50% growth we achieved
in FY22; however, we note that the macro environment is in
transition, from the very recent major constraints in the supply
chain, to the current landscape, where vendors that have managed
the supply chain highly effectively, like Vecima, have fulfilled
strong deliveries of products to fuel customers’ ongoing major
network upgrade projects; over the coming quarters we anticipate
that customers’ focus will temporarily shift from building up their
product pipelines, to managing their DAA rollout logistics and
working through existing inventories; this is likely to lead to
short-term softness in product deliveries to customers prior to an
expected return to growth driven by new programs and deployments,
as well as a normalization of customer demand, in calendar 2024; we
continue to be focused on navigating the current supply and
inventory dynamics, while leveraging our unparalleled portfolio of
cable and fiber access solutions, our strong working capital
position to support customer deployments, and our growing global
reach to capture additional market share and expand our lead in the
vast new DAA market; we are still in the early stages of broad
industry DAA adoption and continue to see a significant long-term
growth runway ahead for Vecima; in our Content Delivery and Storage
segment, demand for our IPTV and open caching solutions continues
to increase as IPTV customers initiate network expansions; we
anticipate a strong finish to fiscal 2023, culminating in low
double-digit year-over-year sales growth for this segment; we
continue to see strong future growth potential as IPTV gains
momentum and our newer caching solutions become an important driver
of CDS performance; overall, we are highly confident in Vecima’s
ability to capture the major and multi-year opportunities in the
compelling DAA and IPTV markets over the long-term; the Entra ERM3
RPD is expected to be used for a substantial portion of Charter’s
network upgrade; and the integration of Vecima’s MediaScale
streaming solution with the Cadent Aperture platform, the largest
independent platform for advanced TV advertising, will enable
service providers to protect existing linear ad revenue as they
migrate to new IPTV platforms, while creating opportunities for
incremental revenue.
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
March 31,
2023
June 30,
2022
Assets
Current assets
Cash and cash equivalents
$
3,919
$
12,902
Accounts receivable
68,393
49,655
Income tax receivable
162
693
Inventories
92,960
49,608
Prepaid expenses and other current
assets
17,002
7,302
Contract assets
1,392
1,335
Total current assets
183,828
121,495
Non-current assets
Property, plant and equipment
16,424
16,483
Right-of-use assets
2,416
2,626
Goodwill
15,254
14,813
Intangible assets
82,757
75,917
Other long-term assets
1,217
1,440
Investment tax credits
24,697
23,041
Deferred tax assets
3,897
6,793
Total assets
$
330,490
$
262,608
Liabilities and shareholders’
equity
Current liabilities
Revolving line of credit
$
16,264
$
-
Accounts payable and accrued
liabilities
53,032
48,172
Provisions
801
659
Income tax payable
2,011
182
Deferred revenue
18,074
12,129
Current portion of long-term debt
2,563
1,782
Total current liabilities
92,745
62,924
Non-current liabilities
Provisions
434
366
Deferred revenue
7,230
4,465
Deferred tax liability
6
6
Long-term debt
14,314
15,115
Total liabilities
114,729
82,876
Shareholders’ equity
Share capital
23,896
7,935
Reserves
3,198
3,141
Retained earnings
187,152
168,923
Accumulated other comprehensive income
(loss)
1,515
(267)
Total shareholders’ equity
215,761
179,732
Total liabilities and shareholders’
equity
$
330,490
$
262,608
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Comprehensive Income
(unaudited - in thousands of Canadian
dollars, except per share amounts)
Three months
Nine months
Periods ended March 31,
2023
2022
2023
2022
Sales
$
78,256
$
50,872
$
227,915
$
126,854
Cost of sales
44,183
26,914
124,056
65,374
Gross profit
34,073
23,958
103,859
61,480
Operating expenses
Research and development
12,053
8,796
33,099
25,156
Sales and marketing
6,929
4,682
19,852
13,337
General and administrative
8,389
6,083
21,505
16,267
Share-based compensation
289
64
1,202
817
Other expense
275
215
318
234
Total operating expenses
27,935
19,840
75,976
55,811
Operating income
6,138
4,118
27,883
5,669
Finance expense
(738)
(82)
(1,493)
(170)
Foreign exchange gain (loss)
198
(541)
1,362
455
Income before income taxes
5,598
3,495
27,752
5,954
Income tax expense
1,147
505
5,650
749
Net income
$
4,451
$
2,990
$
22,102
$
5,205
Other comprehensive income
(loss)
Item that may be subsequently reclassed
to net income
Exchange differences on translating
foreign operations
$
(105)
$
(750)
$
1,782
$
57
Comprehensive income
$
4,346
$
2,240
$
23,884
$
5,262
Net income per share
Basic
$
0.18
$
0.13
$
0.94
$
0.23
Diluted
$
0.18
$
0.13
$
0.94
$
0.23
Weighted average number of common
shares
Shares outstanding – basic
24,201,616
23,080,725
23,545,483
23,070,328
Shares outstanding – diluted
24,226,939
23,116,959
23,573,305
23,107,218
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
-
-
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
Balance as at June 30, 2022
$
7,935
$
3,141
$
168,923
$
(267)
$
179,732
Net income
-
-
22,102
-
22,102
Other comprehensive income
-
-
-
1,782
1,782
Dividends
-
-
(3,873)
-
(3,873)
Common share issuance
15,926
-
-
-
15,926
Shares issued by exercising options
502
(106)
-
-
396
PSUs settled in common shares
1,039
(1,039)
-
-
-
Withholding taxes on PSUs
(1,506)
-
-
-
(1,506)
Share-based payment expense
-
1,202
-
-
1,202
Balance as at March 31, 2023
$
23,896
$
3,198
$
187,152
$
1,515
$
215,761
VECIMA NETWORKS INC.
Interim Condensed Consolidated
Statements of Cash Flows
(unaudited - in thousands of Canadian
dollars)
Three months
Nine months
Periods ended March 31,
2023
2022
2023
2022
OPERATING ACTIVITIES
Net income
$
4,451
$
2,990
$
22,102
$
5,205
Adjustments for non-cash items:
Loss on sale of property, plant and
equipment
13
174
40
192
Depreciation and amortization
5,060
4,303
14,226
12,763
Share-based compensation
289
64
1,202
817
Income tax expense
53
497
2,701
978
Deferred income tax expense (recovery)
1,094
8
2,949
(229)
Interest expense
740
89
1,509
185
Interest income
(5)
-
(17)
(8)
Net change in working capital
(6,980)
(11,349)
(57,981)
(25,059)
Decrease (Increase) in other long-term
assets
123
3
269
(80)
Decrease in provisions
(121)
(124)
(181)
(780)
Increase in investment tax credits
(25)
(46)
(97)
(106)
Income tax received
-
-
-
164
Income tax paid
(152)
(248)
(928)
(827)
Interest received
3
-
18
10
Interest paid
(707)
(55)
(1,406)
(74)
Cash provided by discontinued
operations
-
(190)
-
(190)
Cash provided by (used in) operating
activities
3,836
(3,884)
(15,594)
(7,039)
INVESTING ACTIVITIES
Capital expenditures, net
(1,060)
(1,584)
(2,311)
(4,540)
Deferred development costs
(6,387)
(5,129)
(17,194)
(12,894)
Cash used in investing
activities
(7,447)
(6,713)
(19,505)
(17,434)
FINANCING ACTIVITIES
Principal repayments of lease
liabilities
(489)
(421)
(1,311)
(1,208)
Repayment of short and long-term debt
(281)
(63)
(448)
(188)
Proceeds from long-term debt
-
12,191
-
12,191
Proceeds from short-term debt
585
-
585
-
Dividends paid
(1,331)
(1,270)
(3,873)
(3,808)
Proceeds from common share issuance
-
-
15,926
-
Issuance of shares through exercised
options
453
97
502
426
Withholding taxes on PSUs
(53)
-
(1,506)
(1,073)
Cash provided by (used in) financing
activities
(1,116)
10,534
9,875
6,340
Net decrease in cash and cash
equivalents
(4,727)
(63)
(25,224)
(18,133)
Effect of change in exchange rates on
cash
506
350
(23)
(148)
Cash and cash equivalents, beginning of
period
(8,124)
10,341
12,902
28,909
Cash and cash equivalents, end of
period (1)
$
(12,345)
$
10,628
$
(12,345)
$
10,628
(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/20230511005329/en/
Vecima Networks Investor Relations - 250-881-1982
invest@vecima.com
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