Vecima Reports Strong Q1 Fiscal 2022 Results

  • Revenue: $32.4M (up 19% YoY), Gross Profit: $15.7M (up 24% YoY), Adjusted EBITDA: $4.3M (up 97% YoY)
  • Gross Margin strengthens to 48.5%
  • Cash Balance: $17.9M
  • Entra Family DAA sales climb to $18.1M, up 246% YoY and 9% QoQ

 

VICTORIA, BC – (November 12, 2021) – Vecima Networks Inc. (TSX: VCM) today reported financial results for the three months ended September 30, 2021.

“Fiscal 2022 got off to a strong start with first quarter sales climbing 19% year-over-year to $32.4 million, even as we responded to continued supply chain challenges,” said Sumit Kumar, Vecima’s President and Chief Executive Officer. “Gross margin also strengthened to 48.5%, and our adjusted EBITDA performance of $4.3 million was nearly double what we achieved in Q1 last year.”

“Our Video and Broadband Solutions segment led the growth with sales of $24.3 million climbing 80% year-over-year as several customers, including some of the world’s largest Tier 1 operators, began and continued scale deployments of our Entra Distributed Access Architecture (DAA) solutions. Entra sales set a new quarterly record of $18.1 million, up 246% year-over-year and 9% quarter-over-quarter, continuing the growth trajectory from fiscal 2021. This was achieved despite significant logistics and freight hurdles experienced late in the quarter, with carriers failing to meet delivery commitments for scheduled and in-transit DAA shipments. While these are still early days for the vast new DAA market, the momentum and success of our industry-leading cable and fiber access portfolio is setting the stage for another year of rapid growth in the VBS segment.”

“Our Video and Broadband Solutions segment further benefited from ongoing solid performance from our TerraceQAM product family, which contributed an additional $4.8 million to segment sales in the first quarter,” added Mr. Kumar.

“Our Content Delivery and Storage segment experienced a significant quarterly sales fluctuation with some large orders delayed as a result of supply chain issues and pandemic-driven project delays affecting our customers’ operations. Underlying demand for IPTV and our MediaScaleX solutions remains very strong and Content Delivery and Storage sales are expected to regain momentum subsequent to quarter-end.”

“We ended the first quarter with $17.9 million in cash after investing an incremental $7.7 million in strategic inventory to mitigate supply chain challenges, working capital of $41.8 million, and virtually no debt, providing a very strong financial foundation to support the significant growth opportunities Vecima is pursuing,” said Mr. Kumar.

BUSINESS HIGHLIGHTS

Video and Broadband Solutions (VBS)

Delivered strong segment sales growth with first quarter VBS revenue increasing 80% to $24.3 million, from $13.5 million in Q1 fiscal 2021

  • Entra Family
    • Next-generation Entra DAA sales grew to $18.1 million, up 246% year-over-year and 9% quarter-over-quarter
    • Total customer engagements for Entra increased to 77 MSOs worldwide, from 71 at the end of fiscal 2021. Thirty-nine of these customers have ordered Entra products
    • In total, Vecima has now delivered nearly 7,200 cable and fiber access nodes, covering over 18,000 next-generation service groups
    • Created and opened the new Vecima Experience Studio, a next-generation demo center, to expand brand and marketing presence
    • Expanded customer orders related to the Rural Digital Opportunity Fund initiative, a U.S. federal program that supports efforts to bring broadband services to rural areas
    • Subsequent to the quarter-end, announced the world’s first commercially available Generic Access Platform (GAP) node, the EN9000, which sets the SCTE’s standards for unified access with a modular platform supporting open ecosystems and the evolution of the broadband access network
    • In early October, Vecima announced its latest generation EMM324 Remote MACPHY Cable Access module, marking the most flexible and highest-capacity cable access platform on the market
    • Also in October, Vecima was highlighted in the SCTE Cable-Tec Expo keynote session as a leading next-generation vendor and strategic partner helping to enable the industry’s next leap in broadband
  • Commercial Video Family
    • TerraceQAM sales increased to $4.8 million, up approximately 10% from $4.4 million in both Q1 fiscal 2021 and Q4 fiscal 2021
    • Terrace Family sales provided $1.4 million of contribution as Tier 1 customers neared full coverage, leading to the anticipated migration to the next-generation TerraceIQ platform

Content Delivery and Storage (CDS)

  • Generated first quarter CDS sales of $6.8 million ($12.5 million in Q1 FY2021, $10.4 million in Q4 2021)
  • Service revenue of $4.5 million was on par with Q1 fiscal 2021 results
  • Launched two additional customers with IPTV during the quarter. Vecima’s MediaScaleX platform is now being used by 35 operators worldwide for IPTV services
  • Published Open Caching draft specification with the Streaming Video Alliance and progressed development of standards-compliant Open Caching solutions
  • Continued enhancement of Dynamic Ad insertion, including new versions of the MediaScaleX Origin and Cache products for stream manifest conditioning and manipulation
  • Enhanced Visual Trick Play functionality to increase flexibility and further optimize user experience
  • Enhanced 4K content processing with HDR10 dynamic range support

Telematics

  • Additional deployments with both municipal government and moveable assets customers
  • Added eight new restoration industry customers, with the total number of moveable assets being monitored growing to over 12,000 units
  • Released new Driver Vehicle Inspection Reporting feature (DVIR) – a handset or tablet-based app that ensures customers keep vehicles in good condition and provides a high level of safety assurance. The DVIR feature assists motor vehicle carriers in satisfying Federal Motor Carrier Safety Administration (FMCSA) regulations in the US, and Department of Transportation regulations in Canada
  • Achieved trailing 12-month EBITDA margin of 35%

“As our year progresses, we see a continued sharp growth trajectory for our Entra DAA solutions supported by a growing backlog of purchase orders and binding forecasts that are providing excellent visibility into heavy demand levels going forward. Vecima has emerged as one of the world’s foremost providers of DAA network solutions worldwide and we expect to continue growing both our sales and our share of the large and rapidly growing distributed access market in fiscal 2022,” said Mr. Kumar.

“In our Content Delivery and Storage segment, demand for our IPTV and open caching solutions remains very strong. On a full-year basis, we continue to anticipate sales growth from the segment in fiscal 2022.”

“We reiterate our caution that the significant current global macro supply chain challenges could temper our growth and margin potential, particularly in the near term. However, the opportunities in both the DAA and IPTV markets are enormous and Vecima is exceptionally well-positioned to capitalize on them over an expected multi-year generational shift in the access network,” concluded 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 20, 2021 to shareholders of record as at November 26, 2021.

CONFERENCE CALL

A conference call and live audio webcast will be held today, November 12, 2021 at 1 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, 2021 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/vecima20211112.html and will be archived on the Vecima website at https://vecima.com/investor-relations/earnings-call-archive/

About Vecima Networks

Vecima Networks Inc. is a global leader focused on developing integrated hardware and scalable software solutions for broadband access, content delivery, and telematics. We enable the world’s leading innovators to advance, connect, entertain, and analyze. We build technologies that transform content delivery and storage, enable high‑capacity broadband network access, and streamline data analytics. For more information, please visit our website 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 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: while these are still early days for the vast new DAA market, the momentum and success of our industry-leading cable and fiber access portfolio is setting the stage for another year of rapid growth in the VBS segment; our Content Delivery and Storage segment experienced a significant quarterly sales fluctuation with some large orders delayed as a result of supply chain issues and pandemic-driven project delays affecting our customers’ operations; underlying demand for IPTV and our MediaScaleX solutions remains very strong; we ended the first quarter with a very strong financial foundation to support the significant growth opportunities Vecima is pursuing; subsequent to the quarter-end, announced the world’s first commercially available Generic Access Platform which sets the SCTE’s standards; as Tier 1 customers neared full coverage, leading to the anticipated migration to the next-generation TerraceIQ platform; as our year progresses, we see a continued sharp growth trajectory for our Entra DAA solutions, supported by a growing backlog of purchase orders and binding forecasts that are providing excellent visibility into heavy demand levels going forward; Vecima has emerged as one of the world’s foremost providers of DAA network solutions worldwide and we expect to continue growing both our sales and our share of the large and rapidly growing distributed access market in fiscal 2022; we reiterate our caution that the significant current global macro supply chain challenges could temper our growth and margin potential, particularly in the near term; the opportunities in both the DAA and IPTV markets are enormous and Vecima is exceptionally well-positioned to capitalize on them over an expected multi-year generational shift in the access network.

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

Investor Relations – 250-881-1982

invest@vecima.com

 

 

 

 

 

 

 

 

 

         
         
         
         
         
         
         
         
         
 

 

 

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