Vecima Reports Strong First Quarter Results
Cash Grows to $52.1 Million and Second Quarterly Dividend Declared
VICTORIA – (November 14, 2014) – Vecima Networks Inc. (TSX:VCM), an experienced designer and manufacturer of innovative technology in the broadband equipment market, today reported financial results for the three months ended September 30, 2014.
“Our 2015 fiscal year is off to a very good start with a 54% year-over-year increase in first quarter Adjusted EBITDA,” said Sumit Kumar, President and CEO. “Net income in the first quarter of fiscal 2014 reflected the positive impact of our $3.7 million gain on sale of spectrum licenses in July of 2013. Factoring out that one-time gain, our net income effectively increased by 82% year-over-year. Our cash balance also continued to grow during the quarter, increasing to a robust $52.1 million.”
“Our first quarter results reflect the continued success of our platform products which are used by world leading cable operators to provide desirable services to their commercial customers. During the first quarter we achieved a number of important product milestones, including continued early deployment of our new digital video access platform. In addition, we signed an agreement with a major MSO to develop a new Terrace QAM platform and we also introduced the new Terrace TC600E platform during the quarter. Both products will support the more efficient MPEG-4 format, opening the door for cable MSOs to achieve significant network capacity improvements. Over the next several quarters we plan to develop additional products and platforms that fuel the long-term objective of cable operators to provide gigabit class Internet speeds and IP based video broadly.”
“Based on our continued favourable performance, strong cash position and positive outlook, on November 12 our Board of Directors declared a quarterly dividend of $0.045 consistent with the dividend policy we announced in September,” said Mr. Kumar.
MULTIPLE SYSTEM OPERATOR (MSO) BUSINESS SERVICES
- First quarter sales of Terrace Family products were $7.1 million, similar to the $7.2 million achieved in Q4 fiscal 2014. The uptake of Terrace Family products remained strong as US cable MSOs continue to transition to all-digital networks in order to create capacity for next generation services. The Terrace family of products are essential tools for MSOs undertaking this shift.
- During the first quarter, Vecima announced the new Terrace TC600E platform which provides support for MPEG-4 and high definition inputs. Using the TC600E platform, cable operators will be able to continue to support and enhance their commercial video businesses while freeing up valuable network capacity for additional revenue-generating services.
- Sales of Terrace QAM increased to $6.0 million in Q1, from $5.0 million in Q4 2014 driven primarily by timing of deliveries to our lead customer. The product provides an elegant platform over which cable operators can deliver a leading high definition service offering to hospitality customers. Beyond the lead customer in the US, management is now seeing early interest in Terrace QAM by international MSOs.
- During the first quarter, Vecima announced that a new Terrace QAM platform, the TransQAM, will be developed for a major MSO to support network capacity upgrades. The new platform will enable Terrace QAM to support a broader spectrum of network architectures including MPEG-4, which is a key capacity driver for MSOs.
Digital Video Access Platform
- Vecima continued early deployment of its new Digital Video Access Platform (DVAP) in the first quarter of fiscal 2015, generating sales of $1.8 million. Management anticipates some initial variability in quarterly sales of this product, but expects fiscal 2015 sales to be strong as it works to fulfill the $19 million two-year contract with an OEM customer. As approval testing is concluded at additional MSOs, management expects continued growth in this product.
OUTLOOK FOR FISCAL 2015
The Company’s outlook for fiscal 2015 remains substantially unchanged from that provided in the Company’s annual MD&A for fiscal 2014.
A conference call and live audio webcast will be held on November 14, 2014 at 1 pm ET to discuss the Company’s fourth quarter and year end results. Vecima’s audited condensed interim consolidated financial statements and management’s discussion and analysis for the three months ended September 30, 2014 are available under the Company’s profile at www.sedar.com, and at www.vecima.com/financials.
To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-5340. The webcast will be available in real time at services.choruscall.ca/links/vecima141114.html and will be archived on the Vecima website at www.vecima.com/shareholder-events.
About Vecima Networks
Vecima Networks Inc. (TSX:VCM) designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Vecima’s hardware products incorporate original embedded software to meet the complex requirements of next-generation, high-speed digital networks. Service providers use Vecima’s solutions to deliver services to a converging worldwide broadband market, including what are commonly known as “triple play” (voice, video and data) and “quadruple play” (voice, video, data and wireless) services. Vecima’s solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects the system directly to end-users, commonly referred to as “the last mile”, by overcoming the bottleneck resulting from insufficient carrying capacity in legacy, last mile infrastructures. Vecima’s products are directed at two principal markets: Converged Wired Solutions and Broadband Wireless. The Company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fibre to the home and IP video. More information is available at our website at www.vecima.com.
Adjusted EBITDA does 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 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, investors should refer to Vecima’s Management’s Discussion and Analysis for the first quarter of fiscal 2015.
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 statements about: both products will support the more efficient MPEG-4 format; we plan to develop additional products and platforms that fuel the long-term objective of cable operators; using the TC600E platform, cable operators will be able to continue to support and enhance their commercial video businesses; the new platform will enable Terrace QAM to support a broader spectrum of network architectures including MPEG-4; and management expects continued growth in this product.
In connection with the forward-looking information contained in this news release, Vecima has made numerous assumptions, regarding, among other things: we have the ability to develop new products; if we’re unable to manage our intellectual property accordingly, other incumbents may capture market share predominantly occupied by Vecima; if competitors develop similar products, revenues could decline; we can support MPEG-4 format within our new products; we can adopt new technologies and standards; suppliers provide us with the necessary components to deliver platform solutions; and new technologies don’t impair the market need for the new platforms Vecima develops. While Vecima considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause Vecima’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Known risk factors include, among others: our success depends on our ability to develop new products and enhance our existing products; if our intellectual property is not adequately protected, we may lose our competitive advantage; increased competition could have an adverse effect on our business; we may be unable to deliver products associated with key contracts; our inability to adapt to technological change, new products and standards could harm our business; our reliance on third-party suppliers and contract manufacturers reduces our control over our performance; and competition from new or existing technologies may adversely affect our business.
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 25, 2014, 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.
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