Vecima Reports Q2 Fiscal 2018 Results
Revenue – $14.8M, Gross Margin – 52%, EPS – $0.06
Acquired Concurrent’s IP Video Content Delivery and Storage Business
Cash balances of $61.0M
Continued progress on Entra DOCSIS 3.1 platform
VICTORIA – (February 8, 2018) – Vecima Networks Inc. (TSX:VCM) today reported financial results for the three and six months ended December 31, 2017.
“We continued to lay the foundation for Vecima’s future during the second quarter as we made significant technological progress on our Entra DOCSIS 3.1 distributed access architecture solution and expanded into the rapidly-growing IP video storage, delivery and streaming market with our acquisition of Concurrent,” said Sumit Kumar, Vecima Networks’ President and CEO. “We strengthened our Board through the addition of Ben Colabrese, Rogers Communications’ Senior Vice-President of Finance and Commercial Relationships.”
- Worked closely with a wide base of Tier 1 to Tier 3 MSOs on their 2018/2019 plans for DOCSIS 3.1 DAA solutions and continued to attract interest from a global base of customers including some of the largest Tier 1 MSOs;
- Responded to requests for proposals (RFP) from multiple MSOs for Entra Remote PHY and associated products;
- Initiated lab testing with multiple MSOs for Entra Legacy QAM Adapter;
- Shipped first customer units of Entra Access Switch to Tier 1 MSO for lab entry and initiated lab testing with additional MSOs;
- Demonstrated additional Entra Remote PHY node progress at industry events and at Tier 1 customer labs with broader interoperability, features and performance;
- Recognized in Broadband Technology Report’s Diamond Technology Review 2017 for multiple Entra family products: Access Switch wins Carrier Ethernet category; convertible Access Node named finalist and called “game-changing”; and
- On December 31, 2017, closed the acquisition of Concurrent Computer Corporation’s video content delivery and storage assets for US$29.0 million plus an estimated net working capital adjustment of US$0.7 million (previously estimated at US$1.5 million).
“We are positioning Vecima at the forefront of the two most significant evolutions driving the cable industry: the move to gigabit broadband internet and the rapid growth of IP video. On the Entra front, we are currently participating in a number of RFIs and RFPs with a range of MSOs and market interest is strong. From a technical standpoint, we demonstrated further interoperability of our solution and increased feature sets during the quarter, while preparing for customer trials which are expected to commence in calendar 2018.”
“Our entry into the global IP video content storage and delivery market was the other major highlight of the quarter, with the acquisition of Concurrent now complete and integration underway. Our outlook for Concurrent’s family of products is very positive and we are excited about both near-term and longer-term opportunities arising from this business combination.”
“Financially, we achieved revenues of $14.8 million and Adjusted EBITDA of $3.6 million, which was in line with our expectations for the second quarter of this 2018 transition year. We closed the quarter with cash balances of $61.0 million, which is available to fund continued development and future acquisitions,” 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 19, 2018 to shareholders of record as at February 26, 2018.
OUTLOOK FOR FISCAL 2018
Vecima anticipates a year of transition for its Video and Broadband Solutions segment in fiscal 2018 as the North American cable industry prepares for the new DOCSIS 3.1 standard. Trials of various components of Vecima’s new Entra family of DOCSIS 3.1 products are expected to commence in calendar year 2018. However, timing of the volume phase of the market remains unpredictable with many MSOs continuing to refine their upgrade plans. At the same time, demand for some of Vecima’s legacy Video and Broadband Solutions products is expected to taper off as market saturation is reached and customers prepare for next generation products and technologies.
Demand for the IP Video Content Delivery and Storage products acquired as part of the Concurrent acquisition is expected to be robust in fiscal 2018 as Vecima responds to the cable industry’s need to deliver increasing content over an IP framework and capitalizes on Concurrent’s strong customer relationships. Concurrent’s products broadly address on-going network upgrades to IP-oriented video technologies.
Demand for Vecima’s Telematics products is expected to remain solid in fiscal 2018, with opportunities associated with asset tracking, winter operations, and compliance with the U.S. trucking industry’s adoption of hours of service requirements.
Overall, management expects fiscal 2018 to be a year of continued investment and development as it positions Vecima for industry leadership in the emerging DOCSIS 3.1 market and the IP video storage and delivery space. With a strong financial position, Vecima is well positioned to pursue its product strategies, while also continuing to assess attractive acquisitions that provide significant accretion and give rapid access to technologies that will help drive the Company’s growth and success.
A conference call and live audio webcast will be held today, February 8, 2018 at 1 p.m. ET to discuss the Company’s second quarter results. Vecima’s unaudited condensed consolidated financial statements and management’s discussion and analysis for the three and six months ended December 31, 2017 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 1-604-638-9020. The webcast will be available in real time at services.choruscall.ca/links/vecima20180208.html and will be archived on the Vecima website at www.vecima.com/shareholder-events.
About Vecima Networks
Vecima Networks Inc. (TSX:VCM) is a globally recognized leader in creating breakthrough technology solutions that empower network service providers to connect people and enterprises to information and entertainment worldwide. Vecima products for the cable industry allow service providers a cost-effective Last Mile Solution® for both video and broadband access, especially in the demanding business services market segment. Vecima’s IP Video Content Delivery and Storage business, operated under the Concurrent brand, includes solutions and software for industries and customers that focus on storing, protecting, transforming, and delivering high-value media assets. Vecima also provides fleet managers the key information and analytics they require to optimally manage their business under the Contigo, NERO Global Tracking, and FleetLynx brands. For more information, please visit our website at www.vecima.com.
Adjusted EBITDA and Adjusted Earnings Per Share
Adjusted EBITDA and Adjusted Earnings 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 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 Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the second quarter of fiscal 2018.
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 include the following statements: We continued to lay the foundations for Vecima’s future; we are positioning Vecima at the forefront of the two most significant evolutions driving the cable industry; we are preparing for customer trials which are expected to commence in calendar 2018; market interest for Entra is strong; our Outlook for Concurrent’s family of products is very positive; we are excited about both near-term and longer term opportunities arising from this business combination; the dividend payable on March 19, 2018 to shareholders of record as at February 26, 2018; our cash balances will be able to fund continued development and future acquisitions; and the financial Outlook for fiscal 2018.
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, 2017, 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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