Vecima Reports Q3 Fiscal 2020 Results and Provides COVID-19 Business Update
- Revenue increased 23.5% year-over-year from $20.3M to $25.1M
- Adjusted EBITDA significantly increased year-over-year from $0.4M to $5.6M
- Content Storage and Delivery revenues of $14.2M, up 119% year-over-year
- Sales of next generation Entra family products grew to $1.8M
- Gross Margin – 52%, EPS – $0.03, Cash Balance – $36.2M
VICTORIA, BC – (May 14, 2020) – Vecima Networks Inc. (TSX:VCM) today reported financial results for the three and nine months ended March 31, 2020 and provided a COVID-19 business update.
“We delivered a very strong quarter while navigating the COVID-19 pandemic, and I want to thank all of our employees for helping us to fulfill our essential role in the telecommunications supply chain through these unprecedented times,” said Sumit Kumar, Vecima Network’s President and CEO.
“Around the globe, social distancing and stay-at-home mandates related to the COVID-19 situation are driving incredible utilization across our customers’ cable and IPTV networks. This, in turn, has driven increased need for the solutions we provide to bring additional capacity to our customers’ networks. We have quickly adapted our ways of doing business so that we can protect the health and safety of our teams while responding to this growing demand.”
“More than 80% of our workforce is now working from home, and we have implemented strict practices and protocols for the small number of employees whose presence is required on site to perform their job functions. This includes social distancing, increased cleaning and availability of personal protective equipment where it is required. Our employees have continued to do exceptional work amidst these changes and we are deeply proud of the entire Vecima team,” said Mr. Kumar.
Third Quarter Financial Performance
Third quarter 2020 results reflect the accelerating demand for Vecima’s solutions. Consolidated sales grew 23.5% year-over-year, led by the Content Delivery and Storage Segment where new customer wins and significant demand for the Company’s MediaScaleXTM solutions resulted in a 119% year-over-year increase in segment sales. Vecima remains on track to deliver 20% or better growth in Content Delivery and Storage sales in fiscal 2020.
In the Video and Broadband Solutions segment, Vecima’s next generation Entra family of products continued to gain momentum with sales growing to $1.8 million, led by orders for the Entra Interactive Video Controller (IVC) and also reflecting purchases of Vecima’s broader portfolio of Entra distributed access architecture (DAA) products by a diverse group of MSOs. While demand for legacy products in this segment is generally tailing off as customers move to next-generation platforms, sales of Terrace and TerraceQAM hospitality industry products were solid through the third quarter.
“The robust demand for our products and platforms not only helped us generate $25.1 million of revenues during the third quarter, but also contributed to improved bottom-line performance,” added Mr. Kumar. “Adjusted EBITDA grew to $5.6 million, from $0.4 million in the same period last year, and we increased earnings per share to $0.03 from a loss of $0.07 in Q3 fiscal 2019. We also ended the quarter in a very strong financial position with $36.2 million in cash and working capital of $56.3 million,” said Mr. Kumar.
Q3FY20 BUSINESS HIGHLIGHTS
Video and Broadband Solutions
- Segment sales of $9.6 million increased 14% on a sequential quarterly basis, reflecting higher sales of Entra family and TerraceQAM products, but were lower year-over-year as a result of the anticipated decrease in legacy product sales
- Entra Family:
- Achieved $1.8 million of next generation Entra family product sales, an increase of63% from $1.1 million in Q2 fiscal 2020 and up by $1.5 million compared to $0.3 million in Q3 fiscal 2019, led by uptake of the Entra Interactive Video Controller (IVC) by Tier 1 and Tier 2 MSO customers
- Multiple products within Vecima’s broad Entra DAA ecosystem were purchased by a wide group of MSOs as the industry initiates the network evolution to distributed access architecture
- Expanded a key field trial with a lead Tier 1 customer, moving to fully operationalized node field trials in multiple footprint locations where Entra nodes are providing live broadband internet service into a number of homes with paying subscribers
- Remote-PHY Monitoring software application purchased in Q2 by a Tier 1 customer enabled flawless installation and activation of nodes in the field
- Terrace Family
- Increased TerraceQAM sales by 125% year-over-year and 5% quarter-over-quarter as the lead Tier 1 MSO widened its extensive hospitality services platform, while preparing for migration to the next generation TerraceIQ system
- Progressed development of the next generation TerraceIQ platform, supporting the intent of customers to upgrade their widely deployed ecosystems of the Terrace and TerraceQAM products as networks move to IPTV
- Sales of TC600E increased by 35% quarter-over-quarter as a Tier 1 extended MPEG4 upgrade-related purchases and a second Tier 1 customer initiated MPEG 4 upgrade- related purchases
Content Delivery and Storage
- Generated strong segment sales of $14.2 million, with revenue increasing 119% year-over- year
- Achieved further advances in the burgeoning IPTV market with the win of four new customers for Vecima’s MediaScaleX IPTV products, including three new wins during the third quarter and an additional customer win subsequent to quarter-end
- Further increased deployments of IPTV solutions with cable operators, telcos and broadcasters around the world, servicing over 130 million subscribers and managing 30 petabytes of content worldwide
- Ongoing feature enhancements to our MediaScaleX IPTV products aimed at amplifying the seamless user experience delivered while streaming content to the consumer
- Furthered roll out of previously announced City of Saskatoon fleet management solution, which involves monitoring a fleet of over 1,000 powered and unpowered vehicles and assets
- Expanded penetration in the moveable assets market, adding six new restoration industry customers with vehicles being monitored with GPS beacons and valuable moveable assets being monitored through Vecima’s Bluetooth Low Energy (BLE) tags
“As we enter the fourth quarter, the industry’s overall plan of record to move to DAA and IPTV, together with the current climate of unprecedented consumer demands on networks, are translating into opportunities aligned with Vecima’s strategic product offerings. Working with our blue-chip customers, we are progressing field and lab trials of our next generation family of Entra and MediaScaleX products to respond,” added Mr. Kumar.
“Longer term it is difficult to predict what the full economic, supply chain and network development impacts of the COVID-19 pandemic will be given the evolving and uncertain nature of this crisis. However, with product offerings that respond to essential communication needs and our very strong financial position, we believe we are well positioned to manage the challenges of the COVID-19 business environment in the months ahead.”
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 15, 2020 to shareholders of record as at May 22, 2020.
A conference call and live audio webcast will be held today, May 14, 2020 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, 2020 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 http://services.choruscall.ca/links/vecima20200514.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 third quarter of fiscal 2020.
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: We delivered a very strong quarter while navigating the COVID-19 pandemic; around the globe, social distancing and stay-at-home mandates related to the COVID-19 situation are driving incredible utilization across our customers’ cable and IPTV networks; this, in turn, has driven increased need for the solutions we provide to bring additional capacity to our customers’ networks; third quarter 2020 results reflect the accelerating demand for Vecima’s solutions; Vecima remains on track to deliver 20% or better growth in Content Delivery and Storage sales in fiscal 2020; Vecima’s next generation Entra family of products continued to gain momentum; demand for legacy products in this segment is generally tailing off as customers move to next-generation platforms; the industry’s overall plan of record to move to DAA and IPTV, together with the current climate of unprecedented consumer demands on networks, are translating into opportunities aligned with Vecima’s strategic product offerings; working with our blue-chip customers, we are progressing field and lab trials of our next generation family of Entra and MediaScaleX products to respond; longer term it is difficult to predict what the full economic, supply chain and network development impacts of the COVID-19 pandemic will be given the evolving and uncertain nature of this crisis; with product offerings that respond to essential communication needs and our very strong financial position, we believe we are well positioned to manage the challenges of the COVID-19 business environment in the months ahead.
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 26, 2019, 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.
Investor Relations – 250-881-1982
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