Vecima Reports Q4 and Full-Year Fiscal 2024 Results

Achieves All-time Best Quarterly Revenue of $87.5M

 Q4 Adjusted EBITDA of $16.0M with 18.3% Adjusted EBITDA margin

• • • Q4 Video and Broadband Solutions sales grow 31% YoY to $74.7 million; Q4 Entra DAA sales climb 35% YoY to $68.7 million
    • Q4 Gross profit: $40.7M, Q4 Gross margin 46.5%
    • Q4 EPS grows to $0.34

VICTORIA, BC – (September 19, 2024) – Vecima Networks Inc. (TSX: VCM) today reported financial results for the three months and year ended June 30, 2024.

FINANCIAL HIGHLIGHTS

“Our momentum continued to build in the fourth quarter as the convergence of multiple growth engines drove back-to-back quarters of record results,” said Sumit Kumar, Vecima’s President and Chief Executive Officer.

“On the top line, fourth quarter consolidated sales of $87.5 million were the best in Vecima’s history and reflect particularly strong performance from our Entra DAA product family. Entra sales climbed 35% year-over-year and 13% quarter-over-quarter to a new high-water mark of $68.7 million, enhanced by the introduction and ramp of ERM3 Remote-PHY deliveries to support Charter’s network-wide upgrade, and strong performance from our Entra Optical fiber access products. I am pleased to report that we also initiated sales of our new EN9000 Generic Access Platform and EXS1610 All-PON Shelf during the fourth quarter, both representing significant milestones and important new growth drivers for Vecima going forward.”

“Commercial Video sales of $5.9 million, Content Delivery and Storage sales of $11.1 million and record Telematics segment revenues of $1.8 million further augmented our strong Q4 top line results,” added Mr. Kumar. “Our Q4 gross profit of $40.7 million and Adjusted EBITDA of $16.0 were up 7% and 6% respectively year-over-year, and earnings per share grew to $0.34, from $0.21 in the same period last year,” said Mr. Kumar.

“It was an impressive finish to the year with another new high in sales on the heels of our record third quarter performance. We were able to overcome much of the impact of the temporary transition in the DAA macro environment in the first half and go on to achieve strong full-year results.”

“Going forward we expect to build on this performance as we continue to reap the rewards of our multi-year investments into our world-leading portfolio of cable and fiber access DAA solutions. We anticipate a near-term increase in contribution from our ERM3 Remote PHY and EN9000 Generic Access Platform rollouts, with EXS1610 All-PON Shelf deliveries also ramping up. With our U.S. manufacturing arrangement now in place and U.S.-built Entra fiber access products rolling off the line, we also anticipate significant new opportunities via the US$42.5 billion BEAD broadband infrastructure funding program. Longer term, our entry into the virtual cable modem termination system (vCMTS) market represents a considerable additional growth driver for Vecima. As these and other opportunities begin to converge, and as a broader range of MSOs worldwide begin to undertake their own DAA rollouts, we expect to see Entra momentum further building in fiscal 2025, particularly in the second half.”

“Our CDS segment is also positioned for growth in fiscal 2025 as we support existing and new customers’ IPTV network upgrades and begin to roll out our new Dynamic Ad Insertion and open caching products with more customers. Additionally, we anticipate incremental growth from our Telematics business, which is delivering strong, high-margin performance via our successful fleet tracking and moveable assets solutions.”

“As we look forward, we are excited about the opportunities we see across our operations. Multiple growth drivers are aligning with the global acceleration in DAA and IPTV adoption, and Vecima is poised to enter a new and highly successful chapter in our journey,” said Mr. Kumar.

BUSINESS HIGHLIGHTS

 Financial and Corporate

• • Generated record quarterly revenue of $87.5 million, up 15.8% from $75.5 million in Q4 fiscal 2023. Full-year consolidated sales of $291.0 million decreased 4.1% year-over-year, reflecting the slower first half of fiscal 2024, largely offset by back-to-back record quarters in the second half.
  • Gross profit increased by 6.7% to $40.7 million from $38.1 million in Q4 fiscal 2023. Full-year gross profit of $136.7 million as compared to $142.0 million in fiscal 2023.
  • Achieved a Q4 gross profit margin of 46.5% and full-year gross profit margin of 47.0%, as compared to 50.5% and 46.8% in the same periods of fiscal 2023.
  • Fourth quarter adjusted EBITDA climbed 5.8% to $16.0 million, from $15.1 million in the same period last year. Reported full-year adjusted EBITDA of $53.8 million as compared to $59.8 million in fiscal 2023. (Removing foreign exchange losses in fiscal 2024 and gains in fiscal 2023, the respective full year adjusted EBITDA would have been $55.9 million and $57.1 million.)
  • Earnings per share increased to $0.34, from $0.21 in Q4 fiscal 2023. Full-year earnings per share of $0.80 compared to $1.15 in fiscal 2023.
  • Ended the fourth quarter in a solid financial position with working capital of $84.9 million at June 30, 2024, compared to $83.7 million at June 30, 2023.

Video and Broadband Solutions (VBS)

Achieved record Video and Broadband Solutions sales of $74.7 million in the fourth quarter, with sales climbing 31.0% year-over-year. Generated full-year VBS sales of $236.1 million, as compared to $245.1 million in fiscal 2023, reflecting slower sales during the transition in the first half of fiscal 2024, partially offset by the record results achieved in the second half.

DAA (Entra Family)

• • • Fourth quarter deployments of next-generation Entra DAA products increased 35.5% year-over-year to a new high of $68.7 million. Full-year Entra sales reflected the first-half transition and were 4.5% lower year-over-year at $212.2 million.
    • Increased total customer engagements to 115 MSOs worldwide, from 107 a year earlier. Sixty-two of these customers are ordering Entra products, with order sizes increasing as broader DAA deployment continues.
    • Ramped up volume deliveries of our Entra ERM3 Remote PHY device (RPD) to our lead customer, while also initiating deliveries to additional customers. The award-winning ERM3 RPD helps operators upgrade legacy HFC nodes to DAA quickly and cost-effectively, while dramatically increasing broadband capacity.
    • Began deployments of the new EN9000 GAP (Generic Access Platform) node with a leading Tier 1 customer, while ramping up manufacturing in preparation for anticipated strong adoption. The modular EN9000 GAP Node provides customers with a future-proof path to 10G, protecting today’s network investments by ensuring operators can easily transition to future technologies, including DOCSIS 4.0 and 10G FTTH.
    • Initiated shipments of the new Entra EXS1610 All-PON shelf to two customers in North America. A key component of Vecima’s industry-leading fiber access product portfolio, the EXS1610 ALL-PON Shelf enables customers to cost effectively deploy fiber to the premises (FTTP) services in any market or hub deployment, providing maximum flexibility for customers.
    • Continued lab trials of the Entra Virtualized Cable Modem Termination System (vCMTS) with the lead Tier 1 customer, while securing additional customer engagements for this new platform. The Entra vCMTS is part of the Entra Cloud platform of open, interoperable, and cloud-native applications that help cable operators virtualize and transform their networks for next-generation broadband access.
    • Added additional customers for Vecima’s Remote MACPHY solutions, shipping to operators in North America, Latin America, Europe, and Asia.
    • Subsequent to the year-end, commenced U.S. manufacturing of certain Entra fiber access equipment to meet Buy America requirements under the U.S. Broadband Equity, Access, and Deployment (BEAD) program.
    • Subsequent to the year-end, successfully demonstrated the DOCSIS 4.0 Remote PHY node at an industry interoperability event.

Commercial Video (Terrace Family)

• • • Generated fourth quarter Commercial Video product sales of $5.9 million, as compared to $6.3 million in Q4 fiscal 2023. Full-year Commercial Video products sales increased to $23.8 million in 2024, up 0% from $22.2 million in fiscal 2023.

Content Delivery and Storage (CDS)

The Content Delivery and Storage segment generated sales of $11.1 million (Q4 fiscal 2023: $17.1 million; Q3 fiscal 2024: $10.2 million).

• • • • Fourth quarter gross margin of 53.5% was similar to 53.8% in Q4 fiscal 2023; Full-year gross margin increased to 56.7%, from 53.1% in fiscal 2023, reflecting increased service revenue.
      • Successfully launched Dynamic Ad Insertion (DAI) systems with two U.S. customers and expect further customer additions in upcoming quarters. DAI significantly enhances the ability of operators to further monetize their video assets.
      • Introduced next-generation recording system for Cloud DVR.
      • Initiated Tier 1 customer program to migrate its on-demand streaming network to a Virtual Machine.
      • Continued to grow live linear IPTV traffic with customers regularly exceeding prior all-time high throughputs.
      • Released new versions of Media Scale Origin and Dynamic Content products with additional Dynamic Ad Insertion features, including advances in asset insertion workflows, scaling of ingest throughput for dynamic versus static ad assets, and enhanced stitching capability for frame accurate ad insertion in highly variable ad window duration scenarios.
      • Continued IPTV expansion at multiple customers, growing network footprints to give a larger subscriber base access to state-of-the-art live, on-demand, and cloud DVR streaming services on the IPTV fabric.

Telematics

Fourth quarter Telematics segment sales grew approximately 22.3% year-over-year to a record $1.8 million, with full-year sales growing 11% to $6.7 million as compared to fiscal 2023.

• • • • Achieved strong gross margin percentage of 71.1% in the fourth quarter and 67.5% for the full year.
      • Accelerated penetration into targeted industry verticals for Vecima’s moveable asset solution, which monitors the location of valuable assets in warehouses, on vehicles, and at customer work sites.
      • Added 16 new customers for the NERO asset tracking platform in Q4 and significantly increased the number of moveable assets being monitored to over 68,000 units.
      • On a full-year basis, added 50 new customers for Nero asset tracking translating to over 1,600 new Telematics subscriptions in addition to approximately 20,000 assets under management.

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 November 4, 2024 to shareholders of record as at October 11, 2024.

 CONFERENCE CALL

A conference call and live audio webcast will be held today, Thursday, September 19, 2024 at 1 p.m. ET to discuss the Company’s fourth quarter and full year-end results. Vecima’s audited annual consolidated financial statements and management’s discussion and analysis for the three months and year ended June 30, 2024 are available under the Company’s profile at www.sedarplus.ca, and at http://vecima.com/investor-relations/financial-reports/.

To participate in the Q4FY24 teleconference, dial 1-844-763-8274 or 1-647-484-8814. The webcast will be available in real time at https://event.choruscall.com/mediaframe/webcast.html?webcastid=sUFXGoxT  and will be archived on the Vecima website at http://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 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 fourth quarter of fiscal 2024.

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 momentum continued to build in the fourth quarter as the convergence of multiple growth engines drove back-to-back quarters of record results; we also initiated sales of our new EN9000 Generic Access Platform and EXS1610 All-PON Shelf during the fourth quarter, both representing significant milestones and important new growth drivers for Vecima going forward; going forward we expect to build on this performance as we continue to reap the rewards of our multi-year investments into our world-leading portfolio of cable and fiber access DAA solutions; we anticipate a near-term increase in contribution from our ERM3 Remote PHY and EN9000 Generic Access Platform rollouts, with EXS1610 All-PON Shelf deliveries also ramping up; with our U.S. manufacturing arrangement now in place and U.S.-built Entra fiber access products rolling off the line, we also anticipate significant new opportunities via the US$42.5 billion BEAD broadband infrastructure funding program; longer term, our entry into the virtual cable modem termination system (vCMTS) market represents a considerable additional growth driver for Vecima; as these and other opportunities begin to converge, and as a broader range of MSOs worldwide begin to undertake their own DAA rollouts, we expect to see Entra momentum further building in fiscal 2025, particularly in the second half; our CDS segment is also positioned for growth in fiscal 2025 as we support existing and new customers’ IPTV network upgrades and begin to roll out our new Dynamic Ad Insertion and Open Caching products with more customers; additionally we anticipate incremental growth from our Telematics business, which is delivering strong, high-margin performance via our successful fleet tracking and moveable assets solutions; as we look forward, we are excited about the opportunities we see across our operations; multiple growth drivers are aligning with the global acceleration in DAA and IPTV adoption and Vecima is poised to enter a new and highly successful chapter in our journey.

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 19, 2024, as well as the Company’s continuous disclosure filings with Canadian securities regulatory authorities available at www.sedarplus.ca. 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