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SMALL BUSINESS
Vecima Reports Q4 and Fiscal Year 2009 Results
VICTORIA, BRITISH COLUMBIA -- (Marketwire) -- 09/28/09 -- Vecima Networks Inc. ("Vecima" or "the Company") (TSX: VCM), today reported its fourth quarter and fiscal 2009 year end financial results for the period ended June 30, 2009. (All dollar amounts are in Canadian funds unless otherwise stated.)
"Vecima increased profits by 12% in the fiscal year ended June 30, 2009 compared to last fiscal year while experiencing a 5% decrease in sales," said Dr. Surinder Kumar, Chairman and CEO. "Non-recurring fees for access to our technology, careful attention to cost control and product mix increased gross margin to 46% from 42% last year. Gross margin in excess of 40% is not sustainable in the long-run, but we expect to continue to be at the higher end of our traditional model of 35% to 40%." "On the demand side," said Kumar, "extended rolling-forecasts from some of our major customers are showing some recovery in demand from the recent low-point and, with the new products we have introduced, we expect to return to Vecima's traditional growth mode."
Highlights:
- net income increased by 12% to $13.2 million or $0.58 per share in fiscal 2009 compared to $11.9 million or $0.51 per share in fiscal 2008; net income decreased 28% in Q4 to $3.2 million or $0.14 per share compared to $4.4 million or $0.19 per share in the same period last year;
- gross margin in fiscal 2009 was 46% compared to 42% last year; gross margin in Q4 was 34% compared with gross margin of 45% in Q4 of the prior year;
- revenue decreased by 5% to $114.2 million in fiscal 2009 compared to $120.6 million in fiscal 2008; revenue decreased 44% in Q4 to $20.5 million compared to $36.4 million in Q4 last year;
- operating profit increased $2.1 million to $19.9 million, or $0.86 per share in fiscal 2009 compared to $17.7 million, or $0.76 per share, in fiscal 2008; operating expenses decreased 9% to $7.4 million in Q4 compared to $8.1 million in the same period last year;
- late in the 2009 fiscal year, we began delivering manufactured models of our new TerraceA multiunit digital transport adaptor (M-DTA) designed under a multi-year engineering, supply and maintenance contract with a leading, US-based cable multiple system operator (MSO);
- signing of a multi-year engineering, supply and maintenance contract in February 2009 with a leading, US-based OEM for TerraceQAM, a follow-on product to our new TerraceA, that will deliver encrypted digital HD and SD television directly to newer flat-panel digital television units;
- delivering the first units of the custom-designed base station and subscriber equipment to Telebec, a member of the Bell Aliant Regional Communications Group, for wide-spread wireless deployment in rural Quebec; and
- announcing a partnership between Spectrum Signal Processing and LiveTV LLC to supply next generation radios for Live TV's connectivity system, permitting in-flight sending and receiving of email.
Outlook:
Vecima has seen decreased demand as our customers conserve cash by delaying capital purchases. Our revenue for the 2009 fiscal year was down 5% from last fiscal year as predicted last quarter. Our five-year compound annual growth rate (CAGR) in revenue was 21% for the year ended June 30, 2009, at the lower end of our business model target. If changes in the foreign exchange rate for the Canadian dollar compared to the United States dollar are eliminated, Vecima's revenue for fiscal 2009 increased at a five-year CAGR of 27% and profits increased at a five-year CAGR of 18% per year.
We expect revenue growth in each of our end-markets from sales of existing and new products. We plan to maintain our gross margins in the historical range of 35% to 40%. Research and development will continue to be a key focus as we invest in new product development. Additional resources will be committed to sales and marketing, with particular emphasis on further developing our distribution channels and marketing programs.
The Company's full consolidated financial statements and management's discussion and analysis for the three months and twelve months ended June 30, 2009 are posted on www.SEDAR.com.
Vecima's consolidated financial statements and accompanying notes for the three months and twelve months ended June 30, 2009 are available at http://www.vecima.com/financials_ir.php. A conference call and live audio webcast will be held on September 28, 2009 at 11 a.m. EDT to discuss the results. To participate in the teleconference, dial 888-396-2298 or 617-847-8708 and enter the code 24891484. The fourth quarter fiscal 2009 earnings call webcast is available at http://www.vecima.com/events_ir.php.
About Vecima Networks
Vecima Networks Inc. (TSX: VCM) designs, manufactures and sells products that enable broadband access to cable, wireless, fibre 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. www.vecima.com.
Forward-Looking Statements
Certain statements in this news release may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements are generally identified by the use of such words as "may", "will", "expect", "believe", "plan", "intend" and other similar terminology. These statements reflect Vecima's current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors including, but not limited to, the factors discussed under "Risk Factors" in the Company's Annual Information Form dated September 28, 2009 available on SEDAR (www.sedar.com), could cause actual results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements contained in this news release are based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.
VECIMA NETWORKS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars)
As at June 30,
2009 2008
----------------------------------------------------------------------------
Assets
Current assets
Cash $ - $ 2,010
Marketable securities 898 -
Accounts receivable 14,707 25,174
Inventories 49,058 38,076
Current portion of leases receivable 413 531
Prepaid expenses 516 447
Other current assets 65 77
Current future tax asset 861 1,788
----------------------------------------------------------------------------
66,518 68,103
Leases receivable 246 305
Capital assets 37,592 37,707
Deferred development costs 7,495 2,669
Intangible assets 2,496 2,597
Investment tax credit asset 28,989 23,857
Future tax assets 4,445 8,420
----------------------------------------------------------------------------
$ 147,781 $ 143,658
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Current liabilities
Bank indebtedness $ 335 $ -
Accounts payable and accrued liabilities 12,158 20,327
Warranty accrual 500 500
Deferred revenue 1,471 2,160
Current portion of long-term debt 250 250
----------------------------------------------------------------------------
14,714 23,237
Long-term debt 4,208 4,458
----------------------------------------------------------------------------
18,922 27,695
----------------------------------------------------------------------------
Shareholders' equity
Share capital 35,317 35,512
Contributed surplus 2,276 1,871
Retained earnings 91,266 78,580
----------------------------------------------------------------------------
128,859 115,963
----------------------------------------------------------------------------
$ 147,781 $ 143,658
----------------------------------------------------------------------------
----------------------------------------------------------------------------
VECIMA NETWORKS INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(in thousands of Canadian dollars except net income per share data)
Three months ended Years ended
June 30 June 30
2009 2008 2009 2008
----------------------------------------------------------------------------
(unaudited) (unaudited)
Sales $ 20,491 $ 36,366 $ 114,231 $ 120,557
Cost of sales 13,448 20,018 61,592 69,807
----------------------------------------------------------------------------
Gross margin 7,043 16,348 52,639 50,750
Operating expenses
Research and development 1,444 971 8,846 8,922
Sales and marketing 1,568 1,974 6,445 6,883
General and administrative 4,205 4,918 17,698 16,196
Stock-based compensation 10 56 415 437
Interest expense 162 226 466 608
----------------------------------------------------------------------------
7,389 8,145 33,870 33,046
Gain on the sale of
capital assets 1,083 -
----------------------------------------------------------------------------
Operating income (346) 8,203 19,852 17,704
Foreign exchange (loss)
gain 4,216 264 (1,947) 805
Other income 405 174 772 844
----------------------------------------------------------------------------
Income before income taxes 4,275 8,641 18,677 19,353
Income taxes 1,093 4,210 5,432 7,488
----------------------------------------------------------------------------
Net income and
Comprehensive income 3,182 4,431 13,245 11,865
Net income per share
Basic and diluted $ 0.14 $ 0.19 $ 0.58 $ 0.51
Weighted average number
of Common Shares
outstanding - basic
and diluted 22,948,400 23,213,783 23,033,599 23,151,103
VECIMA NETWORKS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)
Three months ended Years ended
June 30, June 30,
2009 2008 2009 2008
----------------------------------------------------------------------------
Cash flows from (used in) (Unaudited) (Unaudited)
operating activities
Net income $ 3,182 $ 4,431 $ 13,245 $ 11,865
Add (deduct) items not
requiring cash
Future income taxes
recovery 540 1,827 4,902 5,025
Amortization of capital
assets 1,756 1,832 6,113 5,376
Amortization of deferred
development cost 986 889 3,369 2,105
Amortization of other
assets 116 183 146 210
Gain on the sale of
capital assets - - (1,083) -
Stock-based compensation 10 56 415 437
Net change in non-cash
working capital relating
to operations (4,558) 305 (14,385) (5,193)
----------------------------------------------------------------------------
2,032 9,523 12,722 19,825
----------------------------------------------------------------------------
Cash flows from (used in)
investing activities
Purchase of capital assets (789) (3,712) (7,625) (12,793)
Proceeds from the sales of
assets - 2,700 -
Purchase of marketable
securities 91 - (898) -
Deferred development costs (1,791) (1,092) (8,195) (2,629)
Purchase of other assets (93) (207) (45) (282)
----------------------------------------------------------------------------
(2,582) (5,011) (14,063) (15,704)
----------------------------------------------------------------------------
Cash flows from (used in)
financing activities
Proceeds from shares
issued through exercised
options - 38
Purchase and cancellation
of shares - (11) (754) (1,932)
Repayment of long-term debt (63) (63) (250) (271)
----------------------------------------------------------------------------
(63) (74) (1,004) (2,165)
----------------------------------------------------------------------------
Increase (decrease) in cash
during the period (613) 4,438 (2,345) 1,956
Cash beginning of period 278 (2,428) 2,010 54
----------------------------------------------------------------------------
Cash (Bank indebtedness),
end of period $ (335) $ 2,010 $ (335) $ 2,010
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Contacts:
Vecima Networks Inc.
Alan Brick
Investor Relations Officer
250-881-1982
invest@vecima.com
www.vecima.com