INTERNATIONAL DATACASTING CORPORATION OTTAWA, ONTARIO--(Marketwired - Sep 8, 2015) - International Datacasting Corporation ("IDC") (TSX:IDC), a technology provider for the world's premiere broadcasters, today announced its financial results for the second quarter of Fiscal 2016 ended July 31, 2015. All amounts in this release are in Canadian dollars unless otherwise stated.
Financial Highlights:
(in thousands, except for gross margin (GM) and net loss per share)
| Second Quarter | Six months ending July 31, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Revenues: | |||||||||||||||||
| Products | $ | 1,314 | $ | 2,217 | $ | 3,947 | $ | 4,155 | |||||||||
| Services | 359 | 382 | 741 | 1,274 | |||||||||||||
| Total revenues | $ | 1,673 | $ | 2,599 | $ | 4,688 | $ | 5,429 | |||||||||
| GM | GM | GM | GM | ||||||||||||||
| Gross profit as reported | $ | 251 | 15% | $ | 1,282 | 49% | $ | 2,169 | 46% | $ | 2,486 | 46% | |||||
| Gross profit, excluding inventory impairment | $ | 902 | 54% | $ | 1,282 | 49% | $ | 2,820 | 60% | $ | 2,486 | 46% | |||||
| Operating expenses | $ | 2,078 | $ | 2,603 | $ | 4,332 | $ | 5,370 | |||||||||
| Adjusted EBITDA (Loss) (1) | $ | (874 | ) | $ | (1,216 | ) | $ | (902 | ) | $ | (2,421 | ) | |||||
| Net loss | $ | (1,842 | ) | $ | (1,322 | ) | $ | (2,193 | ) | $ | (2,888 | ) | |||||
| Net loss per share | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.05 | ) | |||||
| (1) Adjusted EBITDA (Loss) is a non-GAAP financial measure. The reconciliation of Adjusted EBITDA (Loss) to Net Loss is provided at the end of this release. | |||||||||||||||||
Second Quarter Results
Revenues in the second quarter of $1.7 million were below expectation, 36% lower than prior year's second quarter. The decrease was driven by customers' hesitation in placing orders with IDC in light of the proposed asset sale of IDC's broadcast products business to Pico Digital Inc. (the "Proposed Transaction"). As previously announced in June 2015, the Proposed Transaction was not approved by the shareholders and consequently it was terminated.
Gross profit was $251 thousand or 15% margin, including $0.7 million impairment charge for obsolete and slow-moving inventories mainly for legacy products within our video and audio lines. Excluding this non-cash impairment charge, gross profit was $0.9 million and margin was 54% for Q2 Fiscal 2016.
OPEX was $2.1 million for Q2 Fiscal 2016, a decrease of 20% compared to Q2 of Fiscal 2015 largely due to cost reduction initiatives undertaken during Fiscal 2015 and year-to-date in Fiscal 2016. The current quarter OPEX includes $249 thousand of transaction and termination costs.
Adjusted EBITDA loss was $0.9 million in the quarter, compared to a $1.2 million loss in the same year-ago quarter. The lower revenue base was insufficient to cover the Corporation's operating costs.
At July 31, 2015, IDC's working capital was $1.8 million, including $1.0 million in cash.
Progress Report
Following the termination of the Proposed Transaction, the Board evaluated the near-term business strategy for IDC. The following actions have taken place subsequently:
- Repayment of the US$1.0 million promissory note to Pico Digital Inc. in June 2015 from IDC's internal funds.
- As previously announced in July 2015, the Board streamlined the leadership team to two Co-CEOs, Chris Barrett and Steeve Huin, and the CFO, Steve Archambault, following Doug Lowther's departure from IDC in early July. This leaner executive structure will reduce cost and enable a more agile execution of IDC's new business plan for sustainable growth and profitability.
- In July 2015, we raised $0.9 million through the issuance of Secured Notes via a non-brokered private placement, alleviating significant liquidity strain following the repayment of the US$1.0 promissory note to Pico Digital Inc. The Secured Notes were 40% subscribed by IDC's senior executives.
- The Board also filled the vacant board seats as a result of the previously announced resignations of David Charron and Doug Lowther. The Board appointed Glenn McDougall as an independent director and Steve Archambault (Executive VP and CFO) as a non-independent director. Mr. McDougall has been a long-term shareholder of IDC and also participated in the Private Placement. Messrs. Barrett, Huin and Archambault also participated in the Private Placement.
Since the end of Q2 of Fiscal 2016, we have made further progress:
- In August 2015, we entered into a long term strategic agreement with Ymagis Group where IDC will supply it with its new software based Digital Cinema Client enabling delivery of movies and trailers over both satellite and broadband. Ymagis Group is the European specialist in digital technologies for the motion picture industry.
- We are in active negotiation for a multi-million dollar Laser MPS opportunity, which we expect to conclude during the third quarter.
- We have closed IDC's San Diego location and transferred its activities to head office in Canada.
Steeve Huin and Chris Barrett, IDC's Co-CEOs, jointly stated, "As IDC moves on from the recent proposed acquisition phase, customer confidence is returning and we are seeing signs of increased sales volume and pipeline for both the third and fourth quarter of Fiscal 2016. This increased volume and the advanced state of some larger potential deals maintain our confidence in a stronger IDC going forward."
"We continue to be disciplined and vigilant on cost controls and cash management. Based on the current positive sales momentum observed in recent weeks and current overall cost structure, we believe we can reach operating profitability and financial stability during the second half of Fiscal 2016," stated Steve Archambault, EVP & CFO of IDC.
For further information on IDC's second quarter Fiscal 2016 results, refer to the unaudited condensed consolidated financial statements and Management's Discussion and Analysis that will be available on SEDAR (www.sedar.com) after the Toronto Stock Exchange closes on September 8, 2015.
CONFERENCE CALL
IDC will host a conference call tomorrow (September 9, 2015) to discuss these results. Chris Barrett and Steeve Huin (Co-CEOs) and Steve Archambault (EVP & CFO) will host the presentation starting at 8:30 a.m. Eastern time. A question and answer session will follow management's presentation.
| DATE: | Wednesday, September 9, 2015 |
| TIME: | 8:30 a.m. ET |
| DIAL-IN NUMBERS: | 416-695-7806 / 888-789-9572 |
| PARTICIPANT CODE: | 6578119 |
WEBCAST: A live audio webcast of the conference call will be available at the following link: http://www.gowebcasting.com/6857. This webcast will be archived here for 365 days. Please connect to the website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be needed to access the webcast.
About International Datacasting Corporation:
International Datacasting Corporation (TSX:IDC) is a global technology provider for the world's premiere broadcasters in radio, television, data and digital cinema. IDC's products and solutions are in demand for radio and television networks, targeted ad insertion, digital cinema, 3D live events, satellite news gathering, sports contribution, VOD, and IPTV. IDC is headquartered in Ottawa, Canada. For more information visit: www.datacast.com.
Forward-Looking Statements:
This press release contains certain information that may constitute "forward-looking information" and/or "forward-looking statements" within the meaning of applicable Canadian securities laws including, without limitation, management's beliefs with respect to strategy, results and costs savings in Fiscal 2016, management's expectations with respect to IDC's financial resources and liquidity over the next 12 months, management's expectations with respect to the receipt of orders for the Corporation's products and possible revenue to be generated from sales of the Corporation's products, the ability of IDC to raise funds, and the ability to achieve profitability during the second half of Fiscal 2016. All forward-looking information and forward-looking statements are necessarily based on a number of estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies. The material assumptions used to develop the forward looking-statements made in this release include the size of possible commercial transactions involving the Corporation's products, expectations regarding future shipments of IDC products, anticipated cost savings resulting from the initiatives taken by the Corporation under its action plan, anticipated impact of senior personnel, management's expectations with respect to the approach of the note holders to the repayment of the $0.9 million of secured notes issued in July 2015, management's perceptions of current conditions and expected future developments, as well as other considerations that are believed to be appropriate in the circumstances.
All statements other than statements which are reporting results as well as statements of historical fact are forward-looking statements that may involve a number of known and unknown risks, uncertainties and other factors; many of which are beyond the ability of IDC to control or predict.
Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "design", "plan or "project" or the negative of these words or other variations on these words or comparable terminology. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Risks and uncertainties that might cause actual results to differ materially include, but are not limited to: that commercial transactions with respect to LASER MPS will not materialize or will not be concluded on terms that are favorable to IDC.
More detailed information about potential factors that could affect IDC's financial and business results is included in the public documents IDC files from time to time with Canadian securities regulatory authorities and which are available on SEDAR at www.sedar.com, including, without limitation, IDC's Annual Information Form and MD&A for the year ended January 31, 2015, each dated April 29, 2015, and IDC's MD&A for the three and six months periods ended July 31, 2015 and 2014 dated September 8, 2015.
Except as expressly required by applicable law, we undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements are provided to assist external stakeholders in understanding IDC's expectations as at the date of this release and may not be appropriate for other purposes. Readers are cautioned not to place undue reliance on such statements.
| INTERNATIONAL DATACASTING CORPORATION | |||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | |||||||
| As at July 31 and January 31, 2015 | |||||||
| (Canadian dollars) | |||||||
| July 31, 2015 |
January 31, 2015 | ||||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash | $ | 993,453 | $ | 615,403 | |||
| Restricted short-term investments | - | 80,000 | |||||
| Accounts receivable | 1,056,398 | 1,464,828 | |||||
| Inventories | 2,734,557 | 3,603,125 | |||||
| Other assets | 100,495 | 176,336 | |||||
| Total Current Assets | 4,884,903 | 5,939,692 | |||||
| Non-Current Assets | |||||||
| Capital assets | 426,917 | 541,794 | |||||
| Total Non-Current Assets | 426,917 | 541,794 | |||||
| TOTAL ASSETS | $ | 5,311,820 | $ | 6,481,486 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current Liabilities | |||||||
| Accounts payable | $ | 804,011 | $ | 838,531 | |||
| Secured borrowings | 890,117 | 144,406 | |||||
| Accrued liabilities | 775,433 | 648,615 | |||||
| Customer deposits | 9,495 | 50,712 | |||||
| Deferred revenue - current portion | 465,033 | 275,483 | |||||
| Provisions | 132,933 | 145,947 | |||||
| Current tax liability | 10,348 | 10,450 | |||||
| Total Current Liabilities | 3,087,370 | 2,114,144 | |||||
| Non-Current Liabilities | |||||||
| Deferred tax liability | 7,830 | 8,793 | |||||
| Deferred revenue | 284,497 | 323,230 | |||||
| Total Non-Current Liabilities | 292,327 | 332,023 | |||||
| TOTAL LIABILITIES | 3,379,697 | 2,446,167 | |||||
| Shareholders' Equity | |||||||
| Capital stock | 24,393,909 | 24,131,627 | |||||
| Contributed surplus | 3,728,777 | 3,901,345 | |||||
| Accumulated other comprehensive loss | (229,729 | ) | (229,729 | ) | |||
| Accumulated deficit | (25,960,834 | ) | (23,767,924 | ) | |||
| TOTAL SHAREHOLDERS' EQUITY | 1,932,123 | 4,035,319 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 5,311,820 | $ | 6,481,486 | |||
| INTERNATIONAL DATACASTING CORPORATION | |||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | |||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2015 and 2014 | |||||||||||||
| (Canadian dollars, except for share data) | |||||||||||||
| Three months ended | Six Months Ended | ||||||||||||
| July 31, 2015 | July 31, 2014 | July 31, 2015 | July 31, 2014 | ||||||||||
| REVENUE | |||||||||||||
| Products | $ | 1,313,515 | $ | 2,216,742 | $ | 3,946,777 | $ | 4,154,679 | |||||
| Services | 359,037 | 382,197 | 741,164 | 1,274,022 | |||||||||
| Total revenue | 1,672,552 | 2,598,939 | 4,687,941 | 5,428,701 | |||||||||
| COST OF REVENUE | |||||||||||||
| Cost of goods sold and services | 770,999 | 1,317,035 | 1,868,684 | 2,942,233 | |||||||||
| Inventory impairment charge | 650,740 | - | 650,740 | - | |||||||||
| Total cost of revenue | 1,421,739 | - | 2,519,424 | - | |||||||||
| GROSS PROFIT | 250,813 | 2,598,939 | 2,168,517 | 5,428,701 | |||||||||
| OPERATING EXPENSES | |||||||||||||
| Selling, general and administrative | 1,312,143 | 1,448,498 | 2,673,216 | 2,608,617 | |||||||||
| Research and development, net of investment tax credits | 785,531 | 1,100,651 | 1,634,981 | 2,370,659 | |||||||||
| Restructuring charges | - | 51,990 | - | 370,640 | |||||||||
| Foreign exchange loss | (19,912 | ) | 1,536 | 23,955 | 20,325 | ||||||||
| Total operating expenses | 2,077,762 | 2,602,675 | 4,332,152 | 5,370,241 | |||||||||
| OPERATING LOSS BEFORE OTHER ITEMS | (1,826,949 | ) | (3,736 | ) | (2,163,635 | ) | 58,460 | ||||||
| Interest Income | 407 | 4,944 | 407 | 9,568 | |||||||||
| Interest expense | (20,246 | ) | (858 | ) | (30,306 | ) | (858 | ) | |||||
| LOSS BEFORE INCOME TAXES | (1,846,788 | ) | 350 | (2,193,534 | ) | 67,170 | |||||||
| Income tax recovery (expense): | |||||||||||||
| Current | 4,529 | (5,216 | ) | (339 | ) | (12,251 | ) | ||||||
| Deferred | 445 | 182 | 963 | (536 | ) | ||||||||
| NET AND COMPREHENSIVE LOSS | $ | (1,841,814 | ) | $ | (4,684 | ) | $ | (2,192,910 | ) | $ | 54,383 | ||
| NET LOSS PER SHARE | |||||||||||||
| Basic | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.00 | ||
| Diluted | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.03 | ) | $ | 0.00 | ||
| Weighted average number of shares outstanding - basic | 65,782,516 | 58,599,366 | 65,291,322 | 58,553,360 | |||||||||
| Weighted average number of shares outstanding - diluted | 65,782,516 | 58,599,366 | 65,291,322 | 58,553,360 | |||||||||
| INTERNATIONAL DATACASTING CORPORATION | |||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2015 AND 2014 | |||||||||||||
| (Canadian dollars) | |||||||||||||
| Three months ended | Six months ended | ||||||||||||
| July 31, 2015 | July 31, 2014 | July 31, 2015 | July 31, 2014 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||||
| Net loss | $ | (1,841,814 | ) | $ | (1,321,719 | ) | $ | (2,192,910 | ) | $ | (2,887,850 | ) | |
| Add items not requiring an outlay of cash: | |||||||||||||
| Depreciation of capital assets | 53,248 | 53,097 | 113,166 | 91,741 | |||||||||
| Gain on disposal of capital assets | (11,750 | ) | - | (11,750 | ) | - | |||||||
| Deferred tax adjustments | (445 | ) | (182 | ) | (963 | ) | 536 | ||||||
| Unrealized loss on derivatives | - | 8,968 | - | 8,968 | |||||||||
| Stock-based compensation | 16,156 | 220,423 | 68,496 | 302,840 | |||||||||
| - | |||||||||||||
| (1,784,605 | ) | (1,039,413 | ) | (2,023,961 | ) | (2,483,765 | ) | ||||||
| Net change in non-cash working capital: | |||||||||||||
| Trade and other receivables | 1,495,508 | 263,205 | 408,430 | 864,180 | |||||||||
| Inventories | 581,660 | (532,116 | ) | 868,568 | (137,937 | ) | |||||||
| Other assets | 34,673 | (172,335 | ) | 75,841 | 1,933 | ||||||||
| Trade and other payables and accrued liabilities | 119,297 | 658,834 | 104,801 | (243,137 | ) | ||||||||
| Customer deposits | (199,557 | ) | 1,512 | (41,217 | ) | 7,139 | |||||||
| Deferred revenue | (136,007 | ) | 160,735 | 150,817 | 518,705 | ||||||||
| Provisions | (14,779 | ) | (27,542 | ) | (13,014 | ) | 209,990 | ||||||
| Current tax liability | (4,438 | ) | 5,178 | (102 | ) | 3,164 | |||||||
| Net cash provided by (applied to) operating activities | 91,752 | (681,942 | ) | (469,837 | ) | (1,259,728 | ) | ||||||
| INVESTING ACTIVITIES | |||||||||||||
| Redemption of short-term investment | 80,000 | 50,000 | 80,000 | 72,500 | |||||||||
| Purchase of capital assets | - | (95,757 | ) | - | (106,000 | ) | |||||||
| Proceeds on disposal of capital assets | 13,461 | - | 13,461 | - | |||||||||
| Net cash provided by (applied to) investing activities | 93,461 | (45,757 | ) | 93,461 | (33,500 | ) | |||||||
| FINANCING ACTIVITIES | |||||||||||||
| Advances from secured lenders | 906,000 | - | 2,199,070 | - | |||||||||
| Repayments of secured borrowings | (1,206,401 | ) | - | (1,437,477 | ) | - | |||||||
| Issuance of common shares | - | 394,325 | - | 394,325 | |||||||||
| Payments made on vested RSU's | - | - | (7,167 | ) | - | ||||||||
| Net cash provided by (applied to) financing activities | (300,401 | ) | 394,325 | 754,426 | 394,325 | ||||||||
| Net increase (decrease) in cash during the period | (115,188 | ) | (333,374 | ) | 378,050 | (898,903 | ) | ||||||
| CASH AND CASH EQUIVALENTS - Beginning of period | 1,108,641 | 2,169,126 | 615,403 | 2,734,655 | |||||||||
| CASH AND CASH EQUIVALENTS - End of period | $ | 993,453 | $ | 1,835,752 | $ | 993,453 | $ | 1,835,752 | |||||
| International Datacasting Corporation | ||||||||||||||
| NON-GAAP FINANCIAL MEASURE RECONCILIATION | ||||||||||||||
| ADJUSTED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION | ||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED JULY 31, 2015 and 2014 | ||||||||||||||
| (Canadian dollars) | ||||||||||||||
| Three months ended | Six months ended | |||||||||||||
| July 31, 2015 | July 31, 2014 | July 31, 2015 | July 31, 2014 | |||||||||||
| Net loss reported under IFRS (unaudited) | $ | (1,841,814 | ) | $ | (1,321,719 | ) | $ | (2,192,910 | ) | $ | (2,887,850 | ) | ||
| Add (subtract): | ||||||||||||||
| Inventory impairment charge, net | 650,740 | - | 650,740 | - | ||||||||||
| Transaction costs | 118,475 | - | 367,155 | - | ||||||||||
| Termination costs | 130,513 | - | 130,513 | - | ||||||||||
| Depreciation expense | 53,248 | 53,097 | 113,166 | 91,741 | ||||||||||
| Interest expense | 20,246 | 858 | 30,306 | 858 | ||||||||||
| Income tax recovery (expense) | (4,974 | ) | 5,034 | (624 | ) | 12,787 | ||||||||
| Net investment income | (407 | ) | (4,944 | ) | (407 | ) | (9,568 | ) | ||||||
| Restructuring expense | - | 51,990 | - | 370,640 | ||||||||||
| Adjusted EBITDA Loss | $ | (873,973 | ) | $ | (1,215,684 | ) | $ | (902,061 | ) | $ | (2,421,392 | ) | ||
In this release, IDC has presented Adjusted EBITDA (Loss), which is a "non-GAAP financial measure" and accordingly it is not an earnings measure recognized by IFRS and does have a standardized meaning prescribed under IFRS. IDC defines Adjusted EBITDA as net income (loss) excluding amounts for depreciation and amortization, finance costs, finance income, income tax recovery (expense) as well as unusual and/or non-recurring charges such as large inventory impairment charge, M&A transaction costs, restructuring costs, and significant termination costs.
Moreover, IDC's method for calculating Adjusted EBITDA (Loss) may differ from that used by other companies using the same designation and is unlikely to be comparable to similar measures presented by other companies. Accordingly, we caution readers that Adjusted EBITDA (Loss) should not be substituted for determining net income (loss) as an indicator of operating results or as a substitution for cash flows from operating and investing activities.
We believe Adjusted EBITDA (Loss) is a meaningful and useful supplemental financial metric to investors and analysts for measuring and predicting IDC's operating performance.
