Spectra7 Announces Fourth Quarter and Annual Financial Results For The Year Ended December 31, 2017
March 06 2018 - 06:00AM
(TSX:SEV) Spectra7 Microsystems Inc. (“Spectra7” or the “Company”),
a leading provider of high-performance analog semiconductor
products for broadband connectivity markets, today announced its
audited financial results for the year ended December 31, 2017. A
copy of the audited consolidated financial statements for the
12-months ended December 31, 2017 prepared in accordance with
International Financial Reporting Standards and the corresponding
management’s discussion and analysis (“MD&A”) will be available
under the Company’s profile on www.sedar.com. All amounts are in US
dollars unless otherwise noted.
2017 Financial and Operational
Summary
- Revenue for the year ended December 31, 2017 was $10.6 million
as compared to $8.6 million in the previous year, representing a
23% increase.
- Gross margini as a percentage of revenue for the year ended
December 31, 2017 remained strong at 58%, consistent with gross
margin percentage of 58% in the previous year.
- EBITDAii improved to a loss of approximately $6.0 million from
a loss of approximately $8.1 million in 2016.
- The Company added three new executive team members; Gerald
Hamilton as Senior Vice President of Worldwide Sales, Antony Ng
Yukshing as Vice President of Operations, and Darren Ma as Chief
Financial Officer.
- Closed an aggregate of CAD $6.0 million bought deal public
offering and private placement equity financings in June/July
2017.
- The Company successfully expanded its corporate headquarters by
moving from Palo Alto, California to San Jose, California. The new
facility provides upgraded engineering facilities and reduced
operating costs.
Q4 2017 Financial Summary
- Revenue for Q4 2017 was approximately $2.9 million,
representing a 45% increase over the prior quarter and 16% over the
same period in the prior year.
- Gross margin in Q4 2017 was 55%, approximately flat
sequentially and down from 60% over the same period in the prior
year.
- Supply constraints experienced in Q3 2017 were resolved in the
fourth quarter.
- A $1.6M non-cash impairment charge was taken for goodwill
accrued in connection with the acquisition of RedMere Technology
Limited in February 2013. The Company continues to see strong
adoption of its active copper cable products within its core
markets.
Update on Data Center Market
Traction
- The Company continues to experience strong traction with its
data center solutions and announced six new customer design-ins in
Q4 2017.
- The Company showcased 100/200/400 Gbps data center
interconnects at DesignCon 2018.
- The Company announced key partnerships with three major data
center interconnect suppliers including Foxconn Interconnect
Technology Ltd., Luxshare-ICT Inc., and Amphenol ICC.
- With increased prototype revenue in the Q4 2017, the Company
remains on track for production revenue ramp in the second half of
2018.
Highlights Subsequent to Year
End
- Closed a CAD $15.3 million bought deal convertible debenture
public offering in January 2018.
- Paid off $6.5M senior secured term loan.
- Announced new AR/VR/MR products and reference designs for
mobile tethered head mounted displays at CES 2018.
CEO Commentary
“I am pleased with Spectra7’s performance in
2017 and the strong Q4 results to end the year,” said Spectra7 CEO
Raouf Halim. “This year, we proved our technology leadership in the
active copper cable market, announcing several tier one
customers in our core VR, AR and MR markets. Moving forward,
we are very well positioned in the data center market with the
early acceptance and market traction of our innovative GaugeChanger
Plus™ technology”.
Outlook
Based upon the meetings and sampling requests
the Company had for its data center solutions at the DesignCon 2018
industry show, management continues to believe that its data center
revenue will begin to ramp up in 2018.
Given revenue today is largely derived from
consumer-focused markets, investors should expect some weakness in
the first quarter of 2018 following the strong holiday season. The
Company anticipates stronger sales of MR and VR solutions in the
second half of the year. In addition, third-party estimatesiii for
the Company’s core markets suggest growth will continue over the
long-term regardless of seasonality.
ABOUT SPECTRA7 MICROSYSTEMS
INC.
Spectra7 Microsystems Inc. is a high-performance
analog semiconductor company delivering unprecedented bandwidth,
speed and resolution to enable disruptive industrial design for
leading electronics manufacturers in virtual reality, augmented
reality, mixed reality, data centers and other connectivity
markets. Spectra7 is based in San Jose, California with design
centers in Markham, Ontario, Cork, Ireland, and Little Rock,
Arkansas. For more information, please
visit www.spectra7.com.
CAUTIONARY NOTES
Certain statements contained in this press
release constitute “forward-looking statements”. All statements
other than statements of historical fact contained in this press
release, including, without limitation, those regarding the
Company’s future financial position and results of operations,
strategy, proposed acquisitions, plans, objectives, goals and
targets, and any statements preceded by, followed by or that
include the words “believe”, “expect”, “aim”, “intend”, “plan”,
“continue”, “will”, “may”, “would”, “anticipate”, “estimate”,
“forecast”, “predict”, “project”, “seek”, “should” or similar
expressions or the negative thereof, are forward-looking
statements. These statements are not historical facts but instead
represent only the Company’s expectations, estimates and
projections regarding future events. These statements are not
guarantees of future performance and involve assumptions, risks and
uncertainties that are difficult to predict. Therefore, actual
results may differ materially from what is expressed, implied or
forecasted in such forward-looking statements. Additional factors
that could cause actual results, performance or achievements to
differ materially include, but are not limited to the risk factors
discussed in the Company’s annual MD&A for the year ended
December 31, 2017. Management provides forward-looking statements
because it believes they provide useful information to investors
when considering their investment objectives and cautions investors
not to place undue reliance on forward-looking information.
Consequently, all of the forward-looking statements made in this
press release are qualified by these cautionary statements and
other cautionary statements or factors contained herein, and there
can be no assurance that the actual results or developments will be
realized or, even if substantially realized, that they will have
the expected consequences to, or effects on, the Company. These
forward-looking statements are made as of the date of this press
release and the Company assumes no obligation to update or revise
them to reflect subsequent information, events or circumstances or
otherwise, except as required by law.
For more information, please
contact:
Spectra7 Microsystems Inc. Sean Peasgood Investor Relations
416-565-2805 ir@spectra7.com Spectra7 Microsystems Inc. Darren
MaChief Financial Officer669-284-3170pr@spectra7.com
i Gross margin is a non-GAAP measure. Refer to “Revenue and
Gross Margin” in the Company’s annual MD&A for the year ended
December 31, 2017 for reconciliation to measures reported in the
Company’s financial statements.ii EBITDA or earnings before
interest, tax, depreciation, and amortization is a non-GAAP
measure. EBITDA excludes share-based compensation, amortization,
depreciation, interest, and tax expenses.iii BCC Research –
“Virtual Reality Technologies: Global Market to 2022” Published:
February 2018Research and Markets – “Augmented Reality and Mixed
Reality Market: Outlook and Forecasts 2018-2023” Published January
2018Zion Market Research – “Virtual Reality (VR) Market by Hardware
and Software for (Consumer, Commercial, Enterprise, Medical,
Aerospace and Defense, Automotive, Energy and Others) Global
Industry Perspective, Comprehensive Analysis and Forecast, 2016 –
2022” Published: August 2017Market Insights Reports – “Global
Virtual Reality Market Outlook 2024: Global Opportunity And Demand
Analysis, Market Forecast, 2016-2024” Published September
2017