Rapid growth continues as Distributed Access
Architecture penetration accelerates
- Record Q4 revenue climbs 70% YoY and 18% QoQ to $60.0M;
annual revenue grows 50.4% to new high of $186.8M
- Entra DAA sales increase significantly by 141% YoY to $40.0M
in Q4 and 152% to $107.3M in fiscal 2022
- Q4 adjusted EBITDA of $11.1M and full-year adjusted EBITDA
of $31.0M up 96% and 152% YoY, respectively
- Q4 and full-year gross margin increases to 48%
- Adjusted EPS grows to $0.19 in Q4 and $0.41 in fiscal 2022,
a $0.51 increase from fiscal 2021
- Employee count increases 23% YoY
Vecima Networks Inc. (TSX: VCM) today reported financial results
for the three months and year ended June 30, 2022.
FINANCIAL HIGHLIGHTS
(Canadian dollars in millions except
percentages, employees, and per share data)
Q4FY22
Q4FY21
FY2022
FY2021
Revenue
$60.0
$35.3
$186.8
$124.2
Gross Margin
48%
42%
48%
46%
Net Income (Loss)
$3.5
$1.4
$8.7
$(0.3)
Earnings (Loss) per Share1
$0.16
$0.06
$0.38
$(0.02)
Adjusted Earnings (Loss) per
Share1,2,3,4,5
$0.19
$0.06
$0.41
$(0.10)
Adjusted EBITDA2
$11.1
$5.7
$31.0
$12.0
Cash and Short-term Investments
$12.9
$28.9
$12.9
$28.9
Employees
592
481
592
481
1 Based on weighted average number of
shares outstanding.
2 Adjusted Earnings Per Share and Adjusted
EBITDA do not have a standardized meaning under IFRS and therefore
may not be comparable to similar measures provided by other
issuers. See “Adjusted EBITDA and Adjusted Earnings (Loss) Per
Share” below.
3 Starting in Q4 fiscal 2019, we have
changed our definition and calculation of Adjusted Earnings Per
Share. For a reconciliation of Adjusted Earnings (Loss) Per Share,
investors should refer to Vecima’s Management’s Discussion and
Analysis for the fourth quarter of fiscal 2022.
4 Adjusted Earnings Per Share includes
non-cash share-based compensation of $0.1 million or $0.00 per
share for the three months ended June 30, 2022, and $0.8 million or
$0.04 per share for the year ended June 30, 2022. The non-cash
share-based compensation primarily reflects certain
performance-based vesting thresholds achieved under the Company’s
Performance Share Unit Plan.
5 Adjusted Earnings Per Share includes
foreign exchange gain of $1.4 million or $0.06 per share for the
three months ended June 30, 2022, and $1.8 million or $0.08 per
share for the year ended June 30, 2022.
“The outstanding financial momentum we achieved through the
first nine months of fiscal 2022 reached yet another higher octave
in the fourth quarter as Vecima’s deep engagement in the global
industry migration to distributed access architecture, or DAA,
drove the best quarterly and full-year sales results and growth
rate in our 34-year history,” said Sumit Kumar, Vecima’s President
and Chief Executive Officer.
“Fourth quarter sales climbed 70% year-over-year to $60.0
million and full-year sales rose more than 50% to $186.8 million,
representing a substantial growth rate particularly in light of
ongoing global supply chain constraints. Importantly, our momentum
levered through to the bottom line as we established even bigger
percentage gains in gross profit, adjusted EBITDA and net earnings.
Our fourth quarter adjusted EBITDA of $11.1 million was up 96% from
what we achieved in the same period last year. On a full-year
basis, adjusted EBITDA of $31.0 million grew a remarkable 152% or
more than two and a half times year-over-year and adjusted earnings
per share of $0.41 climbed 51 cents from a year ago."
“These are particularly satisfying results as they directly
reflect the success of our multi-year investment in the industry’s
most complete offering of fully interoperable and technically
differentiated DAA fiber access and cable access solutions for
broadband. In a year when operators worldwide significantly
increased their capital investment into DAA broadband access
networks, Vecima was the technology partner of choice for a growing
number of them, including several of the world’s largest Tier 1
operators. Sales of our Entra DAA cable and fiber access products
soared to $107.3 million, an increase of 152% year-over-year. This
is a powerful growth trajectory for a product family that two years
ago accounted for just $5.3 million or about 6% of our annual
sales. Entra is precisely the growth engine we envisioned, leading
Vecima’s sales and strongly supporting our bottom line."
“Our record results were further supported by continued solid
performance from our Content Delivery and Storage segment, which
contributed $43.5 million in sales to our full-year results."
“We are very proud of Vecima’s striking performance in fiscal
2022 and the steps taken during the year to further our industry
leadership across both DAA and IPTV. Major technical milestones
included successfully demonstrating 10G-capable multi-gig
symmetrical speed DOCSIS 4.0 in partnership with Tier 1 operators,
launching our new XGS-PON FTTH products, and, in our CDS segment,
making significant progress with standards-compliant Open Caching,
including a deepening engagement with a leading global streaming
company. While just starting to realize the rewards of the first
wave of industry migration to DAA and IPTV, Vecima is already on
the pathway to capturing the next,” said Mr. Kumar.
BUSINESS HIGHLIGHTS
Corporate
- Achieved the best quarterly and annual revenue results in
Vecima’s history with fourth quarter consolidated sales increasing
70% to $60.0 million year-over-year and fiscal 2022 consolidated
sales climbing over 50% year-over-year to $186.8 million
- Generated Q4 gross profit of $28.5 million and full-year gross
profit of $90.0 million, up 90% and 59%, respectively, from the
same periods in fiscal 2021
- Increased Q4 and full-year gross profit margin to 48%, from 42%
and 46%, respectively, in the same periods last year
- Lifted fourth quarter adjusted EBITDA by 96% to $11.1 million,
from $5.7 million last year; full-year adjusted EBITDA climbed 152%
to $31.0 million, from $12.3 million in fiscal 2021
- Fourth quarter adjusted EBITDA margin increased to 18.5%, from
16.1% in the same period of 2021
- Grew fourth quarter adjusted EPS to $0.19, from $0.06 last
year; full-year adjusted EPS surged to $0.41, up from a loss of
$(0.10) per share in fiscal 2021
- Ended the year in a strong financial position with $12.9
million in cash and working capital of $58.6 million, as compared
to $10.6 million and $54.9 million, respectively, as at March 31,
2022
Video and Broadband Solutions (VBS)
- Achieved exceptional segment sales growth with Q4 VBS sales
climbing 111% to $49.4 million and annual sales growing 83%
year-over-year to $137.9 million.
DAA (Entra family)
- Deployments of next-generation Entra DAA products soared 141%
year-over-year to $40.0 million in Q4 fiscal 2022; Entra sales for
the full year climbed 152% to $107.3 million
- Milestone DAA achievements in fiscal 2022 included:
- An increase in total customer engagements to 91 MSOs worldwide,
from 71 a year earlier. Forty-five of these customers have now
ordered Entra products, with order sizes increasing as operators
begin to transition to broader deployment
- Cable access engagements increased by 27% year-over-year
- Fiber access engagements increased by 31% year-over-year
- Multiple customer wins, including Liberty Latin America and
Bluepeak
- Industry-leading demonstration of symmetrical multi-gig DOCSIS
4.0 standard; selected by two of the world’s largest cable
operators as a joint development partner for this next-generation
DAA technology
- Launched XGS-PON, an additional standard for FTTH PON (passive
optical networks), which like 10G-EPON can support 10 Gbps
symmetrical data transfer
- Announced industry’s first cloud-based DAA controller, another
step in Vecima’s journey to a cloud-driven intelligent and
cost-effective set of virtualized services for access networks
Commercial Video (Terrace family)
- Grew Q4 Commercial Video sales to $8.8 million, from $6.7
million in the same period last year; generated full-year sales of
$29.8 million as compared to $31.4 million in fiscal 2021
- Increased TerraceQAM sales to $5.9 million in Q4 and $20.6
million in fiscal 2022, up from $4.4 million and $17.1 million,
respectively, last year
- Grew Terrace family sales to $2.9 million in the fourth
quarter, from $2.4 million in the same period last year. For the
full year, Terrace family sales decreased to $9.2 million from
$14.3 million in fiscal 2021, with customers increasingly
transitioning to next-generation solutions
- Deployed new Community Cache solution combining MediaScale and
Terrace products to empower operators to efficiently increase
bandwidth for data services, utilize the latest IPTV user
interfaces, and support legacy video delivery
Content Delivery and Storage (CDS)
- Generated sales of $9.2 million in Q4 fiscal 2022 and $43.5
million in fiscal 2022, as compared to $10.4 million and $43.4
million in the same periods of 2021, respectively
- Milestone CDS developments in fiscal 2022 included:
- Won and executed the largest IPTV deal in Vecima’s history with
a Top 10 U.S. cable operator
- Breezeline (formerly Atlantic Broadband) chose MediaScale to
power its IPTV video delivery solution and accelerate its
next-generation TV experience to its broad subscriber base
- Won two new IPTV customers and secured multiple expansions
- Demonstrated Vecima’s Streaming Video Technology Alliance
standards-compliant Open Caching solution and progressed an
engagement with a globally-leading Tier 1 streaming customer
- Achieved significant enhancements in MediaScale feature sets
and scalability, including server efficiency, egress and
throughput, Ultra-HD support, DRM, and the latest state-of-the-art
flash storage
- Developed and launched Digital Ad Insertion technology in the
MediaScale portfolio allowing for enhanced ad monetization of
broadcast managed-IPTV streams
Telematics
- Generated additional deployments in high-value verticals,
including municipal government and moveable asset customers
- Added 39 new customers for the NERO asset tracking platform in
fiscal 2022, with the number of movable assets being monitored
rising to over 23,000 tags
- Transitioned to newer generation cellular standards in step
with the migration from legacy networks by wireless providers
“Looking ahead to fiscal 2023, we expect demand for our Entra
DAA products will continue to rapidly escalate, with existing
customers ramping scale deployment and newer customers
transitioning to field deployments. Our outlook is further
supported by a very broad order book that gives us excellent
visibility into customer expectations and growth for the year
ahead,” added Mr. Kumar. “While momentum is already building at a
brisk pace, we emphasize that we are still in the early stages of
broad industry DAA adoption, and we see an extraordinary and
lengthy growth runway for Entra."
“In our Content Delivery and Storage segment, we anticipate
moderate growth in fiscal 2023 as demand for our IPTV and open
caching solutions continues to grow. Over the medium-to-longer
term, we see higher growth potential as IPTV gains momentum and as
our newer open caching solutions become an important new driver of
CDS performance."
“We reiterate our caution that continuing global supply chain
challenges have the potential to constrain or impact our revenue
growth and put pressure on gross margins in the near term. We have
increased our working capital to maintain higher-than-normal
inventories of finished goods and raw material, and we will
continue to carefully manage all aspects of our supply chain as we
work to realize the significant opportunities created by the large
and rapidly growing distributed access and IPTV markets,” concluded
Mr. Kumar.
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 7, 2022 to shareholders of record as at
October 7, 2022.
CONFERENCE CALL
A conference call and live audio webcast will be held today,
September 22, 2022 at 1 p.m. ET to discuss the Company’s fourth
quarter and year end results. Vecima’s audited condensed annual
consolidated financial statements and management’s discussion and
analysis for the three months and year ended June 30, 2022 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/vecima2022q4.html and
will be archived on the Vecima website at
https://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 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
fourth quarter of fiscal 2022.
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: the outstanding financial momentum we
achieved through the first nine months of fiscal 2022 reached yet
another higher octave in the fourth quarter; fourth quarter sales
climbed, representing a substantial growth rate particularly in
light of ongoing global supply chain constraints; our momentum
levered through to the bottom line; results as directly reflect the
success of our multi-year investment in the industry’s most
complete offering of fully interoperable and technically
differentiated DAA fiber access and cable access solutions for
broadband; in a year when operators worldwide significantly
increased their capital investment into DAA broadband access
networks, Vecima was the technology partner of choice for a growing
number of them, including several of the world’s largest Tier 1
operators; Entra is precisely the growth engine we envisioned,
leading Vecima’s sales and strongly supporting our bottom line;
while just starting to realize the rewards of the first wave of
industry migration to DAA and IPTV, Vecima is already on the
pathway to capturing the next; looking ahead to fiscal 2023, we
expect demand for our Entra DAA products will continue to rapidly
escalate, with existing customers ramping scale deployment and
newer customers transitioning to field deployments; our outlook is
further supported by a very broad order book that gives us
excellent visibility into customer expectations and growth for the
year ahead; while momentum is already building at a brisk pace, we
emphasize that we are still in the early stages of broad industry
DAA adoption and we see an extraordinary and lengthy growth runway
for Entra; in our Content Delivery and Storage segment, we
anticipate moderate growth in fiscal 2023 as demand for our IPTV
and open caching solutions continues to grow; over the
medium-to-longer term, we see higher growth potential as IPTV gains
momentum and as our newer open caching solutions become an
important new driver of CDS performance; we reiterate our caution
that continuing global supply chain challenges have the potential
to constrain or impact our revenue growth and put pressure on gross
margins in the near term; we have increased our working capital to
maintain higher-than-normal inventories of finished goods and raw
material, and we will continue to carefully manage all aspects of
our supply chain as we work to realize the significant
opportunities created by the large and rapidly growing distributed
access and IPTV markets.
A more complete discussion of the risks and uncertainties facing
Vecima is disclosed under the heading “Risk Factors” in the
Company’s most recently filed Annual Information Form, 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.
VECIMA NETWORKS INC.
Consolidated Statements of Financial
Position
(in thousands of Canadian dollars,
except per share amounts)
As at
June 30, 2022
June 30, 2021
Assets
Current assets
Cash and cash equivalents
$
12,902
$
28,909
Accounts receivable
49,655
28,784
Income tax receivable
693
414
Inventories
49,608
15,578
Prepaid expenses and other current
assets
7,302
3,497
Contract assets
1,335
516
Total current assets
121,495
77,698
Non-current assets
Property, plant and equipment
16,483
13,854
Right-of-use assets
2,626
3,660
Goodwill
14,813
14,542
Intangible assets
75,917
72,224
Other long-term assets
1,440
1,267
Investment tax credits
23,041
24,344
Deferred tax assets
6,793
7,143
Total assets
$
262,608
$
214,732
Liabilities and shareholders’
equity
Current liabilities
Accounts payable and accrued
liabilities
$
48,172
$
22,259
Provisions
659
1,439
Income tax payable
182
454
Deferred revenue
12,129
7,137
Current portion of long-term debt
1,782
1,617
Total current liabilities
62,924
32,906
Non-current liabilities
Provisions
366
397
Deferred revenue
4,465
2,398
Deferred tax liability
6
4
Long-term debt
15,115
4,107
Total liabilities
82,876
39,812
Shareholders’ equity
Share capital
7,935
7,299
Reserves
3,141
3,407
Retained earnings
168,923
165,312
Accumulated other comprehensive loss
(267
)
(1,098
)
Total shareholders’ equity
179,732
174,920
Total liabilities and shareholders’
equity
$
262,608
$
214,732
VECIMA NETWORKS INC.
Consolidated Statements of
Comprehensive Income [Loss]
(in thousands of Canadian dollars,
except per share amounts)
Years ended June 30,
2022
2021
Sales
$
186,814
$
124,177
Cost of Sales
96,852
67,535
Gross Profit
89,962
56,642
Operating expenses
Research and development
36,552
26,247
Sales and marketing
19,330
13,720
General and administrative
22,761
17,937
Share-based compensation
881
1,420
Other expense (income)
1,001
(1,512
)
Total operating expenses
80,525
57,812
Operating income (loss)
9,437
(1,170
)
Finance (expense) income
(272
)
69
Foreign exchange gain (loss)
1,882
(2,973
)
Income (loss) before income
taxes
11,047
(4,074
)
Income tax expense (recovery)
2,358
(1,889
)
Net income (loss) from continuing
operations
8,689
(2,185
)
Net income from discontinued
operations
-
1,854
Net income (loss)
$
8,689
$
(331
)
Other comprehensive income
(loss)
Item that may be subsequently reclassed
to net income
Exchange differences on translating
foreign operations
$
831
$
(3,196
)
Comprehensive income (loss)
$
9,520
$
(3,527
)
Net income (loss) per share
Continuing operations – basic
$
0.38
$
(0.10
)
Discontinued operations – basic
-
0.08
Total basic net income (loss) per
share
$
0.38
$
(0.02
)
Continuing operations – basic
$
0.38
$
(0.10
)
Discontinued operations – basic
-
0.08
Total diluted net income (loss) per
share
$
0.38
$
(0.02
)
Weighted average number of common
shares
Shares outstanding – basic
23,079,181
22,748,826
Shares outstanding – diluted
23,114,389
22,748,826
VECIMA NETWORKS INC.
Consolidated Statements of Changes in
Equity
(in thousands of Canadian dollars)
Share capital
Reserves
Retained earnings
Accumulated other
comprehensive (loss) income
Total
Balance as at June 30, 2020
$
3,161
$
3,838
$
170,665
$
2,098
$
179,762
Net loss
-
-
(331
)
-
(331
)
Other comprehensive loss
-
-
-
(3,196
)
(3,196
)
Dividends
-
-
(5,022
)
-
(5,022
)
Shares issued by exercising options
3,154
(813
)
-
-
2,341
Subscription for common shares
713
-
-
-
713
PSUs settled in common shares
1,038
(1,038
)
-
-
-
Withholding taxes on PSUs
(767
)
-
-
-
(767
)
Share-based payment expense
-
1,420
-
-
1,420
Balance as at June 30, 2021
$
7,299
$
3,407
$
165,312
$
(1,098
)
$
174,920
Net income
-
-
8,689
-
8,689
Other comprehensive income
-
-
-
831
831
Dividends
-
-
(5,078
)
-
(5,078
)
Shares issued by exercising options
733
(171
)
-
-
562
PSUs settled in common shares
976
(976
)
-
-
-
Withholding taxes on PSUs
(1,073
)
-
-
-
(1,073
)
Share-based payment expense
-
881
-
-
881
Balance as at June 30, 2022
$
7,935
$
3,141
$
168,923
$
(267
)
$
179,732
VECIMA NETWORKS INC.
Consolidated Statements of Cash
Flows
(in thousands of Canadian
dollars)
Years ended June 30,
2022
2021
OPERATING ACTIVITIES
Net income (loss) from continuing
operations
$
8,689
$
(2,185)
Adjustments for non-cash items:
Loss (gain) on sale of property, plant and
equipment
208
(302)
Depreciation and amortization
17,849
14,755
Impairment on deferred development
costs
712
-
Share-based compensation
881
1,420
Income tax expense
1,883
1,451
Deferred income tax expense (recovery)
475
(3,340)
Interest expense
299
225
Interest income
(27)
(163)
Net change in working capital
(25,748)
8,032
Increase in other long-term assets
(110)
(135)
Decrease in provisions
(787)
(54)
Increase in investment tax credits
(147)
(149)
Income tax received
164
174
Income tax paid
(883)
(456)
Interest received
29
163
Interest paid
(154)
(40)
Cash provided by discontinued
operations
-
651
Cash provided by operating activities
3,333
20,047
INVESTING ACTIVITIES
Capital expenditures, net
(5,868)
(2,377)
Purchase of short-term investments
-
(295)
Proceeds from sale of short-term
investments
-
17,460
Deferred development costs
(17,405)
(16,235)
Business acquisition
-
(5,871)
Cash provided by discontinued
operations
-
2,323
Cash used in investing activities
(23,273)
(4,995)
FINANCING ACTIVITIES
Principal repayments of lease
liabilities
(1,584)
(1,557)
Repayment of long-term debt
(250)
(250)
Proceeds from long-term debt
12,410
-
Dividends paid
(5,078)
(5,022)
Proceeds from issuing shares
-
713
Issuance of shares through exercised
options
562
2,341
Withholding taxes on PSUs
(1,073)
(767)
Cash used in discontinued operations
-
(64)
Cash provided by (used in) financing
activities
4,987
(4,606)
Net (decrease) increase in cash and cash
equivalents
(14,953)
10,446
Effect of change in exchange rates on
cash
(1,054)
1,113
Cash and cash equivalents, beginning of
year
28,909
17,350
Cash and cash equivalents, end of
year
$
12,902
$
28,909
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220922005349/en/
Vecima Networks Investor Relations - 250-881-1982
invest@vecima.com
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