|By Marketwired .||
|June 5, 2014 04:04 PM EDT||
TORONTO, ONTARIO -- (Marketwired) -- 06/05/14 -- ViXS Systems Inc. (TSX:VXS) a pioneer and leader in media processing solutions, reported its first quarter fiscal 2015 results for the period ended April 30, 2014. All results are reported under International Financial Reporting Standards ("IFRS") and in U.S. dollars, unless otherwise specified. ViXS reported Q1FY15 revenue of $7.4 million, total comprehensive loss of $5.1 million and non-IFRS net loss of $4.5 million.
Q1FY15 Financial Summary
-- Revenue of $7.4 million, a sequential increase over the previous quarter's revenue of $7.0 million. Revenue from new products accounted for 61% of sales in F1Q15 versus 54% in the previous quarter, and 37% in the same quarter last year. -- Gross margin of 42.1% -- Product margin of 47.4% which excludes the effects of amortization of IP and mask-sets, support contracts, and design kits. -- IFRS Comprehensive loss of $5.1 million, or a loss of $(0.10) per share basic and diluted, a 34% improvement over the previous quarter. -- Non-IFRS net loss totalled $4.4 million, as compared to a $6.9 million loss in the previous quarter, and a $6.1 million loss in the same quarter last year. -- $19.7 million of cash and equivalents, with no bank debt outstanding at end of quarter.
Customer and Product Announcements
-- Sharp selected ViXS to power its Ultra High Definition (UHD) 4K Recorder and Television products that are expected to begin shipment during June in Japan. -- ViXS launches UHD HEVC 4K Golden Reference Decoder providing the broadcast industry with a standardized tool to test, validate, and enable UHD 4K/HEVC content. -- ViXS demonstrated industry-first RDK client on UHD 4K Platform at The Cable Show. -- Astra and NTT-Plala commence trails of UHD 4K HEVC 60p using ViXS XCode 6. -- ViXS received the top award for Outstanding Business Innovation from the Hong Kong-Canada Business Achievement Awards.
Revenue for the first quarter of fiscal 2015 was $7.4 million, up 6% sequentially from the $7.0 million in the previous quarter.
Revenue from new products (XCode6, XConnex) accounted for 61% of sales in F1Q15 versus 54% in the previous quarter, and 37% in the same quarter last year.
Revenue was down 7% from the $8.0 million in the same quarter of last year primarily due to the timing of product transitions as customers migrate from the Company's older generation products (such as the XCode5000 and older products) to more integrated next-generation SoC products for the MoCA (XConnex) and cloud video infrastructure (XCodePro) markets. As evidence of this transition, ViXS' new XCode6 product completed its first full quarter of sales, exceeding 20% of revenue, and remains the only commercial shipping product to support UHD4K-60 and HEVC 10-bit.
Gross margin was 42.1% in Q1FY15, an increase from the 40.1% level in Q4FY14 due to the higher mix of XCode6 and other integrated SoC products. Product gross margin was 47.4% in the quarter. Unlike most semiconductor companies, ViXS amortizes its IP and mask-sets, and certain other design costs, at the COGS level but we believe our product margin is a useful metric for assessing and comparing ViXS margins within our industry. ViXS has included the product margin for each of the last eight quarters in the "Selected Consolidated Quarterly Financial Information" section in Company's filed MD&A.
Comprehensive loss for the first fiscal quarter was $5.1 million, or a loss of $(0.10) per share basic and diluted, a 34% improvement compared with the comprehensive income loss in the fourth quarter of FY2014 of $7.6 million, or $(0.15) per share basic and diluted. The sequential improvement in IFRS loss was primarily due to higher revenue from XCode6 and MoCA products, plus ongoing cost controls. The Company also had a $0.3 million gain from currency gains which is now reported below the operating expense line for this and previous quarters. A detailed explanation of these and other changes in operating expenses is also described in the Company's filed MD&A.
Non-IFRS net loss for the third fiscal quarter was $4.2 million, or $(0.09) per share (basic and diluted), compared with a non-IFRS net loss of $6.9 million, or $(0.14) per share (basic and diluted), in the prior quarter and non-IFRS net loss of $6.1 million, or $(1.23) per share (basic and diluted), in the same quarter last year. The impact on non-IFRS loss from continuing operations and non-IFRS loss per share (basic and diluted) from continuing operations are summarized in the table below.
Total of cash and cash equivalents was $19.7 million as of April 30, 2014, compared to $25.6 million at the end of the previous quarter. The decrease was due to $5.1 million in operating loss and the timing of certain working capital needs (including IP licenses) needed for growth this year.
"ViXS made a strategic decision to invest early in technologies that we saw disrupting the global video industry, and as a result we are the first and only commercially shipping solution to support both UHD 4K 60p and 10-bit HEVC," said Sally Daub, President and CEO of ViXS Systems Inc. "Our customer wins, Intel partnership, and incremental revenue from new products in Q1FY15 clearly demonstrate that our investment is starting to pay off, and we expect that UHD and HEVC will drive continued revenue and earnings growth for years to come."
Based on the strength of our new products, ViXS expects sequential revenue growth for the second quarter of fiscal 2015, and continued growth is expected through the rest of the year.
For More Information
In conjunction with this announcement, ViXS management will be holding a conference call on Thursday, June 5, 2014, at 5:00 P.M. Eastern time to discuss the Company's results for the first quarter fiscal 2015.
FISCAL 1Q15 CONFERENCE CALL DETAILS:
DATE: Thursday June 5, 2014 TIME: 5:00 P.M. EST DIAL IN NUMBER: Local / International: 647-426-1845 North American Toll: Free: 1-866-782-8903 REPLAY NUMBER: Local / International: 416-915-1035 North American Toll: Free: 1-866-245-6755 Passcode: 271960 WEBCAST: http://public.viavid.com/index.php?id=108940 The webcast will be archived for 90 days WEBSITE: To view the press release or any additional financial information, please visit the Investor Relations section of the ViXS website at: http://investor.vixs.com/investor-relations/
SELECTED CONSOLIDATED FINANCIAL INFORMATION
Three Month Period Ended April 30, January 31, April 30, Dollar amounts in U.S. dollars 2014 2014 2013 ------------------------------------ Amounts in thousands Revenues $7,441 $7,039 $8,024 Cost of sales 4,305 4,173 4,178 ------------------------------------ Gross margin 3,136 2,866 3,846 ------------------------------------ Operating expenses Research and development 4,255 4,548 6,041 Selling, general and administrative 4,246 4,230 2,577 ------------------------------------ Total operating expenses (1) 8,501 8,778 8,618 ------------------------------------ Loss before finance costs and income, currency gain, convertible preferred share revaluation adjustment and income taxes (5,365) (5,912) (4,772) ------------------------------------ Other income (expense): Finance costs (20) (152) (18,835) Finance income 24 33 - Currency gain 291 (1,578) 10 Convertible preferred share revaluation adjustment - - (1,185) ------------------------------------ Total other income (expense) 295 (1,697) (20,010) ------------------------------------ Loss before taxes ($5,070) ($7,609) ($24,782) Income tax expense (13) (10) (56) ------------------------------------ Net loss for the period (5,083) (7,619) (24,838) Items subject to reclassification Exchange difference on translating foreign operations (30) - (40) ------------------------------------ Comprehensive loss for the period ($5,113) ($7,619) ($24,878) ------------------------------------ ------------------------------------ Loss per share attributed to common equity holders Basic and Diluted ($0.10) ($0.15) ($5.01) Weighted average number of common shares outstanding Basic and Diluted 50,352 50,225 4,960 (1) Includes share-based transaction expense of: Research and development 345 250 60 Selling, general and administrative 199 251 75 ------------------------------------ $544 $501 $135 ------------------------------------ ------------------------------------ Consolidated Balance Sheet Data As at April 30, As at January 31, As at April 30, 2014 2014 2013 ---------------- ----------------- --------------- Cash and cash equivalents $19,667 $25,588 $2,069 Trade accounts receivable 7,045 6,959 6,544 Inventory 3,321 5,293 2,175 Total assets 40,706 47,359 22,304 Bank Debt - - 10,772 Total liabilities 12,782 15,048 132,006 Shareholders' equity (deficiency) 27,924 32,311 (109,702)
NON-IFRS FINANCIAL MEASURES
Non-IFRS net income (loss) is defined as total comprehensive income (loss) before share-based transaction expense, exchange difference related to translating foreign operations and non-recurring or one-time items such as: share offering costs, listing fees, convertible preferred share revaluation adjustment, fair value adjustment on warrant liability, provision for repayable government assistance. Non-IFRS net income (loss) does not have any standardized meaning prescribed by IFRS and is not necessarily comparable to similar measures presented by other companies. Non-IFRS net income (loss) from operations should not be considered in isolation or as a substitute for comprehensive income (loss) prepared in accordance with IFRS.
ViXS has provided a comparison of comprehensive income (loss) to non-IFRS net loss in the following table:
Three Month Period Ended (in thousands of U.S. dollars) April 30, January 31, April 30, 2014 2014 2013 -------------------------------------- Comprehensive loss for the period ($5,113) ($7,619) ($24,878) R&D adjustments Stock-based compensation expense 345 250 60 Provision for repayment of government assistance 111 - (1,121) Selling, general and administrative Stock based compensation expense 199 251 75 Other Income/Expense adjustments Listing Fees - 15 300 Accreted interest on provision for repayment of government assistance - 165 - Fair value adjustment on warranty liability - - 18,219 Other adjustments Convertible preferred share revaluation - - 1,185 Exchange differences on translating foreign operations 30 - 40 -------------------------------------- Non-IFRS net loss ($4,429) ($6,938) ($6,120) -------------------------------------- -------------------------------------- Non-IFRS EPS ($0.09) ($0.14) ($0.28)
About ViXS Systems Inc.
ViXS is the pioneer and market leader in designing revolutionary media processing semiconductor solutions for the broadcasting and consumer electronics industries, with over 461 patents issued and pending worldwide, numerous industry awards for innovation, and over 30 million media processor shipments to date. ViXS is driving the transition to Ultra HD 4K across the entire content value chain by providing professional and consumer grade chipsets that support the new High Efficiency Video Coding (HEVC) standard up to Main 10 Profile, reducing bandwidth consumption by 50% while providing the depth of color and image clarity needed to take advantage of higher-resolution content. ViXS' XCodePro 300 family is ideal for Ultra HD 4K infrastructure equipment, and the XCode 6000 family of system-on-chip (SoC) products achieve unprecedented levels of integration that enable manufacturers to create cost-effective consumer entertainment devices.
ViXS is headquartered in Toronto, Canada with offices in Europe, Asia and North America. VIXS(TM), the ViXS® logo, XCode®, XCodePro(TM), XConnex(TM) and Xtensiv(TM) are trademarks and/or registered trademarks of ViXS. Other trademarks are the property of their respective owners. For more information on ViXS, visit our website: www.vixs.com.
Statements in this press release that are not historical facts constitute "forward-looking statements" within the meaning of applicable securities laws. Such statements include, but are not limited to, statements regarding ViXS' projected revenues, gross margins, earnings, growth rates, the impact of new product design wins, market penetration and product plans. The use of terms such as "may", "anticipated", "expected", "projected", "targeting", "estimate", "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause ViXS' actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements.
These factors include, but are not limited to, our history of losses and the risks associated with not achieving or sustaining profitability; our dependence on a limited number of customers for a substantial portion of our revenues; fluctuating revenue and expense levels arising from changes in customer demand, sales cycles, product mix, average selling prices, manufacturing costs and timing of product introductions; risks associated with competing against larger and more established companies; risks associated with changing industry standards such as MoCA 2.0; risks related to intellectual property, including third party licensing or patent infringement claims; risks associated with adverse economic conditions in Asia; our dependence on a limited number of supply chain partners for the manufacture of our products; and other factors discussed in the "Risk Factors" section of the Annual Information Form of ViXS Systems, a copy of which is available on SEDAR at www.sedar.com. All forward-looking statements are qualified in their entirety by this cautionary statement. ViXS is providing this information as of the date of this release and does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.
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