VIXS REPORTS FIRST QUARTER FISCAL 2017 RESULTS
June 8 2016
TORONTO, ON ­­(Marketwired ­ June 08, 2016) ­ ViXS Systems Inc. (TSX: VXS) a pioneer and leader in advanced media processing
solutions, reported today its first quarter fiscal 2017 results for the period ending April 30, 2016. All results are reported under International
Financial Reporting Standards ("IFRS") and in U.S. dollars, unless otherwise specified.
Selected Financial Highlights
---------------------------------------------------------------------------For the three
US$ 000s (except earnings
For the three
Months ended
For the three
per share)
Months ended
January 31,
Months ended
April 30, 2016
2016
April 30, 2015
---------------------------------------------------------------------------Revenue
$5,702
$5,255
$9,962
---------------------------------------------------------------------------Gross Margin
$1,777
$1,294
$4,689
---------------------------------------------------------------------------Gross Profit Margin
31.2%
24.6%
47.1%
---------------------------------------------------------------------------Comprehensive Loss
$(3,187)
$(2,942)
$(1,771)
---------------------------------------------------------------------------Non-IFRS Loss (defined
below)
$(2,189)
$(2,068)
$(2,236)
---------------------------------------------------------------------------Earnings per share basic
$(0.04)
$(0.07)
$(0.03)
---------------------------------------------------------------------------Cash and Equivalents
$2,850
$7,272
$12,131
----------------------------------------------------------------------------
Customer, Product and Corporate Announcements
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---
--
--
First production order from a Japanese Consumer Electronics company to
power their Ultra High Definition Blu-Ray Players with ViXS' XCode 6800.
OTA (Over-the-Air) design win with North American service provider that
is launching late summer.
Strong backlog in our Cloud & Video Delivery segment for ViXS XCodePro
professional transcoder/decoder products, with production designs with:
-- Vecima Networks Inc. for their Terrace Hospitality Gateway;
-- Inca Networks Incorporated for their 4400 Series Modular platform
for video delivery and;
-- Zycast Technology Inc., who is adding a 4K Ultra HD decoder receiver
to their existing ViXS product portfolio.
ViXS CordCutterTV Streaming Stick is now sampling to customers with
production orders expected in Q3 of this year.
Launch of the third Generation of the Golden Reference Decoder (GRD3), which is currently sampling
with multiple OEMs and production is scheduled for the second half of
this year.
Passed approval testing of one the largest broadcast and cable
television companies in the U.S for our MoCA 2.0 capable multimediaover-coax solution.
Former Bell Labs President and pioneer of HDTV technology, Arun
Netravali, to stand for election to Board of Directors.
"This quarter we stabilized the business with improved financial results. Our backlog is strong which will translate into rev
Q1FY17 Financial Summary
--
Revenues for the first quarter of fiscal 2017 totalled $5.7 million, a
9% sequential increase compared to $5.3 million recognized in the prior
quarter. This higher revenue came from strong sales of MoCA-based
products (XConnex), higher XCode sales, and growing demand for our
cloud-based products (XCode Pro). Revenue decreased by $4.3 million from
$10.0 million recognized a year ago, due to lower XConnex unit sales,
--
--
--
--
along with lower XCode6400 that were used as companion chips into first
generation UHD TVs.
Gross margin for the first quarter of fiscal 2017 was 31.2%, a 6.6%
point increase from the previous quarter's level of 24.6%, but a 15.9%
point decrease from the first quarter of fiscal 2016 gross margin of
47.1%. The sequential improvement in margins was primarily due to better
selling prices of MoCA-based products and favourable product mix; while
the decrease in margins from the first quarter of fiscal 2016 was
primarily due to lower sales of high margin XCode6400 chips, as
previously mentioned. As expected shipments of the Company's XCode5500,
XC6000 family, and XCodePro products begin to ramp in the upcoming
quarters; this better sales mix should generate a corresponding
improvement in gross margins.
IFRS comprehensive loss for the first quarter of fiscal 2017 was $(3.2)
million, or a loss of $(0.04) per share basic and diluted. This is
compared to a loss of $(2.9) million in the previous quarter, and a $1.4
million decrease from the $(1.8) million loss in the first quarter of
fiscal 2016. This year-over-year decline in net loss from was mainly due
to lower revenue levels, coupled with strong Canadian dollar impacts,
and a $0.7 million non-cash adjustment that positively impacted the
first quarter of fiscal 2016.
Non-IFRS net loss for the current quarter (as defined in the Non-IFRS
Financial Measures section of our results) totaled $2.2 million. Despite
the year-over-year decline in revenue, non-IFRS loss improved from the
$2.2 million loss in the first quarter of fiscal 2016 due to lower
operating expenses and continued cost efficiencies.
Cash and Equivalents finished at $2.9 million, with $4.3 million in
working capital spent with our foundries and back-end partners to
support the ramp of our +$10 million backlog.
Management of the Company will host a conference call to discuss the financial results.
FISCAL 1Q17 CONFERENCE CALL DETAILS:
DATE:
Wednesday June 8, 2016
TIME:
5:00 P.M. EST
DIAL IN
NUMBER:
Local / International: 1 (514) 841-2157
North American Toll: Free: 1 (866)-215-5508
Passcode: 4261 1712#
REPLAY
NUMBER:
Local / International: 1 (630) 652-3042
North American Toll: Free: 1 (888) 843-7419
Passcode: 4261 1712#
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/investorrelations/
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected financial information derived from the Company's unaudited interim consolidated financial statements
for the three months ended April 30, 2016 and January 31, 2016, as well as for the three months ended April 30, 2015. The selected
financial information was prepared in accordance with IAS 34 in a manner consistent with the Company's annual financial statements. The
following information should be read in conjunction with these statements and the accompanying notes.
Dollar amounts in U.S. dollars
Three-months Period Ended
April 30,
January 31,
April 30,
2016
2016
2015
--------------------------------------
Amounts in thousands, except loss per
share
Revenue
Cost of sales
Gross margin
Operating expenses
$5,702
$5,255
$9,962
3,925
3,961
5,273
-------------------------------------1,777
1,294
4,689
--------------------------------------
Research and development
Selling, general and administrative
Total operating expenses (1)
Loss before finance costs and income
and currency gains
Other income (expenses):
Finance costs
Finance income
Currency gains
Total other income (expenses)
Loss before income taxes
Income tax expense
Net loss for the period
Other comprehensive income (loss)
Item subject to reclassification
Exchange difference on translating
foreign operations
Comprehensive loss for the period
Loss per share attributed to common
equity holders
Basic
Diluted
Weighted average number of common
shares outstanding
Basic
Diluted
(1) Includes share-based transaction
expense (recovery) of:
Research and development
Selling, general and administrative
in thousands of US Dollars
Cash and cash equivalents
Trade accounts receivable
Other amounts receivable
Inventories
Prepayments
Total assets
Trade payables
Accrued liabilities
Revolving bank loan payable
Deferred revenues
Total liabilities
Total liabilities and shareholders'
equity
2,972
2,806
4,104
2,038
1,449
2,585
-------------------------------------5,010
4,255
6,689
-------------------------------------(3,233)
(2,961)
(2,000)
-------------------------------------(154)
(208)
(92)
1
24
22
141
181
314
-------------------------------------(12)
(3)
244
-------------------------------------(3,245)
(2,964)
(1,756)
(9)
(10)
(10)
-------------------------------------(3,254)
(2,974)
(1,766)
67
32
(5)
-------------------------------------($3,187)
($2,942)
($1,771)
======================================
($0.04)
($0.04)
($0.07)
($0.07)
($0.03)
($0.03)
60,452
60,452
60,452
60,452
50,376
50,376
257
100
163
273
124
(214)
-------------------------------------$530
$224
($51)
======================================
As at April As January
As at April
30,
31,
30,
2016
2016
2015
--------------------------------------$2,850
$7,272
$12,131
3,441
2,291
3,811
836
615
2,809
2,151
4,344
5,456
6,614
1,614
--------------------------------------$23,820
$26,576
$32,770
=======================================
1,425
3,378
8,742
3,531
2,391
3,007
6,285
5,285
247
390
155
16,107
16,206
15,273
--------------------------------------$23,820
$26,576
$32,770
=======================================
NON­IFRS FINANCIAL MEASURES
In addition to disclosing results in accordance with IFRS as issued by the International Accounting Standards Board ("IASB"), the Company
also provides supplementary non­IFRS financial measures as a method of evaluating the Company's performance. These non­IFRS
measures are disclosed as a supplement to financial results prepared in accordance with IFRS in order to provide a further understanding of
ViXS' results of operations from management's perspective. In particular, ViXS uses non­IFRS measures to provide investors with
supplemental measures of its operating performance and highlight trends in its core business that may not otherwise be readily apparent
solely from IFRS measures. ViXS management uses non­IFRS measures in order to facilitate operating performance comparisons from
period to period, prepare annual operating budgets and assess ViXS' ability to meet its future capital expenditure and working capital
requirements. ViXS believes that securities analysts, investors and other interested parties frequently use non­IFRS measures in the
evaluation of issuers.
Non­IFRS net loss is defined as total comprehensive loss before share­based transaction expense, exchange difference related to
translating foreign operations, unrealized currency gains/losses and non­recurring or one­time items such as: share offering costs, listing
fees, convertible preferred share revaluation adjustment, fair value adjustment on warrant liability convertible debt and provision for
repayable government assistance. Non­IFRS net loss does not have any standardized meaning prescribed by IFRS and is not necessarily
comparable to similar measures presented by other companies. Non­IFRS net loss from operations should not be considered in isolation or
as a substitute for comprehensive loss prepared in accordance with IFRS.
ViXS has provided a comparison of comprehensive loss to non-IFRS net loss in the following table:
Three Month Period Ended
April 30,
January 31,
April 30,
2016
2016
2015
--------------------------------------($3,187)
($2,942)
($1,771)
Comprehensive loss for the period
R&D adjustments
Stock-based compensation expense
Provision for repayment of
government assistance
Selling, general and administrative
Stock based compensation expense
Legal fee settlement
Other Income/Expense adjustments
Listing Fees
Unrealized currency loss (gain)
Other adjustments
Fair value adjustment on convertible
debt and warrant liability
Exchange differences on translating
foreign operations
Non-IFRS net loss
Non-IFRS EPS basic
Non-IFRS EPS Diluted
$257
100
163
238
556
-
273
124
(214)
15
148
18
44
(419)
67
32
5
--------------------------------------($2,189)
($2,068)
($2,236)
=======================================
($0.04)
($0.04)
($0.07)
($0.07)
($0.04)
($0.04)
FORWARD LOOKING STATEMENTS
Certain statements in this press release which are not historical facts constitute forward­looking statements or information within the
meaning of applicable securities laws ("forward­looking statements"). 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 forward­looking statements. Readers are cautioned not to place undue reliance upon any such forward­
looking statements. Such forward­looking 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 forward­looking statements. Accordingly, there can be no assurance that forward­looking statements will prove
to be accurate and readers are therefore cautioned not to place undue reliance upon any such forward­looking statements.
Factors that could cause results or events to differ materially from current expectations expressed or implied by forward looking statements
contained herein include, but are not limited to: our history of losses and the risks associated with not achieving or sustaining profitability;
the Company's dependence on a limited number of customers for a substantial portion of 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; competitive risks and pressures from further
consoldiation amongst competitors, customers, and suppliers; market share risks and timing of revenue recognition associated with product
transitions; risks associated with changing industry standards such as HEVC (High Efficiency Video Codec), HDR (High Dynamic Range)
and Ultra HD resolution; risks related to intellectual property, including third party licensing or patent infringement claims; the loss of any of
the Company's key personnel could seriously harm its business; risks associated with adverse economic conditions; delays in the launch of
customer products; price re­negotiations by existing customers; the Company's dependence on a limited number of supply chain partners
for the manufacture of its products, legal proceedings arising from the ordinary course of business; ability to raise needed capital; ongoing
liquidity requirements;and other factors discussed in the "Risk Factors" section of the Company's Annual Information Form dated March 31,
2016, a copy of which is available under the Company's profile on SEDAR at www.sedar.com. All forward­looking statements are qualified in
their entirety by this cautionary statement. ViXS is providing this information as of the current date and does not undertake any obligation to
update any forward­looking statements contained herein as a result of new information, future events or otherwise except as may be
required by applicable securities laws.
About ViXS Systems Inc.
ViXS is a pioneer and market leader in designing revolutionary media processing semiconductor solutions for video over IP streaming
solutions, with over 500 patents issued and pending worldwide, numerous industry awards for innovation, and over 33 million media
processor shipped 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 12 Profile, reducing bandwidth
consumption by 50% while providing the depth of color and image clarity needed to take advantage of higher­resolution content. ViXS'
XCodePro 300 family is ideal for Ultra HD 4K infrastructure equipment, and the XCode 6000 family of system­on­chip (SoC) products
achieve unprecedented levels of integration that enable manufacturers to create cost­effective consumer entertainment devices.
ViXS is headquartered in Toronto, Canada with offices in Europe, Asia and North America. VIXS™, the ViXS® logo, XCode®, XCodePro™,
XConnex™ and Xtensiv™ 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
For further information, please contact:
Charlie Glavin
ViXS Systems Inc.
T: +1 416 646-2000
[email protected]
Investor Relations
T: +1 416 646-2000 ext. 3
[email protected]
Source: ViXS Systems Inc.