Posted on April 29, 2014
Ottawa, ON – April 29, 2014 – International Datacasting Corporation (“IDC”) (TSX:IDC), a global leader in digital content distribution solutions for the world's premiere broadcasters, today announced its financial results for the fourth quarter and fiscal year ended January 31, 2014. All amounts in this release are in Canadian dollars unless otherwise stated.
(in millions, except for gross margin and net loss per share)
Fourth Quarter Results
Revenues totaled $3.6 million for the fourth quarter of Fiscal 2014, a 44% increase from the third quarter and 42% lower than the prior year’s fourth quarter. The fourth quarter reversed five consecutive quarters of declining revenues. IDC’s Adjusted EBITDA loss was $1.6 million in the quarter, as compared to $2.2 million in the third quarter and $0.3 million in the prior year.
Full Year Results
Revenues of $16.3 million decreased by 44% from the prior year, due to the completion of the Direct-to-Home systems project in Kenya, as well as a 38% decrease in IDC product revenues. Services revenues were unchanged from the prior year results. Gross margins improved by four points to 42% in Fiscal 2014, due to the higher proportion of IDC product sales in the revenue mix.
IDC incurred a net loss of $8.2 million in Fiscal 2014, compared with a net loss of $1.0 million in Fiscal 2013. The increased net loss was primarily driven by lower revenues as well as by impairment of non-current assets. Working capital decreased from $11.1 million at January 31, 2013 to $7.0 million at January 31, 2014, due primarily to operating losses incurred in Fiscal 2014.
During Fiscal 2014, IDC performed a comprehensive strategic review and developed an action plan to restructure the business for improved performance. As of January 31, 2014, part of the action plan has been completed and part is underway, with completion forecast in the first half of Fiscal 2015. IDC’s key accomplishments in Fiscal 2014 were as follows:
- The leadership team has been renewed, with fewer top management roles and clearer accountability for designing, building, selling, and supporting new products. A new CEO, CFO, VP of Engineering and Operations, and VP of Products and Services have joined IDC.
- The sales team has been restructured, and is now organized in a regional model that places additional emphasis on fast-growing emerging markets.
- Key field issues which impacted IDC customers in late Fiscal 2013 and early Fiscal 2014 have been resolved, leading to the improved collection of receivables.
- The product portfolio has been significantly improved, with two new products (the second generation STAR Pro Audio™ and LASER™ Two) now completed and available for volume shipments, and two more (the TITAN 3 Encoder and LASER MPS) being prepared for anticipated mid-Fiscal 2015 availability.
- We’ve started to consolidate manufacturing, inventory, and supply chain activity in Ottawa, which is anticipated to increase efficiencies and reduce costs when completed in mid-Fiscal 2015.
- We’ve reduced cost across the company, resulting in more than $3 million of expected savings to IDC’s annual cost structure. These measures have required us to reduce IDC’s global workforce by about 25%.
Doug Lowther, IDC’s President and CEO, stated, “At the beginning of Fiscal 2014, IDC faced significant challenges due to field performance issues, turnover of skilled resources, delays in introducing new products, and the cumulative effect of several years of rapidly changing leadership, strategy, and direction. Since then, we have assembled a strong leadership team, significantly improved product performance, and positioned IDC more competitively with a pipeline of great new products. We’ve comprehensively reviewed performance and taken action to improve it, including cost reductions that are designed to reduce IDC’s quarterly breakeven point for Fiscal 2015 from $7 million to about $4.5 million in revenues”.
Steven Archambault, IDC’s Chief Financial Officer, added “During late Fiscal 2014, IDC made good progress against a challenging restructuring plan, and performance is starting to turn around. This is due to both strong cost controls and to improvements in the revenue outlook. While we anticipate IDC will incur an operating loss during the first quarter of Fiscal 2015, we expect IDC to reach breakeven performance by mid Fiscal 2015, and to achieve profitability in the third or fourth quarter. We also anticipate our working capital will stabilize during the second quarter of Fiscal 2015.”
For further information on IDC’s fourth quarter and fiscal year-end 2014 results, refer to the audited 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 April 29, 2014. The MD&A also provides a detailed update on IDC’s progress against our action plan for improved business performance.
Management Conference Call
This announcement will be followed by a conference call at 8:30 a.m. ET on Wednesday, April 30, 2014 to discuss the results. Mr. Doug Lowther, International Datacasting Corporation’s President and CEO, cordially invites all interested parties to participate in the conference call.
Conference Call Details
DATE: Wednesday April 30, 2014
TIME: 8:30 a.m. ET
DIAL-IN NUMBERS: 613-233-1979 / 1-888-789-9572
PARTICIPANT CODE: 7639272
INSTANT REPLAY: 1-800-408-3053 Passcode: 9007159 Available until May 2, 2014 10:00 a.m. ET
WEBCAST: A live audio webcast of the conference call will be available at the following link: http://www.gowebcasting.com/5451. 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 leader in digital content distribution 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, with regional offices in Arnhem, the Netherlands and in San Diego, California. For more information visit: www.datacast.com.
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, efficiencies, results and costs savings in Fiscal 2015, management’s expectations with respect to customer acceptance of, and the receipt of orders for, the company’s products, and management’s expectations with respect to the impact of new personnel and a restructured sales force. 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 anticipated cost savings resulting from the initiatives taken by IDC under its action plan, anticipated impact of senior personnel, consolidation of operations and restructuring of the sales force, management’s perceptions of current conditions and expected future developments, expectations regarding future shipments of IDC products, management’s knowledge of the current credit, interest rate and liquidity conditions affecting IDC 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: competitive developments; risks associated with IDC’s growth; expectations regarding new product initiatives and timing, including the STAR Pro Audio™ Solution, LASER™ Targeted Ad Insertion Platform, Digital Tattoo™ DTH Over IP Gateway and TITAN 3 Video Encoder; a lengthy and variable sales cycle for IDC's products and services; any difficulties with integrating acquired product lines into IDC’s business and/or manufacturing procedures; any difficulties or disputes with IDC’s subcontractors, contract manufacturers and suppliers; IDC’s dependence on the development and growth of the satellite services market; a lengthy and variable sales cycle for IDC's products and services; IDC’s reliance on a small number of customers for a large percentage of its revenue; expectations with respect to the sufficiency of its financial resources and liquidity; regulatory risks and intellectual property infringement. Further, any incorrect identification of, or failure or delay in identifying, areas that require attention in IDC’s business as part of the company’s strategic review, or inability to successfully address areas requiring increased focus in accordance with IDC’s action plan, could materially adversely affect the company’s business, financial conditions, and results of operations as well as other key indicators.
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, 2014, each dated April 29, 2014.
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.