Vecima Networks Achieves Record Sales in the Second Quarter
Release Date: February 13, 2007
Total Q2 revenue increases 15% to $23.2 million from Q1 led by strong Digital Video sales
VICTORIA, BRITISH COLUMBIA – (Feb 13, 2007) Vecima Networks Inc. (TSX:VCM), formerly
VCom Inc., today announced that its unaudited Financial Statements and Management’s Discussion and Analysis for the three months and six months ended December 31, 2006 have been filed on SEDAR. The highlights provided in this press release should be read in conjunction with the Company’s unaudited interim consolidated financial statements and accompanying notes for the three months and six months ended December 31, 2005.
Our unaudited interim consolidated financial statements and accompanying notes for the three months and six months ended December 31, 2006 are available at:
All dollar amounts are in Canadian dollars. This is the Company’s second earnings report as Vecima Networks Inc. since re-branding from VCom Inc. on November 14, 2006.
• Total revenue in the second quarter of fiscal 2007 was $23.2 million, a quarterly sales record for Vecima, representing an increase of 15% from our total revenue for the first quarter of fiscal 2007 and
an increase of 22% from the second quarter of fiscal 2006. The year-to-date revenues for the six months ended December 31, 2006 increased by $6.6 million or 18% to $43.3 million, as compared to $36.7 million for the six months ended December 31, 2005.
• Net income in the second quarter of the fiscal 2007 was $2.2 million or 10¢ per share, up from $1.7 million, or 8¢ per share for the three months ended September 30, 2006. Net income for the first six
months of fiscal 2007 was $10.5 million or 47¢ per share, including an extraordinary gain of $6.6 million or 30¢ per share, as compared to $4.8 million or 24¢ per share for the six months ended December 31, 2005. This decrease in adjusted earnings per share resulted from implementation of our
strategic plans, as noted in our Final Prospectus, to significantly increase research and development expenditures, in this case from 4% of sales in the first half of fiscal 2006 to 9% in the first half of the
2007 fiscal year. The change was also influenced by our strategic decision to significantly increase sales and marketing expenditures to 5% of sales in the first half of this year from 3% of sales in the
first six months of last fiscal year.
• Shareholders’ equity increased to $86.3 million at December 31, 2006, as compared to $76.4 million at June 30, 2006. The increase was a result of operating profits, the purchase of capital assets and the
acquisition of WaveRider Communications (Canada) Inc. in the first quarter of fiscal 2007.
• On October 27, 2006 the Toronto Stock Exchange accepted Vecima’s Notice of Intention to Make a Normal Course Issuer Bid (the “Bid”) to acquire for cancellation, through the facilities of the Exchange,
up to 500,000 Common Shares of the Corporation, representing approximately 2.2% of the issued and outstanding Common Shares of the Corporation. The Bid commenced on November 1, 2006 and will terminate on or before October 31, 2007. During the second quarter of fiscal 2007, Vecima purchased
25,600 common shares for cancellation at an average price of $9.80 per share for a total of $0.3 million. The Board of Directors of Vecima believes the underlying value of the Corporation’s Common Shares may not be reflected in the current or future market price of the Common Shares.
• On November 13, 2006, the Company declared a special dividend of 4¢ per share, which was paid on December 15, 2006 to shareholders of record on November 22, 2006.
• In the first six months of fiscal 2007, Vecima achieved a total revenue growth of 18% as compared to the first six months of fiscal 2006.
• Gross margin was 39% for the second quarter, at the high end of our business model of 35% to 39%, and 37% for the six months ended December 31, 2006.
• Operating expenses in the three months ended December 31, 2006 were 25% of total revenue as we increased our expenditures in both research and development and sales and marketing. GAAP research and development costs as a percentage of sales were 9% in the three months ended December 31, 2006 up from 4% in the three months ended December 31, 2005. The increase in research and development expenses pushed up our operating cost level by four percentage point to
25% of sales. Fiscal year-to-date operating costs reflect the same proportions.
• The mix of product in our sales continues to evolve. Currently, Digital Video products are strong contributors, with the volume of wireless products beginning to increase rapidly, especially in the WiMAX line. We expect that the legacy DOCSIS 2.0 Data over Cable products and module business will
decline in future years as Multiple Service Operators transition to new equipment based on DOCSIS 3.0 technology. We continue to develop and demonstrate our next generation DOCSIS 3.0 equipment with several customers
• Vecima employs 624 personnel as of December 31, 2006, an increase of 18% from 531 personnel at December 31, 2005.
Fiscal 2007 Q2 Investor Call
Vecima will hold a conference call and live audio webcast today, Tuesday, February 13, 2007 at 5 p.m. (ET) to discuss its financial and operational results for the fiscal 2007 second quarter.
To participate in the teleconference, dial 604-638-5340 or 1-800-319-4610. To access the
simultaneous live audio webcast, visit Vecima’s web site at www.vecimanetworks.com.
The webcast will also be archived on the web site.
A taped rebroadcast will be available approximately one hour after the conference call. To access the taped rebroadcast, dial 604-638-9010 or 1-800-319-6413 and enter the code 2961#.
About Vecima Networks
Vecima Networks Inc. (TSX:VCM) designs, manufactures and sells products that enable broadband access to cable, wireless and telephony networks. Vecima’s hardware products incorporate original embedded software to meet the complex requirements of next-generation, high-speed digital
networks. Service providers use Vecima’s solutions to deliver services to a converging worldwide broadband market, including what are commonly known as “triple play” (voice, video and data) and
“quadruple play” (voice, video, data and wireless) services. Vecima’s solutions allow service providers to rapidly and cost-effectively bridge the final network segment that connects the system directly to
end users, commonly referred to as “the last mile”, by overcoming the bottleneck resulting from insufficient carrying capacity in legacy, last mile infrastructures. Vecima’s products are directed at three principal markets: Data over Cable, Broadband Wireless and Digital Video. The Company has also developed and continues to focus on developing products to address emerging markets such as Voice over Internet Protocol, fibre to the home and IP video.
On November 14, 2006, the Company changed its name from VCom to Vecima Networks.
Vecima’s website is at: www.vecimanetworks.com
Certain statements in this news release may constitute forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this news release, such statements are generally identified by the use of such words as “may”, “will”, “expect”, “believe”, “plan”, “intend” and other similar terminology. These statements reflect Vecima’s current expectations regarding future events and operating performance and speak only as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors including, but not limited to, the factors discussed under “Risk Factors” in the Company’s Annual Information Form dated September 27, 2006 available on SEDAR (www.sedar.com), could cause actual results to differ materially from the results discussed in the forward-looking statements.
Although the forward-looking statements contained in this news release are based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. These forwardlooking statements are made as of the date of this news release, and the Company assumes no obligation to update or revise them to reflect new events or circumstances.