[February 26, 2015] |
|
Espial Reports 2014 Fourth Quarter Results
Espial (News - Alert)® Group Inc. ("Espial" or the "Company"), (TSX:ESP), a
leader in the delivery of on-demand TV software and services, today
announced its fourth quarter and year end financial results for the
three and twelve month periods ended December 31, 2014.
Espial 2014 & Q4 Highlights
-
For the year ended December 31, 2014 revenue increased 59% to a record
$20.0 million.
-
For the year ended December 31, 2014, Adjusted EBITDA income was a
record $3.2 million.
-
Q4 revenue was a record $5.3 million.
-
Q4 Adjusted EBITDA income was $0.5 million.
-
Subsequent to year-end, announced that a European Tier-1 cable
operator signed a major contract with Espial as primary software
vendor and systems integrator to deliver their next-gen RDK based 4K
DVB set-top box platform and user experience.
-
In 2014, we secured an RDK partnership with Samsung (News - Alert), and further
announced multiple wins for our multi-screen and SmartTV products.
"Exciting things are happening at Espial and our record quarter and
annual results reflect this. The goal in 2014 was to secure a leadership
position in this early market stage of RDK and HTML5 based software
solutions," said Jaison Dolvane, CEO, Espial. "We believe we achieved
this goal and our strong sales pipeline reflects this. Early January we
announced that a new European tier-1 cable operator selected Espial as
their primary vendor to deliver their next generation RDK set-top box
and HTML5 user experience. We are heading into 2015 with strong momentum
towards further adoption of Espial's world-class user experience
solutions."
Financial Summary
For the three-month period ended December 31, 2014, the Company is
reporting revenue of $5.3 million compared with revenue of $3.9 million
for the three months ended December 31, 2013. Adjusted EBITDA income for
the fourth quarter of fiscal 2014 was $0.5 million compared to $0.6
million for the fourth quarter of fiscal 2013. Net loss for the quarter
was $0.2 million, compared with net income of $0.1 million last year.
Adjusted net income for the fourth quarter was $0.3 million compared to
Adjusted net income of $0.3 million last year.
For the fiscal year ended December 31, 2014, the Company reported
revenue of $20.0 million compared with revenue of $12.5 million for the
fiscal year ended December 31, 2013. Adjusted EBITDA income for fiscal
2014 was $3.2 million compared to a loss of $3.0 million for fiscal
2013. Net income for the year was $1.2 million, compared with a net loss
of $5.5 million last year. Adjusted net income for the 2014 fiscal year
was $2.7 million compared to an Adjusted net loss of $4.3 million last
year.
Q4 Financial Results
-
Fourth quarter revenues were $5,258,593 compared with revenues of
$3,902,541 in the same period a year ago. Fourth quarter software
license and royalty revenues were $2,898,646 compared to $2,482,863 in
the fourth quarter of fiscal 2013. Professional services for the
fourth quarters of 2014 and 2013 were $1,100,466 and $328,477
respectively. Maintenance and support revenues for the fourth quarter
were $1,259,481 compared to $1,091,201 last year.
-
North American revenues were $1,665,761 in the fourth quarter of 2014
compared to $1,717,493 in 2013. Asia revenues were $1,984,378 in the
fourth quarter of 2014 compared to $892,517 in 2013. European revenues
were $1,608,454 in the fourth quarter of 2014 compared to $1,292,531
in 2013.
-
Gross margin for the fourth quarter of fiscal 2014 was 84% compared
with 81% in the fourth quarter of fiscal 2013.
-
Operating expenses in the fourth quarter of fiscal 2014 were
$4,429,375 compared to $2,845,056 in the fourth quarter of fiscal 2013.
-
Earnings before interest, foreign exchange, taxes, stock compensation,
depreciation and amortization (Adjusted EBITDA) for the fourth quarter
of fiscal 2014 was income of $544,971 compared to income of $576,690
in fiscal 2013.
-
Net loss, which includes non-cash items like depreciation, goodwill
and intangibles, in the fourth quarter was $161,231 compared to net
income of $148,944 last year.
Fiscal 2014 Financial Results
-
Total revenues for the fiscal year ended December 31, 2014 were
$20,003,757 compared with revenues of $12,549,412, in the same period
a year ago. Software license and royalty revenues for the 2014 fiscal
year were $8,723,977 compared to $7,031,332 in fiscal 2013.
Professional services for the fiscal years of 2014 and 2013 were
$6,429,023 and $1,315,749 respectively. Maintenance and support
revenues for the fiscal year ended December 31, 2014 were $4,850,757
compared to $4,202,331 last year.
-
North American revenues were $8,038,906 in the 2014 fiscal year
compared to $4,262,957 in 2013. Asia revenues were $4,771,042 in the
2014 fiscal year compared to $4,125,156 in 2013. European revenues
were $7,193,809 in the 2014 fiscal year compared to $4,161,299 in 2013.
-
Gross margin for the 2014 fiscal year was 79% compared with 82% in
fiscal 2013.
-
Operating expenses for the 2014 fiscal year were $14,237,250 compared
to $14,668,472 in fiscal 2013. Included in the fiscal 2013 year
operating expenses is a restructuring charge and integration costs
related to the acquisition of ANT.
-
Adjusted EBITDA for the fiscal year ended December 31, 2014 was income
of $3,170,985 compared to a loss of $2,960,261 in fiscal 2013.
-
Net profit in the 2014 fiscal year was $1,171,885 compared to a loss
of $5,529,425 in 2013.
Cash, restricted cash and cash equivalents on December 31, 2014, was
$18,111,324
A complete set of financial statements and management's discussion and
analysis for the period ended December 31, 2014 will be available at http://www.sedar.com.
Conference Call
The Company will be hosting a conference call to discuss the Q4 and
fiscal year 2014 financial results on Thursday, February 26th, 2015 at
5:00PM EDT and the phone number to join the results discussion is:
-
Toll Free line (Canada/US) 877-201-0168
-
Toll line (International/Local) 647-788-4901
The playback for the call will be available until 11:59pm ET on March
25, 2015, at the following numbers and passcode:
-
Toll-free line: +1-855-859-2056, Passcode: 85801105
About Espial (www.espial.com)
Espial is a leading supplier of digital TV and IPTV (News - Alert) software and
solutions to cable MSOs and telecommunications operators as well as
consumer electronics manufacturers. Espial's middleware,
video-on-demand, and browser products power a diverse range of pay-TV
and Internet TV business models. Over 35 million licenses of its
patented software are in use across the world. Espial is headquartered
in Ottawa, Canada and has offices in the United States, Europe,
and Asia. Visit www.espial.com or
contact via phone at +1 613 230 4770.
Forward Looking Statement
This press release contains information that is forward looking
information with respect to Espial within the meaning of Section
138.4(9) of the Ontario Securities Act (forward looking statements) and
other applicable securities laws. In some cases, forward-looking
information can be identified by the use of terms such as "may", "will",
"should", "expect", "plan", "anticipate", "believe", "intend",
"estimate", "predict", "potential", "continue" or the negative of these
terms or other similar expressions concerning matters that are not
historical facts. In particular, statements or assumptions about, ,
economic conditions, benefits of new customer and partner relationships,
future opportunities for the company and products and any other
statements regarding Espial's objectives (and strategies to achieve such
objectives), future expectations, beliefs, goals or prospects are or
involve forward-looking information.
Forward-looking information is based on certain factors and assumptions.
While the company considers these assumptions to be reasonable based on
information currently available to it, they may prove to be incorrect.
Forward-looking information, by its nature necessarily involves known
and unknown risks and uncertainties. A number of factors could cause
actual results to differ materially from those in the forward-looking
statements or could cause our current objectives and strategies to
change, including but not limited to changing conditions and other risks
associated with the on-demand TV software industry and the market
segments in which Espial operates, competition, Espial's ability to
effectively develop its distribution channels and generate increased
demand for its products, economic conditions, technological change,
unanticipated changes in our costs, regulatory changes, litigation, the
emergence of new opportunities, many of which are beyond our control and
current expectation or knowledge.
Additional risks and uncertainties affecting Espial can be found in
Management's Discussion and Analysis of Results of Operations and
Financial Condition and its Annual Information Form for the fiscal years
ended December 31, 2013 and 2014 filed on SEDAR at www.sedar.com.
If any of these risks or uncertainties were to materialize, or if the
factors and assumptions underlying the forward-looking information were
to prove incorrect, actual results could vary materially from those that
are expressed or implied by the forward-looking information contained
herein and our current objectives or strategies may change. Espial
assumes no obligation to update or revise any forward looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only as of
the date hereof.
Non-IFRS Financial Measures
We use Adjusted net income (loss) and Adjusted diluted earnings (loss)
per share, which remove the impact of our amortization of intangible
assets and stock based compensation expense, to measure our performance
as these measures align our results and improve comparability against
our peers. We use Adjusted EBITDA INCOME (LOSS) to provide investors
with a supplemental measure of our operating performance and thus
highlight trends in our core business that may not otherwise be apparent
when relying solely on IFRS financial measures. We believe that
securities analysts, investors and other interested parties frequently
use non-IFRS measures in the evaluation of issuers. Management also uses
non-IFRS measures in order to facilitate operating performance
comparisons from period to period, prepare annual operating budgets and
assess our ability to meet our capital expenditure and working capital
requirements.
Adjusted net income (loss), Adjusted diluted earnings (loss) per share
and Adjusted EBITDA income (loss) are not recognized, defined or
standardized measures under IFRS. Our definition of Adjusted net income
(loss), Adjusted EBITDA income (loss) and Adjusted diluted earnings
(loss) per share will likely differ from that used by other companies
and therefore comparability may be limited. Adjusted net income (loss),
Adjusted EBITDA income (loss) and Adjusted diluted earnings (loss) per
share should not be considered a substitute for or in isolation from
measures prepared in accordance with IFRS. Investors are encouraged to
review our financial statements and disclosures in their entirety and
are cautioned not to put undue reliance on non-IFRS measures and view
them in conjunction with the most comparable IFRS financial measures. We
have reconciled Adjusted net income (loss) and Adjusted EBITDA income
(loss) to the most comparable IFRS financial measure as follows:
|
|
Three months ended December 31, 2014 (unaudited)
|
|
Three months ended December 31, 2013 (unaudited)
|
|
Twelve months ended December 31, 2014 (unaudited)
|
|
Twelve months ended December 31, 2013 (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(161,231)
|
|
$
|
148,943
|
|
$
|
1,171,884
|
|
$
|
(5,529,421)
|
|
Add
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
337,373
|
|
|
36,751
|
|
|
861,510
|
|
|
143,969
|
|
Amortization of intangibles
|
|
|
162,993
|
|
|
161,460
|
|
|
645,870
|
|
|
1,101,885
|
|
Adjusted net income (loss)
|
|
|
339,135
|
|
|
347,154
|
|
|
2,679,264
|
|
|
(4,283,567)
|
|
Add(less)
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
56,084
|
|
|
59,569
|
|
|
194,868
|
|
|
212,158
|
|
Net interest income (expense)
|
|
|
(36,136)
|
|
|
147,836
|
|
|
23,687
|
|
|
547,024
|
|
Foreign exchange gain (loss)
|
|
|
(131,942)
|
|
|
(33,241)
|
|
|
(205,653)
|
|
|
277,641
|
|
Income tax
|
|
|
317,830
|
|
|
55,371
|
|
|
478,818
|
|
|
286,483
|
|
Adjusted EBITDA income (loss)
|
|
$
|
544,971
|
|
$
|
576,689
|
|
$
|
3,170,984
|
|
$
|
(2,960,261
|
|
Basic net income (loss) per share
|
|
$
|
(0.01)
|
|
$
|
0.01
|
|
$
|
0.05
|
|
$
|
(0.37)
|
|
Diluted net income (loss) per share
|
|
$
|
(0.01)
|
|
$
|
0.01
|
|
$
|
0.05
|
|
$
|
(0.37)
|
|
Adjusted diluted net income (loss) per share
|
|
$
|
0.01
|
|
$
|
0.02
|
|
$
|
0.11
|
|
$
|
(0.29)
|
|
Consolidated Statements of Income and Loss and Comprehensive
Income and Loss (In Canadian dollars), except share amounts)
|
|
Three Months Ended
|
|
|
|
Twelve Months Ended
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
|
|
|
December 31, 2014
|
|
December 31, 2013
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
$ 2,898,646
|
|
$ 2,482,863
|
|
|
|
$ 8,723,977
|
|
$ 7,031,332
|
|
Professional services
|
|
1,100,466
|
|
328,477
|
|
|
|
6,429,023
|
|
1,315,749
|
|
Support and maintenance
|
|
1,259,481
|
|
1,091,201
|
|
|
|
4,850,757
|
|
4,202,331
|
|
Total Revenue
|
|
5,258,593
|
|
3,902,541
|
|
|
|
20,003,757
|
|
12,549,412
|
|
Cost of revenue
|
|
840,697
|
|
738,575
|
|
|
|
4,297,770
|
|
2,299,217
|
|
Gross margin
|
|
4,417,896
|
|
3,163,966
|
|
|
|
15,705,987
|
|
10,250,195
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
1,162,783
|
|
710,362
|
|
|
|
3,991,274
|
|
3,923,040
|
|
General and administrative
|
|
849,277
|
|
394,635
|
|
|
|
2,843,589
|
|
1,987,502
|
|
Research and development
|
|
2,254,322
|
|
1,578,599
|
|
|
|
6,756,519
|
|
6,606,819
|
|
Business restructuring charges
|
|
|
|
-
|
|
|
|
-
|
|
1,049,222
|
|
Amortization of Intangible assets
|
|
162,993
|
|
161,460
|
|
|
|
645,869
|
|
1,101,889
|
|
|
|
4,429,375
|
|
2,845,056
|
|
|
|
14,237,251
|
|
14,668,472
|
|
Income (loss) before other income (expense)
|
|
(11,479)
|
|
318,910
|
|
|
|
1,468,736
|
|
(4,418,277)
|
|
Foreign exchange gain (loss)
|
|
131,942
|
|
33,241
|
|
|
|
205,653
|
|
(277,641)
|
|
Interest income
|
|
36,136
|
|
3,360
|
|
|
|
82,476
|
|
16,533
|
|
Interest expense
|
|
-
|
|
(151,196)
|
|
|
|
(106,163)
|
|
(563,557)
|
|
Income (loss) before tax
|
|
156,599
|
|
204,315
|
|
|
|
1,650,702
|
|
(5,242,942)
|
|
Income taxes
|
|
(317,830)
|
|
(55,371)
|
|
|
|
(478,818)
|
|
(286,483)
|
|
Net income (loss) and comprehensive income (loss)
|
|
$ (161,231)
|
|
$ 148,944
|
|
|
|
$ 1,171,884
|
|
$ (5,529,425)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share - basic
|
|
$ (0.01)
|
|
$ 0.01
|
|
|
|
$ 0.05
|
|
$ (0.37)
|
|
Weighted average number of shares outstanding - basic
|
|
26,123,246
|
|
16,913,977
|
|
|
|
22,786,909
|
|
14,776,991
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share - diluted
|
|
$( 0.01)
|
|
$ 0.01
|
|
|
|
$ 0.05
|
|
$ (0.37)
|
|
Weighted average number of shares outstanding - diluted
|
|
26,690,370
|
|
16,913,977
|
|
|
|
24,572,562
|
|
14,776,991
|
|
Consolidated Balance Sheets
|
|
December 31, 2014
|
|
December 31, 2013
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
18,111,324
|
|
$
|
7,407,093
|
|
Accounts receivable
|
|
|
3,861,058
|
|
|
2,057,222
|
|
Investment tax credits receivable
|
|
|
312,329
|
|
|
312,027
|
|
Prepaid expenses and other assets
|
|
|
567,853
|
|
|
502,990
|
|
|
|
|
22,852,564
|
|
|
10,279,332
|
|
|
|
|
|
|
|
Equipment
|
|
|
727,626
|
|
|
539,348
|
|
|
|
|
|
|
|
|
|
Intangible assets
|
|
|
1,496,794
|
|
|
2,099,398
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
3,340,808
|
|
|
3,340,808
|
|
|
|
$
|
28,417,792
|
|
$
|
16,258,886
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
2,521,480
|
|
$
|
1,872,505
|
|
Provisions
|
|
|
-
|
|
|
281,813
|
|
Deferred revenue
|
|
|
3,557,667
|
|
|
4,052,700
|
|
Term Debt
|
|
|
-
|
|
|
2,442,056
|
|
|
|
|
6,079,147
|
|
|
8,649,074
|
|
Provisions
|
|
|
275,234
|
|
|
363,132
|
|
Total Liabilities
|
|
|
6,354,381
|
|
|
9,012,206
|
|
|
|
|
|
|
|
COMMITMENTS
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Share capital
|
|
|
91,072,570
|
|
|
77,781,292
|
|
Warrants
|
|
|
928,063
|
|
|
1,436,004
|
|
Share based payments reserve
|
|
|
12,986,590
|
|
|
12,125,080
|
|
Deficit
|
|
|
(82,923,812)
|
|
|
(84,095,696)
|
|
|
|
|
22,063,411
|
|
|
7,246,680
|
|
|
|
$
|
28,417,792
|
|
$
|
16,258,886
|
|
Statements of Cash Flows
|
|
Year Ended
|
|
|
|
December 31, 2014
|
|
|
|
December 31, 2013
|
|
CASH PROVIDED BY (USED IN)
|
|
|
|
|
|
|
|
OPERATING
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
1,171,884
|
|
|
|
$
|
(5,529,425)
|
|
Items not affecting cash
|
|
|
|
|
|
|
|
Depreciation of property and equipment
|
|
|
194,868
|
|
|
|
|
212,158
|
|
Amortization of intangible assets
|
|
|
645,869
|
|
|
|
|
1,101,889
|
|
Share-based compensation expense
|
|
|
861,510
|
|
|
|
|
143,969
|
|
Interest accretion on long-term debt
|
|
|
57,944
|
|
|
|
|
185,449
|
|
Provisions
|
|
|
(369,711)
|
|
|
|
|
421,188
|
|
|
|
|
2,562,364
|
|
|
|
|
(3,464,772)
|
|
Changes in non-cash operating
working capital items
|
|
|
(1,715,059)
|
|
|
|
|
2,194,307
|
|
|
|
|
847,305
|
|
|
|
|
(1,270,465)
|
|
INVESTING
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
(383,146)
|
|
|
|
|
(29,815)
|
|
Purchase of intangibles
|
|
|
(43,265)
|
|
|
|
|
(5,255)
|
|
Purchase of business
|
|
|
-
|
|
|
|
|
(2,120,412)
|
|
Redemption of short-term investments
|
|
|
-
|
|
|
|
|
8,164,551
|
|
|
|
|
(426,411)
|
|
|
|
|
6,009,069
|
|
FINANCING
|
|
|
|
|
|
|
|
Repayment of operating line
|
|
|
-
|
|
|
|
|
(3,010,192)
|
|
Repayment of term debt
|
|
|
(2,500,000)
|
|
|
|
|
(1,000,000)
|
|
Options exercised
|
|
|
17,310
|
|
|
|
|
-
|
|
Warrants
|
|
|
2,201,141
|
|
|
|
|
-
|
|
Proceeds from equity financing
|
|
|
11,500,092
|
|
|
|
|
3,623,037
|
|
Costs of share issuance
|
|
|
(935,206)
|
|
|
|
|
-
|
|
|
|
|
10,283,337
|
|
|
|
|
(387,155)
|
|
Net cash and cash equivalents inflow (outflow)
|
|
|
10,704,231
|
|
|
|
|
4,351,449
|
|
Cash and cash equivalents, beginning of year
|
|
|
7,407,093
|
|
|
|
|
3,055,644
|
|
Cash and cash equivalents, end of year
|
|
$
|
18,111,324
|
|
|
|
$
|
7,407,093
|
|
|
|
|
|
|
|
|
|
Supplementary information:
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
48,219
|
|
|
|
$
|
378,105
|
|
Taxes paid
|
|
$
|
478,818
|
|
|
|
$
|
286,483
|
|
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