VICTORIA, British Columbia--(BUSINESS WIRE)--Vecima Networks Inc. ("Vecima" or the "Company") (TSX: VCM) announced today that its second quarter financial results will reflect impacts related to adjustments in the timing of some of its largest customers' cable and fiber upgrades, as well as certain transitory events including, but not limited to, foreign exchange volatility, costs associated with workforce reductions announced in December, and a temporary shift in product mix that has resulted in a lower gross margin. The Company expects to report second quarter revenue of $71.2 million, a gross margin of 36.4%, Adjusted EBITDA of $1.1 million, and a loss per share of $0.32. Full financial results for the second quarter are expected to be released on February 13, 2025.
"Notwithstanding the challenges faced in Q2, we achieved significant milestones during the quarter that position us for strong future growth," said Sumit Kumar, President and Chief Executive Officer of Vecima. "We also moved forward decisively with cost reductions to better align our teams and program investments with customer needs and to enhance operating efficiency going forward. Our workforce restructuring initiatives, while resulting in one-time costs that impacted Q2 results, are expected to deliver ongoing annualized cash savings of approximately $17.5 million."
Going forward, Vecima recognizes that demand volatility could continue into the second half of fiscal 2025 depending on customer project timing. Delays to date in the timing of customer network upgrades have primarily reflected ongoing system-level field qualifications, which are typically challenging for customers undertaking very large system upgrades. Vecima's technology has performed exceptionally well through these qualification processes and the Company anticipates increased product rollouts once qualifications are completed. The prospect of trade actions between the U.S. and Canada has added further uncertainty to the outlook, potentially impacting a diverse array of businesses and sectors, including Vecima and its competitors. With approximately 90% of its sales in the U.S., an estimated half of which the Company believes could potentially be exposed to tariff actions, Vecima is underway with plans to mitigate potential risks, regardless of the outcome of current tariff discussions.
"Vecima is a strong, proven company with a long history of responding quickly and successfully to changing business conditions," added Mr. Kumar. "While accurate forecasting in the near and medium term will be more difficult in light of the current trade and timing uncertainties, adapting to rapidly changing business environments is one of our core strengths. We are moving forward with global market share leadership in the high-growth DAA and IPTV markets, a proven track record as a provider of innovative technology, services, and products to the world's most sophisticated cable and broadcast providers, and compelling opportunities provided by our growing portfolio of next-generation solutions. We remain confident in our future growth prospects and our ability to continue creating strong value for our customers and shareholders."
About Vecima Networks
Vecima Networks Inc. (TSX: VCM) is leading the global evolution to the multi-gigabit, content-rich networks of the future. Our talented people deliver future-ready software, services, and integrated platforms that power broadband and video streaming networks, monitor and manage transportation, and transform experiences in homes, businesses, and everywhere people connect. We help our customers evolve their networks with cloud-based solutions that deliver ground-breaking speed, superior video quality, and exciting new services to their subscribers. There is power in connectivity - it enables people, businesses, and communities to grow and thrive. Learn more at www.vecima.com.
Cautionary Statement Regarding Forward-Looking Statements
This news release contains "forward-looking information" within the meaning of applicable securities laws. Forward-looking information is generally identifiable by use of the words "believes", "may", "plans", "will", "anticipates", "intends", "could", "estimates", "expects", "forecasts", "projects" and similar expressions, and the negative of such expressions. Forward-looking information in this news release includes, but is not limited to, any statements respecting: the timing of Vecima's customers' cable and fiber upgrades; the transitory nature of the impact on Vecima of workforce reduction costs; the timing of the release of and the actual financial results for the second quarter; management's expectations around Vecima's future growth and financial results; enhancement of future operational efficiency; volatility of customer demand; changes to product rollouts; potential trade actions between the U.S. and Canada; the degree to which the Company's sales are exposed to tariff actions; mitigation of tariff risks; global market share leadership in and the growth of the DAA and IPTV markets; and management's expectations surrounding the degree to which Vecima will create shareholder and customer value. The forward-looking statements are based on the current expectations of the management of Vecima and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. There can be no assurance that future developments will be those that have been anticipated.
Forward-looking information in this news release also includes future-oriented financial information or financial outlook within the meaning of securities laws, such as information regarding Vecima's second quarter revenue, gross margin, adjusted EBITDA and adjusted loss per share; and expected ongoing annualized cash savings associated with Vecima's restructuring initiatives.
A more complete discussion of the risks and uncertainties facing Vecima is disclosed under the heading "Risk Factors" in the Company's Annual Information Form dated September 19, 2024, as well as the Company's continuous disclosure filings with Canadian securities regulatory authorities available at www.sedarplus.ca. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Vecima disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.
Non-IFRS Measures and Reconciliation of Non-IFRS Measure
This press release contains references to Adjusted EBITDA, a non-IFRS measure. Non-IFRS financial measures are used by management to evaluate the performance of the Company and do not have any meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other reporting issuers. Non-IFRS financial measures used herein have been applied on a consistent basis.
The following table reconciles net income for the period to EBITDA and Adjusted EBITDA. The term "EBITDA" refers to net income or net loss as typically reported in the IFRS financial statements, excluding any amounts included in net income or net loss for income taxes, interest expense, and depreciation and amortization for PP&E, right-of-use assets, deferred development and intangible assets. The term "Adjusted EBITDA" refers to EBITDA adjusted for: gains and losses on sale of PP&E, intangible assets, and assets held for sale; impairment of PP&E; impairment of deferred development costs and other intangible assets; restructuring costs; and share-based compensation expense. The Company believes that Adjusted EBITDA is useful supplemental information for management and for investors because it provides for the analysis of the Company's results exclusive of certain non-cash items and other items which do not directly correlate to our business of selling broadband access products, content delivery and storage products and services or supplying telematic services. EBITDA and Adjusted EBITDA are not recognized measures under IFRS and, accordingly, investors are cautioned that EBITDA and Adjusted EBITDA should not be construed as alternatives to net income, determined in accordance with IFRS, or as indicators of the Company's financial performance or as measures of its liquidity and cash flows.
Calculation of Adjusted EBITDA | Three months ended December 31, | Six months ended December 31, | ||||||||||
(in thousands of dollars) | 2024 | 2023 | 2024 | 2023 | ||||||||
Net income (loss) (1) | $ | (7,885 | ) | $ | 3,589 | $ | (5,740 | ) | $ | 5,334 | ||
Income tax expense (recovery) | (2,135 | ) | 1,247 | (1,599 | ) | 907 | ||||||
Interest expense | 2,346 | 1,662 | 4,746 | 2,362 | ||||||||
Depreciation of property, plant and equipment | 1,101 | 844 | 1,960 | 1,676 | ||||||||
Depreciation of right-of-use assets | 373 | 334 | 735 | 659 | ||||||||
Amortization of deferred development costs | 3,848 | 3,486 | 7,382 | 6,636 | ||||||||
Amortization of intangible assets | 836 | 816 | 1,651 | 1,632 | ||||||||
EBITDA | (1,516 | ) | 11,978 | 9,135 | 19,206 | |||||||
Loss on sale of property, plant and equipment | 79 | 18 | 99 | 19 | ||||||||
Share-based compensation | 462 | 257 | 1,008 | 513 | ||||||||
Warrants expense (recovery) | (871 | ) | 217 | (765 | ) | 855 | ||||||
Acquisition-related costs | 130 | - | 387 | - | ||||||||
Restructuring costs | 2,798 | - | 2,798 | - | ||||||||
Adjusted EBITDA | $ | 1,082 | $ | 12,470 | $ | 12,662 | $ | 20,593 | ||||
Percentage of sales | 2 | % | 20 | % | 8 | % | 17 | % | ||||
(1) Net income (loss) includes foreign exchange gains (losses) in the amount of $(4,272) and $1,837 for the three months ended December 31, 2024 and 2023, respectively; and $(3,764) and $1,253 for the six months ended December 31, 2024 and 2023, respectively.
Contacts
Vecima Networks
Investor Relations - 250-881-1982
invest@vecima.com
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