VANCOUVER, BC–(Marketwired – May 10, 2017) – Intrinsyc Technologies Corporation (TSX: ITC) (OTC: ISYRF) (“Intrinsyc” or the “Company”), a leading provider of solutions for the development of intelligent connected devices, today announced its financial results for the first quarter ended March 31, 2017. Intrinsyc achieved annual revenue growth of 4%, net income of US$86,966 (CDN$115,656), and earnings per share of US$0.00 (CDN$0.00), in the three months ended March 31, 2017. Revenue was US$4.5 million (CDN$5.9 million) which was an increase from US$4.3 million (CDN$5.9 million) in the first quarter of fiscal 2016. The increase in revenue over the same period in the prior year was due to increased revenue from the sale of hardware products.
“The Company signed several new product development projects and received significant orders for Embedded Computing Hardware during the quarter which led to our highest ever revenue bookings and order backlog at the end of the quarter,” stated Tracy Rees, CEO, Intrinsyc Technologies. “Additionally, we increased design and production wins for Open-Q™ computing modules from 36 to 39 and 11 to 14, respectively. Adjusted EBITDA[1] and net income performance in the first quarter was reduced from the previous quarter due to a combination of a change in revenue mix, as well as investment in sales, marketing, and product development. We are optimistic that our investments in new product development and marketing will lead to additional design and production wins for our embedded computing hardware, which will fuel long-term revenue growth.”
[1] Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Adjusted EBITDA referenced here relates to operating income (loss) inclusive of revenue reclassified as interest income (as per IFRS) less other operating expenses.
Quarterly Business Highlights
- The Company announced agreements that will extend their strategic relationship with Stream TV. The arrangements provide for a purchase commitment by Stream TV of US$2.0 million in products, services, or royalties to be purchased or generated between February 1, 2017, and February 1, 2018. Also, as part of the expansion of the strategic relationship, Intrinsyc received 120,000 warrants convertible into Class A common shares in Stream TV Networks, Inc. on a one for one basis for a period of up to five years. Previously signed agreements provided for a purchase commitment by Stream TV up to US$6.0 million, on or before December 30, 2016. Stream TV has exceeded this obligation. In addition, the subordinated, secured promissory note originally signed by the companies on October 1, 2014, in the amount of US$1,500,000, was further amended to extend the maturity date from March 30, 2017 to February 1, 2018.
- Signed an agreement with a new client valued in excess of US$600,000.
- Received follow-on orders from an existing client; a subsidiary of a Fortune 500 Global company, that are in aggregate valued at US$708,000. Delivery of the Open-Q™ embedded computing modules began in the first quarter of 2017. Additional follow-on orders from this client are anticipated to continue throughout 2017.
- Received a follow-on order from an existing IoT client valued at US$572,500 for their custom single board computer (“SBC”) from Intrinsyc. The client creates high resolution imaging and analytic products for commercial customers.
- Signed five new agreements for product development services valued in excess of US$840,000.
- Received orders from existing clients, that are in aggregate valued at US$1,189,000. Orders for the Company’s Open-Q™ embedded computing modules and related hardware components are valued at US$992,000 and expected to be delivered in the second quarter of 2017. The Company also received an engineering services order from an existing client valued at US$197,000 with delivery beginning in the first quarter of 2017.
- Announced the introduction of the Company’s Open-Q™ 650 IP Camera Reference Design. The Camera Reference Design enables companies to innovate and produce leading-edge camera products faster, more cost effectively and quickly.
- Announced the Company’s Open-Q™ 410 supports Microsoft Windows 10 IoT and is Microsoft Azure certified for IoT.
- Participated in several key industry conferences throughout the quarter in North America and Europe including: CES, Embedded World 2017, Mobile World Congress and Cantech Investment Conference where the Company was one of three nominees for the TSX Canadian Tech Stock of the Year. The Company frequently exhibits at these events as an invited guest of its strategic technology partner.
Financial Highlights
Three Month Comparative Results
The Company reported revenue of US$4.5 million (CDN$5.9 million), up 4% over the same period in the prior year of US$4.3 million (CDN$5.9 million). The increase in revenue over the same period in the prior year was due primarily to increased revenue from the sale of hardware products.
The Company had net income of US$86,966 (CDN$115,656) in the three months ended March 31, 2017 compared to net income of US$490,738 (CDN$765,965) in the same period in the prior year.
Gross margin[2] in the first quarter of fiscal 2017 was 35%, which was lower than the 38% gross margin in the same period in the prior year. Decrease in gross margin over the same period in the prior year was due to the change in revenue mix, which saw a significant increase in revenues from the Company’s Embedded Computing Hardware business which has lower gross margin and decrease in engineering services revenues. Adjusted EBITDA was as follows:
[2] Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross margin referenced here relates to revenues less cost of sales.
| Three months ended March 31, 2017 | Three months ended March 31, 2016 | |||||||
| Operating income | US$4,651 | CDN$6,157 | US$308,040 | CDN$551,399 | ||||
| Add: revenue recognized as interest income as per IFRS | 33,750 | 44,678 | 33,750 | 46,319 | ||||
| Add back: Other operating expenses | 64,529 | 85,423 | 119,240 | 163,645 | ||||
| Adjusted EBITDA | US$102,930 | CDN$136,258 | US$461,030 | CDN$761,363 | ||||
Financial Position as at March 31, 2017
Working capital[3] as of March 31, 2017 was US$11.8 million (CDN$15.7 million) inclusive of cash and short term investments of US$7.7 million (CDN$10.3 million). This is compared to net working capital of US$11.7 million (CDN$15.7 million) as of December 31, 2016 inclusive of cash and short-term investments of US$7.6 million (CDN$10.1 million).
[3] Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Working capital is defined as current assets less current liabilities.Financial Statements and Management Discussion & Analysis
Please see the unaudited interim condensed consolidated financial statements and related Management’s Discussion & Analysis (“MD&A”) for more details. The unaudited interim condensed consolidated financial statements for the three months ended March 31, 2017 and related MD&A have been reviewed and approved by Intrinsyc’s Audit Committee and Board of Directors. Intrinsyc recognizes that the majority of its investors are now accessing Intrinsyc’s corporate and financial information either through pushed news services, directly from www.intrinsyc.com or SEDAR. Thus, Intrinsyc has prepared this truncated news release to alert investors to its results and that a more detailed explanation and analysis is readily available in the MD&A. These reports have been filed on SEDAR at www.sedar.com and also posted at www.intrinsyc.com.
Conference call
The Company will hold a conference call to discuss its fiscal first quarter 2017 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today. On the call, Tracy Rees, Chief Executive Officer and George Reznik, Chief Financial Officer, will discuss the financial results announced. This conference call may be accessed, toll-free, by dialing 1-877-340-8005, and internationally by dialing 1-416-641-6110 approximately 10 minutes prior to the start of the call. This conference line is operator assisted and an access PIN is not required. The conference call will also be broadcast live over the Internet and available for replay on the Company’s Investor Relations Conference Calls web page (http://www.intrinsyc.com/company/investors/). Analysts and investors are invited to participate on the call. Questions may be submitted to [email protected] prior to the call.
Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”).
Non-IFRS Measures
The following and preceding discussion of financial results includes reference to Gross Margin, Adjusted EBITDA and Working Capital, which are all non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluating the operating performance of the Company. Adjusted EBITDA is defined as operating income (loss) inclusive of revenue reclassified as interest income (as per IFRS) less other operating expenses. The measure is provided as a proxy for the cash earnings from the operations of the business as operating loss for the Company includes non-cash amortization and depreciation expense and share-based compensation which are classified as other operating expenses. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.
Forward-Looking Statements
This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information may include financial and other projections as well as statements regarding the Company’s future plans, objectives, performance, revenues, growth, profits, operating expenses or the company’s underlying assumptions. The words “may”, “would”, “could”, “will”, “likely”, “expect,” “anticipate,” “intend”, “plan”, “forecast”, “project”, “estimate” and “believe” or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Company’s actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: the need to develop, integrate and deploy software solutions to meet the Company’s customer’s requirements; the possibility of development or deployment difficulties or delays; a customer’s decision to cancel or fail to proceed with a commitment to purchase units of the Company’s products contained in an executed purchase order; the dependence on the Company’s customer’s satisfaction; the timing of entering into significant contracts; customers’ continued commitment to the deployment of the Company’s solutions; reliance on products manufactured by other companies for resale or distribution and reliance on third-party suppliers; the performance of the global economy and growth in software industry sales; market acceptance of the Company’s products and services; the success of certain business combinations engaged in by the Company or by its competitors; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to international expansion; concentration of sales; international operations and sales; dependence upon key personnel and hiring; reliance on a limited number of suppliers; industry growth; competition; intellectual property; product defects and product liability; currency exchange rate risk; and other factors described in the Company’s reports filed on SEDAR, including its Annual Information Form and financial report for the year ended December 31, 2016. This list is not exhaustive of the factors that may affect the Company’s forward-looking information.
These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
About Intrinsyc Technologies Corporation
Intrinsyc Technologies Corporation is a product development company that provides comprehensive and tailored solutions that enable the development and production of next-generation embedded and IoT devices. Solutions span the development life cycle from concept to production and help device makers and technology suppliers create compelling differentiated products with faster time-to-market. Intrinsyc is publicly traded (TSX: ITC) (OTC: ISYRF) and is headquartered in Vancouver, BC, Canada.
For more information, please contact:
George W. Reznik, CPA-CA, CBV, CFE
Chief Financial Officer
Intrinsyc Technologies Corporation
Email: [email protected]
Phone: +1-604-678-3734
