VANCOUVER, BC–(Marketwired – November 03, 2016) – Intrinsyc Technologies Corporation (TSX: ITC) (OTC: ISYRF) (“Intrinsyc” or the “Company”), a leading provider of solutions for the development of embedded and IoT products, today announced its financial results for the third quarter of fiscal 2016 ended September 30, 2016. Intrinsyc achieved revenue growth of 20%, with revenue of US$4.1 million (CDN$5.3 million), net income of US$362,048 (CDN$496,711), and earnings per share of US$0.02 (CDN$0.03) in the three months ended September 30, 2016 over the same period in the prior year.
For the nine months ended September 30, 2016, Intrinsyc achieved revenue of US$13.2 million (CDN$17.4 million), net income of US$1.5 million (CDN$1.9 million), and earnings per share of US$0.07 (CDN$0.09).
Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”).
“The Company enjoyed record order bookings, led by record hardware orders, and ended the quarter with an increased order backlog in both product development services and hardware,” said Tracy Rees, Chief Executive Officer. “With our increased sales order backlog, strong opportunity pipeline, and several new product development initiatives underway; we are positioned for a strong finish to the year, with a solid foundation for future performance.”
Quarterly Business Highlights
- The Company achieved record order bookings in the quarter, including record hardware bookings and the announcement of a total of five new product development agreements exceeding US$1.8 million (CDN$2.3 million).
- As of September 30, 2016, the Company has thirty-three (33) companies that are currently working through Intrinsyc or have begun development independently to incorporate Intrinsyc’s Open-Q SOMs into their products, with eight (8) companies in commercial production.
Financial Highlights
Three Month Comparative Results
The Company reported revenue of US$4.1 million (CDN$5.3 million), up 20% over the same period in the prior year of US$3.4 million (CDN$4.4 million). The increase in revenue over the same period in the prior year was due to increased revenue from the sale of product development engineering services, as well as hardware products.
The Company had net income of US$362,048 (CDN$496,711) in the three months ended September 30, 2016 compared to net loss of US$20,603 (CDN$32,792) in the same period in the prior year.
Gross margin1 in the third quarter of fiscal 2016 was 43%, which was higher than the 38% gross margin in the same period in the prior year and in the previous second quarter of fiscal 2016. Increase in gross margin over the same period in the prior year was due to the decrease of third party contractors, and an increase in employer related costs for the Company’s proprietary product development activities which are classified as Research and Development. Adjusted EBITDA2 was as follows:
| Three months ended September 30, 2016 |
Three months ended September 30, 2015 |
|||||||
| Operating income | US$ 366,574 | CDN$ 478,232 | US$ 213,929 | CDN$ 279,969 | ||||
| Add: revenue recognized as interest income as per IFRS | 33,750 | 44,030 | 33,750 | 44,169 | ||||
| Add back: Other operating expenses | 108,245 | 141,216 | 76,439 | 100,036 | ||||
| Adjusted EBITDA | US$ 508,569 | CDN$ 663,478 | US$ 324,118 | CDN$ 424,174 | ||||
Nine Month Comparative Results
The Company reported revenue of US$13.2 million (CDN$17.4 million), up 55% over the same period in the prior year of US$8.5 million (CDN$10.8 million). The increase in revenue was due to increased revenue from the sale of product development engineering services, as well as hardware products.
The Company had net income of US$1,452,654 (CDN$1,905,447) in the nine months ended September 30, 2016, compared to a net loss of US$82,579 (CDN$110,201) in the same period in the prior year.
Gross margin for the nine months ended September 30, 2016 was 41%, which was comparable to the 42% gross margin in the same period in the prior year. Adjusted EBITDA was as follows:
| Nine months ended September 30, 2016 |
Nine months ended September 30, 2015 |
|||||||
| Operating income | US$ 1,069,627 | CDN$ 1,409,843 | US$ 379,184 | CDN$ 483,184 | ||||
| Add: revenue recognized as interest income as per IFRS | 101,250 | 133,826 | 101.250 | 127,552 | ||||
| Add back: Other operating expenses | 344,122 | 455,111 | 257.275 | 323,329 | ||||
| Adjusted EBITDA | US$ 1,514,999 | CDN$ 1,998,780 | US$ 737,709 | CDN$ 934,065 | ||||
Financial Position as at September 30, 2016
Working capital3 as of September 30, 2016 was US$11.5 million (CDN$15.1 million) inclusive of cash and short term investments of US$7.6 million (CDN$9.9 million). This is compared to net working capital of US$9.8 million (CDN$13.6 Million) as of December 31, 2015 inclusive of cash and short-term investments of US$7.0 million (CDN$9.7 million).
Financial Statements and Management Discussion & Analysis
Please see the audited consolidated financial statements and related Management’s Discussion & Analysis (“MD&A”) for more details. The audited consolidated financial statements for the three and nine months ended September 30, 2016 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 year 2016 second quarter 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 invest@intrinsyc.com prior to the call.
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. This measure is provided as a proxy for the cash earnings from the operations of the business as operating income (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. There could be variability in future financial performance based upon the timing of our Client’s product deployment and other factors.
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 and hardware 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, 2015. 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) and (OTC: ISYRF) and is headquartered in Vancouver, BC, Canada.
1 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.
2 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.
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.
For more information, please contact:
George W. Reznik, CA, CBV
Chief Financial Officer
Intrinsyc Technologies Corporation
Email: greznik@intrinsyc.com
Phone: +1-604-678-3734