Record booked sales achieved during the quarter in excess of US$11.5 million
VANCOUVER, British Columbia, Nov. 14, 2018 (GLOBE NEWSWIRE) — Intrinsyc Technologies Corporation (TSX: ITC and OTCQX: ISYRF) (“Intrinsyc” or the “Company”), a leading provider of solutions for the development of intelligent connected devices, today announced its financial results for the third quarter ended September 30, 2018. Intrinsyc achieved revenue of US$6.1 million for growth of 26% and EBITDA of US$513,074 (CDN$670,587), a 787% increase from the prior year. Net income was US$346,477 (CDN$443,840), an increase of 299% from the prior year.
The strong revenue growth from the prior year was a result of increased revenue from both embedded computing hardware and product development services. Gross margin also increased significantly from 30% during third quarter of 2017 to 38% during third quarter of 2018. The improvement in gross margin was due primarily to higher services revenue and corresponding resource utilization.
“Our impressive results are the expected consequence of the strategic growth plan undertaken by the company that is focused on building a powerful suite of high-performance embedded computing modules for the Internet of Things market, in close collaboration with our industry-leading strategic technology partner,” stated Tracy Rees, Chief Executive Officer. “We are both winning new customers and associated product development services, as well as showing the scalable revenue potential of our computing modules. As we enjoy our operational and financial progress, we remain committed to improving shareholder value and always looking for new ways to drive long-term share price appreciation.”
Business Highlights – Third Quarter of Fiscal 2018
- Announced it had record booked sales of more than US$11,500,000, surpassing the record booked orders attained in the previous quarter that exceeded US$8,000,000 and included the following:
- Receipt of orders from multiple clients that are in aggregate valued at US$1,129,000. Orders for the Company’s Open-Q™ embedded computing modules and related hardware components are valued at US$419,000. The Company also received orders for software and product development services from clients valued at US$710,000;
- Receipt of an order valued at US$604,000. Intrinsyc will provide product development services for a leading communications and collaboration company. Intrinsyc’s Open-Q 835 System on Module (“μSOM”) will be the starting point for their new product design;
- Receipt of orders from four clients, that are in aggregate valued at US$1,166,000. Orders for the Company’s Open-Q™ embedded computing modules and related hardware components are valued at US$292,000. The Company also received orders for software and product development services from clients valued at US$874,000;
- Receipt of purchase orders, from an existing Global 500 client that are valued at US$5,431,000; and
- Receipt of orders that are in aggregate valued at US$1,181,000. Orders for the Company’s Open-Q™ embedded computing modules and related hardware components were valued at US$473,000, and engineering services agreements were valued at US$708,000. Revenue from these orders is expected to be recorded in the fourth quarter of 2018 and first quarter of 2019.
- Receipt of orders from multiple clients that are in aggregate valued at US$1,129,000. Orders for the Company’s Open-Q™ embedded computing modules and related hardware components are valued at US$419,000. The Company also received orders for software and product development services from clients valued at US$710,000;
- Entered into a 3G/4G Patent License Agreement with the Company’s key technology partner for Development of Embedded Modules for use in M2M, IoT, and Telematics Devices.
- Extended the Company’s Normal Course Issuer Bid (“NCIB”) program to purchase, for cancellation, up to 1,793,294 common shares based upon ten percent of the public float, representing approximately 8.6% of Intrinsyc’s issued and outstanding common shares as at September 25, 2018.
- Design wins increased from 53 to 56, with 25 of those design wins now in the production phase, which is consistent with the previous quarter.
- The Company’s common shares began trading on the premier tier of the OTC Markets Group in the United States: the OTCQX® Best Market. The Company’s ticker symbol is “ISYRF.”
Financial Highlights – Third Quarter of Fiscal 2018
Three Month Comparative Results
The Company reported third quarter revenue of US$6.1 million (CDN$8.0 million), up 26% over the same period in the prior year of US$4.8 million (CDN$6.0 million) but down 5% over the prior period of US$6.4 million (CDN$8.3 million). The increase in revenue over the comparative period in the prior year was due primarily to increased revenue from the sale of hardware products. Although revenue was reduced from the previous quarter, the Company achieved higher EBITDA due to improved gross margin.
Gross margin2 for the three months ended September 30, 2018 was 38%, which was higher than the 34% gross margin for the three months ended June 30, 2018 and the 30% gross margin for the three months September 30, 2017. The increase in gross margin over the comparative periods was due to an increase in service revenue and corresponding higher engineering resource utilization, as well as a one-time licensing royalty. EBITDA was as follows:
| Three months ended September 30, 2018 |
Three months ended June 30, 2018 |
Three months ended September 30, 2017 (Restated)3 |
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| US$ | CDN$ | US$ | CDN$ | US$ | CDN$ | ||||||||||||
| Operating income (loss) | $ | 379,865 | $ | 496,484 | $ | 265,104 | $ | 342,274 | ($ | 144,032) | ($ | 180,445) | |||||
| Add: revenue recognized as interest income as per IFRS | – | – | – | – | 33,750 | 42,282 | |||||||||||
| Add back: Other operating expenses | 133,209 | 174,103 | 184,987 | 238,838 | 168,146 | 210,654 | |||||||||||
| EBITDA | $ | 513,074 | $ | 670,587 | $ | 450,091 | $ | 581,112 | $ | 57,864 | $ | 72,491 | |||||
Net income for the three months ended September 30, 2018 was of US$346,477 (CDN$443,840) or US$0.02 earnings per share (CDN$0.02) compared to net income of US$86,755 (CDN$104,064) or US$0.00 (CDN$0.00) earnings per share in the same period in the prior year and net income of US$85,492 (CDN$115,975) or US$0.01 (CDN$0.01) earnings per share in the prior quarter.
Nine Month Comparative Results
The Company reported revenue of US$18.6 million (CDN$24.0 million), up 34% over the same period in the prior year of US$13.9 million (CDN$18.1 million). The increase in revenue over the comparative period was due primarily to increased revenue from the sale of hardware products.
Gross margin for the nine months ended September 30, 2018 was 35%, which was slightly higher than the 33% gross margin in the same period in the prior year. The increase was due to an increase in sales of product development services. EBITDA was as follows:
| Nine months ended September 30. 2018 |
Nine months ended September 30, 2017 (Restated) |
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| US$ | CDN$ | US$ | CDN$ | ||||||||
| Operating income (loss) | $ | 793,949 | $ | 1,027,174 | ($ | 170,320) | ($ | 216,109) | |||
| Add: revenue recognized as interest income as per IFRS | – | – | 101,250 | 132,351 | |||||||
| Add back: Other operating expenses | 476,847 | 613,586 | 334,132 | 432,528 | |||||||
| EBITDA | $ | 1,270,796 | $ | 1,640,760 | $ | 265,062 | $ | 348,770 | |||
The Company had net income of US$556,118 (CDN$719,895) or US$0.03 (CDN$0.03) earnings per share during the nine months ended September 30, 2018, compared to net income of US$171,289 (CDN$213,769) or US$0.00 (CDN$0.00) during the same period in the prior year.
Financial Position as at September 30, 2018
Working capital4 as of September 30, 2018 was US$11.2 million (CDN$14.5 million) inclusive of cash, cash equivalents and short-term investments of US$7.4 million (CDN$9.6 million). This is compared to net working capital of US$12.5 million (CDN$15.7 Million) as of December 31, 2017 inclusive of cash, cash equivalents and short-term investments of US$7.3 million (CDN$9.1 million).
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 and nine months ended September 30, 2018 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 third quarter of 2018 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 1-800-263-0877, and internationally by dialing 1-647-794-1827 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, 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. 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, 2017. 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.
Other Disclosure
The Company has agreements with certain technology partners that prevent the use of their name and trademarks without pre-approval. It is not practical to get such approval due to time and other constraints and therefore company names and product trademarks are excluded from this release.
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 OTCQX: 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
1 Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. The closest comparable IFRS financial measure is Operating Income (Loss). EBITDA referenced here relates to operating income (loss) inclusive of revenue reclassified as interest income (as per IFRS) less other operating expenses.
2 Gross Margin is a 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 herein relates to revenues less cost of sales.
3 These numbers have been restated to account for the impact of IFRS 15. Additional details on IFRS 15 are discussed in the Critical Accounting Policies and Estimates section of the MD&A and Note 3 to the Interim Condensed Consolidated Financial Statements.
4 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.
