ViXS Reports First Quarter Fiscal 2015 Results

TORONTO, ONTARIO -- (Marketwired) -- Jun 05, 2014 -- ViXS Systems Inc. (TSX: VXS) a pioneer and leader in media processing solutions, reported its first quarter fiscal 2015 results for the period ended April 30, 2014. All results are reported under International Financial Reporting Standards ("IFRS") and in U.S. dollars, unless otherwise specified. ViXS reported Q1FY15 revenue of $7.4 million, total comprehensive loss of $5.1 million and non-IFRS net loss of $4.5 million.

Q1FY15 Financial Summary


--  Revenue of $7.4 million, a sequential increase over the previous
    quarter's revenue of $7.0 million. Revenue from new products accounted
    for 61% of sales in F1Q15 versus 54% in the previous quarter, and 37% in
    the same quarter last year. 
--  Gross margin of 42.1% 
--  Product margin of 47.4% which excludes the effects of amortization of IP
    and mask-sets, support contracts, and design kits. 
--  IFRS Comprehensive loss of $5.1 million, or a loss of $(0.10) per share
    basic and diluted, a 34% improvement over the previous quarter. 
--  Non-IFRS net loss totalled $4.4 million, as compared to a $6.9 million
    loss in the previous quarter, and a $6.1 million loss in the same
    quarter last year. 
--  $19.7 million of cash and equivalents, with no bank debt outstanding at
    end of quarter. 

Customer and Product Announcements

--  Sharp selected ViXS to power its Ultra High Definition (UHD) 4K Recorder
    and Television products that are expected to begin shipment during June
    in Japan. 
--  ViXS launches UHD HEVC 4K Golden Reference Decoder providing the
    broadcast industry with a standardized tool to test, validate, and
    enable UHD 4K/HEVC content. 
--  ViXS demonstrated industry-first RDK client on UHD 4K Platform at The
    Cable Show. 
--  Astra and NTT-Plala commence trails of UHD 4K HEVC 60p using ViXS XCode
    6. 
--  ViXS received the top award for Outstanding Business Innovation from the
    Hong Kong-Canada Business Achievement Awards. 

Q1FY2015 Results:

Revenue for the first quarter of fiscal 2015 was $7.4 million, up 6% sequentially from the $7.0 million in the previous quarter.

Revenue from new products (XCode6, XConnex) accounted for 61% of sales in F1Q15 versus 54% in the previous quarter, and 37% in the same quarter last year.

Revenue was down 7% from the $8.0 million in the same quarter of last year primarily due to the timing of product transitions as customers migrate from the Company's older generation products (such as the XCode5000 and older products) to more integrated next-generation SoC products for the MoCA (XConnex) and cloud video infrastructure (XCodePro) markets. As evidence of this transition, ViXS' new XCode6 product completed its first full quarter of sales, exceeding 20% of revenue, and remains the only commercial shipping product to support UHD4K-60 and HEVC 10-bit.

Gross margin was 42.1% in Q1FY15, an increase from the 40.1% level in Q4FY14 due to the higher mix of XCode6 and other integrated SoC products. Product gross margin was 47.4% in the quarter. Unlike most semiconductor companies, ViXS amortizes its IP and mask-sets, and certain other design costs, at the COGS level but we believe our product margin is a useful metric for assessing and comparing ViXS margins within our industry. ViXS has included the product margin for each of the last eight quarters in the "Selected Consolidated Quarterly Financial Information" section in Company's filed MD&A.

Comprehensive loss for the first fiscal quarter was $5.1 million, or a loss of $(0.10) per share basic and diluted, a 34% improvement compared with the comprehensive income loss in the fourth quarter of FY2014 of $7.6 million, or $(0.15) per share basic and diluted. The sequential improvement in IFRS loss was primarily due to higher revenue from XCode6 and MoCA products, plus ongoing cost controls. The Company also had a $0.3 million gain from currency gains which is now reported below the operating expense line for this and previous quarters. A detailed explanation of these and other changes in operating expenses is also described in the Company's filed MD&A.

Non-IFRS net loss for the third fiscal quarter was $4.2 million, or $(0.09) per share (basic and diluted), compared with a non-IFRS net loss of $6.9 million, or $(0.14) per share (basic and diluted), in the prior quarter and non-IFRS net loss of $6.1 million, or $(1.23) per share (basic and diluted), in the same quarter last year. The impact on non-IFRS loss from continuing operations and non-IFRS loss per share (basic and diluted) from continuing operations are summarized in the table below.

Total of cash and cash equivalents was $19.7 million as of April 30, 2014, compared to $25.6 million at the end of the previous quarter. The decrease was due to $5.1 million in operating loss and the timing of certain working capital needs (including IP licenses) needed for growth this year.

"ViXS made a strategic decision to invest early in technologies that we saw disrupting the global video industry, and as a result we are the first and only commercially shipping solution to support both UHD 4K 60p and 10-bit HEVC," said Sally Daub, President and CEO of ViXS Systems Inc. "Our customer wins, Intel partnership, and incremental revenue from new products in Q1FY15 clearly demonstrate that our investment is starting to pay off, and we expect that UHD and HEVC will drive continued revenue and earnings growth for years to come."

Based on the strength of our new products, ViXS expects sequential revenue growth for the second quarter of fiscal 2015, and continued growth is expected through the rest of the year.

For More Information

In conjunction with this announcement, ViXS management will be holding a conference call on Thursday, June 5, 2014, at 5:00 P.M. Eastern time to discuss the Company's results for the first quarter fiscal 2015.

FISCAL 1Q15 CONFERENCE CALL DETAILS:


DATE:                Thursday June 5, 2014                              
TIME:                5:00 P.M. EST                                      
DIAL IN NUMBER:      Local / International: 647-426-1845                
                     North American Toll: Free: 1-866-782-8903          
REPLAY NUMBER:       Local / International: 416-915-1035                
                     North American Toll: Free: 1-866-245-6755          
                     Passcode: 271960                                   
WEBCAST:             
http://public.viavid.com/index.php?id=108940       
                     The webcast will be archived for 90 days           
WEBSITE:             To view the press release or any additional        
                     financial information, please visit the Investor   
                     Relations section of the ViXS website at:            
                                          
  http://investor.vixs.com/investor-relations/                

 
SELECTED CONSOLIDATED FINANCIAL INFORMATION
 


                                                                                            Three  Month  Period  Ended            
                                                                                    April  30,    January  31,    April  30,  
Dollar  amounts  in  U.S.  dollars                            2014                2014                2013        
                                                                                ------------------------------------
      Amounts  in  thousands                                                                                                          

Revenues                                                                            $7,441            $7,039            $8,024
      Cost  of  sales                                                              4,305              4,173              4,178
                                                                                ------------------------------------
Gross  margin                                                                      3,136              2,866              3,846
                                                                                ------------------------------------
Operating  expenses                                                                                                                    
      Research  and  development                                        4,255              4,548              6,041
      Selling,  general  and  administrative                  4,246              4,230              2,577
                                                                                ------------------------------------
Total  operating  expenses  (1)                                      8,501              8,778              8,618
                                                                                ------------------------------------
Loss  before  finance  costs  and  income,                                                                              
  currency  gain,  convertible  preferred                                                                              
  share  revaluation  adjustment  and                                                                                      
  income  taxes                                                                (5,365)          (5,912)          (4,772)
                                                                                ------------------------------------
Other  income  (expense):                                                                                                          
      Finance  costs                                                                (20)              (152)        (18,835)
      Finance  income                                                                  24                    33                      -
      Currency  gain                                                                  291          (1,578)                    10
    Convertible  preferred  share                                                                                              
      revaluation  adjustment                                                    -                      -          (1,185)
                                                                                ------------------------------------
Total  other  income  (expense)                                          295          (1,697)        (20,010)
                                                                                ------------------------------------
Loss  before  taxes                                                      ($5,070)        ($7,609)      ($24,782)
      Income  tax  expense                                                      (13)                (10)                (56)
                                                                                ------------------------------------
Net  loss  for  the  period                                            (5,083)          (7,619)        (24,838)
Items  subject  to  reclassification                                                                                      
      Exchange  difference  on  translating                                                                              
      foreign  operations                                                      (30)                      -                (40)
                                                                                ------------------------------------
Comprehensive  loss  for  the  period                      ($5,113)        ($7,619)      ($24,878)
                                                                                ------------------------------------
                                                                                ------------------------------------
Loss  per  share  attributed  to  common                                                                                  
  equity  holders                                                                                                                          
      Basic  and  Diluted                                                  ($0.10)          ($0.15)          ($5.01)
Weighted  average  number  of  common                                                                                      
  shares  outstanding                                                                                                                  
      Basic  and  Diluted                                                    50,352            50,225              4,960

(1)  Includes  share-based  transaction                                                                                
  expense  of:                                                                                                                                
Research  and  development                                                  345                  250                    60
Selling,  general  and  administrative                            199                  251                    75
                                                                                ------------------------------------
                                                                                                $544                $501                $135
                                                                                ------------------------------------
                                                                                ------------------------------------


Consolidated  Balance  Sheet                                                                                                    
  Data                                            As  at  April  30,  As  at  January  31,  As  at  April  30,
                                                                  2014                          2014                          2013          
                                                    ----------------  -----------------  ---------------
Cash  and  cash  equivalents                    $19,667                      $25,588                    $2,069
Trade  accounts  receivable                        7,045                          6,959                      6,544
Inventory                                                        3,321                          5,293                      2,175
Total  assets                                                40,706                        47,359                    22,304

Bank  Debt                                                                -                                  -                    10,772
Total  liabilities                                      12,782                        15,048                  132,006
Shareholders'  equity                                                                                                                
  (deficiency)                                              27,924                        32,311              (109,702)

 
NON-IFRS FINANCIAL MEASURES
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