Espial Reports 2014 Fourth Quarter Results

OTTAWA, Ontario--()--Espial® Group Inc. ("Espial" or the "Company"), (TSX:ESP), a leader in the delivery of on-demand TV software and services, today announced its fourth quarter and year end financial results for the three and twelve month periods ended December 31, 2014.

“Exciting things are happening at Espial and our record quarter and annual results reflect this. The goal in 2014 was to secure a leadership position in this early market stage of RDK and HTML5 based software solutions”

Espial 2014 & Q4 Highlights

  • For the year ended December 31, 2014 revenue increased 59% to a record $20.0 million.
  • For the year ended December 31, 2014, Adjusted EBITDA income was a record $3.2 million.
  • Q4 revenue was a record $5.3 million.
  • Q4 Adjusted EBITDA income was $0.5 million.
  • Subsequent to year-end, announced that a European Tier-1 cable operator signed a major contract with Espial as primary software vendor and systems integrator to deliver their next-gen RDK based 4K DVB set-top box platform and user experience.
  • In 2014, we secured an RDK partnership with Samsung, and further announced multiple wins for our multi-screen and SmartTV products.

“Exciting things are happening at Espial and our record quarter and annual results reflect this. The goal in 2014 was to secure a leadership position in this early market stage of RDK and HTML5 based software solutions," said Jaison Dolvane, CEO, Espial. “We believe we achieved this goal and our strong sales pipeline reflects this. Early January we announced that a new European tier-1 cable operator selected Espial as their primary vendor to deliver their next generation RDK set-top box and HTML5 user experience. We are heading into 2015 with strong momentum towards further adoption of Espial's world-class user experience solutions.”


Financial Summary

For the three-month period ended December 31, 2014, the Company is reporting revenue of $5.3 million compared with revenue of $3.9 million for the three months ended December 31, 2013. Adjusted EBITDA income for the fourth quarter of fiscal 2014 was $0.5 million compared to $0.6 million for the fourth quarter of fiscal 2013. Net loss for the quarter was $0.2 million, compared with net income of $0.1 million last year. Adjusted net income for the fourth quarter was $0.3 million compared to Adjusted net income of $0.3 million last year.

For the fiscal year ended December 31, 2014, the Company reported revenue of $20.0 million compared with revenue of $12.5 million for the fiscal year ended December 31, 2013. Adjusted EBITDA income for fiscal 2014 was $3.2 million compared to a loss of $3.0 million for fiscal 2013. Net income for the year was $1.2 million, compared with a net loss of $5.5 million last year. Adjusted net income for the 2014 fiscal year was $2.7 million compared to an Adjusted net loss of $4.3 million last year.


Q4 Financial Results

  • Fourth quarter revenues were $5,258,593 compared with revenues of $3,902,541 in the same period a year ago. Fourth quarter software license and royalty revenues were $2,898,646 compared to $2,482,863 in the fourth quarter of fiscal 2013. Professional services for the fourth quarters of 2014 and 2013 were $1,100,466 and $328,477 respectively. Maintenance and support revenues for the fourth quarter were $1,259,481 compared to $1,091,201 last year.
  • North American revenues were $1,665,761 in the fourth quarter of 2014 compared to $1,717,493 in 2013. Asia revenues were $1,984,378 in the fourth quarter of 2014 compared to $892,517 in 2013. European revenues were $1,608,454 in the fourth quarter of 2014 compared to $1,292,531 in 2013.
  • Gross margin for the fourth quarter of fiscal 2014 was 84% compared with 81% in the fourth quarter of fiscal 2013.
  • Operating expenses in the fourth quarter of fiscal 2014 were $4,429,375 compared to $2,845,056 in the fourth quarter of fiscal 2013.
  • Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (Adjusted EBITDA) for the fourth quarter of fiscal 2014 was income of $544,971 compared to income of $576,690 in fiscal 2013.
  • Net loss, which includes non-cash items like depreciation, goodwill and intangibles, in the fourth quarter was $161,231 compared to net income of $148,944 last year.


Fiscal 2014 Financial Results

  • Total revenues for the fiscal year ended December 31, 2014 were $20,003,757 compared with revenues of $12,549,412, in the same period a year ago. Software license and royalty revenues for the 2014 fiscal year were $8,723,977 compared to $7,031,332 in fiscal 2013. Professional services for the fiscal years of 2014 and 2013 were $6,429,023 and $1,315,749 respectively. Maintenance and support revenues for the fiscal year ended December 31, 2014 were $4,850,757 compared to $4,202,331 last year.
  • North American revenues were $8,038,906 in the 2014 fiscal year compared to $4,262,957 in 2013. Asia revenues were $4,771,042 in the 2014 fiscal year compared to $4,125,156 in 2013. European revenues were $7,193,809 in the 2014 fiscal year compared to $4,161,299 in 2013.
  • Gross margin for the 2014 fiscal year was 79% compared with 82% in fiscal 2013.
  • Operating expenses for the 2014 fiscal year were $14,237,250 compared to $14,668,472 in fiscal 2013. Included in the fiscal 2013 year operating expenses is a restructuring charge and integration costs related to the acquisition of ANT.
  • Adjusted EBITDA for the fiscal year ended December 31, 2014 was income of $3,170,985 compared to a loss of $2,960,261 in fiscal 2013.
  • Net profit in the 2014 fiscal year was $1,171,885 compared to a loss of $5,529,425 in 2013.

Cash, restricted cash and cash equivalents on December 31, 2014, was $18,111,324

A complete set of financial statements and management’s discussion and analysis for the period ended December 31, 2014 will be available at http://www.sedar.com.


Conference Call

The Company will be hosting a conference call to discuss the Q4 and fiscal year 2014 financial results on Thursday, February 26th, 2015 at 5:00PM EDT and the phone number to join the results discussion is:

  • Toll Free line (Canada/US) 877-201-0168
  • Toll line (International/Local) 647-788-4901

The playback for the call will be available until 11:59pm ET on March 25, 2015, at the following numbers and passcode:

  • Toll-free line: +1-855-859-2056, Passcode: 85801105


About Espial (www.espial.com)

Espial is a leading supplier of digital TV and IPTV software and solutions to cable MSOs and telecommunications operators as well as consumer electronics manufacturers. Espial’s middleware, video-on-demand, and browser products power a diverse range of pay-TV and Internet TV business models. Over 35 million licenses of its patented software are in use across the world. Espial is headquartered in Ottawa, Canada and has offices in the United States, Europe, and Asia. Visit www.espial.com or contact via phone at +1 613 230 4770.

Forward Looking Statement

This press release contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements or assumptions about, , economic conditions, benefits of new customer and partner relationships, future opportunities for the company and products and any other statements regarding Espial's objectives (and strategies to achieve such objectives), future expectations, beliefs, goals or prospects are or involve forward-looking information.

Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those in the forward-looking statements or could cause our current objectives and strategies to change, including but not limited to changing conditions and other risks associated with the on-demand TV software industry and the market segments in which Espial operates, competition, Espial’s ability to effectively develop its distribution channels and generate increased demand for its products, economic conditions, technological change, unanticipated changes in our costs, regulatory changes, litigation, the emergence of new opportunities, many of which are beyond our control and current expectation or knowledge.

Additional risks and uncertainties affecting Espial can be found in Management’s Discussion and Analysis of Results of Operations and Financial Condition and its Annual Information Form for the fiscal years ended December 31, 2013 and 2014 filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein and our current objectives or strategies may change. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

Non-IFRS Financial Measures

We use Adjusted net income (loss) and Adjusted diluted earnings (loss) per share, which remove the impact of our amortization of intangible assets and stock based compensation expense, to measure our performance as these measures align our results and improve comparability against our peers. We use Adjusted EBITDA INCOME (LOSS) to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements.

Adjusted net income (loss), Adjusted diluted earnings (loss) per share and Adjusted EBITDA income (loss) are not recognized, defined or standardized measures under IFRS. Our definition of Adjusted net income (loss), Adjusted EBITDA income (loss) and Adjusted diluted earnings (loss) per share will likely differ from that used by other companies and therefore comparability may be limited. Adjusted net income (loss), Adjusted EBITDA income (loss) and Adjusted diluted earnings (loss) per share should not be considered a substitute for or in isolation from measures prepared in accordance with IFRS. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on non-IFRS measures and view them in conjunction with the most comparable IFRS financial measures. We have reconciled Adjusted net income (loss) and Adjusted EBITDA income (loss) to the most comparable IFRS financial measure as follows:

 

Three months
ended December
31, 2014
(unaudited)

 

Three months
ended December
31, 2013
(unaudited)

 

Twelve months
ended December
31, 2014
(unaudited)

 

Twelve months
ended December
31, 2013
(unaudited)

     
Net income (loss) $ (161,231) $ 148,943 $ 1,171,884 $ (5,529,421)
Add
Stock based compensation 337,373 36,751 861,510 143,969
Amortization of intangibles   162,993     161,460     645,870     1,101,885
Adjusted net income (loss) 339,135 347,154 2,679,264 (4,283,567)
Add(less)
Depreciation 56,084 59,569 194,868 212,158
Net interest income (expense) (36,136) 147,836 23,687 547,024
Foreign exchange gain (loss) (131,942) (33,241) (205,653) 277,641
Income tax   317,830     55,371     478,818     286,483

Adjusted EBITDA income
(loss)

$ 544,971   $ 576,689   $ 3,170,984   $ (2,960,261

Basic net income (loss) per
share

$ (0.01) $ 0.01 $ 0.05 $ (0.37)

Diluted net income (loss) per
share

$ (0.01) $ 0.01 $ 0.05 $ (0.37)

Adjusted diluted net income
(loss) per share

$ 0.01 $ 0.02 $ 0.11 $ (0.29)





Consolidated Statements of Income and Loss and
Comprehensive Income and Loss
(In Canadian dollars), except share amounts)

 

Three Months Ended

     

Twelve Months Ended

December 31,
2014

 

December 31,
2013

December 31,
2014

 

December 31,
2013

(Unaudited) (Unaudited)
Revenue
Software $ 2,898,646 $ 2,482,863 $ 8,723,977 $ 7,031,332
Professional services 1,100,466 328,477 6,429,023 1,315,749
Support and maintenance   1,259,481   1,091,201       4,850,757   4,202,331
Total Revenue 5,258,593 3,902,541 20,003,757 12,549,412
Cost of revenue   840,697   738,575       4,297,770   2,299,217
Gross margin   4,417,896   3,163,966       15,705,987   10,250,195
Expenses
Sales and marketing 1,162,783 710,362 3,991,274 3,923,040
General and administrative 849,277 394,635 2,843,589 1,987,502
Research and development 2,254,322 1,578,599 6,756,519 6,606,819
Business restructuring charges - - 1,049,222
Amortization of Intangible assets   162,993   161,460       645,869   1,101,889
    4,429,375   2,845,056       14,237,251   14,668,472
Income (loss) before other income (expense) (11,479) 318,910 1,468,736 (4,418,277)
Foreign exchange gain (loss) 131,942 33,241 205,653 (277,641)
Interest income 36,136 3,360 82,476 16,533
Interest expense   -   (151,196)       (106,163)   (563,557)
Income (loss) before tax 156,599 204,315 1,650,702 (5,242,942)
Income taxes   (317,830)   (55,371)       (478,818)   (286,483)

Net income (loss) and
comprehensive income (loss)

  $ (161,231)   $ 148,944       $ 1,171,884   $ (5,529,425)
 
Income (loss) per share - basic $ (0.01) $ 0.01 $ 0.05 $ (0.37)

Weighted average number of
shares outstanding - basic

26,123,246

16,913,977

22,786,909

14,776,991

 

 

Income (loss) per share - diluted

$( 0.01) $ 0.01 $ 0.05 $ (0.37)

Weighted average number of
shares outstanding – diluted

26,690,370

16,913,977

24,572,562

14,776,991




Consolidated Balance Sheets

    December 31, 2014   December 31, 2013
   
CURRENT ASSETS
Cash and cash equivalents $ 18,111,324 $ 7,407,093
Accounts receivable 3,861,058 2,057,222
Investment tax credits receivable 312,329 312,027
Prepaid expenses and other assets     567,853     502,990
22,852,564 10,279,332
 
Equipment 727,626 539,348
 
Intangible assets 1,496,794 2,099,398
 
Goodwill     3,340,808     3,340,808
    $ 28,417,792   $ 16,258,886
 
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 2,521,480 $ 1,872,505
Provisions - 281,813
Deferred revenue 3,557,667 4,052,700
Term Debt     -     2,442,056
6,079,147 8,649,074
Provisions     275,234     363,132
Total Liabilities 6,354,381 9,012,206
 
COMMITMENTS

SHAREHOLDERS’ EQUITY

Share capital 91,072,570 77,781,292
Warrants 928,063 1,436,004
Share based payments reserve 12,986,590 12,125,080
Deficit     (82,923,812)     (84,095,696)
      22,063,411     7,246,680
    $ 28,417,792   $ 16,258,886




Statements of Cash Flows

  Year Ended
    December 31, 2014       December 31, 2013
CASH PROVIDED BY (USED IN)      
OPERATING
Net income (loss) $ 1,171,884 $ (5,529,425)
Items not affecting cash
Depreciation of property and equipment 194,868 212,158
Amortization of intangible assets 645,869 1,101,889
Share-based compensation expense 861,510 143,969
Interest accretion on long-term debt 57,944 185,449
Provisions     (369,711)         421,188
2,562,364 (3,464,772)
Changes in non-cash operating

working capital items

    (1,715,059)         2,194,307
      847,305         (1,270,465)
INVESTING
Purchase of equipment (383,146) (29,815)
Purchase of intangibles (43,265) (5,255)
Purchase of business - (2,120,412)
Redemption of short-term investments     -         8,164,551
      (426,411)         6,009,069
FINANCING
Repayment of operating line - (3,010,192)
Repayment of term debt (2,500,000) (1,000,000)
Options exercised 17,310 -
Warrants 2,201,141 -
Proceeds from equity financing 11,500,092 3,623,037
Costs of share issuance     (935,206)         -
      10,283,337         (387,155)
Net cash and cash equivalents inflow (outflow) 10,704,231 4,351,449
Cash and cash equivalents, beginning of year     7,407,093         3,055,644
Cash and cash equivalents, end of year   $ 18,111,324       $ 7,407,093
 
Supplementary information:
Interest paid $ 48,219 $ 378,105
Taxes paid $ 478,818 $ 286,483



Contacts

Espial Group Inc.
Carl Smith, 613-230-4770
Chief Financial Officer
csmith@espial.com
or
Kirk Edwardson, 613-230-4770 x1145
Director, Marketing
kedwardson@espial.com

Recent Stories

RSS feed for Espial Group Inc.

Website

Espial Group Inc.