Espial Reports 2014 Second Quarter Results - KTUL.com - Tulsa, Oklahoma - News, Weather & Sports

Espial Reports 2014 Second Quarter Results

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SOURCE Espial Group

OTTAWA, July 22, 2014 /CNW/ - Espial® Group Inc. ("Espial" or the "Company"), (TSX: ESP), a leader in the delivery of on-demand TV software and services, today announced its second quarter financial results for the three and six month periods ended June 30, 2014.

Espial Q2 Highlights

  • Q2 revenue increased 107% to $4.7 million from $2.3 million last year.
  • Q2 EBITDA income increased to $0.6 million compared to a loss of $1.5 million last year.
  • For the six months ended June 30, 2014 revenue increased 101% to $9.7 million, from $4.8 million last year.
  • For the six months ended June 30, 2014, EBITDA income increased to $1.9 million compared to a loss of $3.9 million last year.
  • Announced a joint RDK solution with Samsung Electronics to provide a home entertainment HTML5 user experience, combining Samsung's IP set-top box and home media gateway with the Espial STB Client.
  • Selected by a global top 5 TV manufacturer to power its next generation smart TVs.
  • Completed a $10 million equity offering.

"Q2 was another strong quarter for us and we are pleased with our growth. We believe our progress is a result of our commitment and focus to deliver world-class products based on open technologies. In Q2, we saw growing momentum for open platforms like ours - that are based on RDK and HTML5 - that allow TV service providers to rapidly introduce innovative services and rich user experiences. We recently announced a partnership with Samsung to provide a joint RDK and HTML5 solution on Samsung set-top-boxes", said Jaison Dolvane, CEO, Espial.  "Samsung is a major consumer TV brand and this partnership reinforces Espial's leadership as RDK continues to gain momentum.  During the quarter, we also continued to make progress with major operators globally who are undertaking RDK evaluation projects with us.  On the Smart TV front, we secured a top five TV manufacturer win and further expanded our footprint in an existing customer to increase use of Espial software across a broader range of TV models."

Financial Summary

For the three-month period ended June 30, 2014, the Company reported revenue of $4.7 million compared with revenue of $2.3 million for the three months ended June 30, 2013. Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the second quarter of fiscal 2014 was income of $0.6 million compared to a loss of  $1.5 million in the second quarter of fiscal 2013. Net income for the quarter was $0.1 million or $0.00 per share, compared with a net loss of $2.1 million last year, or $0.15 per share.

Q2 Financial Results

  • Revenue for the second quarter of fiscal 2014 was $4,712,514 compared with revenue of $2,279,506 in the same period a year ago. Second quarter software license revenue was $1,109,268 compared with software license revenue of $949,471 in the second quarter of fiscal 2013. Professional services revenue for the second quarters of 2014 and 2013 were $2,411,387 and $254,777 respectively.  Maintenance and support revenue for the second quarter was $1,191,859 compared with $1,075,258 last year.
  • North American revenue was $2,371,417 in the second quarter of fiscal 2014 compared to $812,923 in 2013. Asia revenue was $1,113,030 in the second quarter of 2014 compared to $463,787 in 2013.  European revenue was $1,228,067 in the second quarter of 2014 compared to $1,002,796 in 2013
  • Gross margin for the second quarter of fiscal 2014 was 72 percent compared with 78 percent in the second quarter of fiscal 2013.
  • Operating expenses for the second quarter of fiscal 2014 were $3,157,315 compared with $3,738,296 in the second quarter of fiscal 2013.
  • Earnings for the second quarter of fiscal 2014 before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) was income of $601,952 compared to a loss of $1,480,644 in the second quarter of fiscal 2013.
  • Net income in the second quarter was $90,571 compared with a loss of $2,132,914 last year.

A complete set of financial statements and management's discussion and analysis for the period ended June 30, 2014 will be available at http://www.sedar.com.

Conference Call

The Company will be hosting a conference call to discuss the Q2 2014 financial results on July 22, 2014 at 10:00 a.m. Eastern Time (ET). The phone number to join the results discussion is:

  • Toll free line  (Canada/US) -  +1 888-390-0605
  • Toll line (international/local) - +1 416-764-8609

The playback for the call will be available until 11:59pm ET on August 23, 2014, at the following numbers and passcode:

  • Toll line: +1 416-764-8677, Passcode:  151923
  • Toll-free line: +1-888-390-0541, Passcode: 151923

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 year ended December 31, 2013 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

Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) is a non-IFRS financial measure that does not have any prescribed meaning by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers.  Management believes that this non-IFRS financial measure, when taken together with the corresponding consolidated IFRS measures, increases the transparency of the Company's current results and enables investors to more fully understand trends in its current and future performance. A reconciliation of net loss to earnings before interest, foreign exchange, taxes, stock compensation, dividends on redeemable preferred shares, depreciation and amortization is as follows:

  June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013
  (3 months) (3 months) (6 months) (6 months)
  (unaudited) (unaudited) (unaudited) (unaudited)
         
Net income (loss) and Comprehensive loss $90,571 ($2,132,915) $1,119,146 ($5,405,084)
Add        
Stock compensation 150,584 37,268 184,345 80,050
  Depreciation of property and equipment 46,115 51,652 85,816 100,937
Amortization of intangibles 160,770 393,556 321,539 755,517
  448,040 (1,650,439) 1,710,846 (4,468,580)
         
Less (add)        
Net interest income (expense) (10,913) (133,210) (94,619) (267,572)
Foreign exchange gain (loss) (92,321) 22,253 21,460 (201,030)
Income taxes (50,678) (58,837) (123,765) (102,681)
         
Earnings before interest, foreign
exchange, taxes, stock compensation,
depreciation and amortization
$601,952 ($1,480,645) $1,907,771 ($3,897,297)



Q2 Consolidated
Statements of Income
(Loss)

  Three Months Ended     Six Months Ended
    June 30, 2014     June 30, 2013     June 30, 2014     June 30, 2013
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
Revenue                      
  Software $  1,109,268   $  949,471   $ 4,536,619   $ 2,338,915
  Professional services   2,411,387     254,777     2,771,781     502,596
  Support and maintenance   1,191,859     1,075,258     2,378,938     1,980,053
Total revenue   4,712,514     2,279,506     9,687,338     4,821,564
Cost of revenue   1,310,717     504,330     2,064,848     1,017,647
                       
Gross margin   3,401,797     1,775,176     7,622,490     3,803,917
Expenses                      
  Sales and marketing   924,620     992,918     1,846,921     2,128,341
  General and administrative   637,026     545,775     1,180,964     1,134,283
  Research and development   1,434,899     1,806,048     2,956,995     3,570,356
  Business restructuring charges   -     -     -     1,049,222
  Amortization of intangible assets   160,770     393,556     321,539     755,517
    3,157,315     3,738,297     6,306,419     8,637,719
Income (loss) before other income (expense)   244,482     (1,963,121)     1,316,071     (4,833,802)
  Interest income   6,469     2,749     11,544     10,467
  Foreign exchange (loss) gain   (92,321)     22,253     21,458     (201,030)
  Interest expense   (17,381)     (135,959)     (106,163)     (278,038)
                       
Income (loss) before taxes   141,249     (2,074,078)     1,242,910     (5,302,403)
                       
Income tax expense   (50,678)     (58,837)     (123,765)     (102,681)
Net income (loss) and comprehensive income (loss) $  90,571   $ (2,132,915)   $ 1,119,145   $ (5,405,084)
                       
Income (loss) per common share - basic $ 0.00   $  (0.15)   $  0.06   $  (0.38)
                       
Weighted average number of common shares outstanding - basic   20,629,280     14,106,829     20,218,270     14,106,829
                       
Income (loss) per common share - diluted $  0.00   $ (0.15)   $  0.05   $  (0.38)
                       
Weighted average number of common shares outstanding - diluted   23,960,897     14,106,829     23,018,360     14,106,829



Consolidated Balance Sheets

    June 30, 2014   December 31, 2013
           
           
CURRENT ASSETS          
  Cash and cash equivalents $ 14,427,985   $   7,407,093
  Accounts receivable   3,970,236     2,057,222
  Investment tax credits receivable   462,460     312,027
  Prepaid expenses and other assets   758,234     502,990
    19,618,915     10,279,332
           
  Equipment   517,262     539,348
  Intangible assets    1,802,528     2,099,398
  Goodwill   3,340,808     3,340,808
  $ 25,279,513   $ 16,258,886
           
CURRENT LIABILITIES          
  Accounts payable and accrued liabilities $ 2,539,355   $ 1,872,505
  Provisions   290,153     281,813
  Deferred revenue   4,024,649     4,052,700
  Term Debt   -     2,442,056
    6,854,157     8,649,074
Provisions   220,304     363,132
Total Liabilities   7,074,461     9,012,206
           
SHAREHOLDERS' EQUITY          
  Share capital   87,298,111     77,781,292
  Warrants   1,574,067     1,436,004
  Share based payments reserve   12,309,425     12,125,080
  Deficit   (82,976,551)     (84,095,696)
    18,205,052     7,246,680
  $   25,279,513   $ 16,258,886



Statements of Cash Flows

  Six Months Ended
  June 30, 2014     June 30, 2013
  (unaudited)     (unaudited)
CASH PROVIDED BY (USED IN) OPERATING          
  Net income (loss) $ 1,119,145   $ (5,405,084)
  Items not affecting cash          
    Depreciation of property and equipment   85,816     100,938
    Amortization of intangible assets   321,539     755,517
    Share-based compensation expense   184,345     80,051
    Interest accretion on term debt   57,945     81,139
    Provisions   (134,488)     454,316
    1,634,302     (3,933,123)
           
    Changes in non-cash operating working capital items   (1,679,892)     580,828
    (45,590)     (3,352,295)
  INVESTING          
    Purchase of property and equipment   (63,730)         (21,501)
    Purchase of intangible software   (24,669)     (5,255)
    Purchase of business   -     (2,120,412)
    Redemption of short- term investments   -     8,054,551
    (88,399)     5,907,383
  FINANCING          
    Operating line draw (repayment)   -     (2,008,384)
    Repayment of term debt   (2,500,000)     -
    Options exercised   2,960     -
    Warrants exercised   474,582     -
    Proceeds from equity financing   10,000,080     -
    Costs of share issuance   (822,741)     -
    7,154,881     (2,008,384)
  Net cash and cash equivalents inflow   7,020,892       546,704
  Cash and cash equivalents, beginning of period   7,407,093     3,055,644
  Cash and cash equivalents, end of period $ 14,427,985   $ 3,602,348

 

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