VANCOUVER, British Columbia, March 07, 2018 (GLOBE NEWSWIRE) -- Intrinsyc Technologies Corporation (TSX:ITC) (OTC:ISYRF) (“Intrinsyc” or the “Company”), a leading provider of solutions for the development of intelligent connected devices, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2017. Intrinsyc achieved year over year revenue growth of 58% in the fourth quarter of fiscal 2017, with Adjusted EBITDA of US$602,619 (CDN$766,107), net income of US$484,797 (CDN$611,772), and earnings per share of US$0.02 (CDN$0.02).
The strong revenue growth was a result of increased shipments of embedded computing hardware to new and existing clients, as well as improvement in revenue from engineering services. Revenue was US$6.8 million (CDN$8.7 million) which was an increase from US$4.3 million (CDN$5.7 million) in the fourth quarter of fiscal 2016.
Fiscal 2017 revenue was US$20.7 million (CDN$ $26.8 million), which was an increase of 18% over the prior year. Annual revenue growth was a result of very strong growth from hardware sales, partially offset by a decline in software and services revenue. Since services revenue is generally at higher margins than hardware revenue this change in revenue mix impacted overall gross margin and earnings. The decline in services revenue was primarily as a result of the reduced revenue from a single major client as they delayed their product development. Net income for Fiscal 2017 was US$642,337 (CDN$808,382), with earnings per share of US$0.03 (CDN$0.03).
“Our strong performance in the quarter is confirmation of the Company’s successful strategic execution and transition from a non-recurring engineering services business model, to providing integrated solutions with a repeat revenue model,” stated Tracy Rees, Chief Executive Officer, Intrinsyc Technologies Corporation. “When our computing solutions are designed into our clients’ products it typically leads to repeat hardware purchases over multiple years and the benefits of this model are evident in our increasing revenue contribution from the Company’s embedded computing products, which increased by 76% annually.
“Although the decline in services revenue from a major client negatively impacted our gross margin and earnings in Fiscal 2017, we have indications that our client will once again be a significant contributor to our services revenue beginning in the second quarter of 2018.
“I’m confident that Intrinsyc is on the right track with our expanding product portfolio, strong technology partnerships, industry leading technical expertise, and growing client base. While we expect that our continued execution of our strategic initiatives will lead to annual revenue growth; there is a greater likelihood for quarterly variability in Fiscal 2018 due to the timing of our clients’ hardware orders and the availability of components needed for manufacturing.”
Quarterly Business Highlights
- The Company increased design wins for the Company’s Open-Q™ computing modules from 44 in the previous quarter to 50 in the fourth quarter, and production wins from 19 to 22, over the same period. Design and production wins are important metrics to track our progress in building our business with scalable repeat revenue.
- New production wins, agreements, and orders announced during the fourth quarter included:
- A production win and order for the Company’s Open-Q™ 2100 System on Module (“SOM”). The SOM will power an advanced GPS asset tracking product built for government applications by a leading government systems integrator. The initial order received will support a client rollout and field trials with larger production expected beginning in the second quarter of 2018.
- A new production win and the receipt of an initial order valued at US$470,000 for the Company’s Open-Q™ 410 SOM. The SOM will be used in a camera based IoT product.
- The receipt of orders for hardware and services from new and existing clients, that are in aggregate valued in excess of US$800,000. Among the engineering services orders are commitments from an industry leading company in the robotics industry, a Fortune 500 computing company, and an Industrial IoT company that is planning on using the Company’s recently launched Open-Q™ 626 SOM.
- Announced the Open-Q™ 660 Hardware Development Kit. Mobile Platform. The development kit supports an advanced mid-range processor that is designed to provide a leap in performance; supporting advanced photography and enhanced gaming, in addition to long battery life for top-tier mobile and IoT devices.
- Intrinsyc was named to Deloitte's Technology Fast 500™, ranking 407 on this list of the 500 fastest growing technology, media, telecommunications, life sciences and energy tech companies in North America. Intrinsyc achieved this award as a result of our 196 percent revenue growth over a three-year period, from 2013 to 2016.
Three Month Comparative Results
The Company reported fourth quarter revenue of US$6.8 million (CDN$8.7 million), up 58% over the same period in the prior year of US$4.3 million (CDN$5.7 million) and up 41% over the prior period of US$4.8 million (CDN$6.0 million). The increase in revenue over the comparative periods was due primarily to increased revenue from the sale of hardware products.
The Company had net income of US$484,797 (CDN$611,772) in the three months ended December 31, 2017 compared to net income of US$210,128 (CDN$327,171) in the same period in the prior year and net income of US$93,006 (CDN$112,859) in the prior quarter.
Gross margin2 in the fourth quarter of fiscal 2017 was 35%, which was consistent with the 36% gross margin in the same period in the prior year but higher than 30% in the prior quarter. Decrease in gross margin over the same period in the prior year was due to the change in revenue mix, which saw a significant increase in revenues from the Company’s Embedded Computing Hardware business which has a lower gross margin than the Company’s engineering services, and a decrease in engineering services revenues. The increase in gross margin over the prior quarter was due to an increase in engineering services revenues. Adjusted EBITDA was as follows:
|Three months ended
December 31, 2017
Three months ended
September 30, 2017
Three months ended
December 31, 2016
|Operating income (loss)||$||US$
|Add: revenue recognized as interest income as per IFRS||-||-||33,750||42,282||33,750||45,036|
|Add back: Other operating expenses||164,054||208,559||168,146||210,654||(39,780||)||(53,082||)|
Annual Comparative Results
The Company reported revenue of US$20.7 million (CDN$26.8 million) for the twelve months ended December 31, 2017, up 18% over the same period in the prior year of US$17.5 million (CDN$23.1 million). The increase in revenue was due to increased revenue from the sale of hardware products partially offset by a decrease in product development engineering services.
The Company had net income of US$642,337 (CDN$808,382), with earnings per share of US$0.03 (CDN$0.03) for the twelve months ended December 31, 2017, compared to net income of US$1,662,782 (CDN$2,232,617) in the same period in the prior year.
Gross margin for the twelve months ended December 31, 2017 was 33%, which was lower than the 39% gross margin in the same period in the prior year. Adjusted EBITDA was as follows:
|Twelve months ended
December 31, 2017
Twelve months ended
December 31, 2016
|Add: revenue recognized as interest income as per IFRS||-||-||135,000||178,862|
|Add back: Other operating expenses||498,186||641,087||304,342||402,030|
Financial Position as at December 31, 2017
Working capital3 as of December 31, 2017 was US$12.4 million (CDN$15.5 million) inclusive of cash and short term investments of US$7.3 million (CDN$9.1 million). This is compared to net working capital of US$11.7 million (CDN$15.7 Million) as of December 31, 2016 inclusive of cash and short term investments of US$7.6 million (CDN$10.1 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 months and year ended December 31, 2017 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.
The Company will hold a conference call to discuss its fiscal fourth quarter and full year 2017 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 email@example.com prior to the call.
Financial information is reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”).
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. 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.
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.
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.
For more information, please contact:
George W. Reznik, CPA-CA, CBV, CFE
Chief Financial Officer
Intrinsyc Technologies Corporation
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 closet comparable IFRS financial measure is Operating Income (Loss). Adjusted 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 Working Capital is a 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.