MONTREAL, QUEBEC, Oct. 30, 2009 (Marketwire) --
MONTREAL, QUEBEC -- (Marketwire) -- 10/30/09 -- Miranda Technologies Inc. (TSX: MT), a global developer, manufacturer and marketer of high-performance hardware and software for the television broadcast industry, today reported results for the third quarter ended September 30, 2009.
Third Quarter Highlights: Q3 2009/2008
- Sales of $31.8 million, versus $37.6 million in 2008
- EBITDA(1) of $3.3 million, compared to $12.2 million last year
- Net income of $1.1 million, or 5 cents per fully diluted share, compared to net income of $7.7 million and 32 cents per share last year
(1) Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure. See comment on non-GAAP financial measures which follows.
Revenues strengthened slightly over Q2 this year, increasing 2% to $31.8M. Compared to last year, markets remained soft, with revenues declining 16%. Net income came in at $1.1 million, versus $7.7 million in 2008. Quarterly results were impacted by a restructuring charge of $0.4 million related to on-going productivity measures. Excluding this, net income was $1.3 million.
"A stronger Canadian dollar weighed on overall results, although sales activity was more robust compared to Q2 2009," commented Strath Goodship, Miranda's President and Chief Executive Officer. "While, we believe that the broadcast equipment market has bottomed, the timing of a recovery remains uncertain. We are beginning to see momentum build in our sales funnel, bolstered by improving levels of demand and new products."
"During the quarter, we continued to strengthen the Company operationally and financially, laying the groundwork to consolidate some manufacturing operations and appointing new sales leadership in the US," said Mr. Goodship. The Company plans to merge the electronic assembly manufacturing operations from its Grass Valley facility with its Montreal operations. The transfer, which is expected to be completed by January 2010, will improve operational efficiencies. Final Assembly, Testing, Order Fulfilment and New Product Introduction functions will remain in Grass Valley, where local knowledge is essential to ensure the reputation for quality and speed that NVISION has built over the years remains intact.
The ability to move the electronic assembly manufacturing to Montreal was made possible by the recent completion of Miranda's building expansion project. The extra 55% of surface area provides additional space for foreseeable growth in R&D, manufacturing and support.
On the sales side, Richard Brice was appointed to the role of Senior Vice President US Sales. "Richard is a highly experienced and successful sales and engineering executive, with a deep understanding of the television industry and Miranda's product lines," commented Mr. Goodship. He is also well known to many of Miranda's key US clients. Based in New York, Richard is well placed to promote both business development and client relations, and strengthen the development of NVISION's router business in the US.
Miranda recently promoted a number of new and enhanced products at IBC, a leading international forum for the electronic media industry. Among others, they included the Kaleido-Modular card-based multi-viewer; the ultra-resilient NVISION Enterprise Class routers; the XVP-3901 up, down and cross converter with advanced audio processing; and the LGK-3901 modular channel branding processor. At the event, Miranda's Kaleido-Modular multi-viewer won a STAR (Superior Technology Award Recipient) Award from TV Technology Europe magazine. The award is designed to celebrate and showcase the preeminent technological innovations available to the broadcast industry. "The Kaleido-Modular offers outstanding space and energy efficiency and complements our Kaleido-X multiviewers," highlighted Mr. Goodship. "IBC marked the first European showing of our newly acquired NVISION line of routers and we were pleased with the strong customer interest received. The broader solutions being offered with NVISION enhance our product portfolio, and are helping us to win a number of combined deals."
Year-over-year operating highlights: Q3 2009 versus Q3 2008
Revenue
Quarterly revenues totalled $31.8 million, down 16% from last year. Excluding foreign exchange, quarterly sales volumes were down 18% from 2008, although they were up 7% compared with Q2 this year.
On a regional basis, revenues in the United States and Canada were down 43% and 27% respectively versus last year. Other Countries fared better, increasing 27% over 2008. Canada, the United States and Other Countries generated 5%, 39% and 56% of quarterly sales respectively.
Gross Margin
Gross margin as a percentage of sales for the current quarter of 55% was negatively impacted by 3 percentage points, due to certain adjustments relating to the second quarter of 2009. Excluding this, the gross margin for the quarter was 58%, which would have been the resulting margin in Q2 2009, had the adjustments been booked then. On a year-to-date basis, these adjustments have no impact on the reported gross margin of 58%.
Operating Expenses
Selling, General & Administrative expenses (SG&A) were $9.7 million for the quarter, up 9% from last year. The increase continued to be driven by the addition of NVISION's operations, partially offset by lower provisions for incentive bonuses. SG&A as a percentage of sales was 30%. This is down from the 37% and 35% seen in Q1 and Q2 respectively this year, reflecting on-going productivity initiatives and tight cost controls. Compared to last year SG&A as a percentage of sales grew 6 points, reflecting the lower revenue base.
Research and Development (R&D) investments were $5.1 million, up 18% from $4.3 million in 2008. As in past quarters, the increase is largely due to the NVISION acquisition. R&D as a percentage of sales declined from levels seen earlier this year, coming in at 16%, which is more in line with historical levels. The Company is committed to R&D and will continue to make the necessary investments so that it is well positioned when broadcast markets improve.
A foreign exchange loss of $1.0 million was recorded for the quarter, compared to a gain of $0.8 million in 2008. The loss largely reflects the impact of the stronger Canadian dollar in the translation of foreign currencies.
Net Income and EBITDA
Net income was $1.1 million, translating into fully diluted earnings per share (EPS) of 5 cents. This compares to $7.7 million and 32 cents per share respectively in 2008.
EBITDA came in at $3.3M or 10% of sales, compared to $12.2 million or 32% of sales in 2008.
Excluding restructuring charges, net income was $1.3 million, fully diluted EPS were 6 cents and EBITDA was $3.6 million or 11% of sales.
Liquidity and Capital Resources
Quarterly cash flows from operating activities were up $1.0 million. As of September 30, 2009, cash and cash equivalents were $48.4 million. This is down from $72.5 million in Q2 2009, largely due to a $20.3 million Canadian repayment of the Company's US credit facility relating to the NVISION acquisition and a $3.8 million payment relating to the Montreal facility building expansion project.
During the quarter, Miranda announced that its Board of Directors approved a new normal course issuer bid (NCIB) program, to purchase up to 1,799,662 or approximately 8% of the Company's common shares for cancellation. The NCIB lasts for one year, ending on August 25, 2010 or on such earlier date as the Company has purchased the maximum shares permissible. To date, no shares have been purchased in connection with the NCIB, nor is the Company required to purchase any shares over the life of the program. This new share buyback initiative is in addition to the one completed earlier this year, which resulted in the cancellation of 2.0 million shares.
Outlook
"While, markets remain well below last year's levels, we are beginning to see an increase in sales activity," commented Mr. Goodship. "However, it is still too early to predict a market recovery and we remain cautious about our short term growth expectations. Nevertheless, supported by a solid balance sheet and a strengthening product portfolio, we will continue to position ourselves for growth, targeting acquisition opportunities, investing strategically and maintaining disciplined cost controls."
Conference call
Miranda Technologies Inc. (TSX: MT) will hold a conference call with financial analysts to present its third quarter 2009 results on Friday, October 30, 2009, at 9:00 a.m.
