Intrinsyc Reports Quarterly Revenue Growth over Prior Quarter
Quarterly revenue increased to US$4.6 million
Vancouver, BC – August 9, 2017 –– Intrinsyc Technologies Corporation (TSX: ITC and OTC: ISYRF) (“Intrinsyc” or the “Company”), a leading provider of solutions for the development of embedded and IoT products, today announced its financial results for the second quarter of fiscal 2017 ended June 30, 2017. Revenue was US$4.6 million (CDN$6.2 million) in the second quarter of fiscal 2017 with Adjusted EBITDA of US$84,268 (CDN$113,333), and net loss for the period being US$22,432 (CDN$31,905). Adjusted EBITDA was negatively impacted by a reduction in higher margin engineering services business from one of our largest clients.
“We achieved another strong quarter of sales orders,” stated Tracy Rees, President and Chief Executive Officer, Intrinsyc Technologies Corporation. “Among these orders was an order valued at $2,990,000 for memory components, which are planned for use in building computing modules for a Global 500 company. While not contractually obligated at this time, beyond the purchase of these memory components, we expect our client to place future orders for full computing modules that incorporate this memory. Should this occur as planned the Company would recognize additional revenues in excess of $10,000,000 through early FY 2019 from this client. It is also important to note that our client selected Intrinsyc to design, develop, and build the next-generation computing module for their products”
“In addition, to the exciting developments with our Global 500 client, Intrinsyc made excellent progress in earning additional design wins, and moving clients from the product development stage into commercial production,” added Mr. Rees. “The Company increased design and production wins for Open-Q™ computing modules from 39 to 42 and 14 to 18, respectively, during the quarter. Design and production wins are important metrics to track our progress in building our business with scalable repeat revenue.”
Quarterly Business Highlights
- Received orders from two existing clients that are in aggregate valued at US$1,579,551. Orders for the Company’s Open-Q embedded computing modules and related hardware components are valued at US$629,990. The Company also signed engineering services agreements from multiple clients valued at US$949,561. Hardware shipments and services began being delivered during the second quarter of 2017.
- Received an order from an existing Global 500 client that is valued at US$2,990,000. This non-cancellable order is for a last-time purchase of memory components that are reaching end of life. Delivery and title of ownership to the components will transfer to the client with related revenue anticipated to be recognized in three, approximately equal quarterly installments, beginning in the fourth quarter of 2017. The memory is expected to be consumed for potential future orders of the Company’s Open-Q™ 805 computing modules.
- Received orders that are in aggregate valued at US$928,066. Two orders are from new IoT clients for the Company’s Open-Q™ 820 SOM, in aggregate valued at US$594,815. The Company also received a new design win and product development services order valued at US$333,851, from an existing Global 500 client for their next generation product. Hardware shipments and services are expected to be delivered during the third and fourth quarter of 2017.
- Announced the introduction of the Company’s Open‐Q™ 2100 SOM and its companion Open‐Q™ 2100 Development Kit. Intrinsyc’s Open-Q™ 2100 SOM is an ultra-small form-factor (15mm x 31.5mm) computing module based on the Qualcomm® Snapdragon™ Wear 2100 platform. Intrinsyc’s Open-Q 2100 SOM combines critical elements for wearable device innovation and performance: processing capability, size, power efficiency, sensor integration, and connectivity. It is ideally suited for smartwatches, as well as for pet, children, and elderly trackers, sports watches, high-end fitness trackers, connected headsets, smart eyewear, and more.
- Announced the availability of the Open-Q™ 212 SBC. Intrinsyc’s Open-Q™ 212 SBC is a full-featured, production-ready, low-cost IoT computer based on a powerful quad-core ARM Cortex A7 (32-bit) 1.267GHz processor, with integrated GPU and DSP. The SBC supports an LCD display up to 720p, HDMI 720p H.264/H.265 playback, one 8MP camera, four microphone inputs, and amplified stereo outputs.
- Launched a new Hardware Development Kit (“HDK”) featuring the Qualcomm® Snapdragon™ 835 Mobile Platform, a product of Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated. The Snapdragon 835 Mobile Platform is the first commercial processor manufactured using the 10nm FinFET process node, engineered for breakthrough performance and superior power efficiency. The Snapdragon 835 is designed to support next-generation entertainment experiences and connected cloud services for premium-tier consumer and enterprise devices, including smartphones, VR/AR head-mounted displays, IP cameras, tablets, mobile PCs and other devices.
- Announced that it has expanded its board of directors by one director to a total of seven directors and have appointed the Company’s President and Chief Executive Officer, Mr. Tracy Rees, as a Director effective June 15, 2017.
Six Month Comparative Results
The Company reported revenue of US$9.0 million (CDN$12.1 million), down 1% over the same period in the prior year of US$9.1 million (CDN$12.1 million). The decrease in revenue was due to decreased revenue from the sale of product development engineering services, offset by an increase in sales of hardware products.
The Company had net income of US$64,534 ($CDN83,751) during the six months ended June 30, 2017, compared to net income of US$1,090,606 (CDN$1,537,381) during the same period in the prior year.
Gross margin for the six months ended June 30, 2017 was 34%, which was lower than the 44% gross margin in the same period in the prior year. The decrease in revenue was due to decreased revenue from the sale of product development engineering services, offset by an increase in sales of hardware products. Adjusted EBITDA was as follows:
Financial Position as at June 30, 2017
Working capital as of June 30, 2017 was US$11.8 million (CDN$15.3 million) inclusive of cash and short term investments of US$7.7 million (CDN$10.0 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 and six months ended June 30, 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 year 2017 second quarter 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 (https://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 involves 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, 2016. 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
 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.  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 here relates to revenues less cost of sales.  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.