Intrinsyc (TSX: ITC and OTC: ISYRF) Reports Quarterly Revenue of US$6.1 million for Growth of 35% over Prior Year
Adjusted EBITDA of US$307,631 (CDN$389,061) in FY18 Q1 representing growth over US$112,930 (CDN$149,497) in prior year quarter
Vancouver, BC – May 9, 2018 –– Intrinsyc Technologies Corporation (TSX: ITC and 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 first quarter ended March 31, 2018. Intrinsyc achieved year over year revenue growth of 35% in the first quarter of fiscal 2018, with Adjusted EBITDA of US$307,631 (CDN$389,061), net income of US$124,149 (CDN$160,080), and earnings per share of US$0.01 (CDN$0.01).
The strong revenue growth was a result of increased shipments of embedded computing hardware to new and existing clients. Revenue was US$6.1 million (CDN$7.7 million) which was an increase from US$4.5 million (CDN$5.9 million) in the first quarter of fiscal 2017.
“The Company continues to grow our client base and increase hardware revenue from our Open-Q™ embedded computing modules,” said Tracy Rees, Chief Executive Officer, Intrinsyc Technologies Corporation. “New Design Wins and Production Wins, which are important drivers for revenue growth, increased respectively from 50 to 54, and 22 to 24, during the first quarter. Our clients are attracted by the Company’s off-the-shelf and custom embedded computing solutions which lead the industry in performance, function, and reliability, as well as our strong expertise in product development. To continue our momentum, we are investing in our engineering capabilities and new product development.”
Rees added, “We are pleased to have reached an agreement with Stream TV Networks on our strategic investment and additional purchase commitment of US$1,500,000 in services to be purchased directly by Stream or through referrals to connected third parties.”
- Announced two new production wins with the receipt of initial orders valued at US$287,000. The Company also signed product development services agreements and hardware orders from existing clients valued at US$342,000.
- Announced the attainment of a new production client for the Company’s Open-Q™ 820 computing module and receipt of orders, last week that are in aggregate valued in excess of US$500,000. The new client placed an initial order for the Company’s Open-Q™ computing modules that is valued at approximately US$205,000. The Company also signed a product development services agreement with an existing client that is valued at approximately US$311,000. Hardware shipments and services are expected to be provided during the first and second quarters of 2018.
- Announced the availability of two new platforms to support development of Smart Home Hub and other Voice-Controlled products.
- Announced the general availability of a new Hardware Development Kit (“HDK”) featuring the Qualcomm® Snapdragon™ 845 Mobile Platform, a product of Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated.
- Announced the availability of the Open-X™ 8M System on Module (“SOM”) and Development Kit.
- Entered into a line of credit facility with a major Canadian chartered bank of CDN$4.4 million (the “LOC Facility”).
- Established a subsidiary and engineering center in Bangalore, India to add engineering resources for new product development and client projects.
Three Month Comparative Results
The Company reported first quarter revenue of US$6.1 million (CDN$7.7 million), up 35% over the same period in the prior year of US$4.5 million (CDN$5.9 million) but down 11% over the prior period of US$6.8 million (CDN$8.7 million). The increase in revenue over the comparative period in the prior year was due primarily to increased revenue from the sale of hardware products.
Gross margin in the first quarter of fiscal 2018 was 32%, which was lower than the 35% gross margin in the comparative periods. Decrease in gross margin over the comparative periods was due to the change in revenue mix, which saw a significant increase in revenues from the Company’s Embedded Computing Hardware business which has a lower gross margin than the Company’s engineering services, and a decrease in engineering services revenues. Adjusted EBITDA was as follows:
|Three months ended March 31, 2018||Three months ended December 31, 2017(Restated)||Three months ended March 31, 2017(Restated)|
|Operating income (loss)||US$
|Add: revenue recognized as interest income as per IFRS||–||–||–||–||33,750||44,678|
|Add back: Other operating expenses||158,651||200,645||164,054||208,559||64,529||85,423|
The Company had net income of US$124,150 (CDN$160,080) in the three months ended March 31, 2018 compared to net income of US$96,966 (CDN$125,028) in the same period in the prior year and net income of US$453,547 (CDN$570,087) in the prior quarter.
Financial Position as at March 31, 2018
Working capital as of March 31, 2018 was US$12.5 million (CDN$16.2 million) inclusive of cash and short-term investments of US$6.9 million (CDN$8.8 million). This is compared to net working capital of US$12.4 million (CDN$15.5 Million) as of December 31, 2017 inclusive of cash and short-term investments of US$7.3 million (CDN$9.1 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 ended March 31, 2018 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 first quarter of 2018 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 firstname.lastname@example.org 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.
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. 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.
 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.
 These numbers have been restated to account for the impact of IFRS 15. Additional details on IFRS 15 are discussed in the Critical Accounting Policies and Estimates section of the MD&A and Note 3 to the Interim Condensed Consolidated Financial Statements.
 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.