Intrinsyc (TSX: ITC and OTCQX: ISYRF) Reports Strong Fourth Quarter and Record Annual Results
- Q4 Revenue: US$7.1 million (CDN $9.4 million)
- Q4 EBITDA: US$625,025 (CDN$825,283)
- Record Annual Revenue: US$25.7 million (CDN$33.4 million)
- Record Annual EBITDA: US$1.9 million (CDN$2.5 million)
Vancouver, BC – March 14, 2019 –– Intrinsyc Technologies Corporation (TSX: ITC and OTCQX: 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, 2018. Intrinsyc achieved Revenue of US$7.1 million (CDN$9.4 million) with EBITDA of US$625,025 (CDN$825,283).
Intrinsyc achieved record revenue and EBITDA in Fiscal 2018. Revenue was US$25.7 million (CDN$33.4 million), which was an increase of 24% over Fiscal 2017. EBITDA was $1.9 million (CDN$2.5 million), an increase of 158% over the prior year.
“We finished 2018 on a strong note, successfully executing on our strategic business plan, and achieving record full-year results,” said Tracy Rees, Chief Executive Officer, Intrinsyc Technologies Corporation. “I’m especially pleased to see the 33% revenue growth from our embedded computing modules. Intrinsyc’s computing modules are sold on a repeat basis to companies building a variety of Internet of Things products that require advanced intelligence and connectivity, and they are a key driver for our future growth. Further facilitating growth, we developed and introduced eight (8) new products in 2018 and increased our design wins from 45 to 59. In February, we announced the engagement of ROTH Capital Partners, LLC (“ROTH”) as a financial advisor with a mandate to accelerate strategic growth opportunities for the Company. We will be participating in their conference from March 18-19, 2019. Last year, the ROTH Conference hosted more than 4,700 attendees, including institutional investors, analysts, family offices and high net worth investors.”
Quarterly Business Highlights
- Received orders from multiple clients that are in aggregate valued at US$851,000. Orders for the Company’s Open-Q™ embedded computing modules are valued at US$170,000. Orders for product development services from two existing and two new clients are valued at US$681,000. Clients are utilizing Intrinsyc’s high-performance computing modules and expert product development services to build a variety of innovative Industrial IoT devices.
- Announced distribution of the Qualcomm Flight™ Pro reference platform, a highly optimized board and development kit targeted specifically for consumer drones and robotics applications, featuring the Qualcomm® APQ8096SG processor.
- Announced the general availability of a new Hardware Development Kit (“HDK”) featuring the Qualcomm® Snapdragon™ 670 Mobile Platform.
- Announced the availability of the Open-Q™ 605 Single Board Computer (“SBC”) and associated Open-Q™ 605 Development Kit.
- Announced that the Company has qualified to trade on the OTCQX® Best Market. We anticipate that the OTCQX Market will provide Intrinsyc with greater exposure, accessibility, and liquidity in the United States, and this will be beneficial to both existing and new shareholders.
- Retained the strategic consultancy services of Tia Cassett, a 20-year Qualcomm veteran to assist the Company’s Executive Committee and management team in the development and execution of its strategic growth plan through various business development initiatives.
Three Month Comparative Results
The Company reported fourth quarter revenue of US$7.1 million (CDN$9.4 million), up 17% over the prior period of US$6.1 million (CDN$8.0 million) and up 5% over the same period in the prior year of US$6.8 million (CDN$8.7 million). The increase in revenue over the comparative periods was due primarily to increased revenue from the sale of hardware products.
Gross margin in the fourth quarter of fiscal 2018 was 35%, which was lower than the 38% gross margin in the prior quarter but consistent with the 35% gross margin in the same period in the prior year. The decrease in gross margin over the prior quarter was due to an increase in hardware revenue which has a lower gross margin. EBITDA was as follows:
Three months ended December 31, 2018
Three months ended September 30, 2018
Three months ended December 31, 2017 (Restated)
Operating income (loss)
|Add back: Other operating expenses||141,560||186,914||133,209||174,103||164,054||208,559|
The Company had net loss of US$740,655 (CDN$926,159), and loss per share of US$0.04 (CDN$0.05) compared to net income of US$346,477 (CDN$443,840) or US$0.02 (CDN$0.02) earnings per share in the prior quarter and net income of US$453,547 (CDN$570,087) or US$0,02 (CDN$0.03) earnings per share in the same period in the prior year. The net loss was attributable to a decline in the value of $1.1 million of the Company’s equity investment in Stream TV Networks Inc. (“Stream TV”) as at December 31, 2018.
Twelve Month Comparative Results
The Company reported revenue of US$25.7 million (CDN$33.4 million) for the twelve months ended December 31, 2018, up 24% over the same period in the prior year of US$20.7million (CDN$26.8 million). The increase in revenue was due to increased sales of both hardware products and engineering services.
Gross margin for the twelve months ended December 31, 2018 was 35%, which was higher than the 33% gross margin in same period in the prior year. EBITDA was as follows:
Twelve months ended December 31. 2018
|Twelve months ended December 31. 2017 (Restated)|
|Add back: Other operating expenses||618,407||800,501||498,186||641,087|
|Adjusted EBITDA||$ 1,895,821||$ 2,466,042||$ 735,181||$ 942,796|
The Company had net loss of US$184,536 (CDN$206,263), with loss per share of US$0.01 (CDN$0.01) for the twelve months ended December 31, 2018 compared to net income of US$624,836 (CDN$808,382), with earnings per share of US$0.03 (CDN$0.03) in the same period in the prior year.
Financial Position as at December 31, 2018
Working capital as of December 31, 2018 was US$10.4 million (CDN$14.1 million) inclusive of cash and short-term investments of US$6.0 million (CDN$8.1 million). This is compared to net working capital of US$12.5 million (CDN$15.5 million) as at 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 and year ended December 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 fourth quarter and full year 2018 financial results at 9:00 a.m. Eastern Time (6:00 a.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 1-800-319-4610, and internationally by dialing 1-604-638-5340 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, 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. EBITDA is defined as operating income (loss) 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, 2018. 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 OTCQX: 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. The closest comparable IFRS financial measure is Operating Income (Loss). EBITDA referenced here relates to operating income (loss) 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 Audited Consolidated Financial Statements.
 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.