VCom Reports 30%
Earnings Growth in Third Quarter
May 15, 2006
VICTORIA, BRITISH COLUMBIA -- VCom Inc. (TSX:VCM) today announced that
its 2006 fiscal year third quarter interim financial and operating
results for the three months and nine months ended March 31, 2006 have
been filed on the SEDAR system. The highlights provided in this press
release should be read in conjunction with the Company's final
prospectus dated November 3, 2005, relating to our initial public
offering of shares, and our unaudited interim financial statement and
Management Discussion and Analysis for the third quarter, which are
All dollar amounts are in Canadian dollars. As quarterly reports were
not prepared in the previous fiscal year, it is impracticable to
present prior-period information on a basis consistent with the
results for the three months and nine months ended March 31, 2006.
- Net income after tax for the third
quarter was $3.1 million as compared to $2.4 million in the second
quarter representing quarter over quarter growth of 30%. Total
revenue for the same periods was $21.4 million and $19.1 million
respectively, representing quarter over quarter growth of 12%.
- Sales for the nine months ended
March 31, 2006 were $58.1 million. Excluding the effect of a
non-recurring event last year, our nine-month revenue this fiscal
year was 27% higher than three-quarters of our fiscal 2005 operating
revenue. The company increased productivity and experienced
economies of scale in the period that allowed it to substantially
increase sales and maintain gross margin in spite of the 770 basis
point appreciation in the average value of the Canadian dollar
during this period as compared to the same period last year.
- Gross margin was 37% for both the
third quarter and the first nine months of our 2006 fiscal year,
within our model of 35 to 39%.
- The company continues to record
expenses for options granted under our stock option plan. Non-cash
stock-based compensation expense of $200,000 was incurred in the
third quarter. Including the effects of non-cash stock-based
compensation expense, VCom's net income for the third quarter was
$3.1 million or $0.14 per share as compared to $2.4 million, or
$0.12 per share in the second quarter. Including the effects of
non-cash stock-based compensation expense, our net income for the
nine months ended March 31, 2006 was $7.9 million or $0.38 per
share. The diluted weighted number of shares outstanding was 22.5
million for the third quarter, 20.7 million for the second quarter
and 20.7 million for the nine months ended March 31, 2006.
- Excluding the effects of non-cash
stock-based compensation and the non-recurring event from last year,
our net income would have been approximately $8.4 million for the
first three-quarters of the 2006 fiscal year. This represents an
increase of 28% over 75% of the adjusted net income for the year
ended June 30, 2005.
- Shareholders' equity increased to
$72.8 million at March 31, 2006 as compared to $38.5 million at June
30, 2005 as a result of operating profits and successful completion
of our IPO.
- OEM module shipments in quarter
three showed increases that were higher than expected. Customers
pulled some quarter four shipments into quarter three to complete
end-of-version manufacturing before the July 1st prohibition on
lead-based solder in Europe. This will affect fourth quarter
shipments but we expect our revenue to be $75 million to $80
million, within previous projections for the fiscal year ended June
- Operating expenses as a percentage
of total revenue in the third quarter were 18%, excluding the 1% of
sales in non-cash stock-based compensation. This compares to
operating expenses of 19% of total revenue for our fiscal year ended
June 30, 2005.
- VCom ended the third quarter with
569 employees representing a 7% increase from the 531 employees at
the end of the second quarter and an increase of 21% from the 470
personnel at March 31, 2005.
- Using funds provided by the IPO,
we retired $5.0 million in operating line debt in the second quarter
and $3.6 million in long term debt in the third quarter. VCom no
longer has debt other than trade payables.
- YourLink Inc., VCom's service
provision company, was EBITDA positive in the third quarter,
contributing to an improvement in consolidated EBITDA.
- VCom has successfully tested for
interoperability under the provided guidelines at the WiMAX Forum
3rd Plugfest in Sophia Antipolis, France in March 2006.
VCom Inc. (TSX:VCM) designs, manufactures and sells products that
enable broadband access to cable, wireless and telephony networks.
VCom's hardware products incorporate embedded software developed by it
to meet the complex requirements of next-generation, high-speed
digital networks. Service providers use VCom's solutions to deliver
services to a converging worldwide broadband market, including what
are commonly known as "triple play" (voice, video and data) and
"quadruple play" (voice, video, data and wireless) services. VCom's
solutions allow service providers to rapidly and cost-effectively
bridge the final network segment that connects the system directly to
end users, commonly referred to as "the last mile", by overcoming the
bottleneck resulting from insufficient carrying capacity in legacy,
last mile infrastructures. VCom's products are directed at three
principal markets: Data over Cable, Broadband Wireless and Digital
Video. The Company has also developed and continues to focus on
developing products to address emerging markets such as Voice over
Internet Protocol, fibre to the home and IP video.
VCom is a Principal Member of the WiMAX Forum that has developed the
international open standard for this new technology. Certification to
the IEEE 802.16 standard under the WiMAX certification process
requires interoperability of equipment manufactured by different
vendors. Operators demand interoperability to ensure that economies of
mass production will be achieved by aggregating production for all
manufacturers. VCom's VistaMAX Time Division Duplexing (TDD) Base
Station was successfully tested for interoperability under the
provided guidelines at the WiMAX Forum 3rd Plugfest in Sophia
Antipolis, France in March 2006.
VCom Headquarters and Executive Offices
VCom Headquarters and Executive Offices