DAILY NEWS Aug 11, 2011 3:28 PM - 0 comments

Miranda Reports Q2 Results

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2011-08-11

 Miranda Technologies Inc., a worldwide provider of infrastructure, playout and monitoring systems for the television broadcast, cable, satellite and IPTV industry, today reported results for the second quarter ended June 30, 2011.

(Effective January 1, 2011, International Financial Reporting Standards (IFRS) replaced Canadian GAAP for publicly accountable enterprises. Miranda subsequently began reporting its results under IFRS for interim and annual periods beginning January 1, 2011, with comparative information for 2010 restated under IFRS. Details of the more significant accounting differences can be found in Miranda's second quarter Management's Discussion and Analysis and Condensed Consolidated Interim Financial Statements.)

Financial Highlights: Q2 2011

                 --  Sales up 35% to $43.2 million, growth continues across all geographic             locations         --  Gross profit as a percent of sales at 59%         --  EBITDA(1)up 23% to $7.4 million or 17% of sales         --  Net profit of $3.5 million or 16 cents per fully diluted share                     

Business activity remained robust in the second quarter, resulting in continued strong performance. Revenue grew 35% over 2010 to $43.2 million, with increases seen across all geographies. On a constant currency basis sales volume was up 39%. Gross profit also remained high coming in at 59% of sales. This marks the sixth consecutive quarter where margins were in the 58% to 60% range. Earnings growth also continued, with EBITDA increasing 23% to $7.4 million or 17% of sales. Net profit was $3.5 million for the quarter, unchanged from last year, while net earnings per share were 16 cents, up from 15 cents in the prior year. Net cash flows generated from operating activities were $1.1 million for the quarter.

"Business momentum has clearly grown over the past year, resulting in notable gains in revenue and profitability," commented Strath Goodship, Miranda's President and Chief Executive Officer. "Our firm commitment to maintain and strengthen the business during the broadcast market downturn has put us in a strong position." Some of the notable recent sales wins include CCTV (China), DirecTV (USA), Global TV (Canada), Microsoft (USA), News Press Gazette (USA), SABC (South Africa), Sky News Arabia (UAE), Telefutura (USA), TVA (Canada), YLE (Finland). "We are seeing strong organic growth and we continue to make good progress with our IT-based playout offerings, where we are a clear leader."

                 (1) EBITDA is an adjusted financial measure related to cash earnings and is         defined as net profit before interest expense less interest income, taxes,         depreciation and amortization. See comment on adjusted financial measures         which follows.                     

Year-over-year quarterly operating review: Q2 2011 versus Q2 2010

Revenue

Quarterly revenue came in at $43.2 million, up 35% over last year, or 39% on a constant currency basis. Growth was driven by higher revenue in all geographies and the acquisition of OmniBus, with its market leading IT-based playout solution. During the quarter, sales in Canada, the United States, the United Kingdom and Other Countries increased 198%, 44%, 93% and 3% respectively over 2010.

Gross Profit

Gross profit as a percentage of sales was 59%, down slightly from 60% last year, largely due to the unfavourable impact of foreign exchange compared to 2010. This was partially offset by the sale of higher margin solutions acquired in the OmniBus acquisition.

Operating Expenses

Selling, General & Administrative expenses (SG&A) were $15.1 million, compared to $12.3 million in 2010. The increase is largely due to higher sales and amortization costs associated with the acquisition of OmniBus, along with higher selling expenses. SG&A as a percentage of sales was 35%, down from 38% last year.

Research and Development (R&D) investments were $7.0 million or 16% of sales for the quarter, compared to $6.1 million and 19% respectively in 2010. The increase was largely due to higher R&D and amortization costs associated with the OmniBus acquisition.

Quarterly R&D expenses, net of tax credits, were $5.7 million or 13% of sales, compared to $4.2 million and 13% respectively last year. The $1.5 million expense increase is largely due to the addition of OmniBus as previously outlined. The second quarter of 2010 included an adjustment for prior period estimates which increased R&D tax credits by $0.6 million. Excluding the adjustment, 2010 R&D expenses net of tax credits were $4.8 million, resulting in a year over year increase of $0.9 million.

Net finance expense was $96 thousand for the quarter, compared to finance income of $1.1 million in 2010. The change from income to expense was largely due to less favourable currency fluctuations in the current quarter, compared to last year.

EBITDA, Income Taxes and Net Profit

EBITDA was $7.4 million for the quarter, up 23% over 2010. EBITDA as a percentage of sales was 17%.

Income taxes were $1.3 million for the quarter, up from $0.5 million in 2010. Income taxes for the second quarter of 2010 were impacted by a favourable $0.4 million adjustment, relating to prior periods.

Net profit was $3.5 million or 16 cents per fully diluted share, compared to $3.5 million and 15 cents respectively in 2010. Excluding the one-time 2010 favourable adjustments of $0.6 million for R&D tax credits and $0.4 million for income taxes, the 2010 fully diluted earnings per share would have been 11 cents.

Liquidity and Capital Resources

Net operating activities generated $1.1 million of cash flows during the quarter, compared to $1.7 million last year. Cash, cash equivalents and temporary investments were $31.3 million at quarter end, down from $33.8 million in the first quarter of 2011. During the quarter $1.9 million of loans and borrowings were repaid.

In November 2010, the Company filed a new NCIB to redeem up to 1,694,937 common shares for cancellation between November 26, 2010 and November 25, 2011. To date, no shares have been purchased in connection with the NCIB.

Outlook

"The improving television markets we have enjoyed in recent quarters continue to strengthen in several parts of the world," highlighted Mr. Goodship. "Furthermore, our position is building in emerging markets, while our competitive edge extends in developed markets with our IT-based playout and monitoring technology growth platforms. This combined with our strong financial position and some key upcoming events, such as the 2012 Olympics and US elections, should further support our business and allow us to profitably gain further market share."

 Adjusted Financial Measures

We use earnings before interest, taxes, depreciation and amortization ("EBITDA") to compare our operating results from one period to another. EBITDA is an adjusted financial measure related to cash earnings and is defined as net profit before interest expense less interest income, taxes, depreciation and amortization. Our method for calculating EBITDA may differ from that used by other companies under the same designation. EBITDA should not be substituted for net profit as an indicator of operating results in line with IFRS, neither for cash flows from operating and investing activities as a measure of liquidity and cash flows. Please refer to the reconciliation of net profit to EBITDA in the following table.

                 Reconciliation of Net Profit to EBITDA         ---------------------------------------------------------------------------                                                            Quarters ended June 30,         (in thousands of Canadian dollars)                      2011          2010         ---------------------------------------------------------------------------         Net profit                                             3,532         3,494         Interest expense (income)                                141           (30)         Income taxes expense                                   1,316           530         Depreciation of property, plant & equipment              934         1,016         Amortization of intangible assets                      1,499         1,027         ---------------------------------------------------------------------------         EBITDA                                                 7,422         6,037         ---------------------------------------------------------------------------                     

         MIRANDA TECHNOLOGIES INC.
        Condensed Consolidated Interim Statements of Financial Position
        (Unaudited)
        As at June 30, 2011, December 31, 2010 and January 1, 2010
        (In thousands of Canadian dollar)
       
       

                 ---------------------------------------------------------------------------         ---------------------------------------------------------------------------                                                 June 30,  December 31,   January 1,                                                     2011          2010         2010         ---------------------------------------------------------------------------         Assets         Current assets           Cash and cash equivalents          $    31,290  $     30,486  $    29,264           Temporary investments                        -         4,999       19,904           Trade and other receivables             30,626        29,546       25,601           Inventories                             21,056        20,405       14,512           Income taxes and tax credits            receivable                              4,016         5,307        5,808           Prepaid expenses and other               1,911         2,066        1,650         ---------------------------------------------------------------------------                                                   88,899        92,809       96,739           Tax credits receivable                   9,880         9,350        1,870           Property, plant and equipment           31,262        30,923       29,109           Intangible assets                       36,248        39,429       20,960           Goodwill                                44,278        44,219       20,562           Deferred tax assets                        491           579          485         ---------------------------------------------------------------------------         Total assets                         $   211,058  $    217,309  $   169,725         ---------------------------------------------------------------------------         ---------------------------------------------------------------------------         Liabilities and Equity         Current liabilities           Trade and other payables           $    18,571  $     21,139  $    13,505           Provisions                               2,000         1,808        2,071           Deferred revenue                         5,602         5,934        2,327           Income taxes payable                     1,826         2,329        1,239           Loans and borrowings                     3,000         3,119            9         ---------------------------------------------------------------------------                                                   30,999        34,329       19,151           Other payables                             245           942          555           Provisions                               1,011           964          933           Deferred revenue                         3,092         3,590        3,601           Loans and borrowings                    14,750        22,251          136           Deferred tax liabilities                13,475        13,772        8,124         ---------------------------------------------------------------------------         Total liabilities                         63,572        75,848       32,500         ---------------------------------------------------------------------------         Equity           Share capital                           98,220        98,103      103,165           Contributed surplus                      4,833         4,655        4,413           Retained earnings                       46,178        40,324       29,647           Accumulated other comprehensive            loss                                   (1,745)       (1,621)           -         ---------------------------------------------------------------------------         Total equity                             147,486       141,461      137,225         ---------------------------------------------------------------------------         Total liabilities and equity         $   211,058  $    217,309  $   169,725         ---------------------------------------------------------------------------         ---------------------------------------------------------------------------         MIRANDA TECHNOLOGIES INC.         Condensed Consolidated Interim Statements of Comprehensive Income         (Unaudited)         Three-month and six-month periods ended June 30, 2011 and 2010         (In thousands of Canadian dollars, except per share amount)         ---------------------------------------------------------------------------         ---------------------------------------------------------------------------                                                  Three-month             Six-month                                                periods ended         periods ended                                                     June 30,              June 30,                                         -------------------------------------------                                              2011       2010       2011       2010         ---------------------------------------------------------------------------         Revenue                        $   43,181 $   32,066 $   82,978 $   61,039         Cost of sales                      17,498     12,682     33,338     24,924         ---------------------------------------------------------------------------         Gross profit                       25,683     19,384     49,640     36,115         Selling, general and          administrative expenses           15,089     12,330     30,173     23,385         Research and development          expenses, net of tax credits          of $1,307 and $2,721         (2010 - $1,899 and $3,127)          5,650      4,175     11,838      9,280         ---------------------------------------------------------------------------         Results from operating          activities                         4,944      2,879      7,629      3,450         ---------------------------------------------------------------------------         Finance income                       (421)    (1,187)      (896)    (1,347)         Finance costs                         517         42      1,038      2,008         ---------------------------------------------------------------------------         Net finance expense (income)           96     (1,145)       142        661         ---------------------------------------------------------------------------         Profit before income taxes          4,848      4,024      7,487      2,789         Income taxes expense                1,316        530      1,633        896         ---------------------------------------------------------------------------         Net profit for the period           3,532      3,494      5,854      1,893         ---------------------------------------------------------------------------         Other comprehensive loss:           Foreign currency translation            differences for foreign            operations, net of taxes           279          -        124          -         ---------------------------------------------------------------------------         Other comprehensive loss for          the period, net of income          taxes                                279          -        124          -         ---------------------------------------------------------------------------         ---------------------------------------------------------------------------         Total comprehensive income for          the period                    $    3,253 $    3,494 $    5,730 $    1,893         ---------------------------------------------------------------------------         Earnings per share:           Basic                        $     0.16 $     0.15 $     0.27 $     0.08           Diluted                            0.16       0.15       0.27       0.08         ---------------------------------------------------------------------------         ---------------------------------------------------------------------------         MIRANDA TECHNOLOGIES INC.         Condensed Consolidated Interim Statements of Cash Flows         (Unaudited)         Three-month and six-month periods ended June 30, 2011 and 2010         (In thousands of Canadian dollar)         ---------------------------------------------------------------------------         ---------------------------------------------------------------------------                                          Three-month periods     Six-month periods                                                        ended                 ended                                                     June 30,              June 30,                                         --------------------- ---------------------                                              2011       2010       2011       2010         ---------------------------------------------------------------------------         Operating activities:         Net profit for the period      $    3,532 $    3,494 $    5,854 $    1,893           Adjustments:             Depreciation of property,              plant and equipment              934      1,016      1,878      1,876             Amortization of intangible              assets                         1,499      1,027      3,301      2,130             Stock-based compensation          110         35        178        141             Net interest expense              (income)                         141        (30)       295        (42)             Income taxes expense            1,316        530      1,633        896             Effect of exchange rates on              long-term monetary assets              and liabilities                   54       (201)       185        (50)             Effect of exchange rates on              cash and cash equivalents        (27)      (408)      (144)       210         ---------------------------------------------------------------------------                                             7,559      5,463     13,180      7,054         Changes in non-cash operating           working capital items:             Trade and other receivables    (5,520)    (2,217)    (1,084)     5,096             Inventories                       643       (127)      (651)    (2,904)             Income taxes and tax              credits receivable              (988)    (1,877)    (1,012)    (2,796)             Prepaid expenses and other        628        368        156        276             Trade and other payables       (1,151)       273     (3,268)       868             Provisions                        591        126        239       (314)             Deferred revenue                 (465)       (50)      (830)      (555)         ---------------------------------------------------------------------------         Cash generated from operating          activities                         1,297      1,959      6,730      6,725         Income taxes paid                    (190)      (220)      (757)      (245)         ---------------------------------------------------------------------------         Net cash from operating          activities                         1,107      1,739      5,973      6,480         ---------------------------------------------------------------------------         Investing activities:           Proceeds from sale of            temporary investments                -        (76)     4,999        (76)           Additions to property, plant            and equipment                   (1,641)    (1,178)    (2,222)    (2,125)           Additions to intangible            assets                             (37)         -        (37)         -           Interest received                    12         30         43         42         ---------------------------------------------------------------------------         Net cash (used in) from          investing activities              (1,666)    (1,224)     2,783     (2,159)         ---------------------------------------------------------------------------         Financing activities:           Repayment of loans and            borrowings                      (1,865)        (1)    (7,641)        (3)           Proceeds from the exercise of            share options                      117          -        117          -           Redemption of shares                  -     (2,589)         -     (2,589)           Interest paid                      (153)         -       (338)         -         ---------------------------------------------------------------------------         Net cash used in financing          activities                        (1,901)    (2,590)    (7,862)    (2,592)         ---------------------------------------------------------------------------         Effect of exchange rates on          cash and cash equivalents             27        408        144       (210)         Effect of exchange rates on          cash and cash equivalents          related to translation of          foreign operations                  (113)         -       (234)         -         ---------------------------------------------------------------------------         Change in cash and cash          equivalents                       (2,546)    (1,667)       804      1,519         Cash and cash equivalents,          beginning of period               33,836     32,450     30,486     29,264         ---------------------------------------------------------------------------         Cash and cash equivalents, end          of period                     $   31,290 $   30,783 $   31,290 $   30,783         ---------------------------------------------------------------------------         ---------------------------------------------------------------------------                     
           


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