VANCOUVER, BRITISH COLUMBIA — (Marketwired) — 05/08/13 — This press release replaces the one disseminated at 4:00 PM ET on May 8, 2013. The years in the the first table (titled “Interim Condensed Consolidated Statements of Financial Position”) have been revised.
Intrinsyc Software International, Inc. (“Intrinsyc” or the “Company”) (TSX: ICS), a leading provider of solutions for the development of embedded and wireless devices, today announced its financial results for the first quarter ended March 31, 2013, reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”). The Company-s results are presented in comparison to the three months ended December 31, 2012 and the three months ended March 31, 2012, also in accordance with IFRS.
Intrinsyc achieved revenue of approximately $1.2 million in the first quarter, 23% lower than in the previous quarter, with lower core operating expenses, and increased administrative expenses associated with strategic activities and a shareholder proxy dispute. The Company reported negative EBITDA(1) of $791,740 and a net loss of $725,382.
“This was a challenging quarter as we started the year slowly due to the unexpected non-renewal of an agreement with our largest customer in 2012,” stated Tracy Rees, President and CEO of Intrinsyc. “We worked hard to offset the loss of this important customer agreement and were successful in closing several new customer engagements in the quarter. Combined with our Machine-to-Machine (“M2M”) and embedded computing initiatives, we expect significant revenue improvement in the second quarter and beyond. We also expect to record significant non-core operational expenses in the second quarter which will impact our financial results.”
Business Highlights
Notable developments and achievements during the first quarter include the following:
Intrinsyc announced a settlement of a proxy dispute with Stonehouse Capital (“Stonehouse”) on April 17, 2013. Under the terms of the Settlement Agreement, the Company and Stonehouse have agreed on a newly constituted board of directors comprised of Messrs. Thomas Bitove, George Duguay, Skip Speaks, Daniel S. Marks and Michael W. Bird. Further, the Company cancelled the Special Meeting of Shareholders scheduled for May 14, 2013 and will hold its Annual General Shareholder Meeting on June 26, 2013 at 10:30 am in Vancouver. As a further result of this settlement, the reconstituted board has dissolved the Strategic and Special Committees.
“I am pleased that as a result of this this settlement we now have a unified board of directors, representing shareholders with substantial share ownership, and a common vision of enhancing shareholder value through the execution of the company-s strategic initiatives in the embedded computing and M2M communications markets,” added Mr. Rees. “I look forward to working with the reconstituted board to further our new product and market initiatives which are designed to deliver growth and enhance shareholder value.”
Three Month Comparative Results
The Company reported revenue of approximately $1.2 million for three months ended March 31, 2013 as compared to approximately $1.6 million for the three months ended December 31, 2012 and approximately $2.2 million in the period ended March 31, 2012. Gross margin(2) was 25% in the three months ended March 31, 2013, which was lower than 31% in the three months ended December 31, 2012 and lower than the gross margin experienced of 39% in the three months ended March 31, 2012. Lower gross margin was primarily attributable to lower utilization of our engineering personnel for customer projects in the quarter.
Total expenses (excluding other operating expenses)(3) for the three months ended March 31, 2012 were approximately $1.1 million which was an increase of 44% over the preceding three months ended December 31, 2012 and a 4% increase over the three months ended March 31, 2012.
EBITDA for the three months ended March 31, 2013 was ($791,740) compared to ($264,109) in the previous three months ended December 31, 2012 and ($204,060) for the three months ended March 31, 2012.
Working capital(4) as of March 31, 2013 was approximately $10.5 million (which included cash and cash equivalents of approximately $7.0 million and short-term investments of approximately $4.1 million). This is compared to net working capital of approximately $11.4 million as of December 31, 2012 (which included cash and cash equivalents of approximately $6.0 million and short-term investments of approximately $5.3 million).
Conference call
The Company will release its fiscal first quarter financial results on Wednesday, May 8, 2013 at 4:00 p.m. Eastern Time (1:00 p.m. Pacific Time). The company will hold a conference call to discuss the financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) the same day. On the call, Tracy Rees, President and Chief Executive Officer, and George Reznik, Chief Financial Officer, will discuss the financial results announced. This conference call may be accessed in North America, toll-free, by dialing 1-877-240-9772 or direct, and internationally by dialing +1-416-340-8527 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 (). Analysts and investors are invited to participate on the call. Questions may be submitted to prior to the call.
The Audit Committee of the Company has reviewed the contents of this news release.
Non-IFRS Measures
The following and preceding discussion of financial results includes reference to Gross Margin, Total Expenses (excluding other operating expenses), 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. Total expenses excluding other operating expenses is provided as a proxy for cash expenses incurred from the operations of the business. EBITDA is defined as operating 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, share-based compensation and loss on disposal of equipment 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.
Forward-Looking Statements
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; 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; 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, 2012. 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 Software International, Inc.
Intrinsyc is a product development company that provides hardware, software, and service solutions that enable next-generation embedded and wireless products. 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. We help our customers deliver compelling products using our unmatched expertise with the leading operating system, silicon, and wireless technology. Intrinsyc is publicly traded (TSX: ICS) and is headquartered in Vancouver, Canada.
(1) 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. EBITDA referenced here relates to operating loss less other operating expenses. Please refer to the reconciliation of EBITDA to reported financial results attached to this press release.
(2) 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.
(3) Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Total Expenses excludes other operating expenses.
(4) 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.
Contacts:
Intrinsyc Software International, Inc.
George Reznik
Chief Financial Officer
+1-604-678-3734
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