Espial Reports 2014 First Quarter Results

Espial Reports 2014 First Quarter Results


OTTAWA, April 23, 2014 /CNW/ - Espial(®) Group Inc. ("Espial" or the "Company"), (TSX: ESP), a leader in the
delivery of on-demand TV software and services, today announced its
first quarter financial results for the three month period ended March
31, 2014.


Espial Q1 Highlights


-- Q1 revenue increased 96% to a record $5.0 million from $2.5
million last year.
-- Record EBITDA increased to an income of $1.3 million
-- Solid shipments in Q1 of set-top box and devices to our Service
Provider and Smart TV customers globally
-- Participated in leading cable industry panels on RDK & HTML5 at
TV Connect in London, UK and the Lightreading Cable Event in
Denver, Colorado
-- Secured 2 new wins for Espial multiscreen solutions with
several European service provider customers to introduce TV
everywhere services.


"We had a strong start to fiscal 2014. In Q1, we saw solid set-top box
and Smart TV deployments and new project wins from both our service
provider and consumer electronic customers." said Jaison Dolvane, CEO,
Espial. "Cable operators are looking to adopt open, cloud based
solutions like RDK and HTML5, so they can achieve rapid service
innovation and deliver rich user experiences. In line with our
strategy, we continue to gain the attention of major cable operators
worldwide and made good progress developing our sales pipeline in
Q1. We are very pleased with our recent quarterly results and believe
we remain well positioned to capitalize on the opportunities ahead."


Financial Summary


For the three-month period ended March 31, 2014, the Company reported
revenues of $5.0 million compared with revenues of $2.5 million for the
three months ended March 31, 2013. Earnings before interest, foreign
exchange, taxes, stock compensation, depreciation and amortization
(EBITDA) for the first quarter of fiscal 2014 was $1.3 million compared
with a loss of $2.4 million in the first quarter of fiscal 2013. Net
income for the quarter was $1.0 million or $0.05 per share, compared
with a net loss of $3.3 million last year, or $0.23 per share.


Q1 Financial Results


-- First quarter revenues were $4,974,824 compared with revenues
of $2,542,059 in the same period a year ago. First quarter
software license and royalty revenues were $3,427,351 compared
to $1,389,445 in the first quarter of fiscal 2013. Professional
services for the first quarters of 2014 and 2013 were $360,394
and $247,819 respectively. Maintenance and support revenues for
the first quarter were $1,187,079 compared to $904,795 last
year.

-- North American revenues were $1,859,999 in the first quarter of
fiscal 2014 compared to $897,394 in 2013. Asia revenues were
$1,014,449 in the first quarter of 2014 compared to $897,385 in
2013. European revenues were $2,100,376 in the first quarter of
2014 compared to $747,280 in 2013.

-- Gross margin for the first quarter of fiscal 2014 was 85%
compared with 80% in the first quarter of fiscal 2013.

-- Operating expenses in the first quarter of fiscal 2014 were
$3,149,105 compared to $4,899,419 in the first quarter of
fiscal 2013.

-- Earnings before interest, foreign exchange, taxes, stock
compensation, depreciation and amortization (EBITDA) for the
first quarter of fiscal 2014 was $1,305,819 compared to a loss
of $2,416,649 in fiscal 2013. Included in last year's loss was
a restructuring charge of $1,049,222 related to the acquisition
of ANT.

-- Net income, which includes non-cash items like depreciation,
goodwill and intangibles in the first quarter of fiscal 2014
was $1,028,574 compared to a loss of $3,272,165 last year.




Cash and cash equivalents on March 31, 2014 was $7,032,088.



A complete set of financial statements and management's discussion and
analysis for the period ended March 31, 2014 will be available at http://www.sedar.com.


Conference Call


The Company will be hosting a conference call to discuss the Q1 2014
financial results on April 24, 2014 at 10:00 a.m. Eastern Time (ET).
The phone number to join the results discussion is:



-- Toll free line (Canada/US) - +1 888-390-0605
-- Toll line (international/local) - +1 416-764-8609


The playback for the call will be available until 11:59pm ET on May 23,
2014, at the following numbers and passcode:



-- Toll line: +1 416-764-8677, Passcode: 425739
-- Toll-free line: +1-888-390-0541, Passcode: 425739



About Espial (www.espial.com)


Espial is a leading supplier of digital TV and IPTV software and
solutions to cable MSOs and telecommunications operators as well as
consumer electronics manufacturers. Espial's middleware,
video-on-demand, and browser products power a diverse range of pay-TV
and Internet TV business models. Over 35 million licenses of its
patented software are in use across the world. Espial is headquartered
in Ottawa, Canada and has offices in the United States, Europe,
and Asia. Visit www.espial.com or contact via phone at +1 613 230 4770.


Forward Looking Statement


This press release contains information that is forward looking
information with respect to Espial within the meaning of Section
138.4(9) of the Ontario Securities Act (forward looking statements) and
other applicable securities laws. In some cases, forward-looking
information can be identified by the use of terms such as "may",
"will", "should", "expect", "plan", "anticipate", "believe", "intend",
"estimate", "predict", "potential", "continue" or the negative of these
terms or other similar expressions concerning matters that are not
historical facts. In particular, statements or assumptions about
economic conditions, benefits of new customer and partner
relationships, future opportunities for the company and products and
any other statements regarding Espial's objectives (and strategies to
achieve such objectives), future expectations, beliefs, goals or
prospects are or involve forward-looking information.



Forward-looking information is based on certain factors and assumptions.
While the company considers these assumptions to be reasonable based on
information currently available to it, they may prove to be incorrect.
Forward-looking information, by its nature necessarily involves known
and unknown risks and uncertainties. A number of factors could cause
actual results to differ materially from those in the forward-looking
statements or could cause our current objectives and strategies to
change, including but not limited to changing conditions and other
risks associated with the on-demand TV software industry and the market
segments in which Espial operates, competition, Espial's ability to
effectively develop its distribution channels and generate increased
demand for its products, economic conditions, technological
change, unanticipated changes in our costs, regulatory changes,
litigation, the emergence of new opportunities, many of which are
beyond our control and current expectation or knowledge.



Additional risks and uncertainties affecting Espial can be found in
Management's Discussion and Analysis of Results of Operations and
Financial Condition and its Annual Information Form for the fiscal year
ended December 31, 2013 filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the
factors and assumptions underlying the forward-looking information were
to prove incorrect, actual results could vary materially from those
that are expressed or implied by the forward-looking information
contained herein and our current objectives or strategies may change.
Espial assumes no obligation to update or revise any forward looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. Readers are cautioned not to
place undue reliance on these forward-looking statements that speak
only as of the date hereof.


Non-IFRS Financial Measures


Earnings before interest, foreign exchange, taxes, stock compensation,
depreciation and amortization (EBITDA) is a non-IFRS financial measure
that does not have any prescribed meaning by IFRS and is therefore
unlikely to be comparable to similar measures presented by other
issuers. Management believes that this non-IFRS financial measure, when
taken together with the corresponding consolidated IFRS measures,
increases the transparency of the Company's current results and enables
investors to more fully understand trends in its current and future
performance. A reconciliation of net loss to earnings before interest,
foreign exchange, taxes, stock compensation, dividends on redeemable
preferred shares, depreciation and amortization is as follows:






March 31, 2014 March 31, 2013

(3 months) (3 months)

(unaudited) (unaudited)



Net income (loss) and Comprehensive
loss $1,028,574 ($3,272,165)

Add

Stock compensation 33,761 42,782

Depreciation of property and 49,285
equipment 39,701

Amortization of intangibles 160,770 361,957

1,262,806 (2,818,141)

Less (add)

Net interest income (expense) (83,707) (134,362)

Foreign exchange gain (loss) 113,781 (223,283)

Income taxes (73,087) (43,846)

Earnings before interest, foreign
exchange, taxes, stock
compensation, depreciation and
amortization $1,305,819 ($2,416,650)






Q1 Consolidated Statements of Income (Loss)





Three months Ended

March 31, 2014 March 31, 2013

(Unaudited) (Unaudited)



Software $ 3,427,351 $ 1,389,445

Professional services 360,394 247,819

Support and maintenance 1,187,079 904,795

Revenue 4,974,824 2,542,059

Cost of revenue 754,131 513,317

Gross margin 4,220,693 2,028,742



Expenses

Sales and marketing 922,301 1,135,423

General and administrative 543,938 588,508

Research and development 1,522,097 1,764,309

Business restructuring charges - 1,049,222

Amortization of intangible assets 160,770 361,961

3,149,106 4,899,423

Income (loss) before other income
(expense) 1,071,587 (2,870,681)

Interest income 5,075 7,718

Foreign exchange gain (loss) 113,781 (223,283)

Interest expense (88,782) (142,080)

Income (loss) before taxes 1,101,661 (3,228,326)

Income taxes (73,087) (43,843)

Net income (loss) and comprehensive
income (loss) $ 1,028,574 $ (3,272,169)






Consolidated Balance Sheets





March 31, 2014 December 31, 2013



CURRENT ASSETS

Cash and cash equivalents $ 7,032,088 $ 7,407,093

Accounts receivable 2,472,045 2,057,222

Investment tax credits receivable 387,574 312,027

Prepaid expenses and other assets 703,542 502,990

10,595,249 10,279,332



Equipment 506,762 539,348

Intangible assets 1,963,298 2,099,398

Goodwill 3,340,808 3,340,808

$ 16,406,117 $ 16,258,886



CURRENT LIABILITIES

Accounts payable and accrued
liabilities $ 1,767,764 $ 1,872,505

Provisions 292,838 281,813

Deferred revenue 3,884,442 4,052,700

Term Debt 1,482,619 2,442,056

7,427,663 8,649,074

Provisions 295,553 363,132

Total Liabilities 7,723,216 9,012,206



SHAREHOLDERS' EQUITY

Share capital 78,283,061 77,781,292

Warrants 1,308,121 1,436,004

Share based payments reserve 12,158,841 12,125,080

Deficit (83,067,122) (84,095,696)

8,682,901 7,246,680

$ 16,406,117 $ 16,258,886







SOURCE ESPIAL GROUP

ESPIAL GROUP

CONTACT: For inquiries from the financial press or analysts, contact: Carl Smith
Chief Financial Officer
Espial Group Inc.
Email: csmith@espial.com
Phone: +1 613-230-4770 Kirk Edwardson
Director, Marketing
Espial Group Inc.
Email: kedwardson@espial.com
Phone: +1-613-230-4770 x1145


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