Espial Reports 2014 Second Quarter Results

Espial Reports 2014 Second Quarter Results


OTTAWA, July 22, 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
second quarter financial results for the three and six month periods
ended June 30, 2014.


Espial Q2 Highlights


-- Q2 revenue increased 107% to $4.7 million from $2.3 million
last year.
-- Q2 EBITDA income increased to $0.6 million compared to a loss
of $1.5 million last year.
-- For the six months ended June 30, 2014 revenue increased 101%
to $9.7 million, from $4.8 million last year.
-- For the six months ended June 30, 2014, EBITDA income increased
to $1.9 million compared to a loss of $3.9 million last year.
-- Announced a joint RDK solution with Samsung Electronics to
provide a home entertainment HTML5 user experience, combining
Samsung's IP set-top box and home media gateway with the Espial
STB Client.
-- Selected by a global top 5 TV manufacturer to power its next
generation smart TVs.
-- Completed a $10 million equity offering.




"Q2 was another strong quarter for us and we are pleased with our
growth. We believe our progress is a result of our commitment and focus
to deliver world-class products based on open technologies. In Q2, we
saw growing momentum for open platforms like ours - that are based on
RDK and HTML5 - that allow TV service providers to rapidly introduce
innovative services and rich user experiences. We recently announced a
partnership with Samsung to provide a joint RDK and HTML5 solution on
Samsung set-top-boxes", said Jaison Dolvane, CEO, Espial. "Samsung is
a major consumer TV brand and this partnership reinforces Espial's
leadership as RDK continues to gain momentum. During the quarter, we
also continued to make progress with major operators globally who are
undertaking RDK evaluation projects with us. On the Smart TV front, we
secured a top five TV manufacturer win and further expanded our
footprint in an existing customer to increase use of Espial software
across a broader range of TV models."


Financial Summary


For the three-month period ended June 30, 2014, the Company reported
revenue of $4.7 million compared with revenue of $2.3 million for the
three months ended June 30, 2013. Earnings before interest, foreign
exchange, taxes, stock compensation, depreciation and amortization
(EBITDA) for the second quarter of fiscal 2014 was income of $0.6
million compared to a loss of $1.5 million in the second quarter of
fiscal 2013. Net income for the quarter was $0.1 million or $0.00 per
share, compared with a net loss of $2.1 million last year, or $0.15 per
share.


Q2 Financial Results


-- Revenue for the second quarter of fiscal 2014 was $4,712,514
compared with revenue of $2,279,506 in the same period a year
ago. Second quarter software license revenue was $1,109,268
compared with software license revenue of $949,471 in the
second quarter of fiscal 2013. Professional services revenue
for the second quarters of 2014 and 2013 were $2,411,387 and
$254,777 respectively. Maintenance and support revenue for the
second quarter was $1,191,859 compared with $1,075,258 last
year.
-- North American revenue was $2,371,417 in the second quarter of
fiscal 2014 compared to $812,923 in 2013. Asia revenue was
$1,113,030 in the second quarter of 2014 compared to $463,787
in 2013. European revenue was $1,228,067 in the second quarter
of 2014 compared to $1,002,796 in 2013
-- Gross margin for the second quarter of fiscal 2014 was 72
percent compared with 78 percent in the second quarter of
fiscal 2013.
-- Operating expenses for the second quarter of fiscal 2014 were
$3,157,315 compared with $3,738,296 in the second quarter of
fiscal 2013.
-- Earnings for the second quarter of fiscal 2014 before interest,
foreign exchange, taxes, stock compensation, depreciation and
amortization (EBITDA) was income of $601,952 compared to a loss
of $1,480,644 in the second quarter of fiscal 2013.
-- Net income in the second quarter was $90,571 compared with a
loss of $2,132,914 last year.


A complete set of financial statements and management's discussion and
analysis for the period ended June 30, 2014 will be available at http://www.sedar.com.


Conference Call


The Company will be hosting a conference call to discuss the Q2 2014
financial results on July 22, 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 August
23, 2014, at the following numbers and passcode:



-- Toll line: +1 416-764-8677, Passcode: 151923
-- Toll-free line: +1-888-390-0541, Passcode: 151923

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:






June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013

(3 months) (3 months) (6 months) (6 months)

(unaudited) (unaudited) (unaudited) (unaudited)



Net income
(loss) and
Comprehensive
loss $90,571 ($2,132,915) $1,119,146 ($5,405,084)

Add

Stock
compensation 150,584 37,268 184,345 80,050

Depreciation 100,937
of property
and equipment 46,115 51,652 85,816

Amortization of
intangibles 160,770 393,556 321,539 755,517

448,040 (1,650,439) 1,710,846 (4,468,580)



Less (add)

Net interest
income
(expense) (10,913) (133,210) (94,619) (267,572)

Foreign
exchange gain
(loss) (92,321) 22,253 21,460 (201,030)

Income taxes (50,678) (58,837) (123,765) (102,681)



Earnings before
interest,
foreign
exchange,
taxes, stock
compensation,
depreciation
and
amortization $601,952 ($1,480,645) $1,907,771 ($3,897,297)









Q2 Consolidated
Statements of Income
(Loss)



Three Months Ended Six Months Ended

June 30, June 30, June 30, June 30,
2014 2013 2014 2013

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Revenue

Software $ 1,109,268 $ 949,471 $ 4,536,619 $ 2,338,915

Professional 2,411,387 254,777 2,771,781
services 502,596

Support and 1,191,859 1,075,258 2,378,938
maintenance 1,980,053

Total revenue 4,712,514 2,279,506 9,687,338 4,821,564

Cost of revenue 1,310,717 504,330 2,064,848 1,017,647



Gross margin 3,401,797 1,775,176 7,622,490 3,803,917

Expenses

Sales and 924,620 992,918 1,846,921
marketing 2,128,341

General and 637,026 545,775 1,180,964
administrative 1,134,283

Research and 1,434,899 1,806,048 2,956,995
development 3,570,356

Business - - -
restructuring
charges 1,049,222

Amortization 160,770 393,556 321,539
of intangible
assets 755,517

3,157,315 3,738,297 6,306,419 8,637,719

Income (loss) 244,482
before other
income (expense) (1,963,121) 1,316,071 (4,833,802)

Interest 6,469 2,749 11,544
income 10,467

Foreign (92,321) 22,253 21,458
exchange
(loss) gain (201,030)

Interest (17,381) (135,959) (106,163)
expense (278,038)



Income (loss) 141,249
before taxes (2,074,078) 1,242,910 (5,302,403)



Income tax (50,678)
expense (58,837) (123,765) (102,681)

Net income $ 90,571 $ $ $
(loss) and
comprehensive
income (loss) (2,132,915) 1,119,145 (5,405,084)



Income (loss) $ 0.00 $ $ $
per common share
- basic (0.15) 0.06 (0.38)



Weighted average 20,629,280
number of common
shares
outstanding -
basic 14,106,829 20,218,270 14,106,829



Income (loss) $ 0.00 $ $ $
per common share
- diluted (0.15) 0.05 (0.38)



Weighted average 23,960,897
number of common
shares
outstanding -
diluted 14,106,829 23,018,360 14,106,829







Consolidated Balance Sheets



June 30, 2014 December 31, 2013





CURRENT ASSETS

Cash and cash equivalents $ 14,427,985 $ 7,407,093

Accounts receivable 3,970,236 2,057,222

Investment tax credits receivable 462,460 312,027

Prepaid expenses and other assets 758,234 502,990

19,618,915 10,279,332



Equipment 517,262 539,348

Intangible assets 1,802,528 2,099,398

Goodwill 3,340,808 3,340,808

$ 25,279,513 $ 16,258,886



CURRENT LIABILITIES

Accounts payable and accrued $
liabilities $ 2,539,355 1,872,505

Provisions 290,153 281,813

Deferred revenue 4,024,649 4,052,700

Term Debt - 2,442,056

6,854,157 8,649,074

Provisions 220,304 363,132

Total Liabilities 7,074,461 9,012,206



SHAREHOLDERS' EQUITY

Share capital 87,298,111 77,781,292

Warrants 1,574,067 1,436,004

Share based payments reserve 12,309,425 12,125,080

Deficit (82,976,551) (84,095,696)

18,205,052 7,246,680

$ 25,279,513 $ 16,258,886







Statements of Cash Flows



Six Months Ended

June 30, 2014 June 30, 2013

(unaudited) (unaudited)

CASH PROVIDED BY (USED IN) OPERATING

Net income (loss) $ 1,119,145 $ (5,405,084)

Items not affecting cash

Depreciation of property and 85,816 100,938
equipment

Amortization of intangible assets 321,539 755,517

Share-based compensation expense 184,345 80,051

Interest accretion on term debt 57,945 81,139

Provisions (134,488) 454,316

1,634,302 (3,933,123)



Changes in non-cash operating (1,679,892) 580,828
working capital items

(45,590) (3,352,295)

INVESTING

Purchase of property and equipment (63,730) (21,501)

Purchase of intangible software (24,669) (5,255)

Purchase of business - (2,120,412)

Redemption of short- term - 8,054,551
investments

(88,399) 5,907,383

FINANCING

Operating line draw (repayment) - (2,008,384)

Repayment of term debt (2,500,000) -

Options exercised 2,960 -

Warrants exercised 474,582 -

Proceeds from equity financing 10,000,080 -

Costs of share issuance (822,741) -

7,154,881 (2,008,384)

Net cash and cash equivalents inflow 7,020,892 546,704

Cash and cash equivalents, beginning 3,055,644
of period 7,407,093

Cash and cash equivalents, end of $ 3,602,348
period 14,427,985 $







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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