Espial Reports 2010 Fourth Quarter and Fiscal Year Results
February 24, 2011
OTTAWA, Feb. 24 - Espial(R) Group Inc. ("Espial" or the "Company"), (TSX:ESP), a leader in the delivery of on-demand TV software and services, today announced its fourth quarter and fiscal year financial results for the three and twelve month periods ended December 31, 2010. 2010 HIGHLIGHTS:
Achieved record annual revenue of $13.3 million and 44% improvement in EBITDA over 2009.
Improved balance sheet by securing a $3.5 million long-term debtoffering.
Secured major customers like Jilin Cable in China, while existing customers like Optimius, Tele2, Com Hem, SFR demonstrated very strong expansion in their subscriber growth.
Introduce support to enable over the top Internet video to multiple screens including mobile phones, iPads and PCs across Espial products.
Introduced Espial TV Browser product to enable Internet video on Connected TV devices, expanding our entry into the Connected TV market expected to be 243 million units shipping annually by 2013.
Secured new design wins for our Espial Browser v6 product with Consumer Electronic manufacturers. Announced a partnership with Sigma Designs to pre-integrate Espial Webkit Browser with Flash and HTML5 video and the availability of Espial WebKit Browser on the Intel 4100 and 4200 reference chipsets.
Expanded presence, through a partnership with Conax, the global content security specialist, to deliver Hybrid-IP TV solutions and middleware for cable, satellite, terrestrial and telecom operators using the Espial TV Services Platform.
For the year ended December 31, 2010, the Company reported revenues of $13.3 million compared to revenues of $12.2 million for the year ended December 31, 2009, a 9% annual growth in revenues. For the three-month period ended December 31, 2010, the Company reported revenues of $3.5 million compared to revenues of $3.1 million for the three months ended December 31, 2009. Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the fourth quarter of fiscal 2010 was a loss of $0.8 million compared to a loss of $0.3 million in the fourth quarter of fiscal 2009. For the year ended December 31, 2010, EBITDA was a loss of $1.2 million compared to an EBITDA loss of $2.1 million in 2009, a 44% annual improvement in EBITDA. Net loss, which includes non-cash items like depreciation, stock compensation and amortization of intangibles, for the quarter was $1.4 million or $0.10 per share, compared to a net loss of $0.9 million last year, or $0.06 per share. Net loss for fiscal 2010 was $3.2 million compared to a net loss of $4.2 million in 2009. "We are very pleased with our 2010 achievements and financial results", said Jaison Dolvane, President and CEO. "We believe 2010 was a pivotal year for our industry. The success of OTT service providers like Netflix demonstrates the value of on-demand & interactive TV. Such services, along with increased competition in TV service providers, is increasing pressure on incumbent Pay TV operators, telcos, cable & satellite operators to deliver next generation on-demand video services across multiple screens and networks. This increased activity with service providers, coupled with a strong desire for Consumer Electronic manufacturers to offer Internet video and web capabilities on their devices is increasing demand for our products and broadening our customer base".
Q4 Financial Results
Fourth quarter revenues were $3,459,511 compared with revenues of $3,100,699 in the same period a year ago. Fourth quarter software license and royalty revenues were $2,608,846 compared to software license and royalty revenues of $1,496,120 in the fourth quarter of fiscal 2009. Professional services for the fourth quarters of 2010 and 2009 were $57,867 and $892,638 respectively. Maintenance and support revenues for the fourth quarter were $792,798 compared to $711,941 last year.
Gross margins for the fourth quarter of fiscal 2010 were 66% compared with 70% in the fourth quarter of fiscal 2009.
Operating expenses in the fourth quarter of fiscal 2010 were $3,557,733 compared to $2,983,357 in the fourth quarter of fiscal 2009.
Earnings before interest, foreign exchange, taxes, stock compensation,depreciation and amortization (EBITDA) for the fourth quarter of fiscal 2010 was a loss of $796,463 compared to a loss of $311,946 in fiscal 2009.
Net loss, which includes non-cash items like depreciation, goodwill and intangibles, in the fourth quarter was $1,362,527 compared to a loss of $877,704 last year.
Fiscal 2010 Financial Results
Total revenues for the fiscal year ended December 31,2010 were $13,311,294 compared with revenues of $12,217,744, in the same period a year ago. Software license and royalty revenues for the 2010 fiscal year were $8,312,594 compared to software license and royalty revenues of $7,250,697 in fiscal 2009. Professional services for the fiscal years of 2010 and 2009 were $1,821,620 and $ 1,896,446 respectively.Maintenance and support revenues for the fiscal year ended December 31, 2010 were $3,177,080 compared to $3,070,601 last year.
Gross margins for the 2010 fiscal year were 73% compared with 76% in fiscal 2009.
Operating expenses for the 2010 fiscal year were $12,741,313 compared to $13,080,992 in fiscal 2009.
Earnings before interest, foreign exchange, taxes, stock compensation,dividends on redeemable preferred shares, depreciation and amortization (EBITDA) for the fiscal year ended December 31,2010 was a loss of $1,155,306 compared to a loss of $2,081,092 in fiscal 2009.
Net loss in the 2010 fiscal year was $3,222,863 compared to a loss of $4,157,319 in 2009.
Cash and cash equivalents at December 31, 2010 was $10,724,599.
The Company will be hosting a conference call to discuss the fourth quarter financial results on February 24, 2011 at 5:00 PM Eastern Standard Time (EST). The phone number to join the results discussion is:
Toll Free line (Canada/US)- 888-231-8191
Toll line (International/Local) - 647-427-7450
The playback for the call will be available until March 24, 2011 at the following numbers and passcode:
Toll line: 416-849-0833 - passcode:44457630
Toll free line: 1-800-642-1687- passcode:44457630
About Espial (www.espial.com) Espial provides scalable and open digital TV software to service providers in the cable, telecommunications and hospitality industries. Its middleware, Video-On-Demand and browser solutions provide superior service delivery, advanced service innovation tools and the ability to implement flexible business models. Espial serves a range of market segments including, IPTV, Cable, hybrid IP, over-the-top, multi-dwelling unit and enterprise. With over 7 million subscribers using Espial's patented solutions, Espial is a leading supplier of TV software. Espial is headquartered in Ottawa, Canada with offices around the world in USA, Europe and Asia. For more information please call +1.613.230.4770 or visit www.espial.com.
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 about anticipated benefits of new customer and partner relationships, future opportunities for the company and products and any other statements regarding Espial's 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 risks and uncertainties, including Espial's ability to effectively develop its distribution channels, and generate increased demand for its products. Additional risks and uncertainties affecting Espial can be found in Espial's Annual Report for the fiscal year ended December 31, 2009 and in its most recent quarterly report 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. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
Non-GAAP Financial Measures Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) is a non-GAAP financial measure that does not have any prescribed meaning by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers. Management believes that this non-GAAP financial measure, when taken together with the corresponding consolidated GAAP 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, depreciation and amortization is as follows:
Net loss and Comprehensive loss ($,1362,527) ($877,704) ($3,222,863) ($4,157,319) Add Stock compensation 125,000 141,701 475,000 319,701 Depreciation of property and equipment 62,230 81,218 231,366 294,937 Amortization of intangibles 283,083 283,081 1,132,332 1,132,332 ---------------------------------------------------------------------------------------------------- (892,214) (371,704) (1,384,165) (2,410,349) ---------------------------------------------------------------------------------------------------- Less (add) Interest income 6,603 11,878 15,333 75,510 Foreign exchange gain (loss) (100,354) (71,636) (244,192) (404,767) ------------------------------------------------------- Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization ($796,463) ($311,946) ($1,155,306) ($2,081,092) ------------------------------------------------------- -------------------------------------------------------
ESPIAL GROUP INC. Consolidated Balance Sheets (in Canadian dollars) ------------------------------------------------------------------------------- As at As at December 31,2010 December 31,2009
Long term debt 2,932,053 - ------------------------------------------------------------------------- Total Liabilities 8,196,4173 4,208,359 ------------------------------------------------------------------------- COMMITMENTS
Sales and marketing 1,226,555 1,056,416 4,335,749 4,245,989
General and administrative 548,354 491,684 1,916,744 2,008,775
Research and development 1,312,8511 929,257 4,650,122 5,079,258
Stock compensation expense 125,000 141,000 475,000 319,000 Depreciation of property and equipment 62,230 81,218 231,366 294,937
Amortization of intangible assets 283,083 283,081 1,132,332 1,132,332 -------------------------------------------------------------------------
3,557,733 2,983,357 12,741,313 13,080,992 ------------------------------------------------------------------------- Loss before other income (expense) (1,266,776) (817,946) (2,994,004) (3,828,062) ------------------------------------------------------------------------- Other income (expenses)
Interest income 4,603 11,878 15,333 75,510
Foreign exchange gain (loss) (100,354) (71,636) (224,192) (404,767) ------------------------------------------------------------------------- (95,751) (59,758) (228,859) (329,257) ------------------------------------------------------------------------- Net loss and comprehensive loss (1,362,527) ($877,704) (3,222,863) ($4,157,319) ------------------------------------------------------------------------- -------------------------------------------------------------------------
Net loss per common share - basic and diluted ($0.01) ($0.06) ($0.23) ($0.29) Weighted average number of common shares - basic and diluted 14,101,829 14,101,829 14,101,829 14,101,829
For further information or inquiries from financial press or analysts:
Carl Smith, Chief Financial Officer, Espial Group Inc., Email: csmith@espial.com, Phone: 613-230-4770;
