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) -  [phone]
• Toll line (international/local) - [phone]

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

• Toll line: [phone], Passcode: 425739
• Toll-free line: [phone], 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 [phone].

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 equipment	39,701		49,285
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

For inquiries from the financial press or analysts, contact:

Carl Smith
Chief Financial Officer
Espial Group Inc.
Email: [email protected]
Phone: [phone]

Kirk Edwardson
Director, Marketing
Espial Group Inc.
Email: [email protected]
Phone: [phone] x1145