Haivision Announces Results for the Three Months and Six Months Ended April 30, 2022

Haivision reports record quarterly revenues with 36.8% year-over-year revenue growth

MONTREAL, June 15, 2022 /CNW/ - Haivision Systems Inc. ("Haivision" or the "Company") (TSX: HAI), a leading global provider of mission critical, real-time IP video solutions, today announced its results for the second quarter ended April 30, 2022.

Mirko Wicha, Chairman and CEO of Haivision said, "The recent acquisition of Aviwest extends our video contribution solution portfolio and we are pleased that the demand for our expanded portfolio of products and services continues to be strong. Additionally, our teams have done a phenomenal job in successfully managing through this period of global supply chain challenges to meet the needs of our customers."  

Q2 2022 Financial Results

• Revenue of $29.9 million, up 36.8% from $21.9 million in the second quarter of fiscal 2021, a record for quarterly revenue performance.
• Gross margins* for the quarter were 71.4%.
• Operating profit was $0.1 million, a decrease of $2.3 million from the prior year period, but was primarily caused by increases in depreciation and amortization of $1.3 million and transaction costs of $0.6 million related to the recent acquisitions.
• Net loss of $0.4 million was a decrease of $1.6 million from the prior year period, but was primarily caused by increases in depreciation and amortization of $1.3 million and transaction costs of $0.6 million related to the recent acquisitions.
• Adjusted EBITDA* was $2.6 million, a decrease of $1.0 million from the prior year period, but represents the thirty-fourth (34th) consecutive quarter of positive Adjusted EBITDA*.
• Adjusted EBITDA margin was 8.7% compared to 16.5% in the prior year period.

Financial Results for the six months ended April 30, 2022

• Revenue of $58.2 million, up 29.8% from $44.8 million in fiscal 2021.
• Gross margins* were 70.4%.
• Operating profit was $0.0 million, an improvement of $8.9 million from the prior year period. Acquisition related depreciation and amortization expenses of $2.4 million and transactional expenses of $0.7 million was more than offset by the reduction in last-year's non-recurring share-based payments of $14.1 million related to the legacy Employee Stock Option Plan ("ESOP").
• Adjusted EBITDA* was $4.7 million, a decrease of $2.4 million from the prior year period.
• Adjusted EBITDA Margin* was 8.1% compared to 16.0% from the prior year period.
• Net loss was $0.8 million but represented a $10.0 million improvement from the prior year's performance.

Key Company Highlights for Fiscal 2022

• On April 1, 2022, we completed the acquisition of AVIWEST S.A.S. ("Aviwest"), an award winning, premier vendor for ultra-low-latency wireless broadcast video transmission, through mobile networking (5G/4G cellular) and patented network bonding capabilities.
• CineMassive Displays, LLC was renamed Haivision MCS, LLC ("Haivision MCS"), highlighting its focus on "Mission-Critical Systems" for the enterprise, government, and defense verticals.
• Haivision was awarded another Emmy® Award for Technology & Engineering, bringing its total to four, for the "Management of IP Multicast Video Distribution to Desktops and TVs in News and Media Production Facilities" for our flagship multisite live video distribution and IPTV solution, Haivision Media Platform.
• Haivision was awarded "Best Corporate Video and Enterprise Video Content Management Platform" at the 2021 Streaming Media Readers' Choice Awards.
• Haivision partnered with Grass Valley to enable live low latency cloud media production.
• Released the results of our third annual broadcast survey in our Broadcast IP Transformation Report.
• SRT Alliance membership surpassed 550 members.

"The Aviwest acquisition was closed in early April, and just weeks later we presented the companies together at the most important industry trade event of the year. Both Haivision and Aviwest clients applauded the acquisition bringing together the premier vendors in wired and wireless video networking technology," said Mirko Wicha, Chairman and CEO of Haivision. "Furthermore, we're quickly beginning to see the benefits of our combined teams, with sales synergies and technology integrations that are clearly showing how well our company cultures fit together. We are extremely excited to continue our path of accelerated growth."

Financial Results

Revenue for the three months and six months ended April 30, 2022 was $29.9 million and $58.2 million, respectively, an increase of $8.0 million or 37% and $13.4 million or 30% respectively, compared to the three months and six months ended April 30, 2021.  Primary contributors to revenue growth were the recent acquisitions of Haivision MCS in August 2021 and of Aviwest in April 2022.  Gross Margins* for the three months and six months ended April 30, 2022 were 71.4% and 70.4%, compared to 78.1% and 77.2% for the three months and six month period in the prior year. The decrease in Gross Margins* results largely from the addition of Haivision MCS business which historically operated at a lower overall gross margin than Haivision's traditional business.

Total expenses in the quarter ended April 30, 2022 increased by $6.6 million. The increase in total expenses in the three month period is largely related to the acquisition of Haivision MCS and Aviwest, and included acquisition related depreciation and amortization of $1.3 million and transactional expenses of $0.6 million. For the six months ended April 30, 2022, total expenses decreased by $2.5 million.  Additional expenses related to the acquisition of Haivision MCS and Aviwest included $2.4 million of depreciation and amortization and $0.7 million in transactional expenses.  These increases in total expenses were  offset by the reduction in non-recurring share-based payments of $14.1 million related to the legacy Employee Stock Option Plan ("ESOP"). Options governed by the legacy ESOP were only exercisable upon the occurrence of a liquidity event (such as our IPO in December 2020).

Net loss for the three months ended April 30, 2022 was $0.4 million a decrease of $1.6 million from the prior year period, Net losses for the three-month period was primarily caused by the additional $1.3 million in depreciation and amortization and $0.6 million in transaction costs.  The net loss for the six months ended April 30, 2022 was $0.8 million, a $10.0 million improvement from the prior year period.  Net losses for the six months were primarily caused by the additional $2.4 million in depreciation and amortization and $0.7 million in transaction costs during the period.  Adjusted EBITDA* for the three months ended April 30, 2022 was $2.6 million, a decrease of $1.0 million from the prior year period, and Adjusted EBITDA* for the six month period ended April 30, was $4.7 million, a decrease of $2.4 million compared to the prior year period. 

*Represents a non-IFRS measure. For the relevant definition, see "Non-IFRS Measures" below. As applicable, a reconciliation of this non-IFRS measure to the most directly comparable IFRS financial measure is included in the tables at the end of this press release and in the Company's management's discussion and analysis for the three months and six months ended April 30, 2022.

Conference Call Notification

Haivision will hold a conference call to discuss its second quarter financial results on Wednesday,
June 15, 2022 at 5:30 pm (ET). To register for the call, please use this link https://conferencingportals.com/event/myiwYleM.. After registering, a confirmation will be sent through email, including dial in details and unique conference call codes for entry.

Financial Statements, Management's Discussion and Analysis and Additional Information

Haivision's unaudited interim condensed consolidated financial statements for the second quarter ended April 30, 2022 (the "Q2 Financial Statements"), the management's discussion and analysis thereon and additional information relating to Haivision and its business can be found under Haivision's profile on SEDAR at www.sedar.com. The financial information presented in this release was derived from the Q2 Financial Statements.

Forward-Looking Statements

This release includes "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of applicable securities laws, including, without limitation, statements regarding the Company's growth opportunities and its ability to execute on its growth strategy. In some cases, but not necessarily in all cases, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "is positioned", "estimates", "intends", "assumes", "anticipates" or "does not anticipate" or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking statements. Forward-looking statements are not historical facts, nor guarantees or assurances of future performance but instead represent management's current beliefs, expectations, estimates and projections regarding future events and operating performance.

Forward-looking statements are necessarily based on opinions, assumptions and estimates that, while considered reasonable by Haivision as of the date of this release, are subject to inherent uncertainties, risks and changes in circumstances that may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, the risk factors identified under "Risk Factors" in the Company's latest annual information form, and in other periodic filings that the Company has made and may make in the future with the securities commissions or similar regulatory authorities in Canada, all of which are available under the Company's SEDAR profile at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect Haivision. However, such risk factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. Haivision undertakes no obligation to publicly update any forward-looking statement, except as required by applicable securities laws.

Non-IFRS Measures

Haivision's consolidated financial statements for the second quarter ended April 30, 2022 are prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board. This press release makes reference to certain non-IFRS measures, including "EBITDA", "Gross Margin", "Adjusted EBITDA" and "Adjusted EBITDA Margin". These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS, and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. Rather, these non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.

Adjusted EBITDA is a supplemental measure used by management to assess the financial performance of our business. Adjusted EBITDA is also a key metric that management uses prior to execution of any strategic investing or financing opportunity. "EBITDA" is defined as earnings (loss) before income taxes, depreciation, amortization and financial expenses and "Adjusted EBITDA" is defined as EBITDA, as adjusted for stock-based compensation and certain non-recurring expense items. "Adjusted EBITDA Margin" represents Adjusted EBITDA divided by revenue. "Gross Margin" represents gross profit divided by revenue.

A reconciliation of EBITDA and Adjusted EBITDA to Net income (loss) is included in the tables at the end of this press release and in the Company's management discussion and analysis for the three months and six months ended April 30, 2022.

About Haivision

Haivision is a leading global provider of mission-critical, real-time video streaming and networking solutions. Our connected cloud and intelligent edge technologies enable global organizations to engage audiences, enhance collaboration, and support decision making. We provide high quality, low latency, secure, and reliable live video at a global scale. Haivision open sourced its award-winning SRT low latency video streaming protocol and founded the SRT Alliance to support its adoption. Awarded four Emmys® for Technology and Engineering from the National Academy of Television Arts and Sciences, Haivision continues to fuel the future of IP video transformation. Founded in 2004, Haivision is headquartered in Montreal and Chicago with offices, sales, and support located throughout the Americas, Europe, and Asia. Learn more at haivision.com. 

Thousands of Canadian dollars (except per share amounts)
	Three months ended April 30,						Six months ended April 30,
	2022			2021			2022			2021
	($)			($)			($)			($)
Revenue	29,885			21,851			58,219			44,836
Cost of sales	8,556			4,788			17,220			10,221
Gross profit	21,329			17,062			40,999			34,615
Expenses
Sales and marketing	6,673			4,841			12,617			9,952
Operations and support	2,862			1,170			5,426			2,488
Research and development	7,535			4,359			13,736			9,239
General and administrative	3,427			3,514			7,740			6,621
Share-based payment	687			745			1,449			15,194
	21,184			14,629			40,968			43,494
Operating Profit (loss)	145			2,433			31			(8,879)
Financial expenses	192			79			346			188
Income (loss) before income taxes	(47)			2,354			(315)			(9,067)
Income taxes
Current	364			1,117			247			1,781
Deferred	(41)			—			281			—
	(322)			1,117			528			2,018
Net income (loss)	(369)			1,237			(843)			(10,848)
Other comprehensive income (loss)
Foreign currency translation adjustment	(960)			(450)			1,084			(940)
Comprehensive income (loss)	(1,329)			787			241			(11,788)
Net income per share
Net income (loss) per share (basic and diluted)	$(0.01)			$0.05			$(0.03)			$(0.46)
Weighted average number of shares outstanding
Basic	28,878,054			26,632,340			28,830,884			23,809,782
Diluted	28,878,054			27,344,467			28,830,884			23,809,782

Thousands of Canadian dollars
	As at
	April 30, 2022		October 31, 2021
	$		$
Assets
Current assets
Cash	12,760		26,838
Trade and other receivables	24,820		19,476
Investment tax credits receivable	3,000		2,000
Inventories	14,371		8,840
Prepaid expenses	5,276		3,226
	60,227		60,380
Property and equipment	3,517		1,848
Right-of-use assets	9,301		7,926
Intangible assets	30,823		17,533
Goodwill	39,725		30,079
Non-refundable investment tax credits receivable	2,033		2,535
Deferred income taxes	523		2,179
	85,922		62,100
	146,149		122,480
Liabilities
Current liabilities
Line of credit	13,046		—
Trade and other payables	13,359		12,504
Purchase price payable	2,698		—
Income taxes payable	218		2,960
Current portion of lease liabilities	1,420		1,002
Current portion of term loans	1,492		—
Deferred revenue	9,007		7,913
	41,241		24,379
Lease liabilities	8,727		7,587
Long term debt	3,860		—
Deferred revenue	2,135		1,592
	55,963		33,559
Equity
Share capital	90,176		89,785
Retained earnings	(3,845)		(3,002)
Stock option reserve	3,317		2,684
Cumulative translation adjustment	(538)		(546)
	90,186		88,921
	146,149		122,480

Thousands of Canadian dollars
	Three months ended  April 30,						Six months ended April 30,
	2022			2021			2022			2021
	($)			($)			($)			($)
Net Income (loss)	(369)			1,237			(843)			(10.848)
Income Taxes	322			1,117			528			1,781
Income before income taxes	(47)			2,354			(315)			(9,067)
Depreciation	595			298			1,110			587
Amortization	1,162			138			2,141			276
Financial expenses	191			79			346			188
EBITDA^(1)	1,902			2,869			3,282			(8,016)
Share-based payments (LTIP)	687			745			1,449			1,069
Non-recurring expenses:
Share-based payment (ESOP)	—			—			—			14,125
Adjusted EBITDA^(1)	2,589			3,614			4,731			7,178
Adjusted EBITDA Margin^(1)	8.7 %			16.5 %			8.1 %			16.0 %

_______________________

Note:

(1)    Non-IFRS measure. See "Non-IFRS Measures".

SOURCE Haivision Systems Inc.

Glen Akselrod, Bristol Capital, 905-326-1888 ext. 1, [email protected]; Dan Rabinowitz, Chief Financial Officer and Executive Vice President, Operations, 847-362-6800 ext. 7209, [email protected]