Espial Reports 2011 Third Quarter Results

Second Consecutive Quarter of Positive EBITDA

OTTAWA, Nov. 3, 2011 /CNW/ - Espial® Group Inc. ("Espial" or the "Company"), (TSX:ESP), a leader in the delivery of digital and IP TV software and solutions, today announced its third quarter financial results for the three month period ended September 30, 2011.

HIGHLIGHTS:

  • Third quarter revenue of $3,770,473 - an increase of 29% from last year.
  • Record EBITDA income of $149,094 compared to an EBITDA loss of $275,209 last year.
  • Secured a major new Tier 1 consumer electronics (CE) manufacturer to embed the high performance Espial TV Browser, based on WebKit and HTML5, to power the majority of their LCD TVs beginning some time in 2012.
  • Secured a major new win with an Asian cable operator with 1.4 million cable TV subscribers to power their on-demand video and content delivery network (CDN) with Espial MediaBase
  • Announced that Vodafone Iceland selected Espial Media Service Platform and Espial MediaBase to power its nation-wide IPTV services including broadcast TV, DVR, video-on-demand and Catch-up TV.
  • Announced that OTE, Greece's incumbent telecommunication service provider, is powering their nation-wide on-demand video and content delivery network (CDN) using Espial MediaBase.
  • Announced that KPU Telecommunications integrated Espial MediaBase with Nokia Siemens IPTV solution to deliver premium on-demand video services to its IPTV subscribers in Alaska.
  • At IBC, showcased the powerful TV Everywhere capabilities of Espial MediaBase and the Espial Media Service Platform (previously the Evo TV Service Platform) with a unified brand experience including place-shifting and adaptive-bit rate streaming across multiple devices. Service providers can now leverage these capabilities to deliver live TV, network PVR, time-shift TV and video-on-demand services to PCs, connected TVs, smart phones and tablets like iPhone, iPad and Android devices.

For the three-month period ended September 30, 2011, the Company reported revenues of $3.8 million compared to revenues of $2.9 million for the three months ended September 30, 2010. Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the third quarter of fiscal 2011 was income of $0.1 million. This included expenses of $0.2 million for financial advisory and legal fees associated with our previously announced strategic business review - without this, EBITDA would have been income of $0.3 million compared to an EBITDA loss of $0.3 million in the third quarter of fiscal 2010.  Net loss for the quarter was $0.3 million or $0.02 per share, compared to a net loss of $0.7 million last year, or $0.05 per share.

"We are pleased with our second consecutive quarter of achieving EBITDA positive earnings and year over year revenue growth", said Jaison Dolvane, President and CEO. "We added major new customers for our products which continued to strengthen our business.

"Changes in the Pay-TV service provider ecosystem are accelerating as Pay TV providers roll out more robust TV Everywhere and Hybrid video offerings in response to growing competitive pressures." said Jaison Dolvane, President and CEO. "Driving these changes is the consumers' desire to be able to access and share videos anytime, anywhere from set-tops, smart TVs, smart phones, tablets and PCs. This converged video experience, often called TV Everywhere, plays to our solution strengths for Pay-TV service providers and CE manufacturers. We see the pace of change increasing in 2012 and we believe we are poised to benefit from this rapidly evolving environment."

Q3 Financial Results

Third quarter revenues were $3,770,473 compared with revenues of $2,931,531 in the same period a year ago. Third quarter software license revenues were $2,272,018 compared to software license revenues of $1,849,230 in the third quarter of fiscal 2010.  Professional services for the third quarters of 2011 and 2010 were $729,723 and $238,413 respectively.  Maintenance and support revenues for the third quarter were $768,732 compared to $843,887 last year.

Gross margins for the third quarter of fiscal 2011 were 78% compared with 79% in the third quarter of fiscal 2010.

Operating expenses in the third quarter of fiscal 2011 were $3,222,600 compared to $3,095,414 in the third quarter of fiscal 2010.

Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (EBITDA) for the third quarter of fiscal 2011 was income of $149,094 compared to an EBITDA loss of $275,209 in fiscal 2010.

Net loss in the third quarter was $316,049 compared to a loss of $694,205 last year.

Cash and cash equivalents at September 30, 2011 was $9,184,703

The Company will be hosting a conference call to discuss the third quarter financial results on Friday, November 4th, 2011 at 10:00 AM Eastern Standard Time (EST). The phone number to join the results discussion is:

  • Toll Free line (Canada/US) - 888-231-8191
  • Local/International - 647-427-7450

The playback for the call will be available until midnight on Friday, December 2nd, 2011, at the following numbers and passcode:

  • Toll line: 416-849-0833 - passcode:  23433991
  • Toll free line: 1-855-859-2056- passcode: 23433991

About Espial (www.espial.com)
Espial is a leading supplier of digital TV and IPTV software and solutions to service providers in the cable, telecommunications, hospitality and consumer electronics industries. Espial's products include middleware, video-on-demand and browser solutions help implement diverse pay-TV and Internet TV business models. Over 10 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. 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 to Espial resulting from new customer relationships or product releases, expected market trends, future quarterly results, future opportunities for the company and its 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 manage new customer relationships and product introductions, 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, 2010 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, dividends on redeemable preferred shares, depreciation and amortization is as follows:

  September 30 September  30
  2011 2010
  (3 months) (3 months)
  (Unaudited) (Unaudited)
     
Net loss and Comprehensive loss ($316,049) ($694,205)
Add    
Stock compensation 80,596 166,471
Depreciation of property and equipment 52,572 57,599
Amortization of intangibles 286,279 283,918
  $103,398 ($186,217)
Less (add)    
Interest income (expense) (121,854) 7,950
Foreign exchange gain (loss) 76,158 81,042
Earnings before interest, foreign exchange, taxes, stock compensation,  depreciation and amortization $149,094 ($275,209)
 

ESPIAL GROUP INC.
Consolidated Balance Sheets
(in Canadian dollars)

     
  September 30, 2011 December 31, 2010
     
CURRENT ASSETS    
  Cash and cash equivalents $     9,184,703 $  10,724,599
  Short-term investments 110,000 110,000
  Accounts receivable 3,898,112 3,201,585
  Investment tax credits receivable 225,000 300,000
  Prepaid expenses and other assets 223,941 261,134
  13,641,756 14,597,318
     
Property and equipment 640,400 623,385
Intangible assets  2,433,773 3,286,443
Goodwill 3,340,808 3,340,808
  $   20,056,737 $  21,847,954
     
CURRENT LIABILITIES    
  Operating line $     1,500,164 $    1,000,219
  Accounts payable and accrued liabilities 1,777,855 2,441,954
  Deferred revenue 1,659,612 1,821,947
  4,937,631 5,264,120
Long term debt 3,053,752 2,932,053
Total Liabilities 7,991,383 8,196,173
     
COMMITMENTS    
SHAREHOLDERS' EQUITY    
  Share capital 74,861,876 74,859,576
  Warrants 732,382 732,382
  Contributed surplus 11,763,531 11,416,545
Deficit (75,292,435) (73,356,722)
  12,065,354 13,651,781
  $    20,056,737 $  21,847,954

ESPIAL GROUP INC.
Consolidated Statements of Loss and Comprehensive Loss
(in Canadian dollars except share data)

  Three Months Ended     Nine Months Ended
  September 30, 2011 September 30, 2010   September 30, 2011 September 30, 2010
  (Unaudited) (Unaudited)   (Unaudited) (Unaudited)
Revenue          
  Software $  2,272,018 $   1,849,230   $   6,337,816 $    5,703,759
  Professional services 729,723 238,413   1,994,950 1,763,757
  Support and maintenance 768,732 843,887   2,269,212 2,384,267
Total Revenue 3,770,473 2,931,531   10,601,978 9,851,783
Cost of revenue 818,226 619,315   2,482,866 2,395,431
Gross margin 2,952,247 2,312,216   8,119,112 7,456,352
           
Expenses          
  Sales and marketing 990,815 1,040,994   3,261,322 3,192,995
  General and administrative 685,819 493,693   1,965,229 1,556,698
  Research and development 1,259,687 1,276,809   3,776,634 3,622,156
  Amortization of Intangible assets 286,279 283,918   858,523 851,753
  3,222,600 3,095,414   9,861,708 9,223,602
Loss before other income (expense) (270,353) (783,198)   (1,742,596) (1,767,250)
Other income (expenses)          
  Interest income 7,592 7,950   26,846 15,209
  Foreign exchange gain 76,158 81,042   165,113 (143,836)
  Interest expense (129,446) -   (385,076) (4,479)
  (45,696) 88,992   (193,117) (133,106)
           
Net loss and comprehensive loss $    (316,049) $   (694,205)   $  (1,935,713) $   (1,900,356)
           
           
Net loss per common share - basic and diluted $  (0.02) $   (0.05)   $      (0.14) $  (0.13)
           
Weighted average number of common shares outstanding - basic and diluted   14,106,829 14,101,829         14,104,503      14,101,829

ESPIAL GROUP INC.
Consolidated Statements of Cash Flows
(in Canadian dollars)

  Three Months Ended   Nine Months Ended
  September 30, 2011
(unaudited)
  September 30, 2010
(unaudited)
  September 30, 2011
(unaudited)
  September 30, 2010
(unaudited)
CASH PROVIDED BY (USED IN)              
  OPERATING              
    Net loss $  (316,049)   $  (694,205)   $  (1,935,713)   $  (1,900,356)
    Items not affecting cash              
      Depreciation of property and equipment 52,572   57,599   146,920   166,633
      Amortization of intangible assets 286,279   283,918   858,523   851,753
      Share-based compensation expense 80,596   166,471   346,986   390,021
      Interest expense 40,569   -   121,706   -
  143,967   (186,217)   (461,578)   (491,949)
      Changes in non-cash operating
      working capital items (Note 7)
132,904   (490,492)   (1,410,775)   (1,286,582)
  276,871   (676,709)   (1,872,353)   (1,778,531)
  INVESTING              
    Purchase of property and equipment (50,324)   (27,392)   (163,936)   (80,408)
    Purchase of intangible assets (1,390)   -   (5,852)   -
    Redemption of short-term investments -   -   -   12,246
  (51,714)   (27,392)   (169,788)   (68,162)
  FINANCING              
     Operating line -   84   499,945   500,328
     Proceeds from exercise of stock options -   -   2,300   -
  -   84   502,245   500,328
Net cash and equivalents inflow (outflow) 225,157   (704,017)   (1,539,896)   (1,346,365)
Cash and cash equivalents, beginning of period 8,959,546   8,069,350   10,724,599   8,711,697
Cash and cash equivalents, end of period $  9,184,703   $  7,365,333   $  9,184,703   $  7,365,333

 

 

 

SOURCE ESPIAL GROUP

For further information:

Inquiries from financial press or analysts:

Carl Smith
Chief Financial Officer
Espial Group Inc.
Email: csmith@espial.com
Phone: 613-230-4770
          Kirk Edwardson
Director, Marketing
Espial Group Inc.
Email: kedwardson@espial.com
Phone: +1-613-230-4770 x1145

 

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ESPIAL GROUP

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