Haivision Announces Results for the Three Months and Full Year Ended October 31, 2023
Haivision continues to increase gross margins, improves operational efficiency while delivering 11.3% year over year revenue growth
Haivision announces TSX acceptance of Normal Course Issuer Bid
MONTREAL, Jan. 17, 2024 /PRNewswire/ - Haivision Systems Inc. ("Haivision" or the "Company") (TSX: HAI), a leading global provider of mission critical, real-time video networking and visual collaboration solutions, today announced its results for the fourth quarter ended October 31, 2023.
"This last year represented a significant turning point for Haivision, and the results of these initiatives can readily be seen in our financial results," said Mirko Wicha, Chairman and CEO of Haivision. Our fiscal 2023 financial performance is highlighted by an 83% increase in Adjusted EBITDA*, a growth rate that far exceeded our revenue growth as we continue to deliver much higher operational income as promised. Further, our Adjusted EBITDA Margin* for the recently completed fourth quarter was 15.9%, demonstrating the true earning potential of our business as we scale."
Q4 2023 Financial Results
-- Revenue of $35.7 million represents sequential quarterly growth of over
2%.
-- Gross Margins* were 74.4%, a notable improvement from 68.0% for the same
prior year period.
-- Total expenses were $22.9 million, a decrease of $3.2 million, from the
same prior year period.
-- Operating income was $3.2 million, a $4.1 million improvement from the
same prior year period.
-- Adjusted EBITDA* was $5.7 million, a $0.8 million or 15% improvement
from the same prior year period.
-- Adjusted EBITDA Margins* was 15.9%, a notable improvement when compared
to 13.0% for the same prior year period.
-- Net income was $2.5 million, a $3.6 million improvement from the same
prior year period.
Fiscal 2023 Financial Results
-- Revenue of $139.9 million represents an increase of 11.3% from the prior
year (an increase of 16.1% when normalized for our decision to exit the
House of Worship vertical).
-- Gross Margins* were 70.4%, a 180-basis point improvement compared to
68.7% the prior year.
-- Total expenses were $97.4 million, an increase of $5.8 million from the
prior year.
-- Operating income was $1.2 million, a $6.4 million improvement from the
prior year.
-- Adjusted EBITDA* was $14.8 million, a $6.7 million or an 83% improvement
from the prior year.
-- Adjusted EBITDA Margin* was 10.6%, a notable improvement when compared
to 6.4% the prior year.
-- Net loss was $1.3 million, a $4.9 million improvement when compared to
the prior year.
Key Company Highlights for Fiscal 2023
-- Haivision extends rental services in North America with strategic
partnerships with broadcast equipment rental partners, CP
Communications, Flypack, RF Wireless Systems, and VidOvation.
-- Haivision unveiled a compelling new user interface for the Makito X4
video encoder, streamlining workflows and the user experience, along
with a single channel Makito X4 delivering 4K encoding at an industry
leading new level of price performance and a Makito FX for ultra-low
latency 4K video and computer graphics encoder for mission critical
applications.
-- Haivision StreamHub receivers and Haivision Pro460 transmitters awarded
NAB Product of the Year award for remote production at the centennial
NAB show in Las Vegas, and StreamHub won the TVBEurope Best in Show
award.
-- With Haivision Pro Series transmitters and StreamHub receivers,
Haivision client SpaceLabs won the Innovation Award for Sports
Broadcasting at the inaugural Asia-Pacific Broadcasting+ Awards for
Malaysian football remote production.
-- Announced key Command 360 / Command Center deployments at Cleveland
Department of Public Safety Emergency Operations Center (EOC) and
ALERTCalifornia Emergency Communications Center (ECC).
-- With YouTube, Haivision hosted the annual SRT InterOp Plugfest, with the
SRT community executing 2,257 individual device-to-device compatibility
tests proving widespread industry adoption.
"We completed another year of compelling revenue growth. Revenue growth was 11.3% but if you consider our decision to exit the house of worship market in April 2023 our revenue growth was actually over 16%." said Dan Rabinowitz, Chief Financial Officer and EVP, Operations. We are very buoyant about our near-term prospects. With much of the 'heavy lift' of the restructuring now behind us, we believe our common shares are undervalued, and our decision to initiate a normal course issuer bid (NCIB) demonstrates confidence in our strategic plan.
Financial Results
Revenue for the three months was $35.7 million, a decrease of $2.2 million, when compared to the prior year comparative period - revenue from Cloud solutions declined by $2.0 million attributed to our decision to exit the managed services business. Also note that fiscal 2022 fourth quarter revenue represented a 40% increase from the prior year, a growth rate that would be difficult to match in fiscal 2023. Revenue for the full year ended October 31, 2023, was $139.9 million, an increase of $14.2 million or 11.3%, when compared to the prior year. Gross Margins* for the three months and full year ended October 31, 2023 were 74.4% and 70.5%, respectively compared to 68.0% and 68.7% for the prior year comparable periods. Gross Margins* were positively impacted by our decision to exit the managed services business which historically operated at lower gross margins, decreases in the incremental costs of components procured during the worldwide component shortage, and price increases initiated last year.
Total expenses for the three months ended October 31, 2023 was $22.9 million representing a decrease of $3.2 million when compared to the prior year comparative period. The decrease in total expenses is largely related to a non-recurring restructuring costs of $2.3 million incurred last year and general decreases in expenses related to recent restructuring efforts. Total expenses for the full year period ended October 31, 2023 was $97.4 million, an increase of $5.8 million when compared to the prior year. The increase in total expenses includes included expenses related to the acquisition of Aviwest in April 2022, including incremental depreciation and amortization expenses of $1.4 million, and an increase in the Canadian dollar's impact on US dollar denominated assets and liabilities of $1.6 million.
Operating income for the three months ended October 31, 2023 was $3.6 million an improvement of $4.1 million. For the full year ended October 31, 2023, operating income was $1.2 million which was an improvement of $6.4 million when compared to the prior year. Adjusted EBITDA* for the three months and full year ended October 31, 2023, was $5.7 million and $14.8 million, respectively, representing improvements of $0.8 million and $6.7 million respectively, when compared to the prior year comparative periods. Adjusted EBITDA Margins* for the three months and full year ended October 31, 2023, were 15.9% and 10.6, respectively. Net income for the three months ended October 31, 2023, was $2.5 million and the Net loss for the full year ended October 31 2023 was $1.3 million, representing improvements of $6.8 million and $4.9 million respectively, when compared to the prior year comparative periods.
*Measures followed by the suffix "*" in this press release are non-IFRS measures. 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 full year ended October 31, 2023.
Normal Course Issuer Bid ("NCIB")
Management believes that, from time to time, the market price of the common shares of the Company (the "Shares") may not fully reflect the underlying value of the Shares and that at such time the purchase of Shares would be in the best interest of Haivision and its shareholders.
Haivision has received approval from the Toronto Stock Exchange ("TSX") to proceed with a normal course issuer bid ("NCIB"). Under the NCIB, the Company may purchase for cancellation up to 2,007,521 Shares. As at January 12, 2024 Haivision had 28,907,380 Shares issued and outstanding. The maximum number of shares that may be purchased under the NCIB represents approximately 10% of Haivision's public float, being 20,075,217 Shares. The Shares will be purchased on behalf of the Company by a registered broker through the facilities of the TSX and/or eligible alternative Canadian trading systems at the market price at the time of purchase. Purchases may commence on January 22, 2024 and will conclude on the earlier of the date on which the Company has purchased the maximum number of Shares permitted under the NCIB and January 21, 2025. The average daily trading volume of the Shares over the most recently completed six calendar months was 21,593 Shares. Accordingly, for purposes of the TSX rules, the Company is entitled to purchase, on any trading date, up to 5,398 Shares and to make block purchases of its Shares which exceed such daily limits no more frequently than once per calendar week. All shares purchased under the NCIB will be cancelled. The Company did not purchase any of its shares in the last 12 months.
In connection with the NCIB, the Company will enter into an automatic share purchase plan (the "ASPP") with its designated broker to allow for the purchase of Shares under the NCIB when Haivision normally would not be active in the market due to internal trading black-out periods. Such purchases will be determined by the broker at its sole discretion, based on the purchasing parameters set out by the Company in accordance with the rules of the TSX. The ASPP will terminate on the earliest of the date on which: (i) the NCIB expires; (ii) the maximum number of Shares have been purchased under the NCIB; and (iii) the Company terminates the ASPP in accordance with its terms. The ASPP constitutes an automatic purchase plan for purposes of applicable Canadian securities legislation and has been pre-cleared by the TSX.
Conference Call Notification
Haivision will hold a conference call to discuss its fourth quarter financial results on Wednesday,
January 17, 2024 at 5:15 pm (ET). To register for the call, please use this link https://conferencingportals.com/event/pOFoztyE. 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 consolidated financial statements for the full year ended October 31, 2023 (the "2023 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.sedarplus.ca. The financial information presented in this release was derived from the 2023 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.sedarplus.ca. 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 fourth quarter and full year ended October 31, 2023 are prepared in accordance with International Financial Reporting Standards ("IFRS"). As a compliment to results provided in accordance with IFRS, this press release makes reference to certain (i) non-IFRS financial measures, including "EBITDA", and "Adjusted EBITDA", (ii) non-IFRS ratios including "Adjusted EBITDA Margin", and (iii) supplementary financial measures including "Gross Margins" (collectively "non-IFRS measures"). These non-IFRS 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. For information on the most directly comparable financial measure disclosed in the primary financial statements of Haivision, composition of the non-IFRS measures, a description of how Haivision uses these measures and an explanation of how these measures provide useful information to investors, refer to the "Non-IFRS Measures" section of the Company's management's discussion and analysis for the three months and full year ended October 31, 2023, dated January 17, 2024, available on the Company's SEDAR+ profile at www.sedarplus.ca, which is incorporated by reference into this press release. As applicable, the reconciliations for each non-IFRS measure are outlined below. Non-IFRS measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of the Company's performance, liquidity, cash flow and profitability.
About Haivision
Haivision is a leading global provider of mission-critical, real-time video streaming and visual collaboration solutions. Our connected cloud and intelligent edge technologies enable organizations globally 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 Full year ended
October 31, October 31,
2023 2022 2023 2022
($) ($) ($) ($)
Revenue 35,724 37,903 139,857 125,697
Cost of sales 9,139 12,135 41,272 39,367
Gross profit 26,585 25,769 98,585 86,330
Expenses
Sales and marketing 6,978 9,426 30,318 30,010
Operations and support 4,184 3,626 15,593 12,336
Research and development 6,292 7,261 28,834 29,347
General and administrative 4,867 2,892 18,902 14,797
Share-based payment 617 636 2,162 2,696
Restructuring costs 2,337 1,546 2,337
22,938 26,178 97,355 91,523
Operating income (loss) 3,647 (409) 1,230 (5,193)
Financial expenses 401 455 1,738 1,109
Income (loss) before income taxes 3,246 (864) (508) (6,302)
Income taxes
Current 1,755 (61) 1,512 261
Deferred (1,038) 305 (754) (371)
717 244 757 (110)
Net income (loss) 2,525 (4,241) (1,265) (6,192)
Other comprehensive income (loss)
Foreign currency translation adjustment (3,251) (979) 3,248 5,250
Comprehensive income (loss) (3,533) (5,220) 1,983 (942)
Net income per share
Net income (loss) per share
Basic $0.09 $(0.04) $(0.04) $(0.21)
Diluted $0.08 $(0.04) $(0.04) $(0.21)
Weighted average shares outstanding
Basic 29,004,453 28,878,054 28,974,325 28,854,663
Diluted 30,099,686 28,878,054 28,974,325 28,854,663
Thousands of Canadian dollars
As at
October 31, October
31,
2023 2022
$
$
Assets
Current assets
Cash 8,285 5,773
Trade and other receivables 26,113 26,711
Investment tax credits receivable 2,238 3,000
Inventories 18,930 21,056
Prepaid expenses 4,043 5,125
59,609 61,665
Non-current assets
Property and equipment 3,900 3,808
Right-of-use assets 7,494 8,948
Intangible assets 17,668 23,664
Goodwill 46,219 44,435
Non-refundable investment tax credits receivable 5,602 3,298
Deferred income taxes 3,599 2,778
84,482 86,931
144,091 148,596
Liabilities
Current liabilities
Line of credit 4,685 11,173
Trade and other payables 17,534 17,841
Restructuring costs payable 240 1,670
Purchase price payable 204 1,985
Income taxes payable 659 42
Current portion of lease liabilities 1,688 1,538
Current portion of term loans 964 1,389
Deferred revenue 12,104 9,246
38,078 44,884
Non-current liabilities
Lease liabilities 6,738 8,258
Term loans 2,101 2,617
Deferred revenue 3,021 2,587
49,938 58,345
Equity
Share capital 90,902 90,176
Deficit (9,997) (9,195)
Stock option reserve 5,295 4,565
Foreign currency translation reserve 7,953 4,704
94,153 90,251
144,091 148,596
Thousands of Canadian dollars
Three months ended Full year ended
October 31, October 31,
2023 2022 2023 2022
($) ($) ($) ($)
Net Income (loss) 2,529 (1,108) 1,265 (6,192)
Income Taxes 717 244 757 (110)
Income before income taxes 3,246 (864) (508) (6,302)
Depreciation 772 771 3,087 2,609
Amortization 660 1,603 6,750 5,625
Financial expenses 401 455 1,738 1,109
EBITDA
(1) 5,079 1,965 11,067 3,041
Share-based payments (LTIP) 617 636 2,162 2,696
Restructuring costs 2,337 1,546 2,337
Adjusted EBITDA
(1) 5,696 4,938 14,775 8,074
Adjusted EBITDA Margin(1) 15.9 % 13.0 % 10.6 % 6.4 %
(_______________________)
(Note:)
((1) Non-IFRS measure. See "Non-IFRS Measures.")
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SOURCE Haivision Systems Inc.
