VANCOUVER, BRITISH COLUMBIA — (Marketwire) — 03/21/13 — Intrinsyc Software International, Inc. (TSX: ICS) (“Intrinsyc” or the “Company”), a leading provider of solutions for the development of embedded and wireless devices, today announced its financial results for the fourth quarter and full year ended December 31, 2012, reported in United States dollars and in accordance with International Financial Reporting Standards (“IFRS”). The Company-s results are presented in comparison to the three months and twelve months ended December 31, 2011, also in accordance with IFRS.
Intrinsyc achieved revenue of approximately $1.6 million in the fourth quarter, 5% lower than in the previous quarter, with lower operating expenses. The Company reported negative EBITDA(1) of $264,109 and a net loss of $252,887.
“As stated last quarter, Intrinsyc is developing new products that will enable us to expand into additional markets with a scalable, recurring revenue business model,” said Tracy Rees, President and Chief Executive Officer of Intrinsyc. “We are in the early stages of this transition and I am pleased with the progress made with sales of the DragonBoard development kit and interest shown in computing modules for the embedded device market. Many technology companies have recently reduced development plans, cutting both internal and contracted staff and this has negatively impacted our industry as a whole. Unfortunately, we were not immune to this trend and revenue was lower this quarter due to softer demand for engineering services from our traditional consumer original equipment manufacturers and other technology customers.”
(1) Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. EBITDA referenced here relates to operating loss less other operating expenses. Please refer to the reconciliation of EBITDA to reported financial results attached to this press release.
Business Highlights
Notable developments and achievements during the quarter include the following:
Three Month Comparative Results
The Company reported revenue of approximately $1.6 million for the three months ended December 31, 2012 as compared to approximately $2.6 million for the three months ended December 31, 2011. The decrease in revenue is primarily attributable to the decrease in revenues of the Company-s Device Development Solutions and Software Solutions. Total revenue attributable to the Company-s Software Solutions was 28% of revenues, compared to 26% in the comparative quarter with revenue attributable to the Company-s Device Development Solutions decreasing to 56% in the three months ended December 31, 2012 from 74% in the prior year period. Overall, gross margin(2) was 31% in the fourth quarter of 2012 representing a decrease from 46% in the three months ended December 31, 2011.
Total expenses (excluding other operating expenses)(3) for the three months ended December 31, 2012 were approximately $754,000 representing a decrease of 36% from the approximately $1.2 million for the three months ended December 31, 2011.
EBITDA for the three months ended December 31, 2012 was ($264,109) compared to EBITDA of $399 for the three months ended December 31, 2011.
(2) Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Gross margin referenced here relates to revenues less cost of sales.
(3) Non-IFRS measure that does not have a standard meaning and may not be comparable to a similar measure disclosed by other issuers. Total expenses excludes other operating expenses.
Twelve Month Comparative Results
The Company reported revenue of approximately $7.5 million for the year ended December 31, 2012 as compared to approximately $10.3 million for the year ended December 31, 2011. Total revenue attributable to the Company-s Software Solutions decreased to 23% of revenues, including software licensing, maintenance/support and software-related services, as compared to 29% in the respective comparative period. Gross margin was 39% for the year ended December 31, 2012, a decrease from 52% in the year ended December 31, 2011.
Total operating expenses (excluding other operating expenses) for the year ended December 31, 2012 were approximately $3.7 million, compared to approximately $4.6 million for the year ended December 31, 2011.
EBITDA for the year ended December 31, 2012 was ($706,228) compared to $718,432 for the year ended December 31, 2011.
Working capital(4) as of December 31, 2012 was approximately $11.4 million (which included cash and cash equivalents of approximately $6.0 million and short term investments of $5.3 million compared to working capital of $11.9 million as of December 31, 2012 (which included cash and cash equivalents of approximately $9.4 million and short term investments of $2.7 million).
(4) Non-IFRS measure that does not have a standardized meaning and may not be comparable to a similar measure disclosed by other issuers. This measure does not have a comparable IFRS measure. Working capital is defined as current assets less current liabilities.
Conference call
The Company will hold a conference call to discuss its fiscal fourth quarter and full-year 2012 financial results at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) today. On the call, Mr. Rees and George Reznik, Chief Financial Officer, will discuss the financial results announced. This conference call may be accessed, toll-free, by dialing 1-877-240-9772, and internationally by dialing 1-416-340-8527 approximately 10 minutes prior to the start of the call. This conference line is operator assisted and an access PIN is not required. The conference call will also be broadcast live over the Internet and available for replay on the Company-s Investor Relations Conference Calls web page (). Analysts and investors are invited to participate on the call. Questions may be submitted to prior to the call.
Non-IFRS Measures
The following and preceding discussion of financial results includes reference to Gross Margin, Total Expenses (excluding other operating expenses), EBITDA and Working Capital, which are all non-IFRS financial measures. The measure of gross margin is provided as management believes this is a good indicator in evaluating the operating performance of the Company. Total expenses excluding other operating expenses is provided as a proxy for cash expenses incurred from the operations of the business. EBITDA is defined as operating loss less other operating expenses. The measure is provided as a proxy for the cash earnings from the operations of the business as operating loss for the Company includes non-cash amortization and depreciation expense, share-based compensation and restructuring which are classified as other operating expenses. The measure of working capital is provided as management believes this is a good indicator of the operating liquidity available to the Company.
The Audit Committee of the Company has reviewed the contents of this news release.
Forward-Looking Statements
This press release contains statements which, to the extent that they are not recitations of historical fact, may constitute forward-looking information under applicable Canadian securities legislation that involve risks and uncertainties. Such forward-looking statements or information may include financial and other projections as well as statements regarding the Company-s future plans, objectives, performance, revenues, growth, profits, operating expenses or the company-s underlying assumptions. The words “may”, “would”, “could”, “will”, “likely”, “expect,” “anticipate,” “intend”, “plan”, “forecast”, “project”, “estimate” and “believe” or other similar words and phrases may identify forward-looking statements or information. Persons reading this press release are cautioned that such statements or information are only predictions, and that the Company-s actual future results or performance may be materially different. Factors that could cause actual events or results to differ materially from those suggested by these forward-looking statements include, but are not limited to: the need to develop, integrate and deploy software solutions to meet the Company-s customer-s requirements; the possibility of development or deployment difficulties or
delays; the dependence on the Company-s customer-s satisfaction; the timing of entering into significant contracts; customers- continued commitment to the deployment of the Company-s solutions; the performance of the global economy and growth in software industry sales; market acceptance of the Company-s products and services; the success of certain business combinations engaged in by the Company or by its competitors; possible disruptive effects of organizational or personnel changes; technological change, new products and standards; risks related to international expansion; concentration of sales; international operations and sales; dependence upon key personnel and hiring; reliance on a limited number of suppliers; industry growth; competition; intellectual property; product defects and product liability; currency exchange rate risk; and other factors described in the Company-s reports filed on SEDAR, including its Annual Information Form and financial report for the year ended December 31, 2012. This list is not exhaustive of the factors that may affect the Company-s forward-looking information.
These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. All forward-looking statements made in this press release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by the Company will be realized. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
About Intrinsyc Software International, Inc.
Intrinsyc is a product development company that brings to market next generation intelligent connected devices, from smartphones and tablets, to emerging categories of Machine-to-Machine (“M2M”) solutions. Intrinsyc is helping to lead the way to a networked society with 50 billion intelligent connected devices expected by 2020. Intrinsyc is publicly traded (TSX: ICS) and is headquartered in Vancouver, Canada, with operations in Taiwan and the United States.
Contacts:
Intrinsyc Software International, Inc.
George Reznik
Chief Financial Officer
+1-604-678-3734
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