Spectra7 Announces Financial Results For The Quarter Ended March 31, 2017
Company Reports Record Revenues for Q1, and Record Backlog for Q2
March 9, 2017 SAN JOSE, CA--(Marketwired) - (TSX: SEV) Spectra7 Microsystems Inc. ("Spectra7" or the "Company"), a leading provider of high-performance analog semiconductor products for broadband connectivity markets today announced its unaudited financial results for the three month period ended March 31, 2017. A copy of the unaudited interim consolidated financial statements for the three month period ended March 31, 2017 prepared in accordance with International Financial Reporting Standards and the corresponding management's discussion and analysis will be available under the Company's profile on ww.sedar.com. All amounts are in US dollars unless otherwise stated.
Quarter ended March 31, 2017 Financial Highlights
- Revenue for the quarter ended March 31, 2017 was $2.7 million as compared to $2.5 million in the same period in the prior year, representing an increase in revenue of 8%, and an all-time high quarterly revenue for the Company.
- Gross margin(1) as a percentage of revenue for the quarter ended March 31, 2017 remained strong at 60% and consistent with gross margin percentage of 60% in the previous quarter.
- Operating expenditures for the Company decreased by over $0.6M from the prior quarter, primarily due to lower general and administrative expenses which are expected to continue through 2017.
- The Company entered Q2 with sequentially higher backlog than Q1, driven by continued demand growth within its AR/VR portfolio.
- The Company secured three Tier-one design wins in Q1 that management believes could be the three most important wins in the AR/VR/MR industry. One of the three design wins is expected to contribute material revenue growth in the second half of 2017.
- The Company began to sample its GaugeChanger Plus™ to leading cable and OEM partners in the data center market, with early testing underway.
- The Company significantly expanded its technical and sales support organization in the Asia Pacific region in support of its expanding AR/VR/MR and data center customer base.
- The Company received an expression of interest in connection with the proposed sale of its non-core Television tuner/demodulator and RF patents for $4 million plus potential future royalties, subject to due diligence, the execution of definitive documentation and other conditions.
- The Company entered into an amendment to its senior secured term loan facility with MidCap Financial Services, LLC ("MidCap"), which shall become effective upon satisfaction of certain conditions precedent, to defer monthly principal payments originally scheduled to commence on June 1, 2017 by one year to June 1, 2018. Once the amendment is effective, this deferral of principal payments would eliminate $3.2M of principal payments over the next twelve months. In consideration of the amendment, the Company has agreed to issue to an affiliate of Midcap 750,000 common share purchase warrants, with each warrant being exercisable for a period of five years into one common share at an exercise price equal to the volume weighted average trading price of the common shares on the facilities of the TSX for the five days preceding the issuance of the warrants.
- On May 2, 2017, the Company reported the appointment of Gerald J. Hamilton to the position of Senior Vice President, Worldwide Sales, reporting directly to CEO Raouf Halim.
- On May 1, 2017, the Company relocated its headquarters to San Jose. This new site is a significantly larger space allowing for future growth, and is centrally located for its employee base. It also represents a significant cost decrease from its prior headquarters in Palo Alto.
Other Quarterly Highlights
Subsequent Events in Q2 2017
"I am delighted with the trajectory of our business, both in terms of Tier-one design wins and revenue growth in what is seasonally a soft quarter," stated Spectra7 CEO Raouf Halim. "As we scale the business, we continue to strengthen our balance sheet by undertaking several key actions, such as restructuring our debt, coupled with the planned sale of non-core patents."
ABOUT SPECTRA7 MICROSYSTEMS INC.
Spectra7 Microsystems Inc. is a high performance analog semiconductor company delivering unprecedented bandwidth, speed and resolution to enable disruptive industrial design for leading electronics manufacturers in broadband connectivity markets. Spectra7 is based in San Jose, California with design centers in Markham, Ontario, Cork, Ireland, and Little Rock, Arkansas. For more information, please visit www.spectra7.com.
Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company's future financial position and results of operations, strategy, proposed acquisitions, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to the risk factors discussed in the Company's annual MD&A for the year ended December 31, 2016. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives and cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law. (1) Additional GAAP Measure - Gross margin is presented in this press release consistent with information presented in the Company's financial statements. Gross margin has been calculated by deducting manufacturing cost of sales, and provision for inventory write downs from revenue. Management of the Company believes that providing this information allows investors to better understand the Company's historical and future financial performance.
For more information, please contact:
Spectra7 Microsystems Inc.
Spectra7 Microsystems Inc.
Chief Financial Officer