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Miranda reports second quarter 2010 results

August 10, 2009

Source: Miranda Technologies

Miranda Technologies reported results for the second quarter ended June 30, 2010.

Financial Highlights: Q2 2010 versus Q2 2009

View Financial Tables

- Revenues of $32.1 million, up 3% from $31.1 million in 2009; excluding the impact of foreign exchange, sales increased 18%
- EBITDA up 125% to $6.0 million, versus $2.7 million in 2009
- Net income up 173% to $3.5 million or 15 cents per fully diluted share, compared to net income of $1.3 million or 6 cents per share in 2009
- Gross margin as a percentage of sales at 60%, versus 61% in 2009

Second quarter revenues were $32.1 million, or 3% higher than last year and 11% better than the first quarter of 2010. Excluding the impact of foreign exchange, sales were up 18% over 2009, driven by stronger sales in both the United States and International markets.

Gross margins came in at 60% of sales, the highest level seen in recent quarters. Net income grew by 173% over 2009 to $3.5 million or 15 cents per share. Compared to Q2 2009, operating expenses for the quarter were positively impacted by foreign exchange gains and higher research and development tax credits.

Cash levels continue to be strong with cash, cash equivalents and temporary investments totalling $50.8 million at quarter end. During the quarter, the Company began purchasing shares for cancellation under its normal course issuer bid (NCIB) and an automatic securities purchase plan was also launched in connection with the program. The current NCIB was originally announced in August 2009.

“Quarterly sales momentum continues to build, with order intake levels strengthening significantly over the first quarter of 2010,” commented Strath Goodship, Miranda’s President and Chief Executive Officer. This includes a noticeable uptick in the USA, where broadcast markets have been particularly hard hit by the economic downturn. “At the same time we are seeing heightened sales of higher-margin products, including routers, which positively impacts customer and product mix, along with gross margins.”

Some of the notable sales wins in recent months include Discovery (Singapore), ERTU (Egypt), HBO (US), KBS (Korea), Korea Telecom, MTV (Hungary), NBC Connecticut, Sky Italia (Italy), Televisa (Mexico), Tianjin TV (China) and Verizon (US). Several orders were also completed in connection with the 2010 Soccer World Cup, including those to Globosat (Brazil), Rede Bandeirantes (Brazil) and Televisa (Mexico).

“We are taking a number of steps to build on our momentum while our market rapidly evolves, including the hiring of Kevin Joyce in the newly created position of Chief Sales and Marketing Officer,” added Mr. Goodship.

Mr. Joyce has a track record of success most recently with Eastman Kodak where he was Vice President, Worldwide Sales and Marketing of the $1.2 billion Digital Printing Solutions Group. The accelerating demand for higher quality, over more outlets at a lower operating cost, something that started impacting the print industry several years ago, is beginning to take hold in television. Mr. Joyce’s experience should help the Company capitalize on these changes.

Year-over-year quarterly operating review: Q2 2010 versus Q2 2009

Revenue

Revenues totalled $32.1 million for the quarter, up 3% versus 2009. Excluding foreign exchange, quarterly sales were up 18% over 2009.
Sales in International markets and the United States were up 11% and 10% respectively over 2009, while sales in Canada were down 60%. Canada, the United States and Other Countries generated 4%, 43% and 53% of quarterly sales, respectively.

Gross Margin

Gross margin as a percentage of sales was 60% for the quarter, down one percentage point from last year, but up from levels seen in the past three quarters largely due to favourable changes in customer and product mix.

Operating Expenses

Selling, General & Administrative expenses (SG&A) were up 8% versus 2009, to $11.7 million. The increase is largely due to provisions for incentive plans. SG&A as a percentage of sales increased by two percentage points over last year to 37%.

Research and Development (R&D) investments were down 5% from 2009, coming in at $5.5 million, versus $5.8 million last year. R&D as a percentage of sales was 17%, down from 19% last year, but in line with levels seen for full year 2009.

R&D tax credits were $1.9 million for the quarter, up from $0.3 million last year. Excluding one-time changes, R&D tax credits for the second quarter of 2010 and 2009 were $1.3 million and $1.0 million respectively.

A foreign exchange gain of $1.1 million was
recorded for the quarter, versus a loss of $0.5 million in 2009. The gain largely reflects the impact of a weaker Canadian dollar in the translation of foreign currencies.

Net Income and EBITDA

Net income for the quarter was up 173% to $3.5 million or 15 cents per fully diluted share, compared to $1.3 million and 6 cents per share respectively in 2009.
EBITDA grew by 125% over 2009 to $6.0 million. EBITDA as a percentage of sales also improved significantly, coming in at 19%, versus 9% in 2009.

Liquidity and Capital Resources

Operating activities generated $1.8 million of cash flows during the quarter, compared to $3.4 million last year. Cash, cash equivalents and temporary investments stood at $50.8 million at quarter end, down $1.6 million from $52.4 at the end of March 2010. During the quarter, a total of $2.6 million was used to purchase 536,800 of the Company’s shares for cancellation under the NCIB program.

Outlook
“Looking to the second half of 2010, we expect overall business conditions in each of our markets to strengthen, in conjunction with a gradually improving global economy,” commented Mr. Goodship.

“We remain focused on capitalizing on improving markets by offering best-in-class solutions with compelling value, while at the same time targeting acquisition opportunities. This, combined with a solid balance sheet, should place us in a strong position to grow the business and drive profitable growth. We look forward to a gradual return to improved spending by broadcasters.”