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All-New Styleisure™ Brand at JCPenney Promotes Equal Parts Style and Comfort as Company Continues to Innovate Ahead of the Holiday Season

Styleisure™ apparel line is designed to comfortably elevate your everyday

Launching Stylus™ women’s apparel brand Nov. 12 with size-inclusive assortment

PLANO, Texas–(BUSINESS WIRE)–
JCPenney today announced an additional installment of their New and Wow! brands with the introduction of Stylus™ apparel brand. This brand is part of an all-new styleisure™ apparel line which is designed to comfortably elevate your everyday. Only at JCPenney, the Stylus brand is the leader in this new fashion mindset that enables customers to dress effortlessly with both comfort and style. Not to be confused with athleisure, our Stylus brand provides the style and comfort our customers are craving in their multifaceted daily lives, creating a solution that reaches beyond the activewear category.

The Stylus brand’s all-day comfort plus style versatility reflects how JCPenney customers live, whether working from home or in the office, shopping, preparing for the holiday season, or virtually getting together with friends and family. The sophisticated combination of fabric and design, woven into a variety of pieces – including cardigans, easy pants, jumpsuits and tees – can be mixed and matched to seamlessly transition for whatever the day or night may bring. Importantly, the Stylus brand doesn’t ask shoppers to sacrifice fashion for comfort, or vice versa, as ultra-soft fabrics offer unrestricted movement and a relaxed fit. Modern color palettes are paired together based on thoughtfully designed details – including tapered legs, curved hems, and twist-front tops. The Stylus brand allows our customers to be comfortable and look and feel put together to elevate their every day.

“We are excited to launch the Stylus brand right now and in time for the 2020 holiday season for our customers – including our All-In Shopping Enthusiast – who are looking for comfortable yet stylish pieces that fit all aspects of their lives,” said Michelle Wlazlo, EVP, chief merchandising officer. “We began developing the concept of our styleisure™ line, which is exclusive to JCPenney, nearly a year ago to fill this unmet need as customers dress for their day. The Stylus collection is a curated array of neutrals that make it easy to layer and swap pieces for a virtually endless combination of looks, representing true modern comfort and style.”

“Everything we do is with our customers at the forefront – we want our customers to feel and know they’re represented,” Wlazlo continued. “Our inclusive sizing is a philosophy, not an afterthought. Size should never be a deterrent to style or the ability to feel empowered, confident, and comfortable.”

The Stylus brand size assortment ranges from XS to 3X, with consistent pricing from $26 to $89 across all sizes. The introduction of the Stylus brand follows the repositioning and launch of several exclusive JCPenney brands in 2020, including a.n.a a new approach® and Linden Street™, which are offered alongside a wide array of national brands including Nike®, adidas®, Champion®, Levi’s®, Puma®, Clarks®, Cuisinart®, Sharper Image®, Disney®, Lego®, Mattel® and more.

As JCPenney continues implementing its Plan for Renewal transformation strategy, the Stylus brand is a true testament to the Company’s continuous innovative commitment to offer compelling merchandise for today’s shoppers. The brand is now available in 363 stores nationwide and on the JCPenney app and flagship store, jcp.com, offering inclusive sizing and can’t-miss value.

About JCPenney

J. C. Penney Company, Inc. (OTCMKTS: JCPNQ), one of the nation’s largest apparel and home retailers, combines an expansive footprint of stores across the United States and Puerto Rico with a powerful eCommerce site, jcp.com, to deliver style and value for all hard-working American families. At every touchpoint, customers will discover stylish merchandise at incredible value from an extensive portfolio of private, exclusive and national brands. Reinforcing this shopping experience is the customer service and warrior spirit of JCPenney associates across the globe, all driving toward the Company’s mission to help customers find what they love for less time, money, and effort. For additional information, please visit jcp.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005356/en/

JCPenney Corporate Communications and Public Relations:

Kristen Bennett

(972) 431-3400 or [email protected]

Follow @jcpnews on Twitter for the latest announcements and Company information.

Investor Relations:

(972) 431-5500 or [email protected]

KEYWORDS: United States North America Texas

INDUSTRY KEYWORDS: Other Retail Specialty Online Retail Consumer Fashion Other Consumer Retail Department Stores

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New York City REIT Announces Third Quarter 2020 Results

NEW YORK–(BUSINESS WIRE)–
New York City REIT, Inc. (NYSE: NYC) (“NYC” or the “Company”), a real estate investment trust that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City, announced today its financial and operating results for the third quarter ended September 30, 2020.

Third Quarter 2020 and Subsequent Event Highlights

• Revenue was $17.0 million as compared to $18.6 million for the third quarter 2019
• Net loss attributable to common stockholders was $12.3 million as compared to $4.8 million for the third quarter 2019
• Cash net operating income (“NOI”) was $6.1 million compared to $8.8 million for the third quarter 2019
• Funds from Operations (“FFO”) of $(3.6) million, compared to $3.0 million for the third quarter 2019
• Core Funds from Operations (“Core FFO”) of $0.5 million compared to $3.0 million in the prior year third quarter
• Collected 85% of cash rent due in third quarter 2020¹, including 85% among the top 10 tenants²
• High quality 1.2 million square foot, $860.2 million³ portfolio composed of eight office and retail condominium assets primarily located in Manhattan
• 68% of the top 10 tenants portfolio-wide rated as investment grade or implied investment grade⁴
• Portfolio occupancy of 88.6% as of September 30, 2020
• Executed occupancy of 90% and $1 million of additional annual cash rent based on new leases that as of November 1, 2020 that have been signed where the tenant has yet to take possession or commenced paying rent
• Early 10-year⁵ lease extension with City National Bank, the largest tenant at 1140 Avenue of the Americas, adding $44 million of gross rent from an investment-grade tenant
• Executed one lease extension that provided approximately seven months of rent relief in the form of a deferral and rent credit in exchange for a five-year lease extension, providing a net increase of $16.0 million of cash rent
• Increased weighted-average lease term⁶ to 7.5 years from 6.6 years at the end of the second quarter 2020
• Strong balance sheet with net leverage of 36.2%, no debt maturities in the next three years and a weighted average debt maturity of 6.4 years
• Listed shares of Class A common stock on the New York Stock Exchange on August 18, 2020

“New York City REIT completed a successful third quarter, highlighted by listing our Class A shares on the NYSE, collecting over 85% of the cash rent due in the quarter, and significantly increasing our weighted-average remaining lease term to over 7.5 years, despite the ongoing challenges of the COVID-19 pandemic,” Michael Weil, Chief Executive Officer, commented. “We signed an early, 10-year lease extension with City National Bank, our largest tenant at 1140 Avenue of the Americas worth $44 million of additional cash rent to our future revenue and negotiated a short-term rent deferral in exchange for a five-year lease extension worth $16.0 million. We have built a stable, high-quality pure-play New York City portfolio with occupancy of over 88%, and we remain highly confident in the long-term trends of New York City real estate, our business model, and the opportunities to grow our portfolio while building shareholder value.”

Financial Results

		Three Months Ended September 30,
(In thousands, except per share data)		2020				2019
Revenue from tenants		$	16,997			$	18,643
Net loss attributable to common stockholders		$	(12,288)			$	(4,809)
Net loss per common share (a)		$	(0.96)			$	(0.38)
FFO attributable to common stockholders		(3,649)				2,995
FFO per common share (a)		$	(0.29)			$	0.23
Core FFO attributable to common stockholders		$	514			$	3,019
Core FFO per common share (a)		$	0.04			$	0.24

(a) All per share data based on 12,772,176 and 12,749,456 diluted weighted-average shares outstanding for the three months ended September 30, 2020 and 2019, respectively. 2019 values are retroactively adjusted for the effects of the reverse stock split in August 2020.

Real Estate Portfolio

The Company’s portfolio consisted of eight properties comprised 1.2 million rentable square feet as of September 30, 2020. Portfolio metrics include:

• 88.6% leased, compared to 92.4% at the end of third quarter 2019, with 7.5 years remaining weighted-average lease term

• 68% of annualized straight-line rent⁷ from top 10 tenants derived from investment grade or implied investment grade tenants
• 76% office (based on an annualized straight-line rent)

Capital Structure and Liquidity Resources

As of September 30, 2020, the Company had $39.1 million of cash and cash equivalents. The Company’s net debt⁸ to gross asset value⁹ was 36.2%, with net debt of $365.9 million.

All of the Company’s debt was fixed-rate as of September 30, 2020. The Company’s total combined debt had a weighted-average interest rate of 4.4%¹⁰, resulting in an interest coverage ratio of 1.2 times¹¹.

Rent Collection Update

Third Quarter of 2020

For the third quarter of 2020, NYC collected 85% of the cash rents that were due across the portfolio, including 85% of the cash rent payable from the top 10 tenants in the portfolio (based on annualized straight-line rent) and 91% of the cash rent payable from office tenants and 61% of the cash rent payable from retail tenants.

Of the third quarter 2020 cash rent remaining, lease amendments providing for either a rent deferral or a rent credit have been approved for 8% of the unpaid cash rent, while another 6% of rents are currently in negotiation for similar lease amendments. The remaining 1% generally consists of tenants who have made partial payment and/or tenants without active communication on a potential approved agreement.

Footnotes/Definitions

¹ This information may not be indicative of any future period. The impact of the COVID-19 pandemic on the Company’s rental revenue for the fourth quarter of 2020 and thereafter cannot be determined at present. The ultimate impact on our future results of operations and liquidity will depend on the overall length and severity of the COVID-19 pandemic, which management is unable to predict. With respect to ongoing negotiations of rent deferrals or credits, there can be no assurance that these negotiations will be successful and will lead to formal agreements on favorable terms, or at all. With respect to the other remaining unpaid amounts, there can be no assurance the Company will be successful in its efforts to collect or defer these amounts on a timely basis, or at all.

² Top 10 tenants based on annualized straight-line rent as of September 30, 2020.

³ Total real estate investments at cost.

⁴ As used herein, investment grade includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. Ratings information is as of September 30, 2020. Top 10 tenants are 56% actual investment grade rated and 12% implied investment grade rated.

⁵ Assumes tenant does not exercise option to terminate extension term after five years (in 2028) upon payment of termination fee.

⁶ The weighted-average remaining lease term (years) is based on annualized straight-line rent as of September 30, 2020.

⁷ Annualized straight-line rent is calculated using the most recent available lease terms as of September 30, 2020.

⁸ Total debt of $405.0 million less cash and cash equivalents of $39.1 million as of September 30, 2020. Excludes the effect of deferred financing costs, net, mortgage premiums, net and includes the effect of cash and cash equivalents.

⁹ Defined as the carrying value of total assets of $878.0 million plus accumulated depreciation and amortization of $132.4 million as of September 30, 2020.

¹⁰ Weighted based on the outstanding principal balance of the debt.

¹¹The interest coverage ratio is calculated by dividing adjusted EBITDA by cash paid for interest (interest expense less amortization of deferred financing costs, net, and change in accrued interest and amortization of mortgage premiums on borrowings) for the quarter ended September 30, 2020.

Webcast and Conference Call

NYC will host a webcast and call on November 12, 2020 at 11:00 a.m. ET to discuss its financial and operating results. This webcast will be broadcast live over the Internet and can be accessed by all interested parties through the NYC website, www.newyorkcityreit.com, in the “Investor Relations” section.

Dial-in instructions for the conference call and the replay are outlined below.

To listen to the live call, please go to NYC’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the NYC website at www.newyorkcityreit.com.

Live Call

Dial-In (Toll Free): 1-888-317-6003

International Dial-In: 1-412-317-6061

Canada Dial-In (Toll Free): 1-866-284-3684

Participant Elite Entry Number: 3532909

Conference Replay*

Domestic Dial-In (Toll Free): 1-877-344-7529

International Dial-In: 1-412-317-0088

Canada Dial-In (Toll Free): 1-855-669-9658

Conference Number: 10148253

*Available one hour after the end of the conference call through February 12, 2021

About New York City REIT, Inc.

New York City REIT, Inc. (NYSE: NYC) is a publicly traded real estate investment trust listed on the NYSE that owns a portfolio of high-quality commercial real estate located within the five boroughs of New York City. Additional information about NYC can be found on its website at www.newyorkcityreit.com.

Supplemental Schedules

The Company will file supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of NYC’s website at www.newyorkcityreit.com and on the SEC website at www.sec.gov.

Important Notice

The statements in this press release that are not historical facts may be forward-looking statements. These forward-looking statements involve substantial risks and uncertainties that could cause the outcome to be materially different. In addition, words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “would,” or similar expressions indicate a forward-looking statement, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements, including those set forth in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of NYC’s most recent Annual Report on Form 10-K and NYC’s most recent Form 10-Q, as such Risk Factors may be updated from time to time in subsequent reports. Further, forward-looking statements speak only as of the date they are made, and NYC undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.

New York City REIT, Inc. Consolidated Balance Sheets (In thousands. except share and per share data)
		September 30, 2020				December 31, 2019
ASSETS		(Unaudited)
Real estate investments, at cost:
Land		$	193,658			$	193,658
Buildings and improvements		568,134				565,829
Acquired intangible assets		98,412				103,121
Total real estate investments, at cost		860,204				862,608
Less accumulated depreciation and amortization		(132,418)				(114,322)
Total real estate investments, net		727,786				748,286
Cash and cash equivalents		39,088				51,199
Restricted cash		9,700				7,098
Operating lease right-of-use asset		55,427				55,579
Prepaid expenses and other assets (includes amounts due from related parties of $407 and $0 at September 30, 2020 and December 31, 2019, respectively)		11,080				8,602
Straight-line rent receivable		25,231				21,649
Deferred leasing costs, net		9,643				8,943
Total assets		$	877,955			$	901,356
LIABILITIES AND STOCKHOLDERS’ EQUITY
Mortgage notes payable, net		$	396,188			$	395,031
Accounts payable, accrued expenses and other liabilities (including amounts due to related parties of $167 and $222 at September 30, 2020 and December 31, 2019, respectively)		6,831				7,033
Operating lease liability		54,832				54,866
Below-market lease liabilities, net		14,517				18,300
Derivative liability, at fair value		3,722				1,327
Deferred revenue		5,490				4,250
Total liabilities		481,580				480,807
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued and outstanding at September 30, 2020 and December 31, 2019		—				—
Common stock, $0.01 par value, 300,000,000 shares authorized,12,802,690 and 12,755,099 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively		129				128
Additional paid-in capital		686,690				686,026
Accumulated other comprehensive loss		(3,722)				(1,327)
Distributions in excess of accumulated earnings		(288,640)				(264,278)
Total stockholders’ equity		394,457				420,549
Non-controlling interests		1,918				—
Total equity		396,375				420,549
Total liabilities and equity		$	877,955			$	901,356

New York City REIT, Inc. Consolidated Statements of Operations (Unaudited) (In thousands, except share and per share data)
		Three Months Ended September 30,
		2020				2019
Revenue from tenants		$	16,997			$	18,643
Operating expenses:
Asset and property management fees to related parties		1,879				1,962
Property operating		8,300				8,026
Listing expenses		1,299				—
Vesting and conversion of Class B Units		1,153				—
Equity-based compensation		1,711				24
General and administrative		1,234				1,176
Depreciation and amortization		8,639				7,804
Total operating expenses		24,215				18,992
Operating loss		(7,218)				(349)
Other income (expense):
Interest expense		(5,089)				(4,681)
Other income		19				221
Total other expense		(5,070)				(4,460)
Net loss attributable to common stockholders		$	(12,288)			$	(4,809)
Weighted-average shares outstanding — Basic and Diluted		12,772,176				12,749,456
Net loss per share attributable to common stockholders — Basic and Diluted		$	(0.96)			$	(0.38)

New York City REIT, Inc. Quarterly Reconciliation of Non-GAAP Measures (Unaudited) (In thousands)
		Three Months Ended September 30,
		2020				2019
Adjusted EBITDA
Net loss		$	(12,288)			$	(4,809)
Depreciation and amortization		8,639				7,804
Interest expense		5,089				4,681
Listing expenses		1,299				—
Vesting and conversion of Class B Units		1,153				—
Equity-based compensation		1,711				24
Other income		(19)				(221)
Adjusted EBITDA		5,584				7,479
Asset and property management fees to related parties		1,879				1,962
General and administrative		1,234				1,176
NOI		8,697				10,617
Accretion of below- and amortization of above-market lease liabilities and assets, net		(555)				(566)
Straight-line rent (revenue as a lessor)		(2,107)				(1,267)
Straight-line ground rent (expense as lessee)		28				28
Cash NOI		$	6,063			$	8,812
Cash Paid for Interest:
Interest expense		$	5,089			$	4,681
Amortization of deferred financing costs		(386)				(380)
Total cash paid for interest		$	4,703			$	4,301

New York City REIT, Inc. Quarterly Reconciliation of Non-GAAP Measures (Unaudited) (In thousands)
		Three Months Ended September 30,
		2020				2019
Net loss attributable to common stockholders		$	(12,288)			$	(4,809)
Depreciation and amortization		8,639				7,804
FFO attributable to common stockholders		(3,649)				2,995
Listing expenses		1,299				—
Vesting and conversion of Class B Units		1,153				—
Equity-based compensation		1,711				24
Core FFO attributable to common stockholders		$	514			$	3,019

Non-GAAP Financial Measures

This release discusses the non-GAAP financial measures we use to evaluate our performance, including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Net Operating Income (“NOI”) and Cash Net Operating Income (“Cash NOI”). While NOI is a property-level measure, Core FFO is based on our total performance and therefore reflects the impact of other items not specifically associated with NOI such as, interest expense, general and administrative expenses and operating fees to related parties. A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, Core FFO and NOI attributable to stockholders.

Caution on Use of Non-GAAP Measures

FFO, Core FFO, Adjusted EBITDA, NOI and Cash NOI should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.

Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate Core FFO differently than we do. Consequently, our presentation of FFO and Core FFO may not be comparable to other similarly titled measures presented by other REITs.

We consider FFO and Core FFO useful indicators of our performance. Because FFO and Core FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO and Core FFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.

As a result, we believe that the use of FFO and Core FFO, together with the required GAAP presentations, provide a more complete understanding of our performance, including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO and Core FFO are not indicative of cash available to fund ongoing cash needs, including the ability to pay cash dividends. Investors are cautioned that FFO and Core FFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

Funds from Operations and Adjusted Funds from Operations

Funds from Operations

Due to certain unique operating characteristics of real estate companies, as discussed below, the NAREIT, an industry trade group, has promulgated a performance measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.

We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper and approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gains and losses from sales of certain real estate assets, gain and losses from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for consolidated partially-owned entities (including our Operating Partnership) and equity in earnings of unconsolidated affiliates are made to arrive at our proportionate share of FFO attributable to our stockholders. Our FFO calculation complies with NAREIT’s definition.

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.

Core Funds from Operations

In calculating Core FFO, we start with FFO, then we exclude the impact of discrete non-operating transactions and other events which we do not consider representative of the comparable operating results of our real estate operating portfolio, which is our core business platform. Specific examples of discrete non-operating items include acquisition and transaction related costs for dead deals, debt extinguishment costs, listing related costs and expenses (including the vesting and conversion of Class B units and cash expenses and fees which are non-recurring in nature incurred in connection with the listing of Class A common stock on the NYSE and related transactions), and non-cash equity-based compensation. We add back non-cash write-offs of deferred financing costs and prepayment penalties incurred with the early extinguishment of debt which are included in net income but are considered financing cash flows when paid in the statement of cash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of operations. By excluding expensed acquisition and transaction dead deal costs as well as non-operating costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties. In future periods, we may also exclude other items from Core FFO that we believe may help investors compare our results.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income and Cash Net Operating Income.

We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition and transaction-related expenses, fees related to the listing related costs and expenses, other non-cash items such as the vesting and conversion of the Class B Units, equity-based compensation expense and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.

NOI is a non-GAAP financial measure used by us to evaluate the operating performance of our real estate. NOI is equal to total revenues, excluding contingent purchase price consideration, less property operating and maintenance expense. NOI excludes all other items of expense and income included in the financial statements in calculating net income (loss). We believe NOI provides useful and relevant information because it reflects only those income and expense items that are incurred at the property level and presents such items on an unleveraged basis. We use NOI to assess and compare property level performance and to make decisions concerning the operations of the properties. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating expenses and acquisition activity on an unleveraged basis, providing perspective not immediately apparent from net income (loss). NOI excludes certain items included in calculating net income (loss) in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or our ability to pay dividends.

Cash NOI, is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as NOI excluding amortization of above/below market lease intangibles and straight-line adjustments that are included in GAAP lease revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income, as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs present Cash NOI.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005175/en/

Investors and Media:

Email: [email protected]

Phone: (866) 902-0063

KEYWORDS: New York United States North America

INDUSTRY KEYWORDS: Professional Services Commercial Building & Real Estate Finance Construction & Property REIT Banking

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Stratasys Reports Third Quarter 2020 Financial Results

• Revenue of $127.9 million
• GAAP net loss of $405.1 million, or ($7.35) per diluted share, and non-GAAP net loss of $3.0 million, or ($0.05) per diluted share; Included in the GAAP net loss was a $386.2 million ($7.01 per share) non-cash goodwill impairment charge.
• Generated $2.6 million in cash from operations – $308.2 million net cash position with no debt

MINNEAPOLIS & REHOVOT, Israel–(BUSINESS WIRE)–Stratasys Ltd. (NASDAQ: SSYS) announced financial results for the third quarter of 2020.

Q3 2020 Financial Results Summary:

• Revenue for the third quarter of 2020 was $127.9 million, compared to $157.5 million for the same period last year. The 18.8% reduction was primarily driven by the adverse impact of COVID-19 on the company’s customers throughout the industries into which the company sells its products and services.
• GAAP gross margin was 38.9% for the quarter, compared to 49.2% for the same period last year. Non-GAAP gross margin was 46.8% for the quarter, compared to 52.4% for the same period last year. GAAP and non-GAAP gross margin improved sequentially from Q2 by 170bp and 140bp, respectively. The company believes that gross margins will continue to recover as and when our customers return to their pre-COVID utilization levels.
• GAAP operating loss for the quarter was $404.3 million, compared to GAAP operating loss of $6.0 million for the same period last year, mainly due to the non-cash goodwill impairment charge of $386.2 million. Non-GAAP operating loss for the quarter was $1.0 million, compared to non-GAAP operating income of $8.1 million for the same period last year.
• GAAP net loss for the quarter was $405.1 million, or ($7.35) per diluted share, compared to GAAP net loss of $6.9 million, or ($0.13) per diluted share, for the same period last year, mainly due to the non-cash goodwill impairment charge of $386.2 million. Non-GAAP net loss for the quarter was $3.0 million, or ($0.05) per diluted share, compared to non-GAAP net income of $6.3 million, or $0.12 per diluted share, for the same period last year.
• Non-GAAP EBITDA was $5.2 million for the quarter, compared to $14.5 million for the same period last year. Non-GAAP EBITDA improved sequentially from Q2 by $6.8 million.
• The Company recorded a non-cash goodwill impairment charge of $386.2 million, or $7.01 per share, related to the Company’s FDM and PolyJet technologies, primarily as a result of the COVID-19 impact on the Company’s business.
• The Company generated $2.6 million of cash from operations and ended the period with $308.2 million in cash, cash equivalents and short-term deposits. The Company has no debt.

“We were pleased to see sequential improvements in both our top and bottom lines for this quarter, reflecting the beginning of a potential recovery from the pandemic,” said Yoav Zeif, CEO of Stratasys. “We are laser-focused on leading the polymer 3D printing market by delivering the most innovative, next-gen technologies to address the fastest-growing and most transformative manufacturing applications, while leveraging the strongest go-to-market infrastructure in our industry. We believe that our innovations of today will drive competitive production advantages for the factories of tomorrow, resulting in growth and value creation for our customers and shareholders.”

Stratasys Ltd. Q3 2020 Conference Call Details

The Company plans to hold the conference call to discuss its third quarter 2020 financial results on Thursday, November 12, 2020 at 8:30 a.m. (ET).

The investor conference call will be available via live webcast on the Stratasys Website at investors.stratasys.com, or directly at the following web address: https://78449.themediaframe.com/dataconf/productusers/ssys/mediaframe/41658/indexl.html

To participate by telephone, the U.S. toll-free number is 877-407-0619 and the international dial-in is +1-412-902-1012. Investors are advised to dial into the call at least ten minutes prior to the call to register. The webcast will be available for 6 months at investors.stratasys.com, or by accessing the above-provided web address.

Stratasys (Nasdaq: SSYS) is a global leader in additive manufacturing or 3D printing technology and is the manufacturer of FDM^®, PolyJet™, and stereolithography 3D printers. The company’s technologies are used to create prototypes, manufacturing tools, and production parts for industries, including aerospace, automotive, healthcare, consumer products and education. For more than 30 years, Stratasys products have helped manufacturers reduce product-development time, cost, and time-to-market, as well as reduce or eliminate tooling costs and improve product quality. The Stratasys 3D printing ecosystem of solutions and expertise includes 3D printers, materials, software, expert services, and on-demand parts production.

To learn more about Stratasys, visit www.stratasys.com, the Stratasys blog, Twitter, LinkedIn, or Facebook. Stratasys reserves the right to utilize any of the foregoing social media platforms, including the company’s websites, to share material, non-public information pursuant to the SEC’s Regulation FD. To the extent necessary and mandated by applicable law, Stratasys will also include such information in its public disclosure filings.

Stratasys is a registered trademark and the Stratasys signet is a trademark of Stratasys Ltd. and/or its subsidiaries or affiliates. All other trademarks are the property of their respective owners.

Cautionary Statement Regarding Forward-Looking Statements

The statements in this press release regarding Stratasys’ strategy, and the statements regarding its projected future financial performance, are forward-looking statements reflecting management’s current expectations and beliefs. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with Stratasys’ business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: the degree of our success at introducing new or improved products and solutions that gain market share; the degree of growth of the 3D printing market generally; the duration of the global COVID-19 pandemic, which, if extending for a further significant period of time, may continue to impact, in a material adverse manner, our operations, financial position and cash flows, and those of our customers and suppliers; the impact of potential shifts in the prices or margins of the products that we sell or services that we provide, including due to a shift towards lower-margin products or services; the impact of competition and new technologies; potential further charges against earnings that we could be required to take due to impairment of additional goodwill or other intangible assets; the extent of our success at successfully consummating acquisitions or investments in new businesses, technologies, products or services; potential changes in our management and board of directors; global market, political and economic conditions, and in the countries in which we operate in particular (including risks related to the impact of coronavirus on our operations, supply chain, liquidity, cash flow and customer orders); costs and potential liability relating to litigation and regulatory proceedings; risks related to infringement of our intellectual property rights by others or infringement of others’ intellectual property rights by us; the extent of our success at maintaining our liquidity and financing our operations and capital needs; the impact of tax regulations on our results of operations and financial condition; and those additional factors referred to in Item 3.D “Key Information – Risk Factors”, Item 4, “Information on the Company”, Item 5, “Operating and Financial Review and Prospects,” and all other parts of our Annual Report on Form 20-F for the year ended December 31, 2019 (the “2019 Annual Report”), which we filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2020. Readers are urged to carefully review and consider the various disclosures made throughout our 2019 Annual Report and the Report of Foreign Private Issuer on Form 6-K that attaches Stratasys’ unaudited, condensed consolidated financial statements and its review of its results of operations and financial condition, for the quarterly period ended September 30, 2020, which we are furnishing to the SEC on or about the date hereof, and our other reports filed with or furnished to the SEC, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects. Any guidance provided, and other forward-looking statements made, in this press release are made as of the date hereof, and Stratasys undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Use of non-GAAP financial measures

The non-GAAP data included herein, which excludes certain items as described below, are non-GAAP financial measures. Our management believes that these non-GAAP financial measures are useful information for investors and shareholders of our Company in gauging our results of operations on an ongoing basis after (i) excluding mergers, acquisitions and divestments related expense or gains and restructuring-related charges or gains, and (ii) excluding non-cash items such as stock-based compensation expenses, acquired intangible assets amortization, including intangible assets amortization related to equity method investments, impairment of goodwill and long-lived assets, and the corresponding tax effect of those items. These non-GAAP adjustments either do not reflect actual cash outlays that impact our liquidity and our financial condition or have a non-recurring impact on the statement of operations, as assessed by management. These non-GAAP financial measures are presented to permit investors to more fully understand how management assesses our performance for internal planning and forecasting purposes. The limitations of using these non-GAAP financial measures as performance measures are that they provide a view of our results of operations without including all items indicated above during a period, which may not provide a comparable view of our performance to other companies in our industry. Investors and other readers should consider non-GAAP measures only as supplements to, not as substitutes for or as superior measures to, the measures of financial performance prepared in accordance with GAAP. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table below.

Stratasys Ltd.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)
		September 30,				December 31,
		2020				2019
ASSETS
Current assets
Cash and cash equivalents		$	252,906			$	293,484
Short-term deposits		$	55,300			$	28,300
Accounts receivable, net			103,693				132,558
Inventories			152,685				168,504
Prepaid expenses			7,568				6,567
Other current assets			19,209				29,659
Total current assets			591,361				659,072
Non-current assets
Property, plant and equipment, net			198,521				189,706
Goodwill			–				385,658
Other intangible assets, net			65,083				87,328
Operating lease right-of-use assets			18,905				20,936
Other non-current assets			35,238				38,819
Total non-current assets			317,747				722,447
Total assets		$	909,108			$	1,381,519
LIABILITIES AND EQUITY
Current liabilities
Accounts payable		$	23,478			$	35,818
Accrued expenses and other current liabilities			26,462				28,528
Accrued compensation and related benefits			28,536				34,013
Deferred revenues			47,288				52,268
Operating lease liabilities – short term			8,675				9,292
Total current liabilities			134,439				159,919
Non-current liabilities
Deferred revenues – long-term			13,436				16,039
Operating lease liabilities – long term			10,600				12,445
Other non-current liabilities			33,291				35,343
Total non-current liabilities			57,327				63,827
Total liabilities			191,766				223,746
Redeemable non-controlling interests			568				622
Equity
Ordinary shares, NIS 0.01 nominal value, authorized 180,000 thousands shares; 55,112 thousands shares and 54,441 thousands shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively			150				148
Additional paid-in capital			2,722,839				2,706,894
Accumulated other comprehensive loss			(9,289	)			(7,716	)
Accumulated deficit			(1,996,926	)			(1,542,175	)
Total equity			716,774				1,157,151
Total liabilities and equity		$	909,108			$	1,381,519

Stratasys Ltd.
Consolidated Statements of Operations
(in thousands, except per share data)
		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Net sales
Products		$	83,548			$	106,346			$	240,597			$	321,778
Services			44,344				51,114				137,825				154,145
			127,892				157,460				378,422				475,923
Cost of sales
Products			47,339				44,341				126,556				135,605
Services			30,784				35,710				98,491				105,285
			78,123				80,051				225,047				240,890
Gross profit			49,769				77,409				153,375				235,033
Operating expenses
Research and development, net			19,562				23,620				65,059				70,234
Selling, general and administrative			48,343				59,741				155,630				173,217
Goodwill impairment			386,154				–				386,154				–
			454,059				83,361				606,843				243,451
Operating loss			(404,290	)			(5,952	)			(453,468	)			(8,418	)
Financial income (expense), net			(167	)			289				(847	)			2,796
Loss before income taxes			(404,457	)			(5,663	)			(454,315	)			(5,622	)
Income tax expenses (benefit)			(343	)			586				(2,250	)			3,084
Share in profits (losses) of associated companies			(952	)			(733	)			(2,740	)			495
Net Loss			(405,066	)			(6,982	)			(454,805	)			(8,211	)
Net loss attributable to non-controlling interests			(4	)			(41	)			(54	)			(152	)
Net loss attributable to Stratasys Ltd.		$	(405,062	)		$	(6,941	)		$	(454,751	)		$	(8,059	)
Net loss per ordinary share attributable to Stratasys Ltd.
Basic		$	(7.35	)		$	(0.13	)		$	(8.29	)		$	(0.15	)
Diluted		$	(7.35	)		$	(0.13	)		$	(8.29	)		$	(0.15	)
Basic			55,086				54,394				54,851				54,201
Diluted			55,086				54,394				54,851				54,201

				Three Months Ended September 30,
				2020				Non-GAAP				2020				2019				Non-GAAP				2019
				GAAP				Adjustments				Non-GAAP				GAAP				Adjustments				Non-GAAP
				U.S. dollars and shares in thousands (except per share amounts)
		Gross profit (1)		$	49,769			$	10,036			$	59,805			$	77,409			$	5,087			$	82,496
		Operating income (loss) (1,2)			(404,290	)			403,268				(1,022	)			(5,952	)			14,055				8,103
		Net income (loss) attributable to Stratasys Ltd. (1,2,3)			(405,062	)			402,050				(3,012	)			(6,941	)			13,275				6,334
		Net income (loss) per diluted share attributable to Stratasys Ltd. (4)		$	(7.35	)		$	7.30			$	(0.05	)		$	(0.13	)		$	0.25			$	0.12
(1)		Acquired intangible assets amortization expense							4,065												3,916
		Non-cash stock-based compensation expense							524												475
		Restructuring and other related costs							191												696
		Impairment charges of intangible assets							5,256												–
									10,036												5,087
(2)		Acquired intangible assets amortization expense							2,162												2,016
		Non-cash stock-based compensation expense							4,352												4,960
		Goodwill impairment							386,154												–
		Restructuring and other related costs							34												1,992
		Other expenses							530												–
									393,232												8,968
									403,268												14,055
(3)		Corresponding tax effect							(1,296	)											(780	)
		Equity method related amortization, divestments and impairments							78												–
								$	402,050											$	13,275
(4)		Weighted average number of ordinary shares outstanding- Diluted			55,086								55,086				54,394								54,940

				Nine Months Ended September 30,
				2020				Non-GAAP				2020				2019				Non-GAAP				2019
				GAAP				Adjustments				Non-GAAP				GAAP				Adjustments				Non-GAAP
				U.S. dollars and shares in thousands (except per share amounts)
		Gross profit (1)		$	153,375			$	24,062			$	177,437			$	235,033			$	13,780			$	248,813
		Operating income (loss) (1,2)			(453,468	)			435,987				(17,481	)			(8,418	)			32,376				23,958
		Net income (loss) attributable to Stratasys Ltd. (1,2,3)			(454,751	)			433,821				(20,930	)			(8,059	)			28,574				20,515
		Net income (loss) per diluted share attributable to Stratasys Ltd. (4)		$	(8.29	)		$	7.91			$	(0.38	)		$	(0.15	)		$	0.53			$	0.38
(1)		Acquired intangible assets amortization expense							12,196												11,714
		Non-cash stock-based compensation expense							1,424												1,370
		Restructuring and other related costs							5,187												696
		Impairment charges of intangible assets							5,256												–
									24,062												13,780
(2)		Acquired intangible assets amortization expense							6,430												5,688
		Non-cash stock-based compensation expense							14,470												14,387
		Goodwill impairment							386,154												–
		Restructuring and other related costs							3,863												(1,479	)
		Other expenses							1,007												–
									411,925												18,596
									435,987												32,376
(3)		Corresponding tax effect							(2,396	)											(2,198	)
		Equity method related amortization, divestments and impairments							230												(1,604	)
								$	433,821											$	28,574
(4)		Weighted average number of ordinary shares outstanding- Diluted			54,851								54,851				54,201								54,705

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005142/en/

Stratasys Investor Relations

Yonah Lloyd

Vice President – Investor Relations

[email protected]

KEYWORDS: United States North America Israel Middle East Minnesota

INDUSTRY KEYWORDS: Automotive Manufacturing Aerospace Technology Manufacturing Other Technology Other Manufacturing Software Packaging Engineering Hardware Chemicals/Plastics

MEDIA:

Posted on November 12, 2020 6:03 am

Vecima Reports Q1 Fiscal 2021 Results

Vecima Reports Q1 Fiscal 2021 Results

• Revenue – $27.8M, Gross Margin – 47%, Cash Balance – $27.3M
• Grew Q1 Adjusted EBITDA 24% year-over-year to $2.2M
• Achieved record Q1 Entra sales of $5.2M, increasing $4.9M year-over-year and $3.1M (147%) sequentially
• Completed acquisition of Nokia’s cable access portfolio of DAA and EPON/DPoE solutions, creating industry’s most comprehensive next generation access ecosystem and significantly accelerating Vecima’s 10G technology timeline

VICTORIA, British Columbia–(BUSINESS WIRE)–
Vecima Networks Inc. (TSX:VCM) today reported financial results for the three months ended September 30, 2020.

FINANCIAL HIGHLIGHTS

(Canadian dollars in millions except percentages, employees, and per share data)	Q1FY21	Q4FY20		Q1FY20
Revenue	$27.8	$26.1		$20.1
Gross Margin	47%	49%		52%
Net Loss	$(0.8)	$(1.0)		$(1.4)
Loss Per Share1	$(0.04)	$(0.05)		$(0.06)
Adjusted Loss Per Share1, 2, 3	$(0.04)	$(0.06)		$(0.06)
Adjusted EBITDA2	$2.2	$3.8		$1.8
Cash and Short-term Investments	$27.3	$34.5		$41.3
Employees4	456	377		366
1Based on weighted average number of shares outstanding. 2Adjusted Earnings/(Loss) Per Share and Adjusted EBITDA do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. See “Adjusted EBITDA and Adjusted Earnings/(Loss) Per Share” below. 3Starting in Q4 fiscal 2019, we have changed our definition and calculation of Adjusted Earnings Per Share. For a reconciliation of Adjusted Earnings Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the first quarter of fiscal 2021. 4Includes employees and contractors from recently acquired business

“In a year in which we anticipate significant growth, we set the stage by increasing first quarter revenue by 38% to $27.8 million, our best quarterly result in over four years,” said Sumit Kumar, Vecima’s President and CEO. “Our strong topline results were accompanied by gross profit of $13.0 million and adjusted EBITDA of $2.2 million, which were both up 24% as compared to Q1 fiscal 2020.”

“In the Video and Broadband Solutions segment, sales of $13.5 million increased by a very significant 81% year-over-year. This was led by strong sales growth for our new Entra products as the distributed access architecture market kicked off. I am delighted to report that Entra revenues rose sharply to $5.2 million during the quarter, coming close to matching in just three months what we achieved in all of fiscal 2020. The Entra growth was driven by production deployments of our industry-leading Entra Remote PHY Node to our lead Tier 1 customer, as well as initial deployment-related Remote PHY Node purchases made by multiple additional operators. Sales of the Entra Interactive Video Controller (IVC) product also grew significantly, and our newly acquired DAA portfolio, which includes Remote MAC-PHY and EPON/DPoE technologies, contributed approximately $1 million to first quarter Entra sales. Video and Broadband Solutions sales were further bolstered by a significant year-over-year increase in TerraceQAM commercial video sales during the period.”

“In our Content Delivery and Storage segment, we achieved solid revenue of $13.0 million in what is traditionally the seasonally slowest quarter for this segment,” added Mr. Kumar. “CDS sales were up 15% year-over-year as we consolidated the major new business wins of fiscal 2020. We also added two new customer wins during the quarter, securing an additional two IPTV conversions. Our MediaScaleX solutions are now in use by over 100 cable companies, telcos and broadcasters worldwide, translating into a vast base for the future given that most of these customers are just starting their migration to IPTV and scale subscriber uptake remains ahead of Vecima and our customers.”

BUSINESS HIGHLIGHTS

Video and Broadband Solutions (VBS)

• The VBS segment delivered exceptional growth as anticipated with first quarter revenue growing 81% year-over-year and 29% quarter-over-quarter as customers began the transition to next generation networks using platforms across Vecima’s portfolio.

Entra Family

• Deployments of next generation Entra DAA products, tied to the earliest stages of the DAA market, contributed sales of $5.2 million, increasing $4.9 million year-over-year and $3.1 million (147%) sequentially. In the first quarter of fiscal 2021 alone, Vecima achieved 98% of the Entra sales we realized in the full fiscal 2020 period.
• Production deployments of the industry-leading, multi-core interoperable Entra Remote PHY Node increased at the lead Tier 1 customer and deployment-related purchases were initiated at multiple additional MSOs in the first quarter. Combined with the Entra Remote MAC-PHY Node and 10G EPON solutions, Entra DAA platforms have now been sold to over a dozen operators in five continents.
• Vecima’s global engagements for the broader Entra portfolio have widened to include 46 MSOs, including operators in the US, Canada, CALA, EMEA, and APAC. This includes over 40 operators that are either in lab trial, field trial, or live deployment phases across the globe.
• On August 7, 2020, Vecima significantly expanded and accelerated its Entra offering with the acquisition of Nokia’s cable access business. The acquired portfolio includes market-deployed Remote MAC-PHY, access controller and 10G EPON products, and has positioned Vecima as the industry’s leading provider of DAA technologies. Today, Vecima’s Entra offers the broadest full complement of access network solutions in the industry, spanning the varied needs of cable operators globally. In addition to a powerful suite of platforms and technology, the transaction brought Vecima new facilities in the US and China, and a talented team of over 80 employees that have joined the Company.
• Subsequent to quarter-end, Vecima was awarded the prestigious Chairman’s Advanced Technology Award in the Network Hardware category at the 2020 SCTE-ISBE Cable-Tec Expo. The awards were presented to an elite group of technology partners who are helping the cable industry bring the 10G platform to life by paving the way for cable to deliver residential internet speeds up to 10X faster than today’s network. The SCTE-ISBE chose to honour recipient companies that are laying the foundation for a host of applications that will change the ways we interact with one another and the world around us.
• On October 14, 2020, Vecima was honored with a BTR Diamond Technology Review Award for the Entra EN 2112 Access Node, one of the most compact and feature-rich nodes available today.

Commercial Video (Terrace) Family

• TerraceQAM sales grew to $4.2 million, up 120% from $1.9 million in Q1 fiscal 2020 and 25% from $3.3 million in Q4 fiscal 2020. The lead Tier 1 MSO continued to widen its extensive hospitality service platform, while preparing for migration to the next generation Terrace IQ system.
• Terrace family sales of $3.5 million provided ongoing contribution as Tier 1 customers neared full coverage leading up to the migration to next generation platforms.
• Subsequent to the quarter-end, Vecima was honored with a BTR Diamond Technology Review Award for the Terrace IQ Commercial Video Gateway. Terrace IQ enables seamless migration to next generation IP video delivery technologies with minimal hardware investments when migrating away from traditional architectures.

Content Delivery and Storage (CDS)

• CDS segment sales increased to $13.0 million in Q1, a 15% increase from Q1 fiscal 2020.
• Vecima won two new customers for its MediaScaleX IPTV solutions, securing an additional two IPTV conversions during the quarter.
• The migration to IPTV technologies, including IP Linear broadcast , “over the top”, Video on Demand, start-over/catch-up TV, & cloud DVR, continued in full force across Vecima’s global customer base, driving increased capacity and network utilization. Record-high IPTV streaming levels were delivered by MediaScaleX networks across nearly all customers.
• Vecima provided the IP streaming solution for a Tier 2 operator’s 8K Ultra HD resolution delivery, a first-of-its-kind service in North America.
• Major feature enhancements were rolled out across the customer base in the first quarter including advances in DRM, Dynamic Ad Insertion, resiliency to external network issues, and virtualization.

Telematics

• The Telematics segment increased engagement with municipal government customers, with two expansions totaling over 300 subscribers.
• Vecima continued to penetrate the moveable assets market, securing four new customers and approximately 100 additional subscribers in the restoration industry, where vehicles are monitored using GPS beacons and valuable moveable assets are monitored through Bluetooth Low Energy (BLE) tags.

“We believe the momentum achieved in the first quarter is just the start of what’s in store for fiscal 2021,” added Mr. Kumar. “We anticipate continued ramp in Entra DAA sales, particularly in the second half as our lead customers transition to scale deployment and a broader set of MSOs initiate field deployments of DAA to respond to network capacity pressures being seen globally. Our newly acquired Remote MAC-PHY and EPON/DPoE solutions are already performing well and the build-up of overall market activity we see with the combined portfolio is very exciting and fully in line with our expectations after having created the industry’s best access network product lineup. We will continue to leverage the strong opportunities provided by these leading products in the once-in-a-lifetime network upgrade they cover. In our Content Delivery and Storage segment, we continue to anticipate measured sales growth in FY2021 as we consolidate the record-setting customer wins of last year and IPTV usage continues to increase rapidly in households globally.”

“As we move forward, we remain highly confident in our view that fiscal 2021 will be a breakthrough year for Vecima. The move to DAA and IPTV is underway and we are ideally positioned with an unmatched portfolio of industry-leading, next generation solutions and platforms,” said Mr. Kumar.

As previously reported, Vecima’s Board of Directors declared a quarterly dividend of $0.055 per share for the period. The dividend will be payable on December 21, 2020 to shareholders of record as at November 27, 2020.

CONFERENCE CALL

A conference call and live audio webcast will be held today, November 12, 2020 at 1 p.m. ET to discuss the Company’s first quarter results. Vecima’s unaudited condensed interim consolidated financial statements and management’s discussion and analysis for the three months ended September 30, 2020 are available under the Company’s profile at www.SEDAR.com, and at www.vecima.com/financials/.

To participate in the teleconference, dial 1-800-319-4610 or 1-604-638-9020. The webcast will be available in real time at http://services.choruscall.ca/links/vecima20201112.htmland will bearchived on the Vecima website athttps://vecima.com/investor-relations/earnings-call-archive/.

About Vecima Networks

Vecima Networks Inc. is a global leader focused on developing integrated hardware and scalable software solutions for broadband access, content delivery, and telematics. We enable the world’s leading innovators to advance, connect, entertain, and analyze. We build technologies that transform content delivery and storage, enable high‑capacity broadband network access, and streamline data analytics. For more information, please visit our website at www.vecima.com.

Adjusted EBITDA and Adjusted Earnings / (Loss) Per Share

Adjusted EBITDA and Adjusted Earnings / (Loss) Per Share do not have a standardized meaning under IFRS and therefore may not be comparable to similar measures provided by other issuers. Accordingly, investors are cautioned that Adjusted EBITDA or Adjusted Earnings / (Loss) Per Share should not be construed as an alternative to net income, determined in accordance with IFRS, as an indicator of the Company’s financial performance or as a measure of its liquidity and cash flows. For a reconciliation of Adjusted EBITDA or Adjusted Earnings / (Loss) Per Share, investors should refer to Vecima’s Management’s Discussion and Analysis for the first quarter of fiscal 2021.

Forward-Looking Statements

This news release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information is generally identifiable by use of the words “believes”, “may”, “plans”, “will”, “anticipates”, “intends”, “could”, “estimates”, “expects”, “forecasts”, “projects” and similar expressions, and the negative of such expressions. Forward-looking information in this news release includes the following statements: We set the stage for a year where we plan significant growth; our MediaScaleX solutions are now in use by over 100 cable companies, telcos and broadcasters worldwide, translating into a vast base for the future given that most of these customers are just starting their migration to IPTV and scale subscriber uptake remains ahead of Vecima and our customers; the VBS segment delivered exceptional growth as anticipated; the acquired portfolio has positioned Vecima as the industry’s leading provider of DAA technologies; Vecima’s Entra offers the broadest full complement of access network solutions in the industry, spanning the varied needs of cable operators globally; we believe the momentum achieved in the first quarter is just the start of what’s in store for fiscal 2021; we anticipate continued ramp in Entra DAA sales, particularly in the second half as our lead customers transition to scale deployment and a broader set of MSOs initiate field deployments of DAA to respond to network capacity pressures being seen globally; our newly acquired Remote MAC-PHY and EPON/DPoE solutions are already performing well and the build-up of overall market activity we see with the combined portfolio is very exciting and fully in line with our expectations after having created the industry’s best access network product lineup; we will continue to leverage the strong opportunities provided by these leading products in the once-in-a-lifetime network upgrade they cover; in our Content Delivery and Storage segment, we continue to anticipate measured sales growth in FY2021 as we consolidate the record-setting customer wins of last year and IPTV usage continues to increase rapidly in households globally; as we move forward, we remain highly confident in our view that fiscal 2021 will be a breakthrough year for Vecima; the move to DAA and IPTV is underway and we are ideally positioned with an unmatched portfolio of industry-leading, next generation solutions and platforms.

A more complete discussion of the risks and uncertainties facing Vecima is disclosed under the heading “Risk Factors” in the Company’s Annual Information Form dated September 24, 2020, as well as the Company’s continuous disclosure filings with Canadian securities regulatory authorities available at www.sedar.com. All forward-looking information herein is qualified in its entirety by this cautionary statement, and Vecima disclaims any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.

VECIMA NETWORKS INC. Consolidated Statements of Financial Position (in thousands of Canadian dollars)
As at			September 30, 2020				June 30, 2020
Assets
Current assets
Cash and cash equivalents			$	10,432		$	17,350
Short-term investments				16,910			17,165
Accounts receivable				23,058			24,908
Income tax receivable				362			333
Inventories				21,337			17,212
Prepaid expenses				1,707			2,051
Contract assets				704			646
Total current assets				74,510			79,665
Non-current assets
Property, plant and equipment				14,539			11,801
Right-of-use assets				3,620			4,010
Goodwill				15,594			15,487
Intangible assets				70,189			69,200
Other long-term assets				1,246			1,301
Investment tax credits				24,732			24,374
Deferred tax assets				4,870			4,460
Total assets			$	209,300		$	210,298
Liabilities and shareholders’ equity
Current liabilities
Accounts payable and accrued liabilities			$	17,391		$	17,105
Provisions				1,285			492
Income tax payable				3			130
Deferred revenue				4,776			4,960
Other current liabilities				1,245			–
Current portion of long-term debt				1,752			1,698
Total current liabilities				26,452			24,385
Non-current liabilities
Provisions				412			400
Deferred revenue				698			602
Deferred tax liability				7			536
Long-term debt				4,132			4,613
Total liabilities				31,701			30,536
Shareholders’ equity
Share capital				3,556			3,161
Reserves				3,975			3,838
Retained earnings				168,582			170,665
Accumulated other comprehensive income				1,486			2,098
Total shareholders’ equity				177,599			179,762
Total liabilities and shareholders’ equity			$	209,300		$	210,298

VECIMA NETWORKS INC. Consolidated Statements of Comprehensive Loss (in thousands of Canadian dollars, except per share amounts)
		Three months ended September 30,
							2020			2019
Sales						$	27,844		$	20,112
Cost of Sales							14,836			9,638
Gross Profit							13,008			10,474
Operating expenses
Research and development							6,343			5,068
Sales and marketing							3,209			3,746
General and administrative							4,791			3,981
Share-based compensation							239			17
Other (income) expense							(3)			(10)
Total operating expenses							14,579			12,802
Operating loss							(1,571)			(2,328)
Finance income							161			208
Foreign exchange (loss) gain							(225)			298
Loss before income taxes							(1,635)			(1,822)
Income tax recovery							(797)			(438)
Net loss						$	(838)		$	(1,384)
Other comprehensive (loss) income
Item that may be subsequently reclassed to net income
Exchange differences on translating foreign operations							(612)			223
Comprehensive loss						$	(1,450)		$	(1,161)
Net loss per share
Basic						$	(0.04)		$	(0.06)
Diluted						$	(0.04)		$	(0.06)
Weighted average number of common shares
Shares outstanding – basic						22,482,015			22,370,087
Shares outstanding – diluted						22,482,015			22,370,087

VECIMA NETWORKS INC. Consolidated Statements of Change in Equity (in thousands of Canadian dollars)
			Share capital			Reserves			Retained earnings			Accumulated other comprehensive income				Total
Balance as at June 30, 2019		$	1,916		$	4,104		$	173,898		$	1,010		$	180,928
Net loss			–			–			(1,384)			–			(1,384)
Other comprehensive income			–			–			–			223			223
Dividends			–			–			(1,231)			–			(1,231)
Share-based payment expense			–			17			–			–			17
Balance as at September 30, 2019		$	1,916		$	4,121		$	171,283		$	1,233		$	178,553
Balance as at June 30, 2020		$	3,161		$	3,838		$	170,665		$	2,098		$	179,762
Net loss			–			–			(838)			–			(838)
Other comprehensive loss			–			–			–			(612)			(612)
Dividends			–			–			(1,245)			–			(1,245)
Shares issued by exercising options			395			(102)			–			–			293
Share-based payment expense			–			239			–			–			239
Balance as at September 30, 2020		$	3,556		$	3,975		$	168,582		$	1,486		$	177,599

VECIMA NETWORKS INC. Consolidated Statements of Cash Flows (in thousands of Canadian dollars)
	Three months ended September 30,
						2020			2019
OPERATING ACTIVITIES
Net loss					$	(838)		$	(1,384)
Adjustments for non-cash items:
Loss on sale of property, plant and equipment						2			14
Depreciation and amortization						3,542			3,496
Share-based compensation						239			17
Income tax (recovery) expense						(577)			526
Deferred income tax recovery						(220)			(964)
Interest expense						59			80
Interest income						(88)			(222)
Net change in working capital						1,348			(1,193)
Decrease in other long-term assets						43			6
Increase in provisions						11			–
Increase in investment tax credits						(41)			(38)
Income tax paid						(125)			(22)
Interest received						88			222
Interest paid						(10)			(80)
Cash provided by operating activities						3,433			458
INVESTING ACTIVITIES
Capital expenditures, net						(449)			(444)
Purchase of short-term investments						(84)			(200)
Proceeds from sale of short-term investments						339			1,400
Deferred development costs						(3,448)			(2,650)
Business acquisition						(6,401)			–
Cash used in investing activities						(10,043)			(1,894)
FINANCING ACTIVITIES
Proceeds from government grants						–			31
Principal payments of lease liabilities						(375)			(332)
Repayment of long-term debt						(63)			(83)
Issuance of shares through exercised options						293			–
Cash used in financing activities						(145)			(384)
Net decrease in cash and cash equivalents						(6,755)			(1,820)
Effect of change in exchange rates on cash						(163)			(51)
Cash and cash equivalents, beginning of period						17,350			19,834
Cash and cash equivalents, end of period					$	10,432		$	17,963

 

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Vecima Networks

Investor Relations – 250-881-1982

[email protected]

KEYWORDS: North America Canada

INDUSTRY KEYWORDS: Telecommunications Software Audio/Video Hardware TV and Radio Technology VoIP Entertainment

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