Intrinsyc (TSX: ITC and OTCQX: ISYRF) Reports Third Quarter Results
Intrinsyc achieved Revenue of US $6.2 million (CDN $8.2 million) with EBITDA1 of US $473,865 (CDN $625,691)VANCOUVER, British Columbia, Nov. 14, 2019 (GLOBE NEWSWIRE) — Intrinsyc Technologies Corporation (TSX: ITC and OTCQX: ISYRF) (“Intrinsyc” or the “Company”), a leading provider of edge computing solutions for the development of intelligent Internet of Things (“IoT”) products, today announced its financial results for the third quarter ended September 30, 2019. Intrinsyc achieved Revenue of US $6.2 million (CDN $8.2 million) with EBITDA of US $473,865 (CDN $625,691).
On October 31, the Company announced it entered into an agreement with Lantronix, Inc. (NASDAQ: LTRX) (“Lantronix”), a global provider of secure data access and management solutions for IoT assets, pursuant to which Lantronix will acquire 100% of Intrinsyc’s issued and outstanding common shares in a cash and share transaction valued at approximately US$27 million. “I was pleased with the overall financial results achieved during the quarter, as well as operational performance in a number of key areas including: the improvement in hardware margin and order backlog, a significant increase in new production wins for our industry performance-leading edge AI computing modules, and continued product development and launches of advanced computing platforms,” stated Tracy Rees, Chief Executive Officer, Intrinsyc Technologies Corporation. “I believe we are well positioned to add value as part of a combined entity with Lantronix and that the combination has significant potential to unlock shareholder value through continued business momentum, with improvement in operational scale and other synergies.”
In addition to the achievement of excellent financial results in the quarter, the Company continued strong operational productivity, including:The Company achieved its highest ever number of new production wins with 8 in the quarter, bringing the total to 36 net active production wins. With these recent results, the number of production wins has nearly doubled in the past year. These production clients have excellent potential to provide future multi-year repeat revenue.
Intrinsyc is currently developing a variety of next-generation intelligent IoT products, including robotics, drones, medical devices, video conferencing, intelligent cameras, in-flight entertainment, and more. We increased net design wins of companies developing their products or shipping commercial devices using the Company’s computing modules, increased from 71 to 73. With 36 net production wins, there are another 37 design wins with potential to enter future production which will significantly expand and diversify Intrinsyc’s repeatable revenue client base. The expanding client base is the foundation for future hardware product revenue growth.Intrinsyc develops and sells development kits, which contribute to our overall revenue, and they are also lead generators for our product development services and production-ready edge AI computing modules. We ship these products to over 500 customers in more than 50 countries on an annual basis. The Company began shipment of the third-generation Snapdragon™ Automotive Development Platform (“ADP”) based on the Qualcomm® Snapdragon™ SA8155P processor from Qualcomm® Technologies, Inc. (“QTI”). This platform provides OEMs and ecosystem partners with access to QTI’s high-performance automotive infotainment, advanced driver assist platform for developing, testing, optimizing and showcasing next-generation in-vehicle infotainment solutions. The launch of the Snapdragon 8155 Automotive Development kit during the quarter was a key contributor to our overall revenue and improved hardware margin in the quarter. One of Intrinsyc’s clients was highlighted by Qualcomm and Digital Trends as part of their “Tech for Change” initiative. Intrinsyc helped to develop life-changing electronic glasses designed for virtually impaired users to see the world around them, and for some, for the very first time. These devices are powered by Intrinsyc’s edge AI computing modules.
Increased hardware gross margin due to the introduction of new higher margin products and increased economies of scale.With the announcement of several hardware orders during the quarter, we increased our hardware backlog by 42% to US $7.5 million, at the end of the third quarter. The following were announcements regarding orders made during the quarter:Orders received for the Company’s Open-Q™ embedded computing modules valued at US $384,240 and included an initial stocking order for a new production client building medical devices. The Company also received orders from existing and new clients for product development services valued in aggregate at US $433,936.
Received an order, that is valued at US $1,195,000. This initial stocking order is for the purchase of the Company’s Open-Q™ 835 edge AI computing modules to be used in a next-generation video collaboration product. Delivery is expected to occur in the fourth quarter of 2019.
Received an order that is valued at US $513,000. This initial stocking order is for the purchase of the Company’s Open-Q™ 820 edge AI computing modules that will be used to enable commercial vehicle connectivity services provided by a Fortune 500 company. Delivery occurred in the third quarter of 2019.
Received an order that is valued at US $1,120,000. This follow-on order is for the purchase of the Company’s Open-Q™ 835 edge AI computing modules to be used in a next-generation video collaboration product. Delivery is expected to occur in the first quarter of 2020.
Received orders from multiple clients, that in aggregate are valued at US $1,263,000. These orders consist of US $1,002,000 for hardware and US $261,000 for product development services. Hardware and services will be delivered in the third quarter, ending September 30, 2019 and fourth quarter, ending December 31, 2019.Financial HighlightsThree Month Comparative ResultsThe Company reported third quarter revenue of US $6.2 million (CDN $8.2 million), up 13% over the prior period of US $5.5 million (CDN $7.2 million) and 1% over the same period in the prior year of US $6.1 million (CDN $8.0 million).Gross margin2 for the three months ended September 30, 2019 was 35%, which slightly higher than the gross margin in the prior period but lower than the same period in the prior year. EBITDA was as follows:The Company had net income of US $332,386 (CDN $359,844), and earnings per share of US $0.02 (CDN $0.02) compared to net income of US $66,247 (CDN $83,377), or US $0.00 (CDN $0.00) earnings per share in the prior quarter and net income of US $314,046 (CDN $405,838) or US $0,01 (CDN $0.02) earnings per share in the same period in the prior year. Nine Month Comparative ResultsThe Company reported revenue of US $17.8 million (CDN $23.6 million), down 4% over the same period in the prior year of US$18.6 million (CDN$24.0 million). The decrease in revenue over the comparative periods was due primarily to decreased revenue from the sale of services.Gross margin for the nine months ended September 30, 2019 was 34%, which was slightly lower than the 35% gross margin in the same period in the prior year. EBITDA was as follows: