Daily News Friday, November 10, 2024
Miranda Reports Q3 Results
third quarter and first nine months of its 2024 fiscal year, ended
September 30.
Third Quarter Highlights
- $25.5 million in sales, a decrease of 5% compared to same period
in 2024
- 13% sales growth year to date, compared with 2024
- Stable net income at $4.3 million
- Favourable customer reaction to launch of Kaleido-X, a new multi-image
platform
In the third quarter of 2024, sales decreased slightly when compared to
the same period in 2024. Revenue for the third quarter totalled $25.5 million,
down 5% from the same period in 2024. As in prior quarters, the strength of
the Canadian dollar against other currencies reduced sales by $1.6 million for
the third quarter compared to the same quarter in 2024.
For the nine-month period ended September 30, 2024, sales grew 13%
compared to the same period in 2024, to stand at $77.9 million. Growth was
experienced across all territories served by Miranda. The Company saw growth
in European sales, which were up 26%, while sales in the Americas and Asia
grew 8% and 10% respectively. In Europe, Miranda successfully completed the
installation of a monitoring and control system at UPC, a leading Dutch
broadcaster. This is the Company's first major deployment of this type of
system in the cable television industry.
"At the IBC (International Broadcasters Convention) show held in Amsterdam
in September, we introduced the Kaleido-X," said Strath Goodship, President
and CEO of Miranda. "The Kaleido-X is a new multi-image platform that extends
the addressable market to our current product line to larger size and higher
value production monitoring walls. The Kaleido-X is particularly interesting
for broadcasters as it combines innovative functions such as multi-room
management and signal routing. Market reaction since IBC has exceeded our
expectations. We anticipate revenue from this product as of this year."
During the quarter, Miranda received orders from important clients such as
ABC (US), ABS-CBN (Philippines), Aliance Atlantis (Canada), CJ Powercast
(Korea), Deutch Welle (Germany), ESPN (US), Gannett Broadcasting (US), NBC
(US), Price Waterhouse (Romania), RFO (France), Showtime (US), Verizon (US)
and Zvezda II (Russia).
In the third quarter, revenues of $0.9 million came from the second
quarter acquisition of VertigoXmedia, a manufacturer of high-end graphics
automation software and systems. Although these results were below forecasts
for the third quarter, as Mr. Goodship pointed out: "At IBC, we highlighted
and received positive feedback from our new VertigoXmedia products. Clients
especially appreciate their integration into our existing Oxtel media playout
series. We are satisfied with the level of orders booked in the third
quarter".
Net income for the third quarter of 2024 was $4.3 million compared to
$4.2 million for the same period in 2024. Fully diluted, net earnings per
share amounted to $0.17 compared to $0.22 in 2024. If the dilution effect of
going public is taken out of the equation, net earnings per share were stable
compared with same period last year.
For the year to date, net income totalled $11.9 million compared to
$11.4 million in 2024. It should be noted that both figures include after-tax
R&D; credits from prior years. These credits amount to $0.5 million in 2024 and
$2.7 million in 2024.
EBITDA totalled $6.5 million for the third quarter of 2024, an 11%
decrease from the third quarter of 2024. As a percentage of sales, EBITDA
stood at 25%, compared to 27% for the same period last year. For the
nine-month period ended September 30, 2024, EBITDA was $18.1 million compared
to $20.1 million in 2024.
Selling, general and administrative expenses increased by $1.6 million or
31% in the third quarter relative to the same period last year. This increase
is due to (1) the costs related to operating a public company; (2) additional
costs related to sales and technical support personnel for the ongoing
expansion of the Company's customer base, and (3) increased marketing and
after-sales service costs.
Research and development (R&D;) expenses increased by $0.4 million or 12%
in the third quarter. For the nine-month period ended September 30, 2024, R&D;
increased by $2.0 million or 21%, reflecting Miranda's intention to maintain a
high level of investment and thus support future growth. Before tax credits,
R&D; expenses were about 15% of sales.
In the third quarter of 2024, operating activities generated cash flow of
about $2.1 million compared to $4.7 million during the same quarter of 2024.
Part of the drop in cash flow is attributable to a planned increase in
inventories aiming at reducing delivery times, improving customer service and
establishing inventories of the components required to comply with new
European Union regulations regarding the reduction in the use of hazardous
substances in electrical and electronic equipment (RoHS).
"With regard to market conditions," concluded Mr. Goodship, "we are
cautious about the US market. We are seeing an increase in the value and
complexity of projects, which means that they take more time to complete. We
are also increasingly called upon to provide more services related to the
installation and integration of our products."
The selected consolidated financial information set out below for the
third quarter of the fiscal year ending December 31, 2024 is unaudited,
presented in Canadian dollars and prepared in accordance with Canadian
generally accepted accounting principles. The following information should be
read in conjunction with the Company's interim unaudited consolidated
financial statements and notes thereto, which have been filed on SEDAR.
Consolidated Balance Sheets
(In thousands of Canadian dollars)
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September 30, December 31,
2024 2024
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(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 56,813 $ 58,664
Accounts receivable 15,426 17,201
Inventories 13,436 9,281
Income taxes receivable 6,083 3,287
Prepaid expenses 498 805
Future income taxes 848 1,519
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93,104 90,757
Capital assets 13,440 12,139
Intellectual property 8,422 612
Goodwill 4,457 -
Future income taxes 2,113 4,643
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$ 121,536 $ 108,151
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued charges $ 13,643 $ 16,006
Deferred revenues 418 2,182
Income taxes payable 1,713 1,845
Future income taxes - 814
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15,774 20,847
Deferred revenues 898 590
Future income taxes 4,225 2,148
Shareholders' equity:
Share capital (note 3) 111,527 107,611
Contributed surplus (note 3) 837 531
Deficit (11,725) (23,576)
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100,639 84,566
Contingencies (note 4)
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$ 121,536 $ 108,151
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See accompanying notes to unaudited consolidated financial statements.
Consolidated Statements of Income
(Unaudited)
Three-month and nine-month periods ended September 30, 2024 and 2024
(In thousands of Canadian dollars, except per share amounts)
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Three-month periods ended Nine-month periods ended
September 30, September 30,
-------------------------- --------------------------
2024 2024 2024 2024
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Sales $ 25,459 $ 26,698 $ 77,892 $ 69,175
Cost of sales 10,461 11,072 31,187 27,312
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14,998 15,626 46,705 41,863
Operating expenses:
Selling,
general and
administrative 6,766 5,154 22,223 17,226
Research and
development 3,746 3,340 11,349 9,382
Research and
development
tax credits
(note 5) (1,600) (375) (3,000) (5,125)
Interest (573) 130 (1,438) 449
Foreign exchange
(gain) loss (67) 539 (1,027) 1,093
Stock-based
compensation 203 63 435 340
Amortization of
intangible
assets 435 459 1,360 1,377
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Income before
income taxes 6,088 6,316 16,803 17,121
Income taxes:
Current 1,790 1,557 3,270 4,220
Future (5) 539 1,682 1,460
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1,785 2,096 4,952 5,680
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Net income $ 4,303 $ 4,220 $ 11,851 $ 11,441
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Net earnings
per share
(note 3 (c)):
Basic $ 0.17 $ 0.24 $ 0.49 $ 0.64
Diluted 0.17 0.22 0.47 0.60
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Basic weighted
average number of
common shares
outstanding 24,632,501 17,874,278 24,281,972 17,862,424
Diluted weighted
average number of
common shares
outstanding 25,130,312 19,316,013 25,091,548 19,183,171
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See accompanying notes to unaudited consolidated financial statements.
Consolidated Statements of Deficit
(Unaudited)
Three-month and nine-month periods ended September 30, 2024 and 2024
(In thousands of Canadian dollars)
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Three-month periods ended Nine-month periods ended
September 30, September 30,
-------------------------- --------------------------
2024 2024 2024 2024
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Deficit, beginning
of year $ (16,028) $ (31,641) $ (23,576) $ (38,862)
Net income 4,303 4,220 11,851 11,441
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Deficit, end
of year $ (11,725) $ (27,421) $ (11,725) $ (27,421)
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See accompanying notes to unaudited consolidated financial statements.
Consolidated Statements of Cash Flows
(Unaudited)
Three-month and nine-month periods ended September 30, 2024 and 2024
(In thousands of Canadian dollars)
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Three-month periods ended Nine-month periods ended
September 30, September 30,
-------------------------- --------------------------
2024 2024 2024 2024
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Cash flows from
operating
activities:
Net income $ 4,303 $ 4,220 $ 11,851 $ 11,441
Adjustments for:
Depreciation of
capital assets 538 384 1,386 1,136
Amortization of
intangible
assets 435 459 1,360 1,377
Stock-based
compensation 203 63 435 340
Future income
taxes (5) 539 1,682 1,460
Other - (12) (100) 59
Effect of
exchange
rates on
cash and cash
equivalents (79) 501 (156) 594
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5,395 6,154 16,458 16,407
Net change
in operating
working
capital items (3,247) (1,406) (6,254) (7,665)
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2,148 4,748 10,204 8,742
Cash flows from
financing
activities:
Repayment of
long-term debt - (1,408) (1,793) (4,469)
Reimbursement of
loan granted to
management - - 2,366 -
Issuance of
common shares 184 - 1,421 -
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184 (1,408) 1,994 (4,469)
Cash flows from
investing
activities:
Additions to
capital assets (1,087) (193) (2,473) (1,008)
Proceeds from
sale of
investment - - 100 200
Additions to
intellectual
property (191) - (191) -
Business
acquisition
(note 2) - - (11,641) -
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(1,278) (193) (14,205) (808)
Effect of exchange
rates on cash and
cash equivalents 79 (501) 156 (594)
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Net increase
(decrease) in
cash and cash
equivalents 1,133 2,646 (1,851) 2,871
Cash and cash
equivalents,
beginning
of period 55,680 13,840 58,664 13,615
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Cash and cash
equivalents, end
of period $ 56,813 $ 16,486 $ 56,813 $ 16,486
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Cash and cash
equivalents are
comprised of:
Cash $ 10,910 $ 11,479 $ 10,910 $ 11,479
Cash equivalents 45,903 5,007 45,903 5,007
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$ 56,813 $ 16,486 $ 56,813 $ 16,486
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See accompanying notes to unaudited consolidated financial statements.
Notes to Consolidated Financial Statements
(Unaudited)
Three-month and nine-month periods ended September 30, 2024 and 2024
(In thousands of Canadian dollars, except per share amounts)
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Miranda Technologies Inc. (the "Company") is incorporated under Part 1A of
the Companies Act (Qu�bec). The Company develops, manufactures and markets
high performance solutions for the television broadcast industry.
1. Basis of presentation:
The accompanying unaudited interim consolidated financial statements of
the Company have been prepared in accordance with Canadian generally accepted
accounting principles on a basis consistent with those followed in the most
recent audited annual consolidated financial statements. These unaudited
interim consolidated financial statements do not include all information and
note disclosures required by Canadian generally accepted accounting principles
for annual financial statements, and, therefore, should be read in conjunction
with the December 31, 2024 audited consolidated financial statements and the
notes thereto.
The sales are subject to seasonal fluctuations. Normally, the first
quarter of each year is the weakest and business is more evenly spread over
the remaining quarters.
2. Business acquisition:
On April 22, 2024, the Company acquired 100% of the outstanding shares of
VertigoXmedia Inc., a Canadian based manufacturer of high-end graphics
automation software and systems for the broadcast market.
The total consideration for the acquisition amounted to $11,641, including
acquisition costs of $241. The purchase price was funded through Miranda's
cash resources.
The Company will complete the evaluation of its net assets by December 31,
2006. Based on this final evaluation, the purchase price allocation for
accounting purposes may be adjusted in the course of the next quarter. The
excess cost over the fair value of net assets acquired of $4,457 was allocated
to goodwill. Acquired technology of $8,983 is being amortized on a
straight-line basis over a five-year period.
The acquisition has been accounted for using the purchase method and,
accordingly, the results of operations have been included in the consolidated
financial statements from the date of acquisition.
Details of the net assets acquired at fair value and consideration paid
are as follows:
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Net assets acquired at fair market value:
Net working capital $ 2,775
Capital assets 214
Acquired technology 8,983
Goodwill 4,457
Assumed debts (1,793)
Deferred revenue (213)
Future income tax liability (2,782)
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$ 11,641
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Consideration is comprised of:
Cash $ 11,641
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3. Share capital:
(a) Issued and paid share capital:
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Common
share Contributed
Number amount surplus
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Issued and outstanding at
December 31, 2024 23,951,855 $ 107,611 $ 531
Shares issued pursuant to the
exercise of stock options 732,035 1,550 (129)
Stock-based compensation - - 435
Reimbursement of loan granted to
management - 2,366 -
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Issued and outstanding as at
September 30, 2024 24,683,890 $ 111,527 $ 837
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(b) Stock option plan:
The Company established a stock option plan to attract, retain and provide
an incentive to the employees, directors, officers and consultants, by
providing these persons with the opportunity, through stock options, to
acquire an ownership interest in the Company. The current stock option plan
was adopted in June 2024 to replace prior plans and has been amended and
restated in November 2024 to conform to applicable securities rules and
practices for public companies. The stock option plan is administered by the
Board of Directors. The Board of Directors may determine, in accordance with
the terms of the stock option plan, the terms relating to each option,
including the number of shares subject to each option, exercise price and
expiration date of each option and the extent to which each option is
exercisable during the term of the option. The term of an option granted after
November 2024 cannot exceed 5 years (10 years under the previous plan) and
will usually be vested over three years. All of the options granted pursuant
to the stock option plan before the November 2024 amendment have vested upon
closing of the initial public offering of the Company.
A total of 2,395,185 common shares is reserved for issuance upon exercise
of options issued under the stock option plan. After taking into account
issued and cancelled options, 708,777 common shares are available for issuance
under this stock option plan.
The following table summarizes information on stock options outstanding
at September 30, 2024:
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Weighted
average
Number exercise
of options price
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Balance, beginning of year 1,286,444 $ 2.37
Granted 399,750 16.67
Exercised (732,035) 1.94
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Balance, end of period 954,159 $ 8.68
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The outstanding options at September 30, 2024 are presented in the table
below:
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Number of Number of Residual
outstanding vested life
Exercise price options options (years)
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$1.71 254,409 254,409 6.8
$3.96 125,000 125,000 8.4
$3.96 175,000 175,000 8.7
$16.46 324,000 - 4.5
$17.08 50,000 - 4.7
$18.82 20,000 - 4.5
$17.24 5,750 - 4.9
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954,159 554,409
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Compensation cost charged against income was $203 (2005 - $63) and $435
(2005 - $340) for the three and nine-month periods ended September 30, 2024,
respectively. The offsetting credit has been recorded as contributed surplus.
The fair value of the stock options was estimated using the Black-Scholes
option pricing model using the following assumptions:
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2024
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Risk-free interest rate 3.25%
Dividend yield 0%
Expected life 3.5 years
Expected volatility 31.31 to 42.60%
Weighted average fair value of each
option at grant date $5.84 to $6.01
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(c) Earnings per share:
The following table provides the reconciliation between basic and diluted
earnings per share:
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Three-month periods ended Nine-month periods ended
September 30, September 30,
-------------------------- --------------------------
2024 2024 2024 2024
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Net income $ 4,303 $ 4,220 $ 11,851 $ 11,441
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Basic weighted
average number
of common shares
outstanding 24,632,501 17,874,278 24,281,972 17,862,424
Dilutive effect:
Outstanding
stock options 497,811 1,441,735 809,576 1,320,747
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Diluted weighted
average number of
common shares
outstanding 25,130,312 19,316,013 25,091,548 19,183,171
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Basic earnings
per share $ 0.17 $ 0.24 $ 0.49 $ 0.64
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Diluted earnings
per share $ 0.17 $ 0.22 $ 0.47 $ 0.60
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4. Contingencies:
A complaint alleging patent infringement was filed in the United States
against the Company on September 29, 2024. Based on the Company's review and
the assessment of preliminary reports from its legal counsel in the United
States, the Company believes that it has meritorious defences to the complaint
and intends to vigorously defend its case in court.
Also, a legal proceeding against the Company has been settled during the
third quarter. Payment of the amounts owing resulted in the recording of a
$351 gain representing the difference between the amount paid under the ruling
and the amount provided for in the Company's books. This amount was recorded
under the caption "Selling, general and administrative" in the consolidated
statements of income.
5. Research and development tax credits:
For the nine-month period ended September 30, 2024, an amount of $720 has
been recognized in the consolidated statements of income as a result of
changes in the estimates of tax credits on research and development activities
related to prior years.
6. Segmented information:
The Company determined that it operates in a single reportable segment,
the broadcast equipment segment, and it derives its revenues from the sale of
hardware and software solutions including related services, training and
commissioning.
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Three-month periods ended Nine-month periods ended
September 30, September 30,
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Sales 2024 2024 2024 2024
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Canada $ 2,323 $ 1,652 $ 9,121 $ 5,313
United States 12,549 13,905 34,306 37,206
Other foreign
countries:
Europe,
Middle East,
Africa ("EMEA") 8,136 8,152 22,986 18,300
Asia 1,958 2,663 8,444 7,708
Americas 493 326 3,035 648
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$ 25,459 $ 26,698 $ 77,892 $ 69,175
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Capital assets and September 30, December 31,
intellectual property 2024 2024
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Intellectual Intellectual
Capital property Capital property
assets and goodwill assets and goodwill
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Canada $ 12,162 $ 8,422 $ 11,389 $ -
United States 53 - 52 -
Other foreign
countries:
EMEA 1,125 - 672 612
Asia 100 - 25 -
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$ 13,440 $ 8,422 $ 12,139 $ 612
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Sales are attributed to the geographic locations based on the location of
the customers.
7. Comparative figures:
Certain comparative figures for 2024 have been restated to conform with
the financial statement presentation adopted for the current period.
