Concurrent Computer Corp (NASDAQ:CCUR)
F4Q 2013 Earnings Call
August 27, 2013, 4:30 pm ET
Emory Berry - Chief Financial Officer, Executive Vice President - Operations
Dan Mondor - President, Chief Executive Officer, Director
Welcome to Concurrent's earnings conference call for the 2013 fourth quarter and full-year financial results. This call is being recorded for replay purposes. If you have any objections, you may disconnect at this time. This call is also being webcast live via the internet at www.ccur.com. After accessing the web page, please press the Investors tab in the About section.
I would now like to introduce Mr. Emory Berry, Chief Financial Officer and Executive Vive President of Operations. Sir, you may begin.
Thank you, operator, and good afternoon, everyone, and welcome to Concurrent's fiscal fourth quarter and full-year earnings conference call for the period ending June 30, 2013. Joining me today is Concurrent's President and Chief Executive Officer, Dan Mondor.
Before we begin let me remind you that this conference call may include forward-looking statements such as beliefs, expects, estimates, anticipates, and other similar expressions. These statements are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.
Accordingly, the cautionary statements made in Concurrent's 10-K and 10-Q filings with the Securities & Exchange Commission are incorporated here and by reference. The company's actual results could differ materially from the forward-looking information presented on this call.
The content of this webcast contains time sensitive information that is accurate only as of the date of this live broadcast, August 27, 2013. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Concurrent is prohibited.
I caution you that any forward-looking statements made by the company are no guarantees of future performance and that a variety of factors could cause our company's actual results and experience to differ materially from the anticipated or projected results, which the company may discuss on this conference call.
You should all have a copy of the earnings release for Concurrent's fiscal 2013 fourth quarter and full-year results. If you have not received a copy, please contact Sandra Dover at 678-258-4112 and she will be happy to provide you with a copy. Alternatively, you may visit the company's website at www.ccur.com and find a copy in the Investors section of the website under the About tab. Additionally, please contact Sandra if you would like to arrange a call with management.
Dan Mondor will now provide an update on the business. Dan?
Good afternoon, everyone and thanks for joining us today. I will start with a few highlights. We are, of course, pleased to report our sixth consecutive quarter and first full year of profitability in recent history. We are encouraged by the overall progress we made in the business in fiscal 2013 underpinned by the continued market acceptance of our video and real-time solutions. We achieved a number of design wins with new customers, including marquee accounts like Virgin Media, and sound improvement in spending levels from some of our top customers resulting in a 5% year-over-year increase in revenue.
As we have discussed in prior calls, we have reshaped the company to enhance business efficiency and increase profitability. We have improved the alignment of our teams and refine processes and procedures throughout the company. The steps we have taken are working, as is evident by the notable improvement net income we reported in fiscal 2013 versus the prior year.
Excluding the gain from the sale of nonstrategic intellectual property, we improved our operating income by $4.7 million, year-over-year. Our efforts over the last 18 months have resulted in a new and much stronger operating model for the business. Additionally, we instituted and paid a total of $0.86 per share in cash dividend in fiscal 2013 representing a return to our shareholders of $7.5 million.
We are encouraged by the activity we are seeing in the video market with more and more service providers looking to launch multiscreen video services. Our unified video media data intelligence solutions are positioned to address the challenges facing pay TV service providers namely that they need to expand and improve their existing TV services, while positioning themselves to compete in the online video market.
Our solutions enable them to do both by combining our VOD technology for classic TV environments with our next generation online streaming software. We continue to make solid progress in real-time in the fourth quarter with additional shipments of ImaGen Visual Servers to KCEI in Korea for the K-Series Tank Platoon Simulator Program, as well as a number of design wins in our target markets. Overall, I am pleased with our progress in fiscal 2013.
In fiscal 2014, we are focused on growing the business and continuing to operating profitably. I will provide some more business updates after Emory has reviewed our financial results for the fourth quarter and fiscal year. Emery?
Thank you, Dan. Our revenue in the fiscal fourth quarter was $14.9 million compared with revenue of $16.9 million in the third quarter and a 1% increase as compared with the $14.7 million in the fiscal 2012 fourth quarter.
Turning to our product line revenue details, Concurrent's video revenue which includes MDI was $8.6 million, representing 58% of fiscal fourth-quarter revenue in fiscal 2013 and fiscal 2012. In the preceding third quarter video revenue was $9.8 million representing 58% of total revenue. The balance represents our real time revenue which was $6.3 million for the fiscal fourth quarter of 2013 and $6.2 million in 2012. The real time revenue was $7.1 million in our third quarter fiscal 2013.
Gross margin for the fiscal fourth quarter 2013 was 57%, unchanged from the prior fiscal year. During the quarter, the company sold nonstrategic intellectual property, net of expenses, for $2.4 million. The total operating expenses excluding the sale of intellectual property for the fiscal fourth quarter were $8.4 million, up 1% from the fourth quarter a year ago and down 5% from the third quarter of fiscal 2013.
For the fourth quarter of fiscal 2013, we reported operating income of $2,513,000 which included the sale of intellectual property of $2.4 million and non-cash expenses of $732,000 in depreciation and amortization and $255,000 of share based compensation compared with operating income of $187,000 in the comparable period of fiscal 2012 which included non-cash expenses of $1,048,000 in depreciation and amortization and $133,000 of share based compensation.
The company reported an income tax provision of $189,000 during the quarter equal to $0.02 per diluted share. For the comparable period last year, the company had an income tax provision of $219,000 equal to $0.02 per diluted share.
Net income was $2,313,000 for the fourth fiscal quarter of 2013, equal to $0.26 per diluted share compared with net income of $209,000 or $0.02 per share in the comparable period last year.
Looking at our results for fiscal 2013, total revenue was $63.4 million compared with $60.3 million in fiscal 2012. Our video revenue represented 58% of total revenue for fiscal 2013 versus 59% of total revenue a year ago. Gross margin for 2013 was 58%, unchanged from the prior year. Total operating expenses for fiscal 2013 were $34.2 million excluding the sale of intellectual property of $2.4 million, compared with $36.8 million in the prior fiscal year reflecting the improvements in our operating model.
The company reported operating income of $5 million which included the sale of intellectual property and included non-cash expenses of $3.2 million in depreciation and amortization, $840,000 of share based compensation compared with an operating loss of $2 million which included non-cash expenses of $3.7 million in depreciation and amortization and $716,000 of share based compensation.
Net income for the year was $4.2 million or $0.48 per diluted share which included a tax provision of $369,000 or $0.04 per share. This compares with a net loss of $2.9 million or $0.34 per share for last fiscal year.
Providing some highlights from Concurrent's balance sheet, the company's financial position remains strong with no debt. We finished the fourth quarter with cash of $27.9 million versus cash of $29.6 million at June 30, 2012 and $22.4 million at the end of the third quarter. Also, the company began paying quarterly dividends of $0.06 per share in fiscal 2013 and increasing it in the final quarter to $0.12.
During fiscal 2013, the company paid four $0.06 dividends, one $0.12 per share dividend as well as a special dividend of $0.50. Overall the company has paid out in fiscal 2013 cash dividends of over $7.5 million. In addition, we finished the recent quarter with over $27.7 million working capital.
Now I would like to turn the meeting back over to Dan.
Thanks, Emery. Concurrent's video solutions business is focused on developing multiscreen video delivery and media data intelligence solutions that can help our customers be successful in a changing marketplace. Consumers are increasingly watching video on smart TVs, streaming media players, PCs, tablets and smartphones through wireline high-speed data connections and broadband wireless connections. Our video streaming software is designed to serve those devices as well as the classic set-top boxes.
Our customers, specifically pay TV operators, are facing a challenging competitive landscape with emerging threats from over the top services as those offered by Netflix, Amazon, Apple and Google. Concurrent's solutions help pay TV service providers compete in the online video market by enabling them to seamlessly transition classic TV service offerings like live TV, video-on-demand and time shifted TV also offer internet video services.
Our software platform can simultaneously interact with both classic set-top boxes over traditional TV networks and multiscreen devices through broadband internet connections. This means our customers can deliver video services to new consumers on a wider array of screens, while also supporting their existing TV customers. So we deliver the best of both worlds to our customer. We enable them to embrace the TV of tomorrow, while also allowing them to support the needs of today.
Speaking of TV of tomorrow, in the quarter we announced a variety of new video products that are focused on an emerging solution area called RS-DVR or remote storage DVR. Remote storage DVR is a service that enables individual consumers to record live broadcast TV programming and store it in the service providers' network for playback at a later time.
Compared with more traditional in-home DVR technologies like TiVo, RS DVR offers consumers more storage capacity, more simultaneous recording capacity and the ability to playback recorded video content on any device over any network. We believe this is a key area of opportunity for the company and our recent announcement related to transcoding and storage technology show how we are extending our video solution portfolio to address this market.
Turning to our real-time solutions. Concurrent has continued to improve our premier simulation application called SIMulation Workbench. We have made strong advances in the automotive market this year for both road car and racecar applications. Several leading automotive companies and Formula One and Indy car racing teams have selected our SIMulation Workbench solution for their driving simulators and design testing. These companies use our products to test road car ergonomics and electronic systems. In the case of racing teams, to train their driver on how to improve their performance on the track.
We also made inroads in to the financial market with our real time solutions, selling our RedHawk operating system and NightStar Tools to a global financial institution. Our RedHawk operating system is highly deterministic enabling low latency digital securities trading and improved overall trading reliability. Using our NightStar Tools software, developers in the financial space are able to better monitor and tune their applications to achieve optimal performance, thereby gaining an edge on the competition. We are very excited about these growing solution areas and are reassured by the strong market reception for our real-time solutions.
Before I conclude, I would also like to highlight our recent patent award which we announced on August 8. Concurrent has been awarded a patent for a demand-based edge caching system and method. This system and method defines a process for intelligently caching video content within a content delivery network. We are excited to receive the patent award and we believe it directly reflects our continued thought leadership and innovation in the area of multiscreen content delivery.
As a final note, Concurrent will be exhibiting at the IBC 2013 Tradeshow in Amsterdam in the mid-September where we will be demonstrating our latest video and media data intelligence innovations to customers.
We will now conclude the call. Thank you again for your participation this afternoon and for your support and interest in Concurrent.
Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive TeleConference Service. You may now disconnect.
Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.
THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
If you have any additional questions about our online transcripts, please contact us at: email@example.com. Thank you!