Cost-cutting efforts at Ottawa’s International Datacasting Corp. (TSX:IDC) mean the company is expected to return to profitability by the end of the year, its CEO said.
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International Datacasting Corp.'s Kanata headquarters.
By Jacob Serebrin
“Restoring the company to profitability has got to be job one,” Doug Lowther, IDC’s president and CEO said on a conference call with investors on Wednesday morning. “It’s been a long wait and my job is to ensure that the results are worth the wait.”
“As you know, the company had a bad year,” he said. “With the benefit of hindsight, our fiscal 2014 plan was too optimistic.”
The digital content distributor reported revenue of $16.3 million during the year that ended on Jan. 31, a 44 per cent decline from $29.2 million during the previous year.
Mr. Lowther said main contributors to the drop in revenue was the failure to release new products on schedule and he said the company continued to anticipate growing revenue from product sales – despite the lack of new products.
In one case, an audio system was discontinued before its replacement was available.
“Some customers couldn’t wait and had to choose alternatives,” Mr. Lowther said.
IDC’s revenue from product sales dropped 38 per cent during the fiscal year.
The company also saw a decline in its revenue from projects, which it attributed to the completion of a project in Kenya.
Despite the decline in product sales, Mr. Lowther said IDC won’t be going after new projects, like the Kenya one, and instead plans to focus on being a product company.
The decline in revenue pushed IDC’s net loss from $1 million last year to $8.2 million during its fiscal 2014 year.
In an effort to maintain working capital, the company has begun cutting costs.
Mr. Lowther said he wants to cut IDC’s quarterly breakeven point from approximately $7 million in revenue to around $4.5 million.
Some aspects of the cost-cutting plan, including a 25 per cent reduction in the company’s employee headcount, have already been carried out.
Other elements, including a consolidation of the company’s operations in Ottawa, are still ongoing.
While Mr. Lowther said he expects the cost-cutting plan to return the company to the break-even point before the end of July and return to profitability by the end of the year, he said.
For the three-month period that ended Jan. 31, IDC saw revenue drop to $3.6 million from $6.1 million during the same period last year. It is, however, a slight increase from theprevious quarter, when the company reported revenue of $2.5 million.
Net loss for the fourth quarter was $5.4 million. That’s up from the same period last year, when the company reported a net loss of $1 million and from the previous quarter, when the company reported a net loss of $2.2 million.
Those losses are expected to continue. Mr. Lowther said the company plans to record another loss for the first quarter of the new fiscal year, which ends on Thursday. Though, he said it would be smaller than the losses reported during the last two quarters.
IDC’s stock price was down 1.5 cents to eight cents a share in early morning trading.