Evertz Technologies Limited
TSX : ET

Evertz Technologies Limited

September 08, 2010 16:00 ET

Evertz Technologies Reports Results for the First Quarter Ended July 31, 2010

BURLINGTON, ONTARIO--(Marketwire - Sept. 8, 2010) -

Attention Business/Financial Editors:

Evertz Technologies Limited (TSX:ET), a leading equipment provider to the television broadcast industry, today reported its results, for the first quarter ended July 31, 2010, of its fiscal 2011 year.

Quarterly Highlights

  • Sales were $73.8, a 2% increase year-over-year for the quarter
  • Gross margin was 58.3%
  • Cash increased to $150.8 million
  • Gross investment in R&D was $8.0 million
  • Net earnings were $20.6 million for the quarter as compared to $17.0 million a year ago
  • Diluted earnings per share were $0.28 for the year as compared to $0.23 a year ago
Selected Financial Information                          
Consolidated Statement of Earnings Data                          
(in thousands of dollars, except per share amounts)                          
 
        Q1 '11     Q1 '10
Sales $ 73,816   $ 72,021
Gross Margin   42,998     43,416
Earnings from operations   28,121     23,450
Net Income   20,562     17,077
Diluted earnings per share $ 0.28 $ 0.23
 
Selected Financial Information          
Consolidated Balance Sheet Data          
(in thousands of dollars)          
        Q1 '11     YE'10
Cash and Instruments Held for Trading $ 150,840 $ 145,029
Working Capital   281,610     264,161
Total Assets   359,102     345,787
Shareholders' Equity   328,371     312,169

Sales

For the quarter ended July 31, 2010, sales were $73.8 million, an increase of $1.8 million or 2% as compared to sales of $72.0 million for the quarter ended July 31, 2009. For the quarter, sales in the United States/Canada region increased by $0.8 million or 2% when compared to the same quarter last year. The International region grew by $0.9 million or 3% for the quarter ended July 31, 2010 when compared to the same quarter last year.

Gross Margin

For the quarter ended July 31, 2010 gross margin was $43.0 million compared to $43.4 million in the same quarter last year. Gross margin percentage was approximately 58% as compared to 60% for the quarter ended July 31, 2009.

Earnings

For the quarter ended July 31, 2010 net earnings were $20.6 million as compared to $17.1 million in the corresponding period last year.

For the quarter ended July 31, 2010, earnings per share on a fully-diluted basis were $0.28 as compared to $0.23 in the same period in 2009.

Operating Expenses

For the quarter ended July 31, 2010 selling and administrative expenses decreased by $0.3 million as compared to the prior year. Selling and administrative expenses represented approximately 11.4% of sales in the quarter ended July 31, 2010.

For the quarter ended July 31, 2010 gross research and development expenses increased by $0.7 million or 10% as compared to the corresponding period in 2009. Gross research and development expenses represented approximately 11% of sales for the quarter as compared to the approximately 12% for the same period last year.

Liquidity and Capital Resources

The Company's working capital as at July 31, 2010 was $281.6 million as compared to $264.1 million on April 30, 2010.

Cash and instruments held for trading were $150.8 million as at July 31, 2010 as compared to $145.0 million on April 30, 2010.

Cash provided by operations was $11.8 million for the quarter ended July 31, 2010 as compared to $5.4 million for the quarter ended July 31, 2009. Before taking into account the changes in non-cash working capital, the Company generated $21.7 million from operations for the quarter ended July 31, 2010 compared to $20.0 million for the same period last year.

The Company spent $0.8 million on the purchase of equipment for the quarter ended July 31, 2010.

For the quarter ended July 31, 2010, the Company used cash from financing activities of $6.1 million which was principally a result of the payment of dividends.

Shipments and Backlog

Purchase order backlog at the end of August 2010 was in excess of $32 million and shipments during the month of August 2010 exceeded $26 million.

Dividend Declared

Evertz Board of Directors declared a dividend on September 08, 2010 of $0.10.

This is an increase in the quarterly dividend from $0.08 to $0.10 per share. The first increased dividend is payable to shareholders of record on October 13, 2010 and will be paid on or about October 22, 2010.

Selected Consolidated Financial Information  
(Unaudited)  
   
(in thousands of dollars, except earnings per share and share data)  
   
Consolidated Statement of Earnings Data  
Three months ended   Three months ended  
July 31, 2010   July 31, 2009  
Sales $ 73,816   $ 72,021  
Cost of goods sold   30,818     28,605  
Gross margin $ 42,998   $ 43,416  
Gross margin %   58.3 %   60.3 %
Expenses            
    Selling and administrative   8,387     8,661  
    Research and development   8,022     7,265  
    Investment tax credits   (2,005 )   (2,011 )
    Foreign exchange loss (gain)   (680 )   4,113  
    Amortization of intangibles   219     401  
    Stock-based compensation   934     1,537  
    14,877     19,966  
Earnings before undernoted $ 28,121   $ 23,450  
   
Interest and other income $ 920   $ 337  
Non-controlling interest   (142 )   (91 )
Earnings before income taxes $ 28,899   $ 23,696  
Net earnings $ 20,562   $ 17,077  
Earnings per share:            
    Basic $ 0.28   $ 0.23  
    Diluted $ 0.28   $ 0.23  
   
   
Consolidated Balance Sheet Data  
As at   As at  
July 31, 2010   April 30, 2010  
Cash and instruments held for trading $ 150,840   $ 145,029  
Inventory $ 102,112   $ 91,745  
Working capital $ 281,610   $ 264,161  
Total assets $ 359,102   $ 345,787  
Shareholders' equity $ 328,371   $ 312,169  
   
Number of common shares outstanding:            
    Basic   73,641,906     73,607,506  
    Diluted   78,014,906     77,703,006  
   
Weighted average number of shares outstanding:            
    Basic   73,618,973     73,324,244  
    Diluted 1   74,221,645     74,223,642  
   
Note:  
(1) Based on weighted average number of Common Shares outstanding using the treasury stock method as per Canadian GAAP.  

Forward-Looking Statements

The report contains forward-looking statements reflecting Evertz's objectives, estimates and expectations. Such forward looking statements use words such as "may", "will", "expect", "believe", "anticipate", "plan", "intend", "project", "continue" and other similar terminology of a forward-looking nature or negatives of those terms.

Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, all forward-looking statements address matters that involve known and unknown risks, uncertainties and other factors. Accordingly, there are or will be a number of significant factors which could cause the Company's actual results, performance or achievements, or industry results to be materially different from any future results performance or achievements expressed or implied by such forward-looking statements.

Conference Call

The Company will hold a conference call with financial analysts to discuss the results on September 08, 2010 at 5:00 p.m. (EDT). Media and other interested parties are invited to join the conference call in listen-only mode. The conference call may be accessed by dialing 1-416-849- 6166 or toll-free (North America) 1-866-250-6267.

For those unable to listen to the live call, a rebroadcast will also be available until October 08, 2010. The rebroadcast can be accessed at 1-416-915-1035 or toll-free 1-866-245-6755. The pass code for the rebroadcast is 17987.

About Evertz

Evertz Technologies Limited (TSX:ET) designs, manufactures and markets video and audio infrastructure equipment for the production, post production, broadcast and internet protocol television ("IPTV") industry. The Company's solutions are purchased by content creators, broadcasters, specialty channels and television service providers to support their increasingly complex multi-channel digital and high definition television ("HDTV") broadcast environments and by telecommunications companies to roll-out IPTV. The Company's products allow its customers to generate additional revenue while reducing costs through the more efficient signal routing, distribution, monitoring and management of content as well as the automation of previously manual processes.

Contact Information

  • Evertz Technologies Limited
    Anthony Gridley
    Chief Financial Officer
    (905) 335-7580
    ir@evertz.com