Evertz Technologies Limited
TSX : ET

Evertz Technologies Limited

December 07, 2010 16:01 ET

Evertz Technologies Reports Results for the Second Quarter Ended October 31, 2010

BURLINGTON, ONTARIO--(Marketwire - Dec. 7, 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 second quarter ended October 31, 2010, of its fiscal 2011 year.

Quarterly Highlights
  • Sales were $82.3 a 13% increase year-over-year for the quarter
  • Sales in the international region increased by 42% year over year for the quarter
  • Gross margin was 57.9%
  • Cash and instruments held for trading increased to $151.7 million
  • Net earnings were $20.9 million for the quarter as compared to $17.5 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)            
 
      Q2 '11     Q2 '10
Sales   $ 82,327 $   72,984
Gross margin     47,639     42,354
Earnings from operations     31,279     24,940
Net income     20,908     17,512
Fully-diluted earnings per share   $ 0.28 $   0.23
 
Selected Financial Information            
Consolidated Balance Sheet Data            
(in thousands of dollars)            
      Q2 '11     YE ' 10
Cash and instruments held for trading   $ 151,661 $   145,029
Working capital     300,026     264,161
Total assets     374,227     345,787
Shareholders' equity     344,917     312,169

Sales

For the quarter ended October 31, 2010, sales were $82.3 million, an increase of $9.3 million or 13% as compared to sales of $73.0 million for the quarter ended October 31, 2009. For the quarter, sales in the United States/Canada region decreased by $3.2 million or 8% when compared to the same quarter last year. The International region grew by $12.6 million or 42% for the quarter ended October 31, 2010 when compared to the same quarter last year.

Gross Margin

For the quarter ended October 31, 2010 gross margin was $47.6 million compared to $42.4 million in the same quarter last year. Gross margin percentage was approximately 58% similar to the quarter ended October 31, 2009.

Earnings

For the quarter ended October 31, 2010 net earnings were $20.9 million as compared to $17.5 million in the corresponding period last year.

For the quarter ended October 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 October 31, 2010 selling and administrative expenses increased negligibly as compared to the prior year. Selling and administrative expenses represented approximately 11.2% of sales in the quarter ended October 31, 2010.

For the quarter ended October 31, 2010 gross research and development expenses decreased by $0.9 million or 9% as compared to the corresponding period in 2009. Gross research and development expenses represented approximately 10% of sales for the quarter as compared to approximately 12% for the same period last year.

Liquidity and Capital Resources

The Company's working capital as at October 31, 2010 was $300.0 million as compared to $264.2 million on April 30, 2010.

Cash and instruments held for trading were $151.7 million as at October 31, 2010 as compared to $145.0 million on April 30, 2010.

Cash provided by operations was $9.7 million for the quarter ended October 31, 2010 as compared to $6.8 million for the quarter ended October 31, 2009. Before taking into account the changes in non-cash working capital, the Company generated $27.2 million from operations for the quarter ended October 31, 2010 compared to $22.6 million for the same period last year.

For the quarter ended October 31, 2010, the Company spent $0.9 million on the purchase of equipment offset by the proceeds from the sale of capital assets of $0.6 million.

For the quarter ended October 31, 2010, the Company used cash from financing activities of $5.9 million which was principally a result of the payment of dividends offset by the issuance of capital stock pursuant to the Company Stock Option Plan of $1.7 million.

Shipments and Backlog

Purchase order backlog at the end of November 2010 was in excess of $30 million and shipments during the month of November 2010 exceeded $30 million.

Dividend Declared

Evertz Board of Directors declared a dividend on December 07, 2010 of $0.10.

The dividend is payable to shareholders of record on December 16, 2010 and will be paid on or about December 23, 2010.

Subsequent Event

The Company, on December 3, 2010, entered into an agreement to purchase the shares of an international technology based company for under $5 million.

Selected Consolidated Financial Information
(Unaudited)
 
(in thousands of dollars, except earnings per share and share data)
Consolidated Statement of Earnings Data                                
      Three month period ended       Six month period ended  
      October 31,       October 31,  
      2010       2009       2010       2009  
Sales   $ 82,327     $ 72,984     $ 156,143     $ 145,005  
Cost of goods sold     34,688       30,630       65,506       59,235  
Gross margin   $ 47,639     $ 42,354     $ 90,637     $ 85,770  
Gross margin %     57.9 %     58.0 %     58.0 %     59.1 %
Expenses                                
  Selling and administrative     9,194       9,125       17,581       17,786  
  Research and development     8,221       9,076       16,243       16,341  
  Investment tax credits     (1,876 )     (2,014 )     (3,881 )     (4,025 )
  Foreign exchange (gain) loss     (423 )     (642 )     (1,103 )     3,471  
  Amortization of intangibles     219       402       438       803  
  Stock-based compensation     1,025       1,467       1,959       3,004  
      16,360       17,414       31,237       37,380  
Earnings from operations   $ 31,279     $ 24,940     $ 59,400     $ 48,390  
   
Interest and other income   $ (1,975 )   $ 438     $ (1,055 )   $ 775  
Non-controlling interest     (194 )     (140 )     (336 )     (231 )
Earnings before income taxes   $ 29,110     $ 25,238     $ 58,009     $ 48,934  
Net earnings   $ 20,908     $ 17,512     $ 41,470     $ 34,589  
Net earnings per share:                                
  Basic   $ 0.28     $ 0.24     $ 0.56     $ 0.47  
  Fully-diluted   $ 0.28     $ 0.23     $ 0.56     $ 0.46  
           
           
Consolidated Balance Sheet Data          
    As at     As at
    October 31, 2010     April 30, 2010
Cash and instruments held for trading   $ 151,661   $ 145,029
Inventory   $ 107,071   $ 91,745
Working capital   $ 300,026   $ 264,161
Total assets   $ 374,227   $ 345,787
Shareholders' equity   $ 344,917   $ 312,169
 
Number of common shares outstanding:            
  Basic   73,876,906     73,607,506
  Fully-diluted   78,263,806     77,703,006
 
Weighted average number of shares outstanding:            
  Basic   73,663,050     73,324,244
  Fully-diluted 1   74,102,527     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 December 07, 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 January 07, 2011. The rebroadcast can be accessed at 1-416-915-1035 or toll-free 1-866-245-6755. The pass code for the rebroadcast is 329631.

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