Evertz Technologies Limited
TSX : ET

Evertz Technologies Limited

December 03, 2014 16:01 ET

Evertz Technologies Reports Results for the Second Quarter Ended October 31, 2014

BURLINGTON, ONTARIO--(Marketwired - Dec. 3, 2014) - Evertz Technologies Limited (TSX:ET), the leader in Software Defined Video Network ("SDVN") technology, today reported its results for the second quarter of its fiscal 2015.

Quarterly Highlights

  • Revenue of $82.9 million, up 2% year over year
  • United States / Canada region revenue up 19% to $45.4 million, compared to the same quarter last year
  • Net earnings of $14.3 million for the quarter
  • Fully diluted earnings per share of $0.19
  • Quarterly dividend increase of 13% to $0.18 per share, payable on or about December 19, 2014
Selected Financial Information
Consolidated Statement of Earnings Data
(in thousands of dollars, except per share amounts)
Q2 ' 15 Q2 ' 14
Revenue$82,889 $81,244
Gross Margin 46,565 46,652
Earnings from operations 19,528 20,855
Net earnings 14,343 15,620
Fully-diluted earnings per share$0.19 $0.21
Selected Financial Information
Consolidated Balance Sheet Data
(in thousands of dollars)
Q2 ' 15 YE ' 14
Cash and cash equivalents$90,384 $101,956
Working capital 285,253 273,914
Total assets 398,949 401,280
Shareholders' equity 345,575 333,478

Revenue

For the quarter ended October 31, 2014, revenues were $82.9 million as compared to revenues of $81.2 million for the quarter ended October 31, 2013. For the quarter, revenues in the United States/Canada region were $45.4 million, an increase of $7.3 million or 19% when compared to the same quarter last year. The International region had revenues of $37.5 million compared to $43.1 million in the same quarter last year.

Gross Margin

For the quarter ended October 31, 2014 gross margin was $46.6 million compared to $46.7 million in the same quarter last year. Gross margin percentage was approximately 56.2% compared to 57.4% in the quarter ended October 31, 2013.

Earnings

For the quarter ended October 31, 2014 net earnings were $14.3 million, compared to $15.6 million in the corresponding period last year.

For the quarter ended October 31, 2014, earnings per share on a fully-diluted basis were $0.19 compared to $0.21 in the corresponding period last year.

Operating Expenses

For the quarter ended October 31, 2014 selling and administrative expenses were $15.1 million compared to $13.7 million for the quarter ended October 31, 2013.

For the quarter ended October 31, 2014 gross research and development expenses increased by $0.5 million or 3% as compared to the corresponding period in 2013. Gross research and development expenses represented approximately 18.2% of revenue for the quarter ended October 31, 2014.

Liquidity and Capital Resources

The Company's working capital as at October 31, 2014 was $285.3 million as compared to $273.9 million on April 30, 2014.

Cash and cash equivalents were $90.4 million as at October 31, 2014 as compared to $102.0 million on April 30, 2014.

Cash used in operations was $0.7 million for the quarter ended October 31, 2014 as compared to cash provided of $9.7 million for the quarter ended October 31, 2013. Before taking into account taxes and the changes in non-cash working capital and current taxes, the Company generated $17.5 million from operations for the quarter ended October 31, 2014 compared to $19.4 million for the same period last year.

The Company used cash of $2.0 million in investing activities largely a result of purchases in capital assets of $2.0 million, compared to $1.6 million in capital assets purchased for the quarter ended October 31, 2013.

For the quarter ended October 31, 2014, the Company used cash in financing activities of $10.5 million which was principally a result of the payment of dividends.

Shipments and Backlog

At the end of November 2014, purchase order backlog was in excess of $64 million and shipments during the month of November 2014 were $26 million.

Dividend Declared

On December 3, 2014, the Evertz Board of Directors approved a 13% increase of the dividend to $0.18 per share from $0.16 per share. This is the 7th dividend increase in the past seven years reflecting the underlying strength of the Company's cash flow and business outlook.

The dividend is payable to shareholders of record on December 12, 2014 and will be paid on or about December 19, 2014.

Selected Consolidated Financial Information
(in thousands of dollars, except earnings per share and percentages)
Three month period ended Six month period ended
October 31, October 31,
2014 2013 2014 2013
Revenue $ 82,889 $ 81,244 $ 180,903 $ 145,102
Cost of goods sold 36,324 34,592 78,517 61,736
Gross margin 46,565 46,652 102,386 83,366
Expenses
Selling and administrative 15,103 13,671 28,502 25,283
General 1,323 1,465 3,133 2,927
Research and development 15,121 14,625 30,941 28,084
Investment tax credits (2,387 ) (3,008 ) (4,853 ) (5,865 )
Foreign exchange gain (2,123 ) (956 ) (1,380 ) (3,465 )
27,037 25,797 56,343 46,964
Earnings before undernoted 19,528 20,855 46,043 36,402
Finance income 201 603 394 1,224
Finance costs (76 ) (112 ) (143 ) (214 )
Other income and expenses (113 ) (92 ) 27 (85 )
Earnings before income taxes 19,540 21,254 46,321 37,327
Provision for (recovery of) income taxes
Current 5,249 5,345 14,560 11,715
Deferred (52 ) 289 (2,288 ) (1,824 )
5,197 5,634 12,272 9,891
Net earnings for the period $ 14,343 $ 15,620 $ 34,049 $ 27,436
Net earnings attributable to non-controlling interest 194 198 489 281
Net earnings attributable to shareholders 14,149 15,422 33,560 27,155
Net earnings for the period $ 14,343 $ 15,620 $ 34,049 $ 27,436
Earnings per share
Basic $ 0.19 $ 0.21 $ 0.45 $ 0.37
Diluted $ 0.19 $ 0.21 $ 0.45 $ 0.37
Consolidated Balance Sheet Data As at As at
October 31, 2014 April 30, 2014
Cash and cash equivalents $ 90,384 $ 101,956
Inventory $ 150,105 $ 134,561
Working capital $ 285,253 $ 273,914
Total assets $ 398,949 $ 401,280
Shareholders' equity $ 345,575 $ 333,478
Number of common shares outstanding:
Basic 74,454,346 74,310,146
Fully -diluted 79,299,846 79,513,846
Weighted average number of shares outstanding:
Basic 74,341,160 74,064,205
Fully -diluted 74,895,569 74,485,461

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 3, 2014 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 toll-free (North America) 1-888-253-4709.

For those unable to listen to the live call, a rebroadcast will also be available until January 3, 2015. The rebroadcast can be accessed at 1-416-915-1035 or toll-free 1-866-245-6755. The pass code for the rebroadcast is 130013.

About Evertz

Evertz Technologies Limited (TSX:ET) designs, manufactures and markets video and audio infrastructure solutions for the television, telecommunications and new-media industries. 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 and new-media companies. 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