Evertz Technologies Limited
TSX : ET

Evertz Technologies Limited

June 16, 2010 16:05 ET

Evertz Technologies Reports Results for the Fourth Quarter and Fiscal Year Ended April 30, 2010

BURLINGTON, ONTARIO--(Marketwire - June 16, 2010) -

Attention Business/Financial Editors:

Evertz Technologies Limited (TSX:ET), a leading equipment provider to the television broadcast industry, today reported its results, ended April 30, 2010, of its fiscal 2010 year.                        

Annual Highlights

  • Sales were $286.5 million with the International region up 24% year-over-year
  • Gross margin was 58%
  • Cash increased to $145.0 million
  • Gross investment in R&D was $32.0 million
  • Net earnings of $61.5 million despite a foreign exchange loss of $8.0 million for the year
  • Fully-diluted earnings per share were $0.83 for the year as compared to $1.36 a year ago
Selected Financial Information
Consolidated Statement of Earnings Data
(in thousands of dollars, except per share amounts)
 
  Q4'10   YE'10   Q4'09   YE'09
Sales $ 75,285   $ 286,455   $ 77,296   $ 315,905
Gross Margin   43,425     166,973     47,654     194,019
Earnings from operations   22,828     89,933     29,709     137,258
Net Income   15,253     61,502     20,763     100,717
Fully-diluted earnings per share $ 0.21   $ 0.83   $ 0.28   $ 1.36

 

Selected Financial Information      
Consolidated Balance Sheet Data      
(in thousands of dollars)      
  YE'10   YE'09
Cash and Instruments Held for Trading $ 145,029   $ 114,020
Working Capital   264,161     216,539
Total Assets   345,787     316,446
Shareholders' Equity   312,169     268,376

Sales

For the quarter ended April 30, 2010, sales were $75.3 million, a decrease of $2.0 million or 2.6% as compared to sales of $77.3 million for the quarter ended April 30, 2009. For the quarter, sales in the United States/Canada region decreased by $13.5 million or 28% when compared to the same quarter last year. The International region grew by $11.5 million or 41% for the quarter ended April 30, 2010 when compared to the same quarter last year.

For the year ended April 30, 2010, sales were $286.5 million, a decrease of $29.4 million or 9% as compared to sales of $315.9 million for the prior year. The United States/Canada region decreased by $55.2 million or 26% when compared to the prior year, and the International region grew by $25.8 million or 24% when compared to the prior year.

Gross Margin

For the quarter ended April 30, 2010 gross margin was $43.4 million compared to $47.7 million in the same quarter last year. Gross margin percentage was approximately 58% as compared to 62% for the quarter ended April 30, 2009.

For the year ended April 30, 2010 gross margin was $167.0 million compared to $194.0 million when compared to the year ended April 30, 2009. Gross margin percentage was approximately 58% for the year ended April 30, 2010 as compared to 61% for the prior year.

Earnings

For the quarter ended April 30, 2010 net earnings were $15.3 million as compared to $20.8 million in the corresponding period last year.

For the year ended April 30, 2010 net earnings were $61.5 million as compared to $100.7 in the corresponding period last year, a decrease of 39%.

For the quarter ended April 30, 2010, earnings per share on a fully-diluted basis were $0.21 as compared to $0.28 in the same period in 2009.

For the year ended April 30, 2010 earnings per share on a fully-diluted basis were $0.83 as compared to $1.36 in the same period in 2009.

Operating Expenses

For the quarter ended April 30, 2010 selling and administrative expenses decreased by $1.6 million as compared to the prior year. Selling and administrative expenses represented approximately 14% of sales in the quarter ended April 30, 2010.

For the year ended April 30, 2010 selling and administrative expenses increased by $1.6 million as compared to the year ended April 30, 2009. Selling and administrative expenses represented approximately 13% of sales in fiscal 2010.

For the quarter ended April 30, 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 10% of sales for the quarter as compared to the approximately 9% for the same period last year.

For the year ended April 30, 2010 gross research and development expenses rose by 12% or $3.3 million as compared to the prior year. Research and development expenses represented approximately 11% of sales.

Liquidity and Capital Resources

The Company's working capital as at April 30, 2010 was $264.2 million as compared to $216.5 million on April 30, 2009.

Cash and instruments held for trading were $145.0 million as at April 30, 2010 as compared to $114.0 million on April 30, 2009.

Cash provided by operations was $19.0 million for the quarter ended April 30, 2010 as compared to $29.6 million for the quarter ended April 30, 2009. Before taking into account the changes in non-cash working capital, the Company generated $20.0 million from operations for the quarter ended April 30, 2010 compared to $26.9 million for the same period last year.

Cash provided by operations was $59.7 million for the 2010 fiscal year as compared to cash provided by operations of $90.1 million for the 2009 fiscal year. Before taking into account changes in non-cash working capital, the Company generated $81.9 million from operations for fiscal 2010 as compared to $113.9 million for fiscal 2009.

The Company spent $1.6 million on the purchase of equipment for the quarter ended April 30, 2010 and $5.4 million for the year ended April 30, 2010.

For the quarter ended April 30, 2010, the Company used cash from financing activities of $5.5 million as a result of the payout of dividends of $5.4 million.

For the year ended April 30, 2010, the Company used cash from financing activities of $23.0 million as a result of payment of dividends of $23.5 million, repayment of debt of $1.3 million offset by issuance of share capital of $2.3 million.

Shipments and Backlog

Purchase order backlog at the end of May 2010 was in excess of $30 million and shipments during the month of May 2010 exceeded $25 million.

Dividend Declared

Evertz Board of Directors declared a dividend on June 16, 2010 of $0.08 per share. The dividend is payable to shareholders of record on July 14, 2010 and will be paid on or about July 23, 2010.

Consolidated Statements of Balance Sheets  
(Unaudited)  
       
As at April 30  
(in thousands of dollars)  
         
  April 30,   April 30,  
  2010   2009  
Assets            
   
Current assets            
  Cash $ 133,755   $ 81,376  
  Instruments held for trading   11,274     32,644  
  Accounts receivable   48,988     53,144  
  Inventories   91,745     86,518  
  Income tax receivable   3,850     -  
  Future income taxes   -     2,197  
  $ 289,612   $ 255,879  
   
Capital assets $ 39,768   $ 43,145  
Goodwill   14,584     14,359  
Intangible assets   1,823     3,063  
  $ 345,787   $ 316,446  
   
Liabilities            
   
Current liabilities            
  Accounts payable and accrued liabilities $ 23,899   $ 32,529  
  Income taxes payable   -     5,303  
  Current portion of long term debt   388     1,508  
  Future income taxes   1,164     -  
  $ 25,451   $ 39,340  
   
Long term debt $ 2,732   $ 3,519  
Future income taxes   4,027     3,282  
  $ 32,210   $ 46,141  
   
Non-controlling interest   1,408     1,929  
             
Shareholders' Equity            
   
Capital stock $ 51,035   $ 48,261  
Contributed surplus   12,828     6,769  
   
Accumulated other comprehensive loss   (4,459 )   (1,403 )
Retained earnings   252,765     214,749  
  $ 248,306   $ 213,346  
   
    312,169     268,376  
  $ 345,787   $ 316,446  

 

Consolidated Statements of Retained Earnings  
(Unaudited)        
           
Three month and Twelve month periods ended April 30, 2010 and 2009  
(in thousands of dollars)        
           
  Three month periods ended     Twelve month periods ended  
  April 30,     April 30,  
  2010   2009     2010   2009  
Balance, beginning of period $ 242,900   $ 199,833     $ 214,749   $ 139,530  
Net earnings   15,253     20,763       61,502     100,717  
Shares repurchased pursuant to NCIB   -     -       -     (1,789 )
Dividends paid   (5,388 )   (5,847 )     (23,486 )   (23,709 )
Balance, end of period $ 252,765   $ 214,749     $ 252,765   $ 214,749  
   
   
Consolidated Statements of Comprehensive Income                
(Unaudited)                  
   
Three month and Twelve month periods ended April 30, 2010 and 2009        
(in thousands of dollars)                  
   
  Three month periods ended     Twelve month periods ended  
  April 30,     April 30,  
  2010   2009     2010   2009  
Net earnings for the period $ 15,253   $ 20,763     $ 61,502   $ 100,717  
Translation of self-sustaining operations   (1,993 )   (39 )     (3,056 )   (1,022 )
Balance, end of period $ 13,260   $ 20,724     $ 58,446   $ 99,695  
   
Consolidated Statements of Earnings  
(Unaudited)  
   
Three month and Twelve month periods ended April 30, 2010 and 2009  
(in thousands of dollars, except earnings per share amounts)  
   
  Three month periods ended     Twelve month periods ended  
  April 30,     April 30,  
    2010     2009       2010     2009  
   
Sales $ 75,285   $ 77,296     $ 286,455   $ 315,905  
Cost of goods sold   31,860     29,642       119,482     121,886  
Gross margin   43,425     47,654       166,973     194,019  
   
Expenses                          
  Selling and administrative   10,305     11,858       37,550     35,907  
  Research and development   7,708     6,999       32,026     28,719  
  Investment tax credits   (2,182 )   (3,738 )     (8,270 )   (8,377 )
  Foreign exchange loss (gain)   2,948     1,286       7,969     (4,802 )
  Amortization of intangibles   36     402       1,240     1,533  
  Stock-based compensation   1,782     1,138       6,525     3,781  
    20,597     17,945       77,040     56,761  
Earnings before undernoted   22,828     29,709       89,933     137,258  
   
Interest and other income   1,097     324       342     2,889  
Non-controlling interest   344     (118 )     21     (523 )
Earnings before income taxes   24,269     29,915       90,296     139,624  
   
Provision for income taxes                          
  Current   7,175     6,936       24,391     35,613  
  Future   1,841     2,216       4,403     3,294  
    9,016     9,152       28,794     38,907  
   
Net earnings for the year   15,253     20,763       61,502     100,717  
   
Earnings per share                          
Basic $ 0.21   $ 0.28     $ 0.84   $ 1.39  
Diluted $ 0.21   $ 0.28     $ 0.83   $ 1.36  
   
Consolidated Statements of Cash Flows  
(Unaudited)  
   
Three month and Twelve month periods ended April 30, 2010 and 2009  
(in thousands of dollars)  
   
  Three month periods ended     Twelve month periods ended  
  April 30,     April 30,  
    2010     2009       2010     2009  
Operating activities                          
Net earnings $ 15,253   $ 20,763     $ 61,502   $ 100,717  
Add: Items not involving cash                          
  Amortization of capital assets   2,062     2,305       7,508     6,316  
  Amortization of intangible assets   36     402       1,240     1,533  
  Amortization of deferred credit   -     -       -     (2,281 )
  Unrealized (gain) loss on instruments held for trading   (633 )   -       717     -  
  Loss on disposal of capital assets   6     3       6     3  
  Non-controlling interest   (314 )   118       (21 )   523  
  Stock-based compensation   1,782     1,138       6,525     3,781  
  Future income taxes   1,841     2,216       4,403     3,294  
    20,033     26,945       81,880     113,886  
Changes in non-cash working capital items   (1,061 )   2,692       (22,145 )   (23,821 )
Cash provided by operating activities   18,972     29,637       59,735     90,065  
   
Investing activities                          
  Acquisition of instruments held for trading   -     59       (11,347 )   (30,796 )
  Proceeds from sale of instruments held for trading   -     9,000       32,000     83,500  
  Acquisition of capital assets   (1,562 )   (4,068 )     (5,384 )   (14,862 )
  Proceeds from disposal of capital assets   45     23       45     23  
  Business acquisitions net of cash acquired   -     (14,149 )     -     (25,274 )
Cash provided by investing activities   (1,517 )   (9,135 )     15,314     12,591  
   
Financing activities                          
  Repayment of long term debt   152     (7,359 )     (1,306 )   (7,359 )
  Dividends paid   (5,388 )   (5,847 )     (23,486 )   (23,709 )
  Dividends paid by subsidiaries to non-controlling interests   (500 )   -       (500 )   -  
  Capital stock issued   203     38       2,308     2,264  
  Shares repurchased pursuant to NCIB   -     -       -     (1,875 )
Cash used in financing activities   (5,533 )   (13,168 )     (22,984 )   (30,679 )
   
Effect of exchange rates on cash   680     (97 )     314     (796 )
   
Increase in cash   12,602     7,237       52,379     71,181  
Cash beginning of year   121,153     74,139       81,376     10,195  
Cash end of year $ 133,755   $ 81,376     $ 133,755   $ 81,376  

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 June 16, 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 1-416-915- 1035 or toll-free (North America) 1-800-829-9048.

For those unable to listen to the live call, a rebroadcast will also be available until July 16, 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 130455.

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