Evertz Technologies Limited
TSX : ET

Evertz Technologies Limited

December 12, 2006 16:08 ET

Evertz Technologies Reports Second Quarter Results

BURLINGTON, ONTARIO--(CCNMatthews - Dec. 12, 2006) -

Attention Business/Financial Editors:

Evertz Technologies Limited (TSX:ET), a leading equipment provider to the television broadcast industry, today reported results for the second quarter, ended October 31, 2006, of its fiscal 2007 year.

Second Quarter Highlights

- Sales were $46.7 million, 46% higher year-over-year for the quarter

- Gross investment in R&D increased $1.1 million, 47% year-over-year for the quarter

- Net earnings were $14.2 million in the second quarter against $9.3 million a year ago

- Diluted earnings per share were $0.19 in the second quarter against $0.14 a year ago

- Positive customer reaction to the integrated Evertz Quartz presence at IBC (International Broadcasters Convention) in Amsterdam



Selected Financial Information
Consolidated Statement of Earnings Data (in '000 except share data)

Q2'07 Q2'06
-------- --------
Sales $ 46,695 $ 31,945
Gross Margin 28,401 19,669
Operating Income 19,937 13,617
Net Income 14,204 9,308
Fully-diluted earnings per share $ 0.19 $ 0.14


Selected Financial Information
Consolidated Balance Sheet Data

Q2'07 Q4'06
-------- --------
Cash and Cash Equivalents $ 10,276 $ (20,397)
Working Capital 62,546 (807)
Total Assets 94,978 61,706
Shareholder's Equity $ 78,694 $ 7,979


In the second quarter of fiscal 2007 sales were $46.7 million, an increase of 46% or $14.8 million as compared to sales of $31.9 million for the second quarter of fiscal 2006. The Canada/US region grew by $9.2 million or 38% and the international region grew by $5.6 million or 70% when compared to the second quarter of fiscal 2006.

Gross margin was $28.4 million in the second quarter compared to $19.7 million in the corresponding period last year. Gross margin percentage was approximately 61% which is within what the Company believes to be an appropriate range.

Net earnings were $14.2 million in the second quarter compared to $9.3 million in the corresponding period last year, an increase of 53%.

Earnings per share on a fully diluted basis were $0.19 in the second quarter of fiscal 2007 compared to $0.14 in the same period in 2006.

Selling and Administrative expenses increased by $2.1 million in the second quarter of fiscal 2007 compared to the second quarter of fiscal 2006. The increase was attributable to increased selling expenses as well as general administrative overhead increases as a result of operating as a public company. Selling and Administrative expenses represented approximately 11.9% of sales in the second quarter of fiscal 2007.

Research and Development expenses rose by 47% to $3.4 million during the second quarter of fiscal 2007 as compared to the corresponding period during fiscal 2006. Research and Development expenses represented approximately 7.3% of sales. The Company intends to continue to increase its Research and Development expenses in the balance of fiscal 2007.

The Company's working capital as at October 31, 2006 was $62.5 million as compared to $0.8 million deficit on April 30, 2006.

Cash and Cash Equivalents improved to $10.3 million as at October 31, 2006 as compared to a bank indebtedness of $20.4 million as at April 30, 2006.

Cash provided by operations was $3.3 million in the second quarter of fiscal 2007 as compared to cash provided by operations of $6.8 million in the second quarter of fiscal 2006. Before taking into account changes in non-cash working capital, the Company generated $15.8 million from operations in the second quarter fiscal 2007 as compared to $10.2 million in second quarter fiscal 2006. During the second quarter of fiscal 2007, there was a $12.4 million change in non-cash working capital as a result of increases in accounts receivable and inventory of $6.8 million and a reduction in accounts payable of $1.0 million and a reduction in tax payable of $4.6 million.

Cash used in investing activities was $2.2 million in the second quarter of fiscal 2007 resulting from the acquisition of capital assets.

Purchase order backlog at the end of November was in excess of $16 million and shipments during the month of November exceeded $15 million.

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 Tuesday, December 12, 2006 at 5:00 p.m. (EST). Media and other interested parties are invited to join the conference call in listen-only mode. The conference call may be accessed by dialing (416) 849-6166 or Toll-Free (North America) 1-866-250-6267.

For those unable to listen to the live call, a rebroadcast can be accessed at (416) 915-1035 or Toll-Free 1-866-245-6755. The pass code for the rebroadcast is 678174.

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
    Brian Campbell
    Executive Vice-President, Business Development
    (905) 335-7580
    Email: ir@evertz.com
    Website: www.evertz.com