Evertz Technologies Reports a Record $112 Million Revenue for the Second Quarter Ended October 31, 2018

BURLINGTON, Ontario, Dec. 05, 2018 (GLOBE NEWSWIRE) — Evertz Technologies Limited (TSX:ET), the leader in Software Defined Video Network (“SDVN”) technology, today reported its results for the second quarter ended October 31, 2018.

Second Quarter 2019 Highlights

  • Record quarterly revenue of $112.3 million, up 11% from the prior year
  • US/Canada revenue up 18% to $75.5 million from the prior year
  • Net earnings of $20.6 million for the quarter, up 18% from the prior year
  • Fully diluted earnings per share of $0.27 for the quarter, up 17% from the prior year
         
Selected Financial Information
Consolidated Statement of Earnings Data
(in thousands of dollars, except earnings per share and share data)
         
     Q2 ’19     Q2 ’18 
Revenue   $ 112,280   $ 101,261
Gross margin     64,158     56,752
Earnings from operations     27,388     23,874
Net earnings     20,581     17,429
Fully-diluted earnings per share   $ 0.27   $ 0.23
Fully-diluted shares     76,516,761     76,313,441
         
Selected Financial Information
Consolidated Balance Sheet Data
(in thousands of dollars)
       
     Q2 ’19     YE ’18 
Cash and marketable securities   $ 78,949   $ 94,184
Working capital     274,457     264,514
Total assets     431,999     421,115
Shareholders’ equity     338,784     329,227
         

Revenue
For the quarter ended October 31, 2018, revenues were $112.3 million, compared to revenues of $101.3 million for the quarter ended October 31, 2017.  For the quarter, revenues in the United States/Canada region were $77.5 million, an increase of 18%, compared to $66.0 million in the same quarter last year.  The International region had revenues of $34.8 million, compared to $35.3 million in the same quarter last year.

Gross Margin
For the quarter ended October 31, 2018, gross margin was $64.2 million as compared to $56.8 million in the same quarter last year.  Gross margin percentage was approximately 57.1% as compared to 56.0% in the quarter ended October 31, 2017.

Earnings
For the quarter ended October 31, 2018, net earnings were $20.6 million as compared to $17.4 million in the corresponding period last year.

For the quarter ended October 31, 2018, earnings per share on a fully-diluted basis were $0.27 as compared to $0.23 in the corresponding period last year.

Operating Expenses
For the quarter ended October 31, 2018, selling and administrative expenses were $16.4 million as compared to $16.0 million for the quarter ended October 31, 2017. 

For the quarter ended October 31, 2018, gross research and development expenses were $21.1 million as compared to $20.2 million for the quarter ended October 31, 2017.

Liquidity and Capital Resources
The Company’s working capital as at October 31, 2018 was $274.5 million as compared to $264.5 million on April 30, 2018.

Cash and marketable securities were $78.9 million as at October 31, 2018 as compared to $94.2 million on April 30, 2018.

Cash used from operations was $7.6 million for the quarter ended October 31, 2018 as compared to $2.8 million for the quarter ended October 31, 2017.  Before taking into account taxes and the changes in non-cash working capital and current taxes, the Company generated $22.7 million from operations for the quarter ended October 31, 2018 compared to $20.1 million for the same period last year.

For the quarter, the Company used $5.9 million from investing activities which was principally driven by the purchase of marketable securities of $2.9 million and capital equipment of $3.1 million.

For the quarter ended, the Company used cash in financing activities of $14.0 million which was principally a result of the payment of dividends of $14.1 million.

Acquisition
On November 1, 2018, the Company acquired Quintech Electronics and Communications, Inc. (“Quintech”), a privately held company headquartered in Indiana, Pennsylvania, USA, with world class RF solutions and products deployed in over 120 countries.  The acquisition was completed for cash consideration of $6.6 million at closing with a working capital adjustment to be completed in the third quarter.  

Shipments and Backlog
At the end of November 2018, purchase order backlog was in excess of $103 million and shipments during the month of November 2018 were $38 million.  

Dividend Declared
Evertz Board of Directors declared a regular quarterly dividend on December 5, 2018 of $0.18 per share.

The dividend is payable to shareholders of record on December 14, 2018 and will be paid on or about December 21, 2018.

                   
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,
    2018     2017       2018     2017  
Revenue $ 112,280   $ 101,261     $ 215,369   $ 210,270  
Cost of goods sold   48,122     44,509       92,433     92,357  
Gross margin   64,158     56,752       122,936     117,913  
                           
Expenses                          
Selling and administrative   16,389     16,026       32,294     31,853  
General   2,069     2,370       3,408     4,467  
Research and development   21,083     20,214       42,403     39,486  
Investment tax credits   (1,933 )   (2,850 )     (3,936 )   (5,301 )
Foreign exchange (gain) loss   (838 )   (2,882 )     (1,910 )   5,362  
    36,770     32,878       72,259     75,867  
Earnings before undernoted   27,388     23,874       50,677     42,046  
                           
Finance income   310     174       669     275  
Finance costs   (83 )   (157 )     (509 )   (205 )
Other income and expenses   5     (75 )     140     (46 )
Earnings before income taxes   27,620     23,816       50,977     42,070  
Provision for (recovery of) income taxes                          
Current   7,876     6,515       13,494     12,370  
Deferred   (837 )   (128 )     (459 )   (921 )
    7,039     6,387       13,035     11,449  
                           
Net earnings for the period $ 20,581   $ 17,429     $ 37,942   $ 30,621  
                   
Net earnings attributable to non-controlling interest   235     143       323     257  
Net earnings attributable to shareholders   20,346     17,286       37,619     30,364  
Net earnings for the period $ 20,581   $ 17,429     $ 37,942   $ 30,621  
                           
Earnings per share                          
Basic $ 0.27   $ 0.23     $ 0.49   $ 0.40  
Diluted $ 0.27   $ 0.23     $ 0.49   $ 0.40  

 

Consolidated Balance Sheet Data     As at       As at  
      October 31, 2018       April 30, 2018  
Cash and cash equivalents   $ 65,189     $ 94,184  
Inventory   $ 171,430     $ 168,070  
Working capital   $ 274,457     $ 264,514  
Total assets   $ 431,999     $ 421,115  
Shareholders’ equity   $ 338,784     $ 329,227  
                 
Number of common shares outstanding:                
Basic     76,519,746       76,481,746  
Fully-diluted     79,036,246       78,722,746  
                 
Weighted average number of shares outstanding:                
Basic     76,497,637       76,211,007  
Fully-diluted     76,516,761       76,347,750  
                 

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 5, 2018 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 647-793-2625 or toll‑free (North America) 1-888-297-0356, access code 2223034.

For those unable to listen to the live call, a rebroadcast will also be available until January 4, 2019.  The rebroadcast can be accessed at 647-436-0148 or toll‑free 1-888-203-1112.  The pass code for the rebroadcast is 2223034.

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 and ultra-high definition television (“HDTV” and “UHD”) and next generation high bandwidth low latency IP network environments and by telecommunications and new-media companies.  The Company’s products allow its customers to generate additional revenue while reducing costs through efficient signal routing, distribution, monitoring and management of content as well as the automation and orchestration of more streamlined and agile workflow processes on premise and in the “Cloud”.

Contact: 
Anthony Gridley 
Chief Financial Officer 
(905) 335‑7580 
[email protected]