Evertz Reports Q4 and Full Year Results

Posted by Joe Zaller
Jun 17 2010

Last night, broadcast technology vendor Evertz released their Q4 and full year results.

You can read the company’s earnings press release here.

You can hear a replay of conference call by dialing +1.866.245.6755. Pass code: 130455.

The company delivered good results, which topped the expectations of equity analysts.

Here are a few highlights:

Revenue for Q4 was C$75.3m, down 3% versus the same period a year ago, but up 14% over the previous quarter.

In terms of geographic split, sales in Q4 from the US and Canada decreased by 28% versus the same period last year, but this was partially offset by a 41% y/y increase in international revenue (which Evertz defines as markets outside of the US and Canada).  International revenue rose by 23% versus the previous quarter, while sales in the US and Canada decreased by 28%.

Revenue for the full year was C$286.5, a 9% y/y decline. 

Annual revenue from the US and Canada declined 26% versus last year, while international revenue was up by 24% over last year.

The company’s gross margins slipped a bit to 58% (versus 61% last year).  On the earnings conference call, the company attributed this to pricing pressures and the cost of international expansion.

Overall, this was a strong performance from Evertz.  The company’s international growth is particularly notable. 

The growth in international sales confirms the findings from the 2010 Big Broadcast Survey, which found that both the top trend and top project in the European market is the transition to HDTV HD/3Gbps operations. 

The market in the US and Canada has slowed due to the recession and also because many of the top TV markets have already transitioned to HDTV operations.  Thus the spending on this type of equipment is shifting to Europe and Asia.  Traditionally these markets have not been strong for Evertz, but the company has clearly made international expansion a priority and despite the slightly lower gross margins, we are seeing the fruits of these efforts.  Indeed, international sales accounted for just over half of the company’s Q4 revenue and 46% of total revenue for the full year.

This of course make one wonder, is the European market getting larger, or is Evertz taking share away from entrenched incumbents?

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