Evertz Reports 13% Increase in Q2 Revenue Driven by Strong International Sales. Announces Purchase of File-based Workflow Specialist.

Posted by Joe Zaller
Dec 07 2010

Evertz Technologies reported that it earned C$20.9m during its second quarter on sales of C$82.3.  Sales were up 13% year over year, and up 12% versus the previous quarter.  According to a Reuters article, analysts were expecting revenue to come in around C$78.6m.

Without disclosing any specific names, Evertz said that its top ten customers accounted for around 35% of sales (C$28.8m) during the quarter, and that no customer accounted for more than 12% of revenue (C$9.9m).

International sales, which increased 42% versus the same period a year ago, were C$42.8m and accounted for 52% of total revenue.  This is the first time that more than 50% of the company’s revenue has come from the international market.  Meanwhile, sales in the US and Canada were down 8% versus the prior year quarter to C$40.4m.  

The company said that its backlog at the end of the November 2010 was more than C$30m, and that the geographic mix of these future sales was similar to its Q2 performance – so it appears that the its strong international performance will continue.

Gross margins were 57.9%, at the lower end of the company’s target range.  On the earnings conference call company management attributed the lower gross margins to product mix and increased pricing pressure, but said that they were not changing their gross margin targets.

For the first six months of the year the company’s sales were C$156.1m, an increase of 8% versus the first half of last year.  International sales were up 22% during the first six months of the year, while sales from the US and Canada were down 3%.  Gross margins for the first half of the year were 58%.

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Acquires file-base specialist

In its earnings press release, the company said that it had “entered into an agreement to purchase the shares of an international technology based company for under $5 million.” 

When asked about this purchase by equity analysts on the conference call, Evertz EVP Brian Campbell did not identify the acquired company by name, but said that it had revenue of around C$9m and provides file-based workflow, automation and content management tools.  Campbell said that these new capabilities would help Evertz accelerate its penetration of file-based markets, specifically those it will soon be addressing with its recently announced media server and channel-in-a-box products.  Campbell told analysts that the company’s media server is a full system, encompassing ingest, playout and enterprise storage; and that the company expects to achieve “significant traction” in the market with this product.

When asked about the possibility of future M&A, Campbell said that because of its size and reach, Evertz is often approached by smaller companies who are looking for a bigger partner.  

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You can read the full Evertz Q2 earnings release here.

Information about the company’s previous quarter results are here.

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