Evertz Misses Q4 Revenue and Profit Expectations as International Sales Fall by 31%

Posted by Joe Zaller
Jun 16 2011

Evertz announced that its revenue for the fourth quarter of its 2011 fiscal year was C$68.5m, down 9% versus the same period a year ago, and a down of 18% versus the previous quarter.  The results for the quarter were below the expectations of equity analysts, which on average were looking for revenue of C$76.7m.

The decline in sales during the quarter was due to a sharp drop in international revenue, which decreased 31% versus the same period a year ago.  Q4 sales in the US/Canada region were up 16% versus the same period a year ago.

Net income in the quarter was C$12.4m, or C$0.16 per share, down 19% versus the fourth quarter last year and down 47% versus the previous quarter. Analysts were expecting earnings of C$0.24 per share in Q4.

Gross margins in the quarter were 57%, down from 58% last year and 57.5% in the previous quarter.  On the company’s earnings conference call, Evertz CFO Anthony Gridley said that the lower gross margins were due to a variety of factors including pricing, volume and currency fluctuations.

Evertz EVP Brian Campbell added that the company’s gross margins have been at the lower end of its target range for several quarters, and now that the company has entered the video server market he expects the company’s gross margin range to be in the 56% – 60% going forward.  The company’s target gross margin range had previously been 58% – 62%.

R&D expenses in the quarter increased by $2.1m or 28% compared to the same period last year.  R&D expenses represented approximately 14% of sales for the quarter compared to 10% for the same period last year.  The increase was due to both organic growth in R&D staff as well as several acquisitions made by Evertz since the fourth quarter of the 2010 fiscal year.  Evertz says it intends to continue to invest heavily in R&D.

For the quarter ended April 30, 2011 selling and administrative expenses were $10.9 million compared to $10.3 million for the quarter ended April 30, 2010. Selling and administrative expenses represented approximately 16% of sales in the quarter ended April 30, 2011.

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Full Year Results — Revenue Up 7 Percent Versus Previous Year:

Evertz said that its revenue for the full fiscal year ended April 30, 2011 were C$307.9m, an increase of 7% versus the previous year. Revenue in the US/Canada were up 12% compared to the prior year, while international sales grew 2% versus the previous fiscal year.
For the full year the company’s top 10 customers accounted for 24% of total revenue, with no single customer accounting for more than 5% of revenue.  Evertz had 250 orders in excess of C$200,000 during the year.

Full year net earnings were C$77.4m up 26% versus the previous year.  Gross margins for the year were 58%, flat versus the previous year.

Evertz continued to increase its investment in R&D during the year, spending a total of C$35.7m in the area, up 12% versus the previous year. For the full year, R&D expenses represented approximately 12% of sales, while full year selling and administrative expenses represented approximately 13% of sales.

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Related Content:

Press release: Evertz Technologies Reports Results for the Fourth Quarter and Fiscal Year Ended April 30, 2011

Evertz Q4 2011 Management Discussion and Analysis (MD&A) filing with Canadian securities regulators (Catchpa required)

Evertz Q3 Net Income Doubles as Revenue Rises 26 Percent

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