EVS Revenue Declines 3.8% in 2011, But 2012 Order Book Hits Record Levels

Posted by Joe Zaller
Feb 16 2012

Production and playout video server specialist EVS reported that its revenue for the full year 2011 was €106.9m, down 3.8% versus last year.  

Despite the year-over-year revenue drop, the company said that its order book had reached a record €46.1m by the end of 2011, driven in part by a new investment cycle from OB truck operators and in anticipation of many large sporting events in 2012, including the Olympics

EVS typically performs better in “even” years when major sporting events drive a sharp increase in the company’s rental business.

 

Q4 2011 Results

For the fourth quarter of 2011 EVS revenue was €31m, an increase of 15.3% versus the same period a year ago, and up 22.7% excluding impact of exchange rates and large rental contracts, which are a major driver of the company’s business.

Gross margins for the fourth quarter were 78%, up from 76.6%, last quarter, but lower than the 81% reported last quarter.  The company attributed the higher year-over-year gross margin performance to higher sales.

Operating expenses increased by 30.5% in the fourth quarter partially due to increased employee headcount, costs associated with the departure of former CEO Pierre L’Hoest and a higher R&D tax credit in the fourth quarter of the previous year.

The company’s higher operating expenses in the quarter impacted its operating margins (EBIT), which dropped to 41.9% in the quarter, versus 43.9% last year and 46.6% last quarter.

On a segment basis, revenue was split fairly evenly between studio (51%) and outside broadcast (49%). Studio revenue was €15.83m, up 16.4% versus Q4 last year and up 37% versus last quarter.  Outside broadcast revenue was €15.13m, up 14.2% versus last year, and down 17% versus last quarter.

 

On a geographic basis:

  • Revenue from the EMEA region was €17.7m, up 7.7% versus last year and up 5% compared to last quarter

 

  • Revenue from the Americas region was €6.1m, up 46.7% versus last year and down up 11% versus the previous quarter.

 

  • APAC revenue for the quarter was €7.23m, an increase of 14.6% versus last year, and up 17% versus last quarter. 

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Full Year Results

For the year 2011, EVS revenue was €106.9m, down 3.8% versus last year, but up 6.3% excluding the impact of big event rentals and currency fluctuations. 

Full Year gross margins were 78.4%, down slightly from 2010 due to lower sales levels absorbing fixed assembling and support costs.

Operating expenses jumped 21.6% in FY11, due to increased headcount and higher commercial fees for distributors, but partially offset by the positive effect of a €1.1m R&D tax credit. 

The company invested heavily in personnel during 2011. On the company’s conference call with analysts, EVS said its full time employee roster had increased 13.4% to 415 at the end of 2011.  Included in this is a 51% increase in R&D staff.

As a result of these increased expenses the company’s operating (EBIT) margin fell to 41.3% of versus 50.0% in 2010.

Higher expenses also impacted the company’s net profit, which declined 15.7% versus 2010 to €32.1m. Excluding the company’s XDC digital cinema business net profit for the year was €31.7m for the year.

On a segment basis, revenue from studio declined 12.9% versus the previous year to €48.34m, or 45.2% of total revenue for the year.  OB revenue increased 5.2% versus FY 2010 to €55.7m, or 54.8% of total revenue.  Revenues in FY11 included €0.8m of rentals relating to the Winter Asian Games and to the Panam Games, compared to €10.2m in 2010.

 

On a geographic basis:

  • Revenue from EMEA in 2011 was €57.8m, down 5.1 versus 2010, representing 54.1% of group revenue. The company said that the UK, Eastern Europe and the Middle East were clear drivers of the business in 2011, and that it expects this to continue thanks to a major OB deal with Panorama in Russia as well as a large unnamed studio project in Eastern Europe.

 

  • Americas revenue for 2011 was €25.5m, down 7.8% versus 2010. EVS said that new OB vans and upgrades to HD continue to drive the business in the Americas in OB segment, but that the studio segment was weaker in 2011 than 2010.

 

  • 2011 revenue from the APAC region was €23.5m, up 11.3% versus 2010.  The company said that 11.3%). Malaysia, China and South Korea the most dynamic markets during the year, citing the continued high demand for European sport content on TV in APAC as a long term growth driver in the region.

 

Company CFO Jacques Galloy issued a mildy optimistic statement, saying: “As expected, sales in 4Q11 were higher, which allows us to record, for FY11, nearly stable sales, actually lower by 3.8% to €106.9m. The lower 41.3% EBIT margin is due to the increasing cost base as a result of additional employees during this year. We are very enthusiastic about our record order book, which prepares for a strong first half of 2012, partially driven by big sporting events. The second half of the year is more uncertain, and should be impacted by the usual market slow down following big events, the timing of the launch of expected solutions, and the macro-economic environment.”

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Related Content:

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Press Release: EVS Reports Revenue and Results for 2011

EVS Q4 and Full Year 2011 Analyst Presentation

Previous Quarter: EVS Reports Q3 2011 Results, Issues Strong Guidance

Previous Year: EVS Posts Record Revenue in 2010, Driven by Improving Market Conditions and Global Move to HDTV

EVS CEO Pierre L’Hoest Steps Down

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© Devoncroft Partners. All Rights Reserved.

 

 

 

One Response

  1. Addison Lilly says:

    Contributing to their drop is the continual underperformance of the NALA region being run out of the Fairfield, NJ office. This may change now that Pierre L’Hoest is no longer CEO of the company. Fred Garroy and Greg Macchia have done nothing to grow the business. They have never sought adjacent markets or sought ways to grow the consulting practice. Hopefully the new management will realize that being the best friend of the former CEO is not necessarily the greatest quality to maximizing shareholder value. The new management needs to prune the dead wood.

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