Evertz Q4 FY 2012 Revenue Rises 11 Percent, Order Backlog at Record Level

Posted by Joe Zaller
Jun 15 2012

Evertz announced that its revenue for the third quarter of its 2012 fiscal year was C$76.3m, an increase of 11% versus the same period a year ago, and up 7% versus the previous quarter. 

The company’s top ten customers provided 20% of revenue during the quarter, with no one customer accounting for more than 5% (C$3.82m).

Net earnings for the quarter were C$13.5m (C$0.17 per share), up 9% versus the same quarter last year, and up 6% versus the previous quarter. The results for the quarter were below the expectations of equity analysts, who on average were looking for revenue of C$80m and EPS of C$0.23.

Although the company missed expectations for the fourth quarter in a row, it announced that its order backlog was a record C$57m, and that most of this would ship in the first quarter of FY 2013, implying a strong start to the next fiscal year. It is believed that the jump in the company’s backlog is due to the 2012 Olympics and worldwide elections, which are traditionally strong drivers of broadcast technology spending.

Revenue in the US/Canada region was C$36.7m, or 48% of total revenue, down from last year, and up 15% versus the previous quarter.

International revenue was C$39.6m, an increase of 42% versus last year, and flat versus last quarter.  When asked about the company’s international performance, Evertz EVP Brian Campbell attributed the growth to the increasing demand for the company’s products in international markets as a result of the ongoing worldwide transition to HDTV operations, the rebound in some international markets.

Gross margins in the quarter were 56%, down from 58% last year and down from 56.2% last quarter.  The company attributed the decline in gross margins to product mix and competition.  When questioned by analysts about the continuing decline in the gross margins performance, CFO Anthony Gridley said that the company’s gross margins were still within its target range of 56% – 62%, and reiterated this target range.

R&D expenses in the quarter were C$12.8m, an increase of 30% versus the same period last year, and an increase of 16% versus last quarter.  Gridley said R&D was higher in the quarter because the company accelerated the purchase of materials and prototypes in order to take advantage of government tax incentives before the end of its fiscal year.  Management reiterated that the company intends to continue to increase its R&D spend because it sees this as one of its critical success factors.

SG&A expenses for the quarter were C$12.3m, an increase of 18% and down slightly from the previous quarter. Selling and administrative expenses represented approximately 16% of revenue in the quarter versus 17.7% last quarter.

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Full Year FY2012 Performance:

Revenue for the full year FY 2012 was C$293m, down 5% versus last year.  During the year, the company had 282 orders of more than C$200,000.  Full year revenue from the US and Canada revenue was down 13% versus the previous year.  Full year revenue from the international was down 5% versus the previous year.

Gross margins for the full year were 57%, down from 58% last year, but still within what the company’s targeted range.

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