Posts Tagged ‘broadcast vendor financial results’

Broadcast Vendor M&A: Vitec Group Buys SmallHD for up to $30 Million in Cash

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Dec 11 2014

The Vitec Group, which owns more than a dozen brands in the broadcast industry, announced that it has acquired the business of SmallHD for up to $30m.

Based in North Carolina, SmallHD provides high-definition on-camera field monitors used by broadcasters and independent content creators, so its products are complementary with Vitec wide range of camera support and accessory brands, including Vinten, Vinten Radamec, Sachler, OConnor, Andon/Bauer, Autoscript, Camera Corps, Teradek, The Camera Store, Haigh-Farr, Litepanels, and Petrol Bags.

Typical of a Vitec M&A transaction, the deal includes an up-front cash payment and a large potential earn-out for SmallHD managers if the company meets certain performance targets after being acquired.

Specifically, Vitec will pay an initial cash consideration of $4.6m on a debt/cash free basis, and up to a further $25.4m, payable in cash, dependent on SmallHD’s performance over a two and a half year period to 30 June 2017.  To achieve the maximum payment, SmallHD must deliver an annualized EBITDA run-rate of $9m in 2017.

For the financial year-ended 31 December 2013, SmallHD had sales of $8.1m, and generated an unaudited adjusted profit before tax of $300,000. At the end of 2013 SmallHD had gross assets of $2.5 million.

Vitec says that SmallHD has grown during 2014 and is investing in new product platforms, and that the company anticipates “both healthy sales and profit growth going forward.”

According to Vitec, the SmallHD deal is in line with its “strategy of offering a growing range of high technology solutions to the Group’s established global customer base. It complements Vitec’s existing video activities, including Teradek, which serves a similar customer base. There are opportunities to sell SmallHD’s products through Vitec’s global sales and distributor network. SmallHD is being acquired from its current management, who will remain with the business, and it will operate as a business unit within the Videocom Division.”

The consideration will be financed out of Vitec’s existing banking facilities. The Board expects the acquisition to be earnings enhancing in the year ending 31 December 2015.

“I am delighted to welcome the SmallHD team to Vitec, said Vitec CEO Stephen Bird. “This high technology business complements our market-leading broadcast activities and is in line with our strategy of enabling our customers to capture and share exceptional images. There is an increasing demand for SmallHD’s products from the growing community of independent content creators who use this world leading technology. The business has great prospects and we anticipate that it will generate a good return on our investment.”

The purchase of SmallHD is similar to the 2013 transaction when Vitec acquired Teradek for up to $30m.  For the Teradek deal, Vitec paid $14.9m in cash and up to a further $15.5m dependent on Teradek achieving against annual EBIT targets over the three-year period to 31 December 2015.

The Teradek deal appears to have been a success for Vitec.  Since the time of the Teradek acquisition, subsequent Vitec financial filings indicate that the company has indeed been making earn-out payments to Teradek shareholders over the past year.  The addition of Teradek, which is active in the fast growing bonded cellular and wireless communication links segment, forced the company to re-think it’s overall portfolio, and ultimately to divest its IMT Wireless Communications and Microwave Business in mid-2014.

 

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Related Content:

Vitec Group Announces Intention to Divest IMT Wireless Communications and Microwave Business

Vitec Group 1H 2014 Results: Videocom Down 1%, Bexel up 39.9%

Broadcast Vendor M&A: Vitec Buys Teradek for $15 Million

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Evertz Revenue Increases 2 Percent in Q2 FY 2015, Misses Analyst Estimates

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Dec 04 2014

Evertz announced revenue for its second fiscal quarter of 2015 (ending October 31, 2014) of C$82.9 million, an increase of 2% versus the same quarter in 2014 and down 15% from the previous quarter.

Net earnings for the quarter were C$14.3 million ($0.19 earnings per share), a decline of approximately 8% against the 2014 second quarter performance and down 27% versus the preceding quarter.  It is important to note the revenue result from the first quarter of 2015 was the highest in Evertz’s corporate history.

The results for the quarter were lower than the consensus estimate of equity analysts, who were expecting revenue of C$88m and earnings of C$0.23 per share.

The revenue miss was principally attributable to the softness in international markets.

Revenue in the US/Canada region was C$45.4m, up 19% versus the same period a year ago, and up 18.2% versus the previous quarter. US/Canada sales were 55% of total revenue during the quarter, up from 47% of revenue during the same period a year ago, and 57% of revenue last quarter.

International revenue was C$37.5m, representing a 13% decline versus the previous year’s result and a slight decrease of 11.8% when compared to the previous quarter. International sales were 45% of total revenue, down from 53% last year and 43% last quarter.

Gross margins in the quarter were 56.2%, down slightly from 57.4% last year and up from 57.0% last quarter. This result remained in Evertz’s previously communicated target gross margin range of 56% to 60%.

R&D expenses in the second quarter were C$15.1m, an increase of 3% versus the same period last year, and down 4.5% versus the previous quarter.  R&D expenses were approximately 18.2% of revenue in the quarter, higher on a percentage basis of revenue than last year (17.9%) and last quarter (13.6%) due to higher revenue.

Selling and administrative expenses for the quarter were C$15.1m, an increase of 10% versus last year, and an increase of 12.6% versus the previous quarter. Selling and administrative expenses represented approximately 18.2% of revenue in the quarter versus 16.8% of revenue during the same period last year, and 15.5% of revenue last quarter.

One interesting non-financial note from the quarter was the disclosure that Evertz has signed deals with more than thirty customers for its IP routing products, including its new 46 TB/s EXE router.

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Avid Releases First Financial Results in Nearly Two Years, Revenue Down 11.4 Percent in 2013

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Sep 12 2014

Avid released financial results for the first time in nearly two years, following a protracted audit of it historic accounting treatment of software upgrades, dating back to 2009, which were made available to certain of its customers at no-charge.

The company has now completed the audit, and released financial results for both 2012 and 2013.  Avid has also released re-stated results for 2009-2011, which reflect the results of the audit.

For the full year 2013, Avid’s revenue was $563.4m, down 11.4% versus the previous year.

GAAP net income for the full year 2013 was $21.2m, down sharply from $92.9m in 2012. Non-GAAP income from continuing operations was $57.2 million or $1.46 per share. The company attributed the decline in revenue and net income to the larger portion of revenue from periods prior to 2011 being amortized in 2012 as compared to 2013 due changes in accounting rules.

The results for 2012 and 2013 are shown below, along with re-stated results from 2009-2011.

 

Avid restated earnings

 

“As a result of our restatement and in accordance with GAAP, revenue that had originally been recognized in earlier periods is now being recognized ratably over an extended timeframe,” said Avid EVP and CFO John Frederick. “The amount of revenue earned or to be earned over the entire period of recognition essentially remains unchanged from the amount we historically recognized. There was no change to the cash characteristics of the transactions being restated nor to the Company’s liquidity directly relating to these transactions. As a result of the restatement, the balance sheet reflects a significant increase in deferred revenue, which will be recognized in revenue over a number of years and will provide significant visibility into our future revenues. The revenue recognized from deferred revenue originating in periods prior to 2011 will continue in declining amounts through 2016, creating downward pressure on revenue growth until 2017.”

“We have worked diligently for well over a year on the restatement and are delighted to have completed the process,” said Louis Hernandez, Jr., president and CEO of Avid. “Throughout this period, we have put a premium on maintaining our focus on continued innovation for our customers and reasserting our commitment to being a strategic leader for the media industry with our Avid Everywhere vision. I’m encouraged by the progress we’ve made in executing against our three phase transformational strategy, and specifically with the growth in bookings over the past few quarters. Now that we have completed the restatement process, we are excited to continue our work on the transformation and feel the momentum building.”

Following the filing of Avid’s first quarter 2014 financial report, Avid plans to apply for relisting on the NASDAQ stock exchange, and hopes to be relisted on the NASDAQ stock exchange sometime after becoming current with its SEC reporting obligations. In the interim, Avid stock will continue to trade on OTC Markets — OTC Pink Tier under the trading symbol AVID.

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Related Content:

Avid 2013 10-K Filing

Avid Nears Completion of Accounting Audit, Says Normal Financial Reporting Cycle to Resume in Q3 2014

Avid to be Delisted from NASDAQ on February 25, 2014

Avid Receives Anticipated NASDAQ Delist Letter

New Avid Rights Agreement Will Cause “Substantial Dilution” to Potential Acquirers

Avid Unlikely to Regain Compliance with NASDAQ Listing Requirements by March 2014 Deadline

Avid Technology and Computershare Trust Company as Rights Agent, Rights Agreement Dated as of January 6, 2014

Avid Receives Additional Notice of Potential NASDAQ Delisting

Avid Delays Filing of Q2 2013 Financial Results and Form 10-Q

New Avid Bonus Plan Contemplates “Reorganization Event”

Avid Says its 2009 – 2011 Financial Statements No Longer Reliable

Avid Delays Release of Q4 and Full Year 2012 Results, Shares Fall

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Evertz Reports Record Revenues for First Quarter of New Fiscal Year

broadcast industry technology trends, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Sep 09 2014

Evertz announced record revenue for the first quarter of its 2015 fiscal year of C$98.0m, up 54% versus the same period a year ago (a poor quarter for the company), and up 12.5% versus the previous quarter.

Net earnings for the quarter were C$19.7m ($0.27 earnings per share), an increase of 61.3% versus the first fiscal quarter of 2014, and an increase of 33% versus the preceding quarter. The company generated C$15.3m cash from operations in the quarter.  This compares to cash from operations of C$2.7m during the same period last year and negative C$1.3m during the previous quarter.

The revenue result is the highest in Evertz’s corporate history. It came in well above the consensus estimates of equity analysts, which were expecting revenue of $C91.7m and earnings of C$0.24 per share.

Evertz EVP Brian Campbell attributed the strong performance “to the ongoing transition to HD, channel proliferation, the increasing global demand for high-quality video anywhere anytime, to worldwide demand for Evertz’s comprehensive product offering with our optimized workflow solutions providing compelling value to customers and to the growing adoption of Evertz’s state of the art sports replay and our software defined video networking solutions”

Revenue in the US/Canada region was C$55.5m, up 55% versus the same period a year ago, and up 28.8% versus the previous quarter. US/Canada sales were 57% of total revenue during the quarter, up from 56% of revenue during the same period a year ago, and 49.5% of revenue last quarter.

International revenue was C$42.5m, representing 52% growth versus the previous year’s result and a slight decrease of 3.7% when compared to the previous quarter. International sales were 43% of total revenue, down from 44% last year and 50.5% last quarter.

The top ten customers in the quarter accounted for 31% of revenue (C$17.2m), and the largest customer in the quarter accounted for 6% of revenue (C$3.3m).

During the first quarter of fiscal 2015, Evertz had 86 individual customers each representing over $200,000 of revenue.

Gross margins in the quarter were 57.0%, down slightly from 57.5% last year and up from 56.3% last quarter. Evertz executives said that the gross margin performance in the quarter were within the company’s target range of 56% to 60%.  Consistent with recent calls, equity analysts asked both why the company’s gross margins were not increasing more rapidly with revenue growth, and what is required for gross margins to move to the high-end of Management’s target range.

While Management cited gross margins drivers of product mix, geographic mix, and the discounting of volume orders, the principal factor was the competitive pricing environment.  “We’ve been in a quite a competitive pricing environment for the last year, so there hasn’t been any significant change to that.” noted Campbell.

R&D expenses in the second quarter were C$15.8m, an increase of 18% versus the same period last year, and down 2.8% versus the previous quarter.  R&D expenses were approximately 13.6% of revenue in the quarter, lower on a percentage basis than last year (16.6%) and last quarter (15.8%) due to higher revenue.

Selling and administrative expenses for the quarter were C$13.4m, an increase of 16% versus last year, and a decrease of 18.8% versus the previous quarter. Selling and administrative expenses represented approximately 15.5% of revenue in the quarter versus 20.5% of revenue during the same period last year, and 18.9% of revenue last quarter.

The company said that its shipments in August 2014 were C$25m, and that its purchase order backlog at the end of the quarter was in excess of C$46m.

The company ended the quarter with $103.4m of cash and short term investments up slightly from C$102.0 at the end of last quarter.

There was some additional commentary provided during management’s exchange with equity analysts:

Thanos Moschopoulos, BMO: “…With respect to the EXE and the overall IP product platform, is there any incremental color you can provide in terms of the types of customers you are seeing adopt that solution?”

Brian Campbell, Evertz: “…We are definitely seeing good interest and traction within our broadcast and new media customer set”

Rob Young, Canaccord Genuity: “…A lot of your competitors have been going through large M&A and are you seeing any beneficial environment for Evertz while some of these large competitors change their strategy?”

Brian Campbell, Evertz: “Yes we have picked up market share from our perspective.  We have very solid year-over-year growth and I don’t know that any of the competitors have had anything similar to that although some of them are no longer public entities where you can see the numbers. So I would say that yes we have definitely benefited and as a consequence perhaps of their activities but also directly resulting from the very significant, sustained investments we’ve made in new products and innovation.

Campbell concluded the call by emphasizing several points, “Our commitment to R&D continues to deliver innovative solutions enabling our customers to migrate to IP and IT based solutions to address the increasing complexities of our industry and to implement multiscreen TV everywhere anytime solutions.  Our customers have confidence in Evertz’s financial stability and our competitive position as one of the largest pure-players in the broadcast technology sector.”

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Related Content:

Press Release: Evertz Technologies Limited Revenue for the three months ended July 31, 2014

Evertz Revenue Declines 33 Percent in Q1 Fiscal 2014

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© Devoncroft partners 2009-2014. All Rights Reserved.

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EVS Q2 2014 Revenue Increases by 19.4 Percent, In Line with Expectations

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Sep 08 2014

Production and playout video server specialist EVS reported revenue of €35.6 million, an increase of 19.4% versus the same period last year, and an increase of 21.5% versus the previous quarter.  Excluding the effect of exchange rate movements and event rentals, the Company’s Q2 2014 revenue increased 9.0% versus the year earlier period.

Q2 2014 results were in-line with the Company’s expectations for the quarter.  Management cited strong performance in the Americas in Q2 2014 (compared to weak Q2 2013) and the company’s involvement in delivering the recent World Cup.  This more than offset a significant drop in revenue from the Asia Pacific region.

Net profit for the second quarter was €8.9m.  This represents a 28.0% growth versus the same period a year ago and an increase of 25.4% compared to the preceding quarter.

EBIT (Earnings before Interest and Tax) for the quarter was €12.9m, up 33.5% compared to the year earlier period and up 29.0% versus the first quarter of 2014.

 

Geographic Revenue:

  • Revenue from EMEA in the second quarter of 2014 was €17.7m, up 1.8% last year. Sales in EMEA accounted for 50% of group revenue.

 

  • Americas’ revenue for the second quarter of 2014 was €8.6m, up 170.8% versus last year. Americas accounted for 24.4% of group revenue, up significantly from 10.8% last year.

 

  • Q2 2014 revenue from the APAC region was €5.1m, down 41.4% versus last year. APAC accounted for 14.2% of total revenue in the quarter, down significantly from the contribution of 29.0% last year.

 

 

Segment Revenue:

  • Revenue from sports-related applications during the second quarter of 2014 was €23.2m, or 65.2% of total group sales, an increase of 20.8% versus last year.

 

  • Revenue from Entertainment, News & Media (ENM) during the quarter was €8.3m, or 23.2% of total group sales, down -17.8% compared to last year.

 

 

System & Service Revenue:

  • Systems revenue in the quarter was €33.4m, or 93.7% of total revenue, up 19.6% versus the same period last year

 

  • Services revenue was €2.2m, or 6.2% of total revenue, up 15.8% versus the year ago period.  Services revenue includes advices, installations, project management, training, maintenance, and distant support

 

 

Operating margin for the quarter was 36.2%, an improvement over both the 32.4% from last year and the 34.1% operating margin during the first quarter of the year.

Gross margins for the quarter were 75.0%, a slight decrease from the 76.3% gross margins during the Q2 2013 and flat versus the 74.9% gross margin level from last quarter.

Operating expenses grew by 6.8% versus the same period a year ago.  Management attributed the increase to additional hiring and incremental costs including investments in DYVI Live/SVS.

R&D expenses in the quarter were €6.2m, or 17.6% of revenue, up 11% from the same period last year, and down 0.5% versus last quarter.

Selling and administrative expenses in the quarter were €6.8m, or 19% of revenue, up 3.1% versus the same period a year ago, and up 25.6% versus the previous quarter.

The company ended the quarter with 503 employees, up from 497 at the end of last quarter, and up 5.4% from the 477 employees at the end of Q2 2013.

 

 

Order Book:
The order book stood at €40.9m as of August 27, 2014.  This compares to €35.4m on the same date one year ago.  All of the €40.9m order book will invoice during 2014.  This includes €7.7m for big event rentals for the 2014 World Cup and other smaller sporting events.  In addition, the Company has already secured €13m worth of orders for invoicing during 2015.

 

 

Outlook:

Based on signs of a moderate slowdown in the live production server market, EVS is now expecting low single digit revenue growth in 2014 versus 2013.  Management also indicated an expected 10-13% operating expense growth related to investments in new technologies.

“In the current challenging environment, we have been able to protect our market shares in our 4 target markets and deliver solid results in the second quarter.” said EVS CEO Joop Janssen. “At the upcoming IBC tradeshow in Amsterdam, we will launch new features and solutions, which will help us to consolidate our leading position in Sports and ENM. We are confident that our strategy is right and that our continued efforts will start paying off when the market situation improves.”

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Related Content:

Press Release: EVS Reports Second Quarter 2014 Results

EVS Q2 2014 Earnings Call Presentation

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Telestream Says Transcoding and Workflow Revenue Increased by 40 Percent Last Year

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 08 2014

Telestream said in a statement that revenue from its “flagship Vantage transcoding and workflow automation systems increased by more than 40 percent last year.”

The company also said that it has posted “profitable growth for the last 14 years.”

Company CEO Dan Castles attributed the company’s impressive track-record of growth to both innovation and management stability.

Privately held Telestream, which was acquired in 2011 by private equity firm Thoma Bravo, did not provide any other financial metrics such as overall revenue, gross margins, or profitability. Neither did it give an indication on the performance of its transcoding and workflow products in the current year.

However, the company did make some provocative statements about the market, competitive vendors, and broadcast industry M&A.

According to Telestream “market forces have driven recent corporate acquisitions, and some of these companies were struggling to survive. As a result, there are new combined companies, new management, and typically, new strategies. One of the likely victims during these transitions are customers who may have purchased products from one of these companies only to learn that a change of direction has resulted in product decisions that impact the original cost of ownership that was part of the initial purchase decision.”

“Based on our own experience of acquiring companies, we know that they have to be implemented carefully and strategically,” said Castles. “Owning a new piece of intellectual property does not mean that you understand the market it serves nor that it will integrate harmoniously within your existing product portfolio. We believe we are the right size as a company – not large and unwieldy, but not so small that we have to chase deals to remain in business. Our customers know we listen to their input as they see new products consistently coming to market that reflect their requirements. Implied in that equation is a level of trust that we will be around for years to come and that investing in products from Telestream is a smart decision long term.”

“Telestream offers its customers a very clear proposition,” said Castles. “We were one of the first companies to develop file-based workflow solutions as long ago as 1998 and today, our products reflect many hundreds of man years of development in this area. We are financially very solid and this has allowed us to stick to our strategies and not be tempted to chase opportunities that may bring in short term results, but distract us in the long term from executing on what we have committed to customers. We are very relevant to our customer base, and we take that role extremely seriously.”

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Related Content:

Press Release: Telestream Announces Strong Growth in File-based Workflow Enterprise Operations

More Broadcast Vendor M&A: Private Equity Firm Acquires Telestream

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Autodesk Media & Entertainment Revenue Flat in Q2 FY 2015

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 19 2014

Autodesk reported that its Q2 FY 2015 revenue from its Media and Entertainment (M&E) segment was $44m, flat versus the same period a year ago, and up 15.8% compared to the previous quarter.

Revenue from animation products decreased 2% versus the same period a year ago, while sales of creative finishing products increased 7% compared to the second quarter last year.

The company said that its results “reflect general changes in the M&E industry end-market demand environment, the planned inclusion of our M&E products in other Autodesk industry suites, and the business model transition as customers are opting for desktop subscription.”

M&E gross margins for the second quarter of fiscal 2015 were $34m (72.7%), down from 79% for the same period a year ago, and down from 76.3% in the previous quarter.

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Related Content:

Press Release: Autodesk Reports Record Revenue Results in Q2 FY 2015

Previous Year: Autodesk Media & Entertainment Revenue Declines 11 Percent in Q2 FY 2014

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Vitec Group Announces Intention to Divest IMT Wireless Communications and Microwave Business

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Aug 19 2014

The Vitec Group, which owns more than a dozen brands in the broadcast industry said that it has decided to exit its Integrated Microwave Technologies (IMT) business unit, which provides wireless microwave products.

The announcement was made in an investor presentation that accompanied Vitec’s earnings announcement for the first half of 2014.

However, company executives stressed that, until a transaction occurs, it will continue to manufacture, sell, support, and honor the warranty of all IMT products provided to its broadcast customers.

Vitec’s IMT business includes three brands: Nucomm, RF Central, and Microwave Services Company.

Vitec IMT Brands - Nucomm, RF Central, Microwave Svs Co

Vitec’s IMT business posted a loss of £1.1m during the first half of 2014, compared to a profit of £1.4m for the same period a year ago.  IMT’s 1H 2014 revenue was £5.8m, down 35% versus the same period last year.

For the full year 2013, IMT broke even on revenue of £14m, which included a large profitable contract from the US Department of Justice, worth approximately £3.4m.

The company says that the disposal for IMT will allow it to focus its Videocom business on its core broadcast activities.

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Vitec acquired Nucomm and RF Central in a transaction valued at up to $73m in June 2007.

At that time, Vitec said the deal would immediately enhance its earnings, and that “the acquisition is an excellent fit with Vitec’s Broadcast Systems division. The acquired companies sell to similar customers and Vitec’s infrastructure is expected to provide opportunities for further growth internationally.”

The purchase of Nucomm and RF Central coincided with the start of a huge wave of spending related to the 2.4 Ghz Broadcast Auxiliary Service (BAS) Relocation Project, whereby wireless operator Sprint, in response to a 2004 FCC decision, implemented a program to resolve ongoing interference between public safety and commercial operations in the 800MHz band.

By the time of the project’s official completion in 2010, Sprint had spent about $750 million and broadcasters had moved their ENG and other contribution applications to new compressed digital channels between 2025MHz and 2110MHz.  Sprint said more than 1,000 engineers were employed during the project and that as many as 100,000 pieces of microwave and ENG equipment were installed.

The strategy paid off almost immediately for Vitec, which said the following in its full year results for 2007:  “RF Systems is performing well, with sales and operating profit in the seven months of Vitec ownership of £23.5 million and £3.3 million respectively. Pro-forma 12-month sales and operating profit for 2007 were £32.2 million and £5.2 million. Both RF Central and Nucomm, have launched well-received ‘High Definition’ products that will maintain our competitive position. 2008 and 2009 results will be buoyed by revenue from the BAS relocation project, which is expected to fall away by 2010.”

Today however, Vitec says that its IMT business is now “relatively small part of our business, which provides wireless microwave products for the Military, Aerospace and Government (MAG) markets.”

Vitec explained the rationale for the decision to exit IMT saying: “We have attempted to grow IMT in an increasingly challenging market that has become overly price driven. This was recently demonstrated by the award of certain large government contracts to competitors at prices where we would not generate positive returns. There are limited synergies between IMT’s MAG business and other activities within the Group.

“As a result, we have decided to exit the IMT business and we are accessing our options of a sale or closure. Our preliminary assessment of the net exit costs based on closing the business is an exceptional one-off pre-tax charge in the region of c.£5.5 million, after foreign exchange recycling, of which c.£5.0 million is anticipated to be a cash outflow. We will provide an update on the exit from IMT in due course.”

In addition to anticipated fall-off in business following the completion of the BAS relocation project, another likely catalyst for Vitec’s decision to sell the IMT business is the strong performance by Teradek, which Vitec acquired in August 2013 for up to $15m.

The chart below, from Vitec’s 1H 2014 earnings call with equity analysts describes the declining sales at IMT and strong growth by Teradek, and announces the company’s intent to divest IMT in order to focus on its core broadcast activities.

 

Vitec 1H 2014 with IMT & Teradek outlined

 

According to Vitec’s most recent earnings announcement, “the Teradek business that we acquired in H2 2013 is performing well with strong growth post-acquisition. The business continues to develop innovative products, including the new Bolt wireless transmitter that was released in July 2014 and further product launches are planned for later in the year.”

Based on the success of Teradek during the period, Vitec made a $3.2m “earnout” payment to Teradek’s former shareholders in March 2014. This consisted of $2.4m in cash, and 72,933 new Vitec ordinary shares worth a further $800,000.

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Related Content:

Vitec Group 1H 2014 Results: Videocom Down 1%, Bexel up 39.9%

Broadcast Vendor M&A: Vitec Buys Teradek for $15 Million

Press Release (2007): The Vitec Group Plc Acquisitions of Nucomm and RF Central

Vitec Group 2007 Full Year Results: A Year of Strong Growth

Vitec Group Presentation (2007): “RF Systems ‘Consolidate and Grow” announcing purchase of Nucomm and RF Central

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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DTS Reports Strong Q2 2014 Results; Revenue Growth of 33% Year-over-Year

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 18 2014

Audio processing specialist DTS announced that its revenue for the first quarter of 2013 was $36.2m, an increase of 33% versus the same period a year ago, and flat versus the previous quarter.

On a GAAP basis net income for Q2 2014 was $7m, or $0.41 per, share compared to a net loss during the year earlier period of $2m or $(0.11) per share.  Net income for Q1 2014 was $5.6m or $0.32 per share.

GAAP gross margins were 93% during the quarter up slightly from the 91% gross margins recorded during Q2 2013 and flat compared to the Q1 2014.

Non-GAAP operating margins were 31% during the quarter.  This compares favorable versus the same period last year where non-GAAP operating margins were 13% and the preceding quarter when non-GAAP operating margins of 24% were recorded.

Jon Kirchner, DTS’s Chairman and CEO attributed the principal driver of top line growth in the quarter to “further penetration of the network connected segment as well as the resolution of several royalty audit matters.”

DTS’s network connected segment is the company’s largest.  It includes revenue generated from consumer electronic devices that are network-capable including TVs, smartphones, tablets, and PCs.  This segment contributed 50% of DTS’s revenue in the quarter compared to 45% during the year earlier period.  Melvin Flanigan, the Company’s CFO, highlighted the TV business within the network connect segment on the company’s earnings call as having grown 27% year-over-year.

DTS closed the quarter with cash and investments totaling $69.5m and generated $5.5m in operating cash flow.

In his prepared remarks on the call with analysts, Kirchner offered some interesting commentary on DTS’s relevance to 4K.  “DTS’ solution suite is particularly relevant as the market resets to support 4K or ultra high definition delivery which we believe will be disrupted with playback devices and will also require content services to rethink their high definition audio and video offerings. Already, DTS has partnered with companies to develop proof of concept 4K video distribution with DTS HD audio solutions specifically designed for OTT.”

 

Guidance Raised for Full Year 2014

DTS says it expects its organic growth in 2014 to come primarily from the network-connected markets, specifically connected TVs, mobile devices and PCs. Network-connected markets are expected to represent more than 50% of total revenue in 2014.

As a result of the strong performance in the quarter and management’s confidence in the remainder of the year, DTS raised its guidance for 2014.

The company says it is now expecting revenues in the range of $137m to $142m, non-GAAP operating margins in the mid-to-upper 20s, and non-GAAP EPS of $1.40 to $1.50.  Previous guidance was for revenue in the range of $132 million to $138 million, non-GAAP operating margins in the mid-20s, and EPS in the range of $1.20 to $1.40.

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Related Content:

Press Release: DTS Reports Strong Second Quarter 2014 Financial Results

Previous Year: DTS Posts Q2 2013 Loss, Lowers Full Year Outlook

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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Orad’s Revenue Jumps 40.7 Percent in Q2 2014

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 18 2014

Graphics and media asset management (MAM) provider Orad reported that its revenue for the second quarter of 2014 was $10.2m, an increase of 40.7% versus the same period a year ago, and up 9.7% versus the previous quarter.

Product sales in Q2 2014 were $7.5m, or 73.7% of total revenue, an increase of 33.4% versus the 2nd quarter of last year when product sales were $5.6m, or 77.7% of total revenue.

Service revenue in the quarter was $2.68m, or 26.3% of total revenue, an increase of 65.9% versus the 2nd quarter of last year when service revenue was $1.62m, or 22.3% of total revenue.

Net profit for the quarter was $800,000, versus a loss of $1.3m during the same period a year ago, and up 14.2% versus last quarter.

Gross margins for the quarter were 69.3% versus 62.5% last year, and 67.8% last quarter.

Operating income for the quarter was $900,000, versus an operating loss of $1.5m during the second quarter of 2013, and operating income of $800,000 last quarter.

Operating expenses were up across the board.

R&D expense for the quarter was $1.54m, or 15.1% of total revenue, up 5.8% versus the same period a year ago.

Sales & marketing expenses were $3.7m, or 36.4% of total revenue in the quarter, up effectively flat versus the third quarter of 2013, when sales and marketing costs were 51% of total revenue.

G&A expenses in the quarter were $899,000, or 8.8%% of total revenue, up 5.4% from last year.

Cash, cash equivalents and restricted cash at the end of June 2014 amounted to $7.6m compared to $6.4m at the end of March 2014.

 

First Half 2014 Results

For the first six months of 2012, Orad’s revenue was $19.5m, up 35.2% versus the first half of 2013.

Product sales for the first six months of 2014 were $14.8m, or 76.1% of total revenue, an increase of 36.2% versus the same period a year ago, when product sales were $10.9m, or 75.6% of total revenue.

Service revenue for the first six months of 2014 was $4.65m, or 23.9% of total revenue, an increase of 36.2% versus the same period a year ago, when product sales were $10.9m, or 75.6% of total revenue.

Net Profit for the 1H 2012 was $1.5m, versus a loss of $2.2m for the first six months of 2013.  Gross Margins for the first half of 2012 were 68.6%, up from 63.5% for the first six months of 2013.

Operating income for 1H 2012 was $1.7m, compared to a loss of $2.2m for the first half of 2013.

R&D expenses for the first half of 2014 were $3m, or 15.5% of total revenue, up just under 1% versus the first six months of last year when R&D expenses represented 20.7% of total revenue.

Sales & marketing expenses for 1H 2014 were $6.7m, or 34.7% of total revenue, up 3.2%% versus the first half of 2013 when S&M expenses represented 45.5% of total revenue.

G&A expenses in the 1H 2014 were $1.9m, or 9.8% of total revenue, up 9.9% versus the first half of 2013 when G&A expenses represented 12.1% of total revenue.

 

 

Outlook

Orad says that it is expecting its revenue for the full year 2014 to be between $39m and $40m, in line with previous projections. If the company achieves the projected top-line results, it would represent an increase of 22% to 26% compared to 2013.

Full year operating profits for 2014 are expected to be approximately 6% to 8% of revenues, compared to the operating loss of 5% in 2013.

 

“We are pleased to announce the results of this quarter which show the highest level of quarterly revenues in the Company’s history,” said Orad CEO Avi Sharir. “Revenues for the first half of 2014 show an increase of 35% compared to the same period in 2013. This substantial increase in revenues is attributed to the return of our traditional markets and the higher penetration in new markets such as North America. We have recently announced several important sales in North and South America to major American and Brazilian broadcasters. Our efficient and cost effective solutions enable broadcasters to substantially increase their ROI by providing them efficient and cost effective solutions.

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Related Links:

Press Release: Orad Reports Financial Results for the Second Quarter and the first six months of 2014

Previous Year: Orad Revenue Declines 29% in Q2 2013, Announces 10% Workforce Reduction

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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