Evertz reported results for its fiscal fourth quarter and year ending April 30, 2016. For the full year Evertz achieved record annual revenue of C$381.6 million, an increase of 5% versus fiscal 2015 revenue.
Net earnings for the fiscal year were C$70.9 million (C$0.94 per share), an 8% increase against fiscal 2015. Evertz generated cash flow of C$91.2 million from operations during 2016, an increase of 68% over 2015.
Gross margin percentage for fiscal 2016 was 57%, which is similar to the 56.7% recorded during fiscal 2015. Operating margins for the 2016 year were 25.2%, a slight improvement over the 24.3% operating margins in 2015.
2016 annual revenue from the US/Canada region was $216.0 million, up 6% when compared to 2015. US/Canada represented 56.6% of total revenue in 2016, approximately flat versus the 56.2% in 2015.
International revenue for full year 2016 was $165.5 million, a 3.9% increase compared to 2015. As a percentage of total revenue, International represented 43.3% of total sales in 2016, which compares to 43.7% of total revenue in 2015.
The top ten customers for the year accounted for 29% of total revenue, and no customer accounted for an excess of 7% of revenue. During the year, Evertz had 311 individual customers each representing over C$200,000 of revenue.
The Company ended the year with C$123.1 million of cash and cash equivalents down slightly from C$129.9 million at January 31, 2016.
Q4 FY2016 Results:
Evertz revenue for the fourth quarter of its 2016 fiscal year was C$96.4 million, up 5% versus the same quarter a year earlier, and down 3.3% versus the previous quarter ending January 31, 2016.
Revenue for the quarter was in line with the consensus analyst estimates for revenue of C$96.7 million.
The Company said that its shipments during May 2016 were C$21 million, and that its purchase order backlog at the end of the quarter was in excess of C$69 million. May 2016 shipments represented a 28% year-over-year decline versus May 2015. Management attributed the weakness to the timing of customer orders and fewer shipping days in May.
Net earnings for the quarter were C$8.1 million (C$0.11 earnings per share), a decrease of 26.6% versus the fourth fiscal quarter of 2015, and a decrease of 66% versus the preceding quarter. Evertz generated cash from operations of C$10.1 million for the quarter, which compares favorably to the C$1.6 million used by operations during the fourth quarter of fiscal 2015. The operating results included an unfavorable C$11.8 million foreign exchange loss during the quarter.
Revenue in quarter for the US/Canada region was C$51.2 million, up 2.4% versus the same period a year ago, and down 4.4% versus the previous quarter. US/Canada sales were 53% of total revenue during the quarter, down from 54% of revenue during the same period a year ago, and 53.7% of revenue last quarter.
International revenue for the quarter was C$45.1 million, representing a 7.6% increase versus the previous year’s result and a decrease of 2.3% when compared to the previous quarter. International sales were 47% of total revenue in the quarter, up from 45% during the same quarter last year and 46.3% from the preceding quarter.
Gross margins in the quarter were 57.1%, down slightly from 57.3% during the prior year period and equivalent to the 57.1% contribution from the third fiscal quarter of the year.
R&D expenses in the second quarter were C$17.3 million, a decrease of 1.9% versus the same period last year, and flat versus the previous quarter. R&D expenses were approximately 17.9% of revenue in the quarter, lower on a percentage basis than last year (19.1%) and last quarter (17.3%).
Selling and administrative expenses for the quarter were C$16.2 million, an increase of 4.5% versus last year, and a decrease of 2.4% versus the sequential quarter. Selling and administrative expenses represented 16.8% of revenue in the quarter, the same as the year earlier quarter, and a slight increase versus the 16.6% contribution of revenue in the previous quarter.
On the call with earnings analyst, Evertz EVP Brian Campbell highlighted Evertz’s positive market momentum with its Software Defined Video Networking (SDVN) solutions. Responding to a question by Robert Young from Canaccord Genuity, Brian Campbell stated, “We have over 50 deployments of SDVN including some of the first of their kind and largest scale. By virtue of that, it would put us in leadership position. As you recall as well, we were very early in developing the solutions and advocating software defined networking and also virtualized – whether it be private cloud or public cloud – solutions. So I think we are very well positioned to help our customers that are looking to move in that direction, and to give them great comfort that they’ve got fabulous solutions that they can count on going forward.”
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