Production and playout video server specialist EVS reported Q4 2014 and full year 2014 results.
Revenues for the full year 2014 were €131.4 million, an increase of 1.8% over 2013 results.
Net profit for full year 2014 was €35.5 million (€2.63 per share), an increase 4.4% versus 2013.
Gross margins for the full year were 74.5%, which is a slight reduction versus the 75.5% achieved in 2013. Management attributed the impact to gross margins to product and project mix, along with reclassification of certain expenses.
EBIT margin for the full year was 35.1%, which compares to 37.5% during the full year 2013.
R&D expenses for the full year 2014 were €25.2 million, or 19.1% of total revenue, an increase of 11% versus the R&D expense recorded in 2013.
Selling and administrative expenses for the full year 2014 were €25.1 million, or 19.1% of total revenue, representing a 2.9% increase over the full year 2013.
The company ended 2014 with 512 employees, down from 514 at the end of the third quarter of 2014, and up 5.3% from the 486 employees at the end of 2013. Average headcount in 2014 represented a 6.8% increase over 2013.
The order book stood at €29.8 million as of February 15, 2015. This represents a 38.3% decrease versus the order book on February 15, 2014 and an increase of 53.0% versus October 31, 2014.
Q4 2014 Results:
EVS had Q4 2014 revenue of €30.5 million, a decrease of 20.8% versus the same period last year, and a decrease of 15.3% versus the previous quarter.
Excluding the effect of exchange rate movements and event rentals, the Company’s Q4 2014 revenue decreased 22.4% versus the year earlier period.
Net profit for Q4 2014 amounted to €8.3 million (€0.61 per share), compared to €10.7 million (€0.80 per share) in the year earlier period and €11.3 million (€0.84 per share) in the preceding quarter.
Gross margins for the fourth quarter were 73%, equivalent to the gross margins recorded in Q4 2013, and a slight decrease from the 74.9% gross margins recorded in Q3 2014.
EBIT (Earnings before Interest and Tax) for the fourth quarter 2014 was €8.9 million, down 44.1% compared to the fourth quarter of 2013 and down 21.2% versus Q3 2014.
Operating margin for the quarter was 29.1%, substantially lower than 41.3% from the same period last year and the 39.8% operating margin achieved during the third quarter of 2014.
The drop in profitability for the quarter was attributable to a rise in operating expenses related to increases in headcount, one-time costs associated the departure of former CEO Joop Janssen, and various IS/IT investments.
Operating expense for the quarter grew by 11.7% versus the same period a year ago.
R&D expenses in the quarter were €6.6 million, or 21.6% of revenue, up 10% from the same period last year, and up 8.1% versus last quarter.
Selling and administrative expenses in the fourth quarter were €6.6 million, or 21.6% of revenue, up 13.8% versus the same period a year ago, and up 4.7% versus the previous quarter.
Revenue by Vertical Segment:
- Revenues from sports-related applications during the fourth quarter of 2014 were €19.8 million, or 65.1% of total revenue, a decrease of 8.5% versus the fourth quarter of 2013. For the full year 2014, this segment contributed 65.1% of the total revenue, a decrease of 6.6% versus 2013.
- Revenues from Entertainment, News & Media (ENM)during the quarter were €10.6 million, or 34.9% of total group sales, down 36.8% compared to year earlier period. For the full year, this segment contributed 34.7% of total revenue, a decrease of 14% versus 2013.
Product and Service Revenue:
- Systems revenue in the quarter was €28.2 million, or 92.4% of total revenue, down 22.3% versus Q4 2013. During the full year 2014, Systems revenue was €122.4m representing 92.5% of total revenue and was up slightly (0.9%) versus 2013.
- Services revenue was €2.3 million for Q4 2014, or 7.6% of total revenue, up 5.4% versus the year ago period. Contribution to full year 2014 results was €8.9 million for this segment, representing 7.5% of total revenue, which was an increase of 15.3% when compared to 2013.
- Revenue from EMEA (excluding events) in the fourth quarter of 2014 was €16.9 million, up 3.8% against last year’s quarter. Sales in EMEA accounted for 55.4% of group revenue during the fourth quarter. This compares to 42.2% of total revenue during the fourth quarter of 2013. For the entire year of 2014, EMEA revenue (excluding events) was €62.8 million or 47.7% of total revenue and was flat when compared to 2013.
- Americas’ revenue for the fourth quarter of 2014 was €7.6 million, down 30.5% versus last year. Americas accounted for 25.0% of total revenue during the quarter, down from 28.5% of total revenue during the fourth quarter of 2013. For the entire year of 2014, Americas’ revenue was €32.9 million or 25.0% of total revenue and was up 12.3% when compared to Americas’ revenue during 2013.
- Q4 2014 revenue from the APAC region was €5.9m, down 47.1% versus last year’s quarter. APAC accounted for 19.4% of total revenue in the fourth quarter, down from a contribution of 29.1% during Q4 2013. For the full year 2014, APAC’s revenue was €21.3 million or 16.2% of total revenue and was down 41.5% when compared to APAC’s revenue in 2013.
New CEO Appointed:
The Company also announced the appointment of Muriel De Lathouwer as the Managing Director & CEO of the Company. Ms. De Lathouwer had been serving as interim president of the Executive Committee since the departure of Joop Janssen in October 2014. She has been a member of the board of EVS since November 2013.
The Company’s full year 2014 results were in line with management’s guidance of low single digit growth over the performance in 2013. Management cited a continued challenging market situation in the broadcast industry and specifically the live production server market segment. This gives EVS limited visibility on expectations for 2015, though EVS did expanded on the discussion of the market by noting macro-economic headwinds and longer investment cycles. In fact, the headline of the press release noted “2015 will be a transition year.”
The company provided additional commentary on the market environment in its Q4 2014 earnings presentation. Management cited market data confirming its strong market share in outside broadcast vans and the opportunity for future upgrades of this existing installed base. EVS also referenced a slide from Devoncroft’s pre-IBC 2014 analysis illustrating the ongoing “Trend Spend Disconnect” in the broadcast technology sector (included below as a reference). The slide was supportive of management’s view that product investments by EVS are aligned with long-term trends in the sector.
Press Release: EVS Reports 2014
Results:Press Release: EVS Broadcast Equipment Appoints Muriel De Lathouwer as Managing Director & CEO
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