Posts Tagged ‘Paralinx’

Vitec Group Updates Segment Reporting for Broadcast Division

Annual Results, broadcast technology market research, Broadcast technology vendor financials | Posted by Josh Stinehour
Feb 05 2018

The Vitec Group, which owns more than a dozen brands in the broadcast industry, released an update of its financial performance through the first half 2017 based on its new segment reporting. 

The change followed the Company’s divestiture of its services business Bexel to NEP.  The new structure offers visibility into the two product groups Vitec sells in the broadcast industry.

As of November 2017, The Vitec Group reports across the following three Divisions:

  • Imaging Solutions contains the assets formerly reported in the Photographic division, which is focused on the professional and consumer photographers.
  • Production Solutions groups Vitec’s more traditional broadcast products, including camera supports, robotic camera systems, prompters, mobile power, lighting, along with the remaining service activities of Camera Corps and The Camera Store.
  • Creative Solutions comprises The Vitec Group’s video transmission systems (Paralinx, Teradek), monitors (smallHD), and camera accessories (Wooden Camera, Offhollywood).

One of the stated goals of the reporting modification is to give greater focus to the fast-growing independent content creator market where the Creative Solutions division has a larger presence.

It is interesting to note nearly all of the assets in Creative Solutions were acquired over the past five years.

Broadcast Operating Segment Results

The restated 2016 and 1H 2017 results illustrate the relative revenue contribution and profitability profiles of the Production Solutions and Creative Solutions divisions.

For full year 2016, Production Solutions represented 72.5% of Broadcast sales or £121.6 million.  Creative Solutions had sales of £45.9 million or 27.5% of Broadcast revenue.

When including an allocation for corporative overhead the operating margin profile for Production Solutions was 10.9% during 2016 and 16.8% for Creative Solutions.

During the first half of 2017 (ending June 30) Production Solutions had sales of £55.7 million (64.3% of Broadcast) and Creative Solutions contributed £30.8 million of revenue (35.7% of Broadcast).

Operating margins (with corporate allocation) for 1H 2017 were 9.5% for Production Solutions and 17.2% for Creative Solutions.

Vitec Group did not provide comparable year-over-year period presentations of the Divisions.  However, even using a straight line estimate, it is reasonable to view the Production Solutions as an approximately flat business (year-over-year) in the first half of 2017, as the second half is usually the stronger portion of the year.  Creative Solutions, in contrast, is experiencing strong growth.  The magnitude of growth is difficult to estimate given the inorganic additions to the division with the closing of the acquisitions of Offhollywood and Wooden Camera.  As a reference point, the 2016 restatement lists £20.4 million of investing activities attributable to the Creative Solutions division.

While growing faster, the Creative Solutions division is also meaningfully more profitable with operating margins in the high teens.  Thus, consistent with The Vitec Group’s stated intentions, this reporting approach provides greater visibility into the higher growth, higher margin Creative Solutions division.

In addition, the restatement of 2016 financial results further highlights the merits of the divestiture of Bexel.  This is not a commentary on the quality of Bexel, but rather an observation about the fundamentally different characteristics of Bexel’s asset and capital intensive business, which contrasts with the remaining product businesses.  Consider that during 2016 – the fourth year in the four year industry cycle – Bexel had revenue of £47.7 million, an adjusted (before impairments and restructuring costs) operating loss of £1.4 million, and capital expenditures of £7.1 million.  (It is appropriate to point out Bexel generated operating cash when adjusting for non-cash items and including rental asset disposals).

Full year 2017 results are scheduled for release on February 22, 2018.

Impact of US Tax Change

In the same release, Vitec offered guidance on the impact of the new Tax Cuts and Jobs Act legislation passed in the United States.  The immediate impact to Vitec is a revaluation lower of its US deferred tax balance by £7.0 million.  This is because the lower US tax rate of 21% (versus 34%) means tax losses have less value in the future.



Related Content:

Vitec Announces Segment Reporting, US Tax and Adjusted Performance Measures



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Vitec Group Acquires two Businesses, Grows Broadcast 10% in 1H 2016

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Aug 15 2016

The Vitec Group, which owns more than a dozen brands in the broadcast industry as well as technical services company Bexel, released its results for the first half of 2016.  Vitec Group Logo

Total revenue for 1H 2016 was £171.1 million, an increase of 9.7% versus 1H 2015, and an increase of 5.7% when compared to 2H 2015.  Operating profit was £12.6 million, a decrease of 8.7% versus 1H 2015, and a 41.7% decrease against 2H 2015.  On a constant currency basis, revenue increased 3.1% and operating profit increased 5.2% on a year-over-year basis.

Operating profit declined despite the revenue growth because of non-repeat, high-margin Haigh-Farr antennas contracts in the comparison period (1H 2015) and a greater mix of lower margin broadcast services business during the first six months of 2016.

Operating profit is reported before costs associated with the acquisition of business ($2.7 million during 1H 2016), restructuring (£2.8 million in 1H 2016), and also the £0.7 million gain on sale of The Vitec Group’s manufacturing facility in Bury St Edmunds.  Vitec indicated the restructuring activities initiated in 2015 resulted in savings of £2.5 million in the first six months of the year.

Vitec Acquisitions:

Vitec acquired two businesses in the first half of 2016.  In January Vitec purchased Provak Foto Film Video B.V., a Netherlands distributor partner for cash consideration of £0.9 million.  On April 12, 2016, Vitec’s Broadcast Division acquired Offhollywood Digital for upfront cash consideration of £1.6 million along with contingent compensation of up to $8.0 million (USD) if gross profit targets are met for the periods to December 2018.  Offhollywood Digital provides camera-back modules for RED cameras along with related services.

Vitec often structures its acquisitions with contingent consideration.  During the period Vitec made yet another payment in the amount of £2.8 million on the earn-out related to the 2013 acquisition of Teradek.

Vitec Broadcast Division:

Vitec’s broadcast brands serve various parts of the broadcast industry: Anton/Bauer, Autocue, Autoscript, Bexel, Camera Corps, Haigh-Farr, Litepanels, OConnor, Paralinx, Petrol Bags, Sachtler, SmallHD, Teradek, The Camera Store, and Vinten.

Vitec reports the results of its Broadcast Division separate from its Photographic division. For the first half of 2016, the Broadcast Division represented 60.0% of The Vitec Group’s total sales.  In 1H 2015 and 2H 2015 the Broadcast Division accounted for 60.0% and 59.0%, respectively.

The below slide is taken from the Vitec Group earnings presentation and offers a summary on the key developments with the Broadcast Division in the first half of 2016.


The Broadcast Division had revenue of £102.3 million in 1H 2016, an increase of 10.0% versus 1H 2015 (an increase of 4.0% on constant currency basis), and an increase of 6.6% compared to the preceding period, 2H 2015.

In the Company’s release, management noted strength in the US market, which offset a more challenging environment in the EMEA region.

Positive currency benefits from a weaker British pound accounted for 60% of the Broadcast Division’s growth in 1H 2016.  Given the currency volatility stemming from the recent EU referendum in the UK, The Vitec Group expects to realize a net currency benefit in the second half of 2016.  Management indicated the hedges it maintains on the GBP to USD and GBP to EUR exchange rates will also delay part of the impact of a weaker GBP into the 2017 fiscal year.

Product sales for the Broadcast Division were £78.7 million for 1H 2016, an increase of 0.5% over 1H 2015, and a decrease of 4.0% over 2H 2015.  As a percentage of Broadcast Revenue, Products sales accounted for 76.9% of revenue in 1H 2016.  This compares to 84.6% in 1H 2015 and 85.4% during 2H 2015.

Within Product sales management highlighted the increased sales of wireless transmitters and receivers, camera monitors, and mobile power.  The US market was especially strong for broadcast battery products.  These results were offset by a decrease in large camera support sales.

Services sales from Vitec’s Bexel subsidiary were £23.6 million in 1H 2016, an increase of 66.2% versus 1H 2015, and an increase of 62.8% against 2H 2015.  Services represented 23.1% of Broadcast revenue during 1H 2016.  In 1H 2015 Services were 15.4% of sales and during 2H 2015 Services were 15.1% of Broadcast Revenue.

The strong growth in Services was due to a large contract with the NFL for project management and support to upgrade the communication infrastructure for all 31 NFL stadiums. The contract includes the pass-through of low margin products impacting the profitability of the Broadcast Division.

Operating profit for the Broadcast Division in 1H 2016 was £8.5 million, a decrease of 12.4% versus the 1H 2015 result (down 10.0% on constant currency basis), and a decrease of 34.6% against 2H 2015. In addition to the greater concentration with Services, operating profit was also negatively impacted by Vitec’s continued investment in the development of its wireless products and camera monitor business.

Operating margin for the Broadcast Division was 8.3% during the first half of 2016, a decrease of 220 basis points against 1H 2015, and a decrease of 600 basis points compared to 2H 2015.


Business Outlook:

Commenting on the first half results and outlook for the full year, Group Chief Executive Stephen Bird offered the following, “The Board’s expectations for the full year are unchanged. We anticipate that the Group’s performance in the second half of the year will benefit from the Rio 2016 Olympics, full year savings from the previously announced restructuring plans, and, potentially, from weaker Sterling.”


Related Content:

Press Release: Vitec Group 1H 2016 Results

Presentation: Vitec Group 1H 2016 Results



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Vitec Group 2015 Growth Driven by M&A Activity

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Feb 29 2016

The Vitec Group, which owns more than a dozen brands in the broadcast industry as well as technical services company Bexel, released its results for 2015.Vitec Group Logo

Total revenue was £317.8 million, an increase of 2.6% versus 2014.  Operating profit was £35.4 million, a decline of 8.8% versus last year.  On a constant currency basis, revenue increased 1.3% and operating profit decreased 1.8%.

In the earnings release, management highlighted the negative impact of currency, the disposal of IMT during 2014, and the softness in comparisons against 2014 given the non-repeat of large events.

Stephen Bird, Group Chief Executive commented, “We have continued to invest additional resources in driving new product sales in line with our strategy. As expected, the full year results reflect the non-repeat of the 2014 Sochi Winter Olympics and FIFA World Cup, and an anticipated negative impact from foreign exchange. There was growth in revenue and operating profit over the prior period excluding these items. The Group is making good progress in streamlining certain activities with lower growth prospects, with some further actions being taken to drive profitable growth.”

Vitec also announced it has sold its main UK Broadcast manufacturing site in Bury St Edmunds.  The proceeds from the sale were £3.9 million.  Vitec is planning to move the business to a smaller leased facility in the same region.  In recent years, Vitec had transitioned a significant amount of its manufacturing to Costa Rica.


Vitec Broadcast Division:

Vitec’s Broadcast brands serve various parts of the broadcast industry: Anton/Bauer, Autocue, Autoscript, Bexel, Camera Corps, Teradek, Haigh-Farr, Litepanels, OConnor, Paralinx, Petrol Bags, Sachtler, SmallHD, Vinten and Vinten Radamec.

The Broadcast Division had revenue of £189.0 million in 2015, an increase of 10.5% versus 2014 when excluding the divested IMT’s revenue from 2014 (and up 7.0% on constant currency basis).

Vitec’s acquisitions of Paralinx (February 2015) and SmallHD (December 2014) contributed approximately 75% of the revenue increases over 2014.

Given the positive contribution from companies acquired through M&A actions, Vitec highlighted its acquisition track record in its presentation to investors.


Vitec FY Presetnation - highlights M&A


Remarking on the Broadcast Division results, CEO Stephen Bird stated, “The Broadcast Division performed satisfactorily in variable market conditions. Our higher technology product businesses are performing well, including further strong growth of our wireless products. This partially offset lower sales of large camera supports, the non-repeat of major sporting events, and investments in the future growth of our higher technology businesses.”

Bird continued, “Broadcast Market continues to show some variability in demand with customers remaining cautious this is impacting large project activity.  The US market has been more positive and Japan is performing well.  However, conditions in EMEA are more challenging.”

Operating profit for the Broadcast Division in2015 was £20.3 million, a decrease of 4.2% versus the 2014 result (down 1.3% on constant currency basis).  Operating profit is stated before restructuring costs and charges associated with acquired businesses.

Restructuring costs for 2015 were predominantly attributable to streamlining activities in the Broadcast Division.

These activities were announced as part of Vitec’s first half earnings release.  Additional streamline actions for the entire company were announced in the year-end earnings release.

In aggregate, one-off costs associated with the continued restructuring are approximately £10 million, an increase from Management’s previous estimate of £6 million.  The restructuring is focused on the UK, US, and Europe operations and will be completed by the end of 2016.




Related Content:

Press Release: The Vitec Group plc 2015 Full Year Results

The Vitec Group plc. Full year results 2015 Presentation

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

Vitec Group Broadcast Revenue Up 6.3 Percent in 2014; Changes Reporting Structure to Focus on Core Businesses

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



© Devoncroft Partners 2009 – 2016. All Rights Reserved.



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