Posts Tagged ‘quarterly results’

Broadcast Vendor M&A: ChyronHego to be Taken Private by Vector Capital in $114 Million Deal

Analysis, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Nov 17 2014

Broadcast graphics specialist ChyronHego announced that it has entered into a definitive agreement with Vector Capital, under which an affiliate of Vector will acquire all of the outstanding shares of ChyronHego common stock for $2.82 per share in cash.

San Francisco-based Vector Capital is a private equity firm with experience in the digital media sector. Recent portfolio investments include Corel and Technicolor. To fund the ChyronHego deal, Vector has secured committed financing consisting of a combination of equity and debt.

This is the second recent take-private transaction of a broadcast graphics provider. Earlier this month. Vizrt announced that it will be taken private by Nordic Capital in a $374m all-cash deal.

The $2.82 per share purchase price represents a premium of approximately 18% over the company’s average closing share price for the six months ending on November 14, 2014, and a 4% premium over the company’s closing share price on November 14, 2014, the last day of trading before the announcement.

Based on the total number of shares outstanding in ChyronHego, the deal equates to an equity value of approximately $114m. After backing out the cash on the company’s most recently published financial statements, this represents an enterprise value of approximately $108m.  On a valuation multiple basis, this is approximately 1.8x trailing 12 month’s revenue.

According to a shareholder FAQ, ChyronHego’s management team will stay the same after the transaction closes. Johan Apel will continue as CEO, and Soren Kjellin will continue as CTO.

The contractual details of the ChyronHego – Vector Capital agreement are complex and worth a longer discussion. We are preparing an analysis of the deal, and we will post this later this week.

A very brief synopsis of certain deal points follow:

  • Technically, the deal is a merger rather than an acquisition. ChyronHego is being merged into an entity controlled by Vector Capital, in order to create a new corporate entity, which will also be owned and controlled by Vector Capital.

 

  • All major shareholders on the ChyronHego management team have agreed to re-invest approximately 50% of their holdings in ChyronHego into the new corporate entity, for which they will receive approximately 31% of the equity in the new entity

 

  • Interestingly the merger agreement includes a “go shop” provision whereby ChyronHego has seven weeks to find a buyer who will offer a higher price than Vector Capital’s offer of $2.82 per share. Given Vizrt’s valuation in the Nordic Capital deal, and the fact that shares of ChyronHego have traded above $3.00 several times during the past year, it is possible that ChyronHego will be able to find a better offer. However, the “go shop” provision includes termination fees that will triggered under specified circumstances such as the acceptance of a superior offer. The company says it does not intend to disclose developments with respect to the solicitation process unless and until a decision has been made in respect to any potential superior proposal. 

 

The transaction is subject to customary closing conditions and most notably the approval by holders of two-thirds of ChyronHego’s outstanding shares and the approval by holders of a majority of shares held by current ChyronHego’s stockholders who will not become stockholders in the going-forward entity.  The Company expects the transaction to close in the first quarter of fiscal 2015.

The company said that its  board of directors and a special committee of the board composed entirely of independent directors have unanimously approved the deal, and have recommend that ChyronHego’s stockholders approve the transaction

“We are very happy to announce this partnership with Vector Capital, an established global technology oriented private equity firm that is focused on building long-term value. Our management is convinced that this is the right opportunity at the right time for ChyronHego’s customers, employees and stockholders,” said Apel.

In the third quarter of 2014, ChyronHego posted a net loss of $2.6m on revenue of $14. During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.

.

.

Related Content:

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

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.

.

.

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

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

 

 

 

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.”

.

.

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

.

.

© Devoncroft partners 2009-2014. All Rights Reserved.

.

.

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.”

.

.

Related Content:

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

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

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

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.

.

.

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

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

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.

.

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.

.

.

 

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

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

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.

.

.

Related Content:

Press Release: DTS Reports Strong Second Quarter 2014 Financial Results

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

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

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.

.

.

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

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

 

 

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

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results | Posted by Joe Zaller
Aug 14 2014

The Vitec Group, which owns more than a dozen brands in the broadcast industry as well as technical services company Bexel, said that its total revenue for the first six months of 2014 was £152.9m, a decrease of 3% versus the first six months of 2013.

Operating profit for the first half of 2014 was £19.2m, down 3% versus last year.

Despite the lower top-line results the company achieved an operating margin of 12.6%, equal to the first six months of 2013.

On organic basis at constant currency, its revenue was up 3.8% versus the first half of 2013, and that its operating profit increased by 6.3%

 .

 

Vitec Videocom Division

Vitec’s broadcast-focused Videocomm division is made up of more than dozen brands that serve various parts of the broadcast industry: Anton/Bauer, Autoscript, Camera Corps, Teradek, The Camera Store, Haigh-Farr, Litepanels, Microwave Service Company, Nucomm, OConnor, Petrol Bags, RF Central, Sachtler, Vinten and Vinten Radamec.

For the first six months of 2014, Videocom revenue was £69.5m, down 1% versus the first six months of 2013.

Videocom operating profit for 1H 2014 was £8.5m, down 2.3% versus last year, resulting in an operating margin of 12.2%, flat with the year earlier period. Operating profit on a constant exchange rate basis was up by 1.2%.

Profitability was helped by the cost control measures and a restructuring program of the Videocom division, which Vitec says is now largely complete.  The company also said that it has also close to completing completed the relocation of certain UK manufactured products to Costa Rica completed to schedule in the first half of 2014.

The company also said that it results were helped by the Sochi Winter Olympics, and a strong performance from Teradek, which was acquired by the Vitec Group during the second half of 2013. 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.

Offsetting the strength of Teradeck and the boost from the Olympics was a poor performance by the IMT business, a “relatively small part of the Videocom division” that provides microwave and which provides wireless microwave products to customers in the Military, Aerospace and Government (MAG) market.

 

Vitec Group 1H 2014 -- Videocom performance

 

The 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

As a result of the poor performance in MAG space, which Vitec says is an “increasingly challenging market that has become overly price driven,” the company has decided to exit its IMT business, and is currently assessing its options of a sale or closure.”

Vitec says that the divestiture of the IMT business will allow it to focus the Videocom division on its core broadcast activities.

The company highlighted the performance of several its brands, saying:

Our camera supports brands experienced a lower level of project activity. However we have continued to grow sales of our premium robotics products across all regions

 

  • Prompters performed in line with last year

 

  • Litepanels LED lighting products and Anton/Bauer mobile power products performance has been lower than expected. We are in the process of broadening our LED lighting product range to maintain our leading position in the market, and are launching some new, innovative mobile power products.

 

  • 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.

 

 

 .

Vitec Services Division (Bexel) Revenue Jumps 39.9 Percent

For the first half of 2014, revenue from Vitec’s Services Division, which primarily comes from Bexel, was £19.8m, up 39.9% versus the first six months of 2013.

Vitec Group 1H 2014 -- Services (Bexel) performance

The company attributed Bexel’s growth to contracts associated with the Sochi Winter Olympics, the FIFA World Cup, and an increase in in its rental business.

Bexel’s operating profit for 1H 2014 was £2.1m compared to £200,000 last year.  This translates to an operating margin of 10.9% for the first half of 2014, versus an operating margin of 1.4% for the year ago period.

.

 

M&A Activity: Two Businesses Acquired During 1H 2014

Vitec purchased to companies during the first six months of 2014.

In March 2014, the Videocom division acquired the assets of the Specialty Cameras division of SIS Outside Broadcasts Limited through a business combination for a cash consideration of £1.8m, and a potential earnout of up to £1.4m. The deal gives Vitec new specialty camera including the “Stump Cam” used in international cricket matches, and the “Plunge Cam” that tracks high divers from the dive to underwater.

In April 2014, Vitec reached an agreement to acquire UK teleprompter vendor Autocue, for a net consideration of £6m. This deal has yet to close, as it is subject to clearance by the UK Competition and Markets Authority.

.

.

Related Content:

Press Release: The Vitec Group plc Half Year Results to 30 June 2014

Press Release: The Vitec Group plc 2013 Full Year Results

Previous Year: Vitec Group 1H 2013 Results: Videocom Revenue Down 5.1 Percent, Bexel Flat

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

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

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

Broadcast technology vendor financials, Quarterly Results, SEC Filings | Posted by Joe Zaller
Aug 13 2014

Avid, which since February 2013 has been conducting an internal investigation into its current and historical accounting treatment related to software updates, said in a regulatory filing that in approximately four weeks, it expects to have completed its accounting audit and filed its annual report (Form 10-K) for the fiscal year ended December 31, 2013.

Because of its 18 month-long internal accounting audit, the company has not been able to file financial results with securities regulators since the third quarter of 2012.

This delay ultimately resulted in Avid’s stock being delisted from The NASDAQ Stock Market on February 25, 2014.

But with today’s announcement, it appears that the audit is nearly completed.

Avid now says that its 2013 Form 10-K will include results for the fiscal year ended December 31, 2012 and restated results for the fiscal year ended December 31, 2011. The company said it also intends to file its Form 10-Q for each of the three-month periods ended March 31, June 30 and September 30, 2013 concurrently with the 2013 Form 10-K filing.

The company will then file its Form 10-Q for the period ended March 31, 2014 approximately one week after filing the 2013 Form 10-K and file Form 10-Q for the period ended June 30, 2014 approximately 40 days later.

Avid then expects to be back to a normal reporting cycle beginning with the reporting of results for the third quarter of 2014.

When the Avid does report its financials, it will bring an end to a process that began in February 2013 when the company announced that it would delay the announcement of its Q4 and full year 2012 results in order “to provide additional time for the company to evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”

That news came just two weeks after Avid named Louis Hernandez, Jr. to replace Gary Greenfield as the company’s president and CEO.

In May of 2013, Avid said that, as a result of its internal review, the company had determined that its financial statements from 2009 – 2011 are no longer reliable, and must be restated “because of errors in the application of US GAAP.”

At issue is the historic accounting treatment the company applied for certain software upgrades, dating back to 2009, which were made available to certain of its customers at no-charge. Avid management said in August 2013 that it has now determined that these upgrades should have been accounted for as “implied post-contract customer support” under US GAAP accounting rules.

The problem is that Avid has had a lot of transactions since 2009, and each one must be reviewed.

In January 2014, the company said it had made significant progress toward completion of the restatement, including evaluating transactions over an eight-and-a-half year period, encompassing a review of approximately 5 million transaction lines and 700 software releases.

Not only is this a time-consuming process, it’s also expensive. In January 2014, Avid said its cash expenditures in 2014 related to the ongoing accounting evaluation through completion of the evaluation will amount to approximately $25m to $34m.

On June 30, 2014 Avid’s cash and debt balances were $23m and $5m respectively, $48m no debt at on December 31, 2013.

Avid says it expects remaining payments related to the restatement as of July 1, 2014 to amount to approximately $12m to $14m.

Despite its well-publicized financial woes over the past few years, our market research during this same period shows that Avid continues to enjoy a strong brand reputation and customer loyalty, particularly among broadcasters and large media companies.

It’s also interesting to note that, while it may be a coincidence, the timing of Avid planned release of its historic financials more or less exactly coincides with the AvidConnect Europe event, and the 2014 IBC trade show in Amsterdam.

.

.

Related Content:

Press Release: Avid Announces Timeline for Restatement

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

.

.

© Devoncroft Partners 2009 – 2014. All Rights Reserved.

.

.

%d bloggers like this: