Posts Tagged ‘Robert Young’

International Sales and IP Adoption Drive Evertz Quarterly Growth

Analysis, Broadcast technology vendor financials, Quarterly Results | Posted by Josh Stinehour
Mar 09 2016

Evertz announced revenue for the third quarter of its 2016 fiscal year was C$99.8 million, up 10% versus the same period a year ago, and down 1.0% versus the previous quarter.evertz-logo

Net earnings for the quarter were C$24.4 million (C$0.32 per share), up 15.1% versus the same quarter last year, and up 24% versus the previous quarter. The company generated C$49.6 million cash from operations in the quarter, up from C$27.5 million cash used last year, and C$23.6 million generated last quarter.

The revenue result (second highest in Evertz history) was slightly above the consensus estimates of equity analysts, who were looking for revenue of $C97.5m.  Consensus earnings expectations for the quarter were C$0.24 per share.

Evertz EVP Brian Campbell attributed the strong performance to ongoing industry technical transition to IP networking and file-based workflow.  Brian Campbell also highlighted the growing adoption of Evertz’s IP-based software-defined networking solutions, compression solutions, and DreamCatcher IP-based replay and production suite.

Revenue in the US/Canada region was C$53.5 million, flat versus the same period a year ago, and down 12.4% versus the previous quarter. US/Canada sales were 53.7% of total revenue during the quarter, down from 59% of revenue during the same period a year ago, and 60.8% of revenue last quarter.

International revenue was C$46.2 million, an increase of 24% versus the same period last year, and up 17.5% versus the previous quarter. International sales were 46.3% of total revenue, up from 41% last year, and 39.2% last quarter.

The top ten customers in the quarter accounted for 36% of revenue (C$35.9 million), and the no customer in the quarter accounted for more than 11% of revenue (C$10.9 million). Altogether Evertz had 78 orders in the quarter that were greater than C$200,000 (the same as last year, and down from 82 last quarter).

Gross margins in the quarter were 57.1%, up from 57.6% last year and up from 57.2% last quarter. Evertz CFO Anthony Gridley reiterated the gross margin performance in the quarter was within the company’s target range of 56% to 60%.

R&D expenses in the second quarter were C$17.2 million, an increase of 8.8% versus the same period last year, and up 6.8% versus the previous quarter.  R&D expenses were approximately 17.2% of revenue in the quarter, higher on a percentage basis than last year (16.1%) and last quarter (16%).

Selling and administrative expenses for the quarter were C$15.1 million, an increase of 2.0% versus last year, and a decrease of 7.9% versus the previous quarter. Selling and administrative expenses represented approximately 15.2% of revenue in the quarter versus 16.3% of revenue during the same period last year, and 16.3% of revenue last quarter.

The company said that its shipments in February 2015 were C$28m, and that its purchase order backlog at the end of the third quarter were in excess of C$60 million, down slightly from the C$66 million figure in the second quarter.  Combination of the shipments and backlog (C$88 million) represents a 5% increase versus the same period last year.

The company ended the quarter with $129.9 million of cash and short term investments up from C$97.5 million at the end of last quarter, a difference of C$32.4m.  Cash generation in the quarter benefited from a C$18.7 million positive impact from changes in non-cash working capital accounts.

Management’s exchange with equity analyst Robert Young from Canaccord Genuity on the earnings call was worth highlighting for its commentary on the current competitive dynamic in the market:

Robert Young (Canaccord): … they (a competitor) also called out the number of IP projects that they booked and the number that they shipped. I was wondering, would you be willing to share a similar metric?

Brian Campbell (Evertz): Thanks, Robert. So in terms of the metric, what is more important for us would be to showcase the on-air installs. We’re quite familiar with the ESPN DC-2 that really launched the industry’s move to IP-based solutions for live production and workflow. And if we just even look to the recent Super Bowl 50, there’s been several industry articles highlighting the fact that the CBS Super truck was there as part of the coverage, or actually, the centerpiece of the coverage. That’s an industry pioneering, one of several that incorporates Evertz Software Defined Video Networking. In fact, it’s an EXE hyperscale, 23-terabit switch in that truck. And in addition, the Levi’s Stadium is a state-of-the-art stadium. It includes Evertz solutions, and for Super Bowl 50, there was an overlay of our Software Defined Video Networking helping to provide the coverage that folks saw at the Super Bowl and also the 4K replay for the in-stadium venue experiences.

 

 

Related Content:

Evertz Q3 2016 MD&A

Evertz Q3 2016 Financial Statements

 

 

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Evertz Beats Expectations in Q1 Fiscal 2013 as Profits Jump 41 Percent

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Sep 14 2012

Evertz announced that its revenue for the first quarter of its 2013 fiscal year was C$96m, an increase of 28% versus the same period a year ago, and up 26% versus the previous quarter.

Net earnings for the quarter were C$24.8m (C$0.34 per share), up 41% versus the same quarter last year, and up 87% versus the previous quarter.

The results for the quarter were well above the expectations of equity analysts, who on average were looking for revenue of C$84.9m and EPS of C$0.25.

Revenue in the US/Canada region was C$59.4, or 62% of total revenue, up 31% versus the same period a year ago, and up 62% versus the previous quarter.

International revenue was C$36.6m, an increase of 23% versus the same period last year, and down 8% versus the previous quarter. International sales were 38% of total revenue, down from 40% last year.

Evertz EVP Brian Campbell attributed the revenue growth to the ongoing transition to HD, a growing demand globally for high quality video, traction in the company’s workflow solutions from its purchase of Pharos, and several large projects that were recognized during the quarter.

The company had 76 orders in the quarter that were greater than C$200,000, and the top ten customers provided for 41% of revenue (C$39.4m), so Evertz clearly closed some big deals close during the quarter.

Significantly, one customer accounted for 15% of total revenue, or C$14.4m, during the quarter. C$14.4m is a huge order for any broadcast vendor, and this means that the company’s revenue during the quarter was significantly more concentrated than in the past.  For comparison, during the previous quarter no customer accounted for more than 5% of total revenue, or C$3.82m. In response to questions about the “15% customer” from Canacord Genuity analyst Robert Young, Brian Campbell pointed out that the 15% number relates to all product shipped to a single customer during the quarter, not necessarily a single order for one project.  Campbell also said that although this order was indeed large, the company has had large orders in the past.  What appears to make this order unusual is that it appears to have happened during a single quarter as opposed to delivery over multiple quarters, which Campbell said is more common.  Campbell declined to state who the customer was, or its geographic location, but given the rise in US/Canada sales, and the q/q decline in international revenue, it’s easy to speculate.

The strong results follow on from the previous quarter when Evertz announced that its order backlog had reached a record C$57m, and said that most of this backlog would ship during the current quarter. This appears to have happened, as the company’s order backlog at the end of the first quarter of its 2013 fiscal year was C$40m, or 30% lower than three months ago.

Gross margins in the quarter were 58%, up from 57% last year and up from 56% last quarter.  The company attributed its margin expansion in the quarter to higher revenue and traction in new product areas. Company CFO Anthony Gridley said that gross margins were within the company’s targeted range of 56% to 62%, and that the company is “comfortable” with that range.  Campbell added that this margin range allows Evertz to make money while remaining price-competitive in the market.

R&D expenses in the quarter were C$11.8m, an increase of 14% versus the same period last year, and down 8% versus the previous quarter when the company accelerated the purchase of materials and prototypes in order to take advantage of government tax incentives before the end of its fiscal year.  Gridley said the company is constantly adding R&D staff, so any reported decline in R&D spending is typically the result of an increase in prototypes in previous quarters.  Campbell said that the company will continue to invest in R&D as the company sees its engineering strength as a key market differentiator, and Evertz intends to “continue to extend this lead.”

SG&A expenses for the quarter were C$12.4m, an increase of 19% versus last year, and essentially flat with the previous quarter. Selling and administrative expenses represented approximately 13% of revenue in the quarter versus 14% of revenue during the same period last year, and 16% of revenue last quarter.

The company’s purchase order backlog at the end of August 2012 was in excess of C$40m, up 90% versus the same period last year, and down 30% versus the previous quarter.

Commenting on the recent IBC trade show, Campbell said that Evertz saw increasing awareness of some of its recent large R&D investments.  He specifically cited video transport, IT-based playout, asset management, and compressed domain products as areas where the company is seeing interest.

When asked by an analyst about the pick-up in broadcast technology M&A activity such as the recent purchase of Miranda by Belden, and the decision by Harris to divest its broadcast business, Campbell responded by saying that Grass Valley should be added to this list because it is also has been going through changes since being acquired by Francisco Partners.  Campbell implied that the distractions facing competitors was a net positive for Evertz.  “Customers look to Evertz as a very stable entity with very little disruption, so we’ve been able to capture market share” he said.

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Related Content:

Press Release: Evertz Technologies Reports Results for the First Quarter Ended July 31, 2012

Previous Quarter: Evertz Q4 FY 2012 Revenue Rises 11 Percent, Order Backlog at Record Level

Previous Year: Evertz Beats Expectations in Q1 2012 as Domestic Revenue Increases Six Percent

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