Evertz Technologies Reports $120 Million Revenue for the Quarter Ended October 31, 2019

Burlington, Ontario--(Newsfile Corp. - December 12, 2019) - Evertz Technologies Limited (TSX: ET), the leader in Software Defined Video Network ("SDVN") technology, today reported its results for the second quarter ended October 31, 2019.

Second Quarter 2020 Highlights

  • Quarterly revenue of $119.8 million , an increase of $7.5 million or 7% from the prior year
  • Quarterly revenue in the US/Canada region of $88.6 million, an increase of 14% from the prior year
  • Net earnings of $20.5 million for the quarter, inclusive of a foreign exchange loss of $1.1 million
  • Fully diluted earnings per share of $0.27 for the quarter
  • Cash position as at November 30, 2019 of $29 million

Selected Financial Information
Consolidated Statement of Earnings Data
(in thousands of dollars, except earnings per share and share data)

   

     Q2 ' 20       Q2 ' 19   
Revenue $ 119,788   $ 112,280  
Gross margin   69,322     64,158  
Earnings from operations before foreign exchange   28,353     26,550  
Earnings from operations   27,223     27,388  
Net earnings   20,526     20,581  
Fully-diluted earnings per share $ 0.27   $ 0.27  
Fully-diluted shares   76,783,365     76,516,761  

Selected Financial Information
Consolidated Balance Sheet Data
(in thousands of dollars)

     Q2 ' 20       YE '19   
Cash and cash equivalents $ 5,449   $ 104,583  
Working capital   222,038     282,521  
Total assets   427,701     466,597  
Shareholders' equity   293,593     353,123  

Revenue

For the quarter ended October 31, 2019, revenues were $119.8 million, an increase of $7.5 million compared to revenues of $112.3 million for the quarter ended October 31, 2018. For the quarter, revenues in the United States/Canada region were $88.6 million, an increase of $11.1 million compared to $77.5 million in the same quarter last year. The International region had revenues of $31.2 million compared to $34.8 million in the same quarter last year.

Gross Margin

For the quarter ended October 31, 2019, gross margin was $69.3 million as compared to $64.2 million in the same quarter last year. Gross margin percentage was approximately 57.9% as compared to 57.1% in the quarter ended October 31, 2018.

Earnings

For the quarter ended October 31, 2019, net earnings were $20.5 million as compared to $20.6 million in the corresponding period last year.

For the quarter ended October 31, 2019, earnings per share on a fully-diluted basis were $0.27 as compared to $0.27 in the corresponding period last year.

Operating Expenses

For the quarter ended October 31, 2019, selling and administrative expenses were $18.0 million as compared to $16.4 million for the quarter ended October 31, 2018.

For the quarter ended October 31, 2019, gross research and development expenses were $22.9 million as compared to $21.1 million for the quarter ended October 31, 2018.

Liquidity and Capital Resources

The Company's working capital as at October 31, 2019 was $222.0 million as compared to $282.5 million on April 30, 2019.

Cash and cash equivalents were $5.4 million as at October 31, 2019 as compared to $104.6 million on April 30, 2019.

Cash used in operations was $12.9 million for the quarter ended October 31, 2019 as compared to $7.6 million for the quarter ended October 31, 2018. Before taking into account taxes and the changes in non-cash working capital and current taxes, the Company generated $23.9 million from operations for the quarter ended October 31, 2019 compared to $22.7 million for the same period last year.

For the quarter, the Company generated $1.8 million from investing activities.

For the quarter ended, the Company used cash in financing activities of $81.9 million which was principally a result of the payment of dividends of $83.4 million.

Shipments and Backlog

At the end of November 2019, purchase order backlog was in excess of $97 million and shipments during the month of November 2019 were $39 million.

Dividend Declared

Evertz Board of Directors declared a regular quarterly dividend on December 12, 2019 of $0.18 per share.

The dividend is payable to shareholders of record on December 20, 2019 and will be paid on or about December 27, 2019.

Selected Consolidated Financial Information
(in thousands of dollars, except earnings per share and percentages)

    Three month period ended     Six month period ended  
    October 31,     October 31,  
    2019     2018     2019     2018  
Revenue $ 119,788   $ 112,280   $ 223,199   $ 215,369  
Cost of goods sold   50,466     48,122     94,725     92,433  
Gross margin   69,322     64,158     128,474     122,936  
                         
Expenses                        
   Selling and administrative   18,004     16,389     34,334     32,294  
   General   864     763     1,758     1,501  
   Research and development   22,938     21,083     45,632     42,403  
   Investment tax credits   (1,978 )   (1,933 )   (3,981 )   (3,936 )
   Share based compensation   1,141     1,306     2,872     1,907  
   Foreign exchange loss (gain)   1,130     (838 )   2,907     (1,910 )
    42,099     36,770     83,522     72,259  
Earnings before undernoted   27,223     27,388     44,952     50,677  
                         
Finance income   361     310     812     669  
Finance costs   (78 )   (83 )   (541 )   (509 )
Other income and expenses   (223 )   5     (182 )   140  
Earnings before income taxes   27,283     27,620     45,041     50,977  
Provision for (recovery of) income taxes                        
   Current   7,707     7,876     11,274     13,494  
   Deferred   (950 )   (837 )   34     (459 )
    6,757     7,039     11,308     13,035  
                         
Net earnings for the period $ 20,526   $ 20,581   $ 33,733   $ 37,942  
                         
Net earnings attributable to non-controlling interest   154     235     284     323  
Net earnings attributable to shareholders   20,372     20,346     33,449     37,619  
Net earnings for the period $ 20,526   $ 20,581   $ 33,733   $ 37,942  
                         
Earnings per share                        
Basic $ 0.27   $ 0.27   $ 0.44   $ 0.49  
Diluted $ 0.27   $ 0.27   $ 0.44   $ 0.49  

                   

Consolidated Balance Sheet Data   As at     As at  
    October 31, 2019     April 30,
2019
 
Cash and marketable securities $ 5,449   $ 108,606  
Inventory $ 172,969   $ 171,271  
Working capital $ 222,038   $ 282,521  
Total assets $ 427,701   $ 466,597  
Shareholders' equity $ 293,593   $ 353,123  
             
Number of common shares outstanding:            
   Basic   76,801,646     76,545,246  
   Fully-diluted   77,894,646     77,958,746  
             
Weighted average number of shares outstanding:            
   Basic   76,642,814     76,510,417  
   Fully-diluted   76,721,893     76,529,799  


Forward-Looking Statements

The report contains forward-looking statements reflecting Evertz's objectives, estimates and expectations. Such forward looking statements use words such as "may", "will", "expect", "believe", "anticipate", "plan", "intend", "project", "continue" and other similar terminology of a forward-looking nature or negatives of those terms.

Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, all forward-looking statements address matters that involve known and unknown risks, uncertainties and other factors. Accordingly, there are or will be a number of significant factors which could cause the Company's actual results, performance or achievements, or industry results to be materially different from any future results performance or achievements expressed or implied by such forward-looking statements.

Conference Call

The Company will hold a conference call with financial analysts to discuss the results on
December 12, 2019 at 5:00 p.m. (EDT). Media and other interested parties are invited to join the conference call in listen-only mode. The conference call may be accessed by dialing 647-793-2625 or toll-free (North America) 1-888-297-0356, access code 2976163.

For those unable to listen to the live call, a rebroadcast will also be available until
January 11, 2020. The rebroadcast can be accessed at 647-436-0148 or toll-free 1-888-203-1112. The pass code for the rebroadcast is 2976163.

About Evertz

Evertz Technologies Limited (TSX: ET) designs, manufactures and markets video and audio infrastructure solutions for the television, telecommunications and new-media industries. The Company's solutions are purchased by content creators, broadcasters, specialty channels and television service providers to support their increasingly complex multi-channel digital, and high and ultra-high definition television ("HDTV" and "UHD") and next generation high bandwidth low latency IP network environments and by telecommunications and new-media companies. The Company's products allow its customers to generate additional revenue while reducing costs through efficient signal routing, distribution, monitoring and management of content as well as the automation and orchestration of more streamlined and agile workflow processes on premise and in the "Cloud".

Contact:

Doug Moore, CPA, CA
Chief Financial Officer
Evertz Technologies Limited
(905) 335-3700 ext 2256
www.evertz.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/50756

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