Vizrt  Reports H1 and Q2 2013 Results  – Return to growth, Improved margins

Bergen, Norway, August 9, 2013, Vizrt Ltd. (Oslo Main List: VIZ)

Vizrt today reported its financial results for the second quarter 2013 and the first six months of 2013.

SECOND QUARTER 2013 HIGHLIGHTS

  • Revenues of MUSD 31.7, up 5% compared to Q2 2012.
  • Recurring EBIT * of MUSD 5.0, corresponding to a 16% margin, up 29% compared to MUSD 3.9 (13%) in Q2 2012.
  • EBITDA of MUSD 6.1, corresponding to a 19% margin, up 12% compared to MUSD 5.4 (18%) in Q2 2012.
  • Cash generation from operating activities of MUSD 6.3, up 40% compared to MUSD 4.5 in Q2 2012.

FIRST HALF 2013 HIGHLIGHTS

  • Revenues of MUSD 58.7, down 5% compared to H1 2012.
  • Recurring EBIT * of MUSD 7.0, corresponding to a 12% margin, down 11% compared to MUSD 7.9 (13%) in H1 2012.
  • EBITDA of MUSD 9.2, corresponding to a 16% margin, down 16% compared to MUSD 11.0 (18%) in H1 2012.
  • Cash generation from operating activities of MUSD 7.0 compared to MUSD 7.9 in H1 2012.
    Adjusted for a MUSD 1.4 revaluation of a contingent liability related to the LiberoVision acquisition, cash generation from operating activities was MUSD 8.4.

BUSINESS HIGHLIGHTS

  • AMECS and APAC continue to perform strongly. Europe shows continued softness, although some broadcasters started to catch up on investments that were postponed due to the macro economic uncertainties over the last 18 months.
  • As communicated today in a separate PR a special net dividend per ordinary share of approximately NOK 1.71 (USD 0.29 per ordinary share) will be distributed on August 23, 2013. On May 3, 2013, a net dividend of NOK 0.66 (USD 0.12) per ordinary share, related to 2012 results, was distributed.

The two dividend distributions, together with the March 2012 dividend distribution of MUSD 10.2, combine for a total MUSD 44.3 in dividend distributions to shareholders over the last 18 months.

Following the distribution, Vizrt retains a strong balance sheet and continues to have the financial resources for implementation of its growth strategy and to pursue opportunities in the market as they may arise.

Management summary and outlook

Martin Burkhalter, Vizrt’s CEO, stated: “Considering the continued softness we experienced in our largest market, we are very pleased to have returned to growth. Growth was driven by a strong performance for both the Americas and APAC, which were up 26% and 13%, respectively. This growth was offset partially by continued weakness in Europe, which saw revenues decline by 9% compared to Q2 2012. We believe that the strategic nature of our product offering, in helping customers achieve financial and strategic objectives, puts our products in the “must have” premium category, which has allowed us to defend and grow margins.”

Mr. Burkhalter continued: “Both the 8% solid growth in BG and the 5% growth in MAM compared to Q2 2012 were driven by our global presence, and our ability to react to local economic trends, as witnessed in the Americas and APAC. The media landscape is very dynamic, and broadcasters need to invest in order to protect their competitive position.

Revenues for our Online product line went down by 32% compared to Q2 2012, a result of continued weakness for printed media houses.”

Mr. Tomer Wald, Vizrt’s CFO commented: “Growing revenues together with our continued focus on cost control led to improved margins. During the second quarter, we once again showed our ability to deliver a strong financial performance despite challenging market conditions, generating MUSD 6.3 in cash from operating activities and ending the quarter with a cash position of MUSD 74.3 following the May 3, 2013 dividend payout of MUSD 9.1 related to 2012 results.”

Mr. Burkhalter concluded: “For the coming months we foresee continuing weakness in the European market where broadcasters are investing on a strict “need to have” basis. We anticipate this weakness to be more than offset by the relatively robust markets in APAC and the Americas. We believe that our global presence, and regionalized distribution and support capabilities will allow us to capitalize on these region specific opportunities, resulting in continued overall growth. We will continue to strengthen our technological and strategic leadership, while at the same time maintain our financial prudence and discipline.”

* Recurring EBIT in Q2 2012 exclude non-cash intangible impairment of MUSD 7.8 related to the Escenic acquisition.

FINANCIAL REVIEW Q2 and H1 2013

RESULTS OVERVIEW –

In KUSD Q2 2013 Q2 2012 Change in % Q1 2013 Change in % H1 2013 H1 2012 Change in %
Revenue 31,734 30,154 5% 27,013 17% 58,747 61,862 -5%
Gross Profit 21,190 19,887 7% 17,556 21% 38,746 40,975 -5%
Gross Margin 67% 66% 65% 66% 66%
Operational Gross Profit* 21,489 20,524 5% 17,872 20% 39,361 42,261 -7%
Operational Gross Margin 68% 68% 66% 67% 68%
Recurring EBIT** 5,021 3,894 29% 2,013 149% 7,034 7,907 -11%
Recurring EBIT-Margin 16% 13% 7% 12% 13%
EBITDA 6,099 5,440 12% 3,127 95% 9,226 11,002 -16%
EBITDA-Margin 19% 18% 12% 16% 18%
Net Profit (loss) 3,598 (4,374) N/A 1,182 204% 4,780 (2,235) N/A
Net Profit-Margin 11% N/A 4% 8%
EPS 0.05 (0.07) 0.02 0.07 (0.03)
Recurring EPS** 0.05 0.05 0.02 0.07 0.08
Backlog 49,695 48,518 2% 48,989 1%
Cash Flow from operating activities 6,334 4,525 40% 676 837% 7,010 7,923 -12%
Cash Position 74,252 69,563 7% 78,667 -6%
Employees 590 582 1% 582 1%

* Excluding amortization of intangible assets from acquisitions.

** Recurring EBIT in Q2 2012 exclude non-cash intangible impairment of MUSD 7.8 related to the Escenic acquisition.

Product lines breakdown of revenues

In KUSD Q2 2013 Q2 2012 Change in % Q1 2013 Change in % H1 2013 H1 2012 Change in %
BG 24,903 23,033 8% 21,938 14% 46,841 47,948 -2%
MAM 5,666 5,410 5% 4,199 35% 9,865 10,630 -7%
ONL 1,165 1,711 -32% 876 33% 2,041 3,284 -38%
Revenues 31,734 30,154 5% 27,013 17% 58,747 61,862 -5%

BG, MAM and ONL revenues in Q2 2013, accounted for 78%, 18% and 4% of the total revenues, respectively, compared with 76%, 18% and 6%, respectively in Q2 2012.


Geographic breakdown of revenues

In KUSD Q2 2013 Q2 2012 Change in % Q1 2013 Change in % H1 2013 H1 2012 Change in %
EMEA 13,565 14,916 -9% 11,135 22% 24,700 32,825 -25%
AMECS 9,221 7,331 26% 9,361 -1% 18,582 14,397 29%
APAC 8,948 7,907 13% 6,517 37% 15,465 14,640 6%
Revenues 31,734 30,154 5% 27,013 17% 58,747 61,862 -5%

Revenues in EMEA, AMECS and APAC, accounted for 43%, 29% and 28% of the Q2 2013 total revenues, respectively, compared to 50%, 24% and 26%, respectively in Q2 2012.


Recurring operating expenses *

In KUSD Q2 2013 Q2 2012 Change in % Q1 2013 Change in % H1 2013 H1 2012 Change in %
R&D 4,774 4,651 3% 5,025 -5% 9,798 9,758 0%
S&M 8,572 8,597 0% 7,721 11% 16,293 17,529 -7%
G&A 2,823 2,745 3% 2,797 1% 5,621 5,780 -3%
OPEX 16,169 15,993 1% 15,543 4% 31,712 33,067 -4%

* Recurring operating expenses excludes MUSD 7.8 non-cash goodwill and intangible assets impairment related to Escenic acquisition recorded in Q2 2012

Q2 2013 OPEX remained relatively stable compared to Q2 2012.

H1 2012 OPEX included a variable compensation component based on annual targets. This variable component is the main reason for the lower OPEX in H1 2013, as compared to H1 2012.

Currency effects

Exchange rate fluctuations in the USD versus the other main currencies Vizrt deals with (Euro, NOK, SEK) did not materially affect revenues as compared to the revenues reported for Q2 2012. The net currency effect on EBIT was not material.

Order backlog

The order backlog as of August 7, 2013, was MUSD 49.7, up 2% compared to MUSD 48.5 in the same period LY, and up 1% compared to Q1 2013 results release date. BG backlog was at MUSD 28.8, MAM backlog at MUSD 17.8 and ONL backlog at MUSD 3.1. BG backlog was up 9% compared to the same period LY, whereas for MAM and ONL the backlog was down 1% and 23% respectively, comparing to the same period LY.

Balance sheet, cash flow and liquidity

Cash flow generation from operating activities in Q2 2013 was MUSD 6.3 compared to MUSD 4.5 in Q2 2012.

Vizrt has a strong financial position with no interest-bearing debt and a cash position of MUSD 74.3 as of June 30, 2013 (including MUSD 0.3 short term restricted cash). The company’s cash position as of June 30, 2013 decreased by MUSD 4.4 compared to March 31, 2013 due to the MUSD 9.1 dividend distribution on May 3, 2013 related to the 2012 results.

Furthermore, shareholders’ equity as of June 30, 2013 was MUSD 113.2, equivalent to an equity ratio of 75%.

Taxes 
Tax on income for Q2 2013 amounted to MUSD 1.4, with an effective tax rate of 29% compared to MUSD 1.6 (31%) in Q2 2012 (adjusted for MUSD 7.8 non-cash impairment of goodwill and intangible assets related to Escenic acquisition recorded in Q2 2012). The effective tax rate is inline with the annual expected rate.


ANALYST CONFERENCE

An Analyst Conference will be held on August 9, 2013 at 09:30 a.m. (CET) at the DNB Markets Head Office, Dronning Eufemias gate 30, Bjørvika, 0191 Oslo.

Management will furthermore discuss the Q2 2013 results in a conference call at 1.15 p.m. (CET) Call details are as follows:

+47 24 159585 (Norway)

+44 203 1474861 (UK)

+49 69 247501899 (Germany)

A recording of the call will be available at the Company’s website: http://www.vizrt.com/company/presentations/


COMPANY CALENDAR

The Vizrt Capital Markets day will take place in Bergen on September 26, 2013.

The results for the third quarter of 2013 will be published on November 14, 2013.

Contacts:

Martin Burkhalter / CEO / +41 22 365 75 01 / MBurkhalter@vizrt.com

Tomer Wald / CFO / +47 5351 8040 / TWald@vizrt.com

Frank Schwarz / Schwarz Financial Communication / +49 611 1745 398 11 schwarz@schwarzfinancial.com

Copyright © Vizrt. All rights reserved. This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Vizrt and its affiliates. These statements are based on the current expectations or beliefs of Vizrt's management and are subject to a number of risks and uncertainties that could cause actual results or performance of the Company to differ materially from those contemplated in such forward-looking statements. These risks and uncertainties relate to changes in technology and market requirements, the company’s concentration on one industry, decline in demand for the company’s products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Vizrt undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.