Vizrt Reports Q3 and 9M 2014 Results

  • Continued increase in profitability
  • Cash generation from operating activities at all time high

 

Bergen, Norway, November 13, 2014. Vizrt Ltd. (Oslo Main List: VIZ)

Vizrt today reported its financial results for the third quarter and the first nine months of 2014.

THIRD QUARTER HIGHLIGHTS

  • Quarterly revenues of MUSD 35.2, up 9% compared to Q3 2013.
  • EBITDA of MUSD 8.4, corresponding to a 24% margin, up 25% compared to MUSD 6.7 (21%) in Q3 2013.
  • Cash generation from operating activities of MUSD 15.0, up 174% compared to MUSD 5.5 in Q3 2013.

FIRST 9M 2014 HIGHLIGHTS

  • Revenues of MUSD 105.3, up 18% compared to 9M 2013.
  • EBITDA of MUSD 23.4, corresponding to a 22% margin, up 39% compared to MUSD 16.9 (19%) in 9M 2013.
  • Cash generation from operating activities of MUSD 28.0 (adjusted for MUSD 18.0 one-off taxes on income paid as part of the settlement reached with the Israeli tax authorities in Q2 2014), up 125%, as compared to MUSD 12.5 in 9M 2013.

BUSINESS HIGHLIGHTS

  • MUSD 2.6 of the BG revenue increase Q-o-Q is attributable to organic growth and MUSD 2.0 attributable to the Mosart acquisition.
  • EMEA and AMECS were the main contributors to Q-o-Q revenue increase, both achieving double digit growth rates.
  • The improvement in profitability was mainly due to a change in product mix away from hardware, less transactions related costs and lower headcount related to MAM projects delivery.
  • The very strong cash generation from operating activities is attributable mainly to accelerated collection from customers, partially compensating for slower collection during Q2 2014. Consequently, account receivables decreased by MUSD 6.7, as compared to June 30, 2014.
  • Vizrt launched Viz Opus, a complete broadcast control solution running from a single system, and Viz Multiplay, a control system for a variable number of studio screens, during IBC. Viz Opus has won the News Technology Award in October.
  • Solid backlog of MUSD 50.8.

MANAGEMENT SUMMARY AND OUTLOOK

Martin Burkhalter, Vizrt’s CEO, stated: “We are pleased with our results, showing continued strong revenue growth and a significant improvement of our profitability. Q-o-Q growth was driven primarily by EMEA and AMECS, which both recorded double digit growth rates.”

“In product terms, BG remains our growth engine, strengthened by the addition of Mosart. Revenues from MAM related projects for the first nine months of 2014, however, fell by 14% compared to last year, which was attributable mainly to a cancelled project in Eastern Europe late in 2013 and delays in delivery of projects in Thailand in the first six months of this year. Even though we do not expect a major improvement of the MAM results during Q4, we are seeing more strength building up in our MAM pipeline. We are confident that once the majority of broadcasters and other content owners start to switch from tape-based archiving to digital systems, Vizrt holds prime position to benefit from this momentum.”

“Our strong growth during the first nine months of the year also boosted profitability, with a gross margin of 69%, up from 67% last year. Our EBITDA margin in Q3 was 24%, up 3 percentage points from 21% in Q3 13. For the first nine months the EBITDA margin was 22% as compared to 19% for the same period in 2013. Aside from business growth in general, the strong improvement in profitability was due to a shift in the mix of products sold away from hardware, as well as due to lower headcount for MAM delivery and lower transaction-related costs.”

“The recent IBC in Amsterdam was once again very successful for Vizrt, and an excellent opportunity to showcase our extensive product and solutions portfolio to the market. At the event, we introduced two brand new products, Viz Opus and Viz Multiplay, both attracting immediate strong interest from customers. The compact, quickly to install and intuitive to use control room system, Viz Opus, has won the News Technology Award presented by Broadcasting & Cable and TV Technology in October. Viz Opus offers broadcasters a quickly deployable, easy to use, fully integrated, compact control room in one system. In addition Vizrt and Sky Sports Monday Night Football won the IBC 2014 Innovation Award.”

Mr. Burkhalter concluded: “The acquisition of Mosart has broadened our already impressive product portfolio. The launch of Viz Opus signifies the first step on the innovation roadmap resulting from the integration of Mosart and Vizrt technology. With a customer base that needs to invest continuously in broadcast technology in order to maintain their competitive position in their respective markets, Vizrt has become the de-facto partner to deliver innovative solutions that meet current technology and economic needs, while being easy to adapt for future developments.”

“We anticipate market conditions to remain stable in the coming months, with the exception of Eastern Europe.  Based on a healthy backlog, which as of November 12, 2014, stood at MUSD 50.8, we expect to meet our annual growth targets."

FINANCIAL REVIEW Q3 AND 9M 2014

RESULTS OVERVIEW

In KUSD Q3 2014 Q3 2013 Change in % Q2 2014 Change in % 9M 2014 9M 2013 Change in %
Revenue 35,193 32,381 9% 36,388 -3% 105,305 89,087 18%
Gross Profit 25,158 21,974 14% 24,765 2% 73,076 59,659 22%
Gross Margin 71% 68% 68% 69% 67%
EBIT 7,221 5,801 24% 6,644 9% 19,862 13,784 44%
EBIT Margin 21% 18% 18% 19% 15%
EBITDA 8,436 6,725 25% 7,996 6% 23,448 16,854 39%
EBITDA Margin 24% 21% 22% 22% 19%
Cash Flow from operating activities 14,961 5,452 174% (13,863) N/A 10,076 12,462 -19%
Adjusted cash Flow from operating activities* 14,961 5,452 174% 4,105 264% 28,044 12,462 125%

* Q2 2014 and 9M 2014 adjusted for MUSD 18.0 taxes on income paid as part of the settlement with the Israeli tax authorities.

Product lines breakdown of revenues

In KUSD Q3 2014 Q3 2013 Change in % Q2 2014 Change in % 9M 2014 9M 2013 Change in %
BG 30,530 25,894 18% 31,356 -3% 91,231 72,736 25%
MAM 4,663 6,487 -28% 5,032 -7% 14,074 16,351 -14%
Revenues 35,193 32,381 9% 36,388 -3% 105,305 89,087 18%

BG and MAM revenues in Q3 2014, accounted for 87% and 13% of total revenues, respectively, as compared to80% and 20%, respectively, in Q3 2013.

Geographic breakdown of revenues

In KUSD Q3 2014 Q3 2013 Change in % Q2 2014 Change in % 9M 2014 9M 2013 Change in %
EMEA 16,726 14,813 13% 17,695 -5% 50,480 37,604 34%
AMECS 10,294 9,201 12% 8,986 15% 28,351 27,700 2%
APAC 8,173 8,367 -2% 9,707 -16% 26,474 23,783 11%
Revenues 35,193 32,381 9% 36,388 -3% 105,305 89,087 18%

Revenues in EMEA, AMECS and APAC, accounted for 48%, 29% and 23% of Q3 2014 total revenues, respectively, as compared to 46%, 28% and 26%, respectively, in Q3 2013.

Operating expenses

In KUSD Q3 2014 Q3 2013 Change in % Q2 2014 Change in % 9M 2014 9M 2013 Change in %
R&D 5,692 4,650 22% 5,779 -2% 16,980 13,493 26%
S&M 8,965 8,931 0% 9,152 -2% 26,712 24,480 9%
G&A 3,280 2,592 27% 3,190 3% 9,522 7,902 21%
OPEX 17,937 16,173 11% 18,121 -1% 53,214 45,875 16%

The increase in OPEX for Q3 2014, as compared to Q3 2013,is attributable mainly to the consolidation of Mosart starting from March 11, 2014, as well as to the variable compensation component based on annual targets and headcount related costs whereas lower transactions related costs offset this increase. OPEX stayed at a similar level compared to Q2 2014.

Currency effects

Exchange rate fluctuations in the USD versus the other main currencies Vizrt deals with (Euro, NOK, SEK, THB, AUD) did not materially affect revenues as compared to the revenues reported for Q3 2013.

Order backlog

Order backlog as of November12, 2014, reached a level of MUSD 50.8, up 11%, compared to MUSD 45.6 at same time LY, and down 2% compared to the Q2 2014 results release date. BG backlog was at MUSD 36.9 and MAM backlog at MUSD 13.9. BG backlog was up 34% compared to the same time LY, and MAM backlog was down 22%, compared to the same time LY. The increase in the BG backlog is mainly attributed to the inclusion of Mosart in the backlog starting from the Q2 2014 results announcement.

Balance sheet, cash flow and liquidity

Adjusted cash flow generation from operating activities in Q3 2014 was MUSD 15.0, up 174% compared to MUSD 5.5 in Q3 2013. The very strong cash generation from operating activities is attributable mainly to accelerated collection from customers, partially compensatingfor slower collection in Q2 2014. As a result, account receivables decreased by MUSD 6.7 from June 30, 2014 to September 30, 2014.

Vizrt has a strong financial position with no interest-bearing debt and a net cash position of MUSD 50.8 as of September 30, 2014 (including MUSD 0.2 restricted cash), compared to MUSD 61.1 as of December 31, 2013 (including MUSD 0.2 restricted cash).

The Company’s cash position increased by MUSD 26.1, as compared to December 31, 2013, adjusted for the ITA cash settlement of MUSD 18.0, the net cash consideration for the Mosart acquisition of MUSD 16.8, the gross dividend pay-out of MUSD 3.6, and the MUSD 2.0 consideration received for the Escenic divestiture.

Shareholders’ equity as of September 30, 2014 was MUSD 97.2, which is equivalent to an equity ratio of 70.1%.

Taxes 
Taxes on income for Q3 2014 amounted to MUSD 1.9, reflecting an effective tax rate of 26%, as compared to adjusted tax of MUSD 1.6 (27%) for Q3 2013 (adjusted for a one-off MUSD 1.8 tax payment on special dividend distributed in Q3 2013).

Organization

At the end of Q3 2014, the Company had 586 employees compared to 536 at the end of Q3 2013.

24 employees were added following the Mosart acquisition in Q1 2014.

ANALYST CONFERENCE

An analyst conference will be held on November 13, 2014 at 09:30 a.m. (CET) at the DNB Markets Head Office, Dronning Eufemias gate 30, Bjørvika, 0191 Oslo, Norway.

Management will furthermore discuss the results in a conference call at 13:15 p.m. (CET). Call details are as follows:

+ 47 24 159584 (Norway)

+ 44 203 3679216 (UK)

+49 69 247501895 (Germany)

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



 

Investor and media contact:

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

Tomer Wald / CFO / +44 20 3289 6415 / TWald@vizrt.com

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

 

About Vizrt:

Vizrt provides real-time 3D graphics, studio automation, sports analysis and asset management tools for the broadcast industry - interactive and virtual solutions, animations, maps, weather, video editing and compositing tools. Vizrt's products are used by the world's leading broadcasters, including: CNN, CBS, Fox, the BBC, BSkyB, Al Jazeera, ITN, ZDF, Star TV, Network 18, TV Today, CCTV, and NHK. Furthermore, many world-class production houses and corporate institutions such as the Stock Exchanges in New York and London use Vizrt systems.

Vizrt is a public company traded on the Oslo Main List: VIZ, ISIN: IL0010838154. For further information please refer to www.vizrt.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.