Vizrt Reports 9 Months and Q3 2012 Results
Operating Margins Improved
Nearly Flat YoY Revenue Development
Bergen, Norway, November 15, 2012. Vizrt Ltd. (Oslo Main List: VIZ)
Vizrt posted revenues of MUSD 91.5 for the first nine months of 2012, nearly flat in comparison to the MUSD 91.9 revenues in the first nine months of 2011. Q3 2012 revenues decreased by 7% to MUSD 29.6, compared to MUSD 31.8 in Q3 2011. Yet, the Q3 2012 EBIT margin improved significantly to 15% compared to 12% LY and the recurring EBIT margin improved to 13% for the nine months period in 2012, compared to 12% LY.
HIGHLIGHTS
- Revenues for the first nine months of 2012 came in at MUSD 91.5, nearly flat compared to the same period in 2011. Revenues for Q3 2012 were MUSD 29.6 down 7%, compared to the same period LY.
- EBIT of MUSD 4.3 for Q3 2012, corresponding to a 15% margin, compared to MUSD 3.8 (12%) for the same period LY.
- Recurring EBIT of MUSD 12.2 for first nine months of 2012, corresponding to a 13% margin, compared to MUSD 11.3 (12%) for the same period LY.
- EBITDA of MUSD 16.9 for the first nine months of 2012 and MUSD 5.9 for Q3 2012, corresponding to a 18% and 20% margin respectively, compared to MUSD 16.0 (17%) and 5.6 (18%) for the same periods LY.
- Net income of MUSD 0.8 (1%) for the first nine months of 2012, and MUSD 3.0 (10%) for Q3 2012 compared to MUSD 10.0 (11%) and MUSD 3.3 (10%) for the same periods LY. Net income for the first nine months was impacted by MUSD 7.8 non-cash impairment charge recorded in Q2 2012.
- EPS of USD 0.01 and USD 0.04 per share for the first nine months of 2012 and Q3 2012, respectively, compared to USD 0.15 and USD 0.05 in the same periods LY.
- Recurring EPS of USD 0.13 per share for the first nine months of 2012, compared to USD 0.15 for the same period LY.
- Cash provided by operating activities in Q3 2012 was MUSD 5.4, leading to a closing cash balance of MUSD 75.4.
- Backlog to date of MUSD 47.8, down 2% compared to the same time LY.
Comments and Outlook
Martin Burkhalter, Vizrt CEO, commented on the results: "As discussed at the time of our Q2 release, we continue to experience challenging market conditions. The uncertainties in the general economic environment, most notably in Europe, have lead to a lengthening of investment decision making cycles. Against this background, we recorded revenues nearly equal to last year's first nine months, and down 7% compared to Q3 of last year. Furthermore, we have managed to improve our margins, with EBITDA and EBIT coming in at 20% and 15%, of revenues respectively, for the quarter."
"Product wise, performance this past quarter was backed by a strong showing in MAM, especially in APAC, whereas BG slightly increased Y-o-Y. Revenues for ONL suffered, down significantly, which is to be expected as media houses are less likely to make what they would regard as non-core investments in times of uncertainty. For the regions, the main weakness, as expected, was in Europe, while the U.S. posted growth both Year on Year and Quarter on Quarter."
"Despite the experienced softness in the market, we managed to increase our cash position to over USD 75 million, a nearly USD 6 million increase for the quarter. We believe these figures show the depth and strength of our offering."
"Another evidence to the strength of our offering is that Vizrt was once again the vendor of choice for broadcasters looking to capture audiences in relation to the U.S. presidential elections. In the United States alone, six national networks and more than 150 local channels covered the election with Vizrt tools - more than ever before."
"Going forward, we expect that the general economic environment will continue to influence market conditions and prolong decision making cycles, especially in Europe. However, our healthy backlog together with our strong product offering, give us the confidence that we should be capable of delivering a solid result for the full year, despite the challenging market conditions".
Results Overview
| In KUSD | Q32012 | Q32011 | Increase (decrease) in% | Q22012 | Increase (decrease) in% |
| Revenue | 29,595 | 31,760 | (7%) | 30,154 | (2%) |
| Gross Profit | 19,607 | 21,080 | (7%) | 19,887 | (1%) |
| Gross Margin | 66% | 66% | 66% | ||
| Recurring Operating Income | 4,342 | 3,792 | 14% | 3,894 | 12% |
| Recurring Operating Income-Margin | 15% | 12% | 13% | ||
| EBITDA | 5,882 | 5,628 | 5% | 5,440 | 8% |
| EBITDA-Margin | 20% | 18% | 18% | ||
| Net Profit (loss) | 2,990 | 3,320 | (10%) | (4,374) | N/A |
| Net Profit-Margin | 10% | 10% | N/A | ||
| Recurring Earnings Per Share | 0.04 | 0.05 | (20%) | 0.05 | (20%) |
| EPS (Loss Per Share) | 0.04 | 0.05 | (20%) | (0.07) | |
| Backlog | 47,758 | 48,673 | (2%) | 48,518 | (2%) |
| Cash Position | 75,355 | 62,374 | 21% | 69,560 | 8% |
Vizrt Product Lines and Geographical Overview
Broadcast Graphics (BG)
BG revenues for the first nine months of 2012 accounted for 77% of total revenues with MUSD 70.6, a 1% growth compared to the same period last year and a decrease of 12% comparing Q3 2012 to Q3 2011. Compared to Q2 2012, BG revenues were down 2%.
Media Asset Management (MAM)
MAM revenues for the first nine months of 2012 accounted for 18% of total revenues with MUSD 16.5, a 6% growth compared to the first nine months of 2011 and 35% increase comparing Q3 2012 to Q3 2011. Compared to Q2 2012, MAM revenues were up 8%.
Online (ONL)
ONL revenues for the first nine months of 2012 accounted for 5% of total revenues with MUSD 4.4, compared to MUSD 6.5 for the first nine months of 2011, corresponding to a 32% decrease. Comparing Q3 2012 to Q3 2011, the decrease was 34%. Compared to Q2 2012 ONL revenues were down 36%.
Geographical Overview
The economic slowdown in most Euro zone countries continued to impact our results. The Americas and APAC regions, however, recorded growth. Revenues for The Americas grew by 12% to MUSD 22.4 for the first nine months and 19% to MUSD 8.0 for Q3. For the first nine months of 2012, APAC revenues increased by 6% to MUSD 22.7 and for the third quarter by 8% to MUSD 8.0. EMEA revenues decreased by 8% for the first nine months and 23% for the quarter. Revenues in EMEA came in at MUSD 46.4 and MUSD 13.6 in the first nine months of 2012 and in Q3 2012, respectively.
FINANCIALS
Gross Profit and Gross Margin
The gross margin for the first nine months of 2012 was 66%, as compared to 65% for the same period LY. The gross profit for the first nine months of 2012 was affected by a MUSD 1.9 amortization of intangible assets from acquisitions, compared to MUSD 2.2 for the same period LY. Adjusted for these amortization effects, the gross margin was 68%, compared to 67% LY.
The gross margin for both Q3 2012 and Q3 2011 was 66%. The gross profit was affected by MUSD 0.6 in Q3 2012, compared to MUSD 0.9 in Q3 2011, due to amortization of intangible assets resulting from acquisitions. Adjusted for these amortization effects, the gross margin was at 68% compared to 69% LY.
Recurring Operating Expenses
Total recurring operating expenses for first nine months of 2012 came in at MUSD 48.3, stable compared to the same period in 2011.
Recurring Operating Expenses Summary
| In KUSD | 9m12 | 9m11 | Q312 | Q311 | Q212 |
| R&D | 14,240 | 14,425 | 4,482 | 5,057 | 4,651 |
| S&M | 25,594 | 25,836 | 8,064 | 9,322 | 8,597 |
| G&A | 8,499 | 8,128 | 2,719 | 2,909 | 2,745 |
| OPEX | 48,333 | 48,389 | 15,265 | 17,288 | 15,993 |
Currency Effects
Adjusted for the appreciation of the USD compared to the first 9 months and Q3 of 2011 versus the other main currencies Vizrt deals with (Euro, NOK, SEK), revenues would have increased by 3% as compared to the same level of revenues reported in the first 9 months of 2012 and decreased by only 3% as compared to the 7% decrease reported for Q3 2012. The effect on OPEX was the reverse but of similar magnitude, resulting in a near neutral net effect.
Taxes
Tax on income for the first nine months of 2012 amounted to MUSD 4.2, out of which MUSD 1.2 is related to reversal of deferred tax assets, due to the slowdown in ONL business. Adjusted for this effect, taxes on income for the first nine months of 2012 amounted to MUSD 3.0 (23%).
Order backlog
The order backlog as of November 10, 2011, was MUSD 47.8, down 2%, compared to LY MUSD 48.7, and down 2% compared to the Q2 2012 results release date. BG backlog was at MUSD 24.9, MAM backlog at MUSD 18.9, and ONL backlog at MUSD 4.0. BG backlog was up 1% compared to the same period LY, whereas for MAM and ONL the backlog was down 4% and 6%, compared to the same period LY respectively.
Balance Sheet, Cash Flow and Liquidity
Cash provided by operating activities for the first nine months of 2012 was MUSD 13.3, compared to MUSD 12.2 for the first nine months of 2011. Cash provided by operating activities in Q3 2012 was MUSD 5.4, compared to MUSD 6.8 in Q3 2011.
Vizrt has a strong financial position with no interest-bearing debt and a net cash position of MUSD 75.4 as of September 30, 2012 (including MUSD 0.6 restricted cash), compared to MUSD 73.1 as of December 31, 2011 (including MUSD 0.7 restricted cash). Furthermore shareholders' equity as of September 30, 2012 was MUSD 117.7, which is equivalent to an equity ratio of 75%.
Organization
At the end of September 30, 2012, the Company had 575 employees, compared to 591 as the end of September 30, 2011. This decrease is mainly attributable to a strict recruitment policy.
Analyst Conference
An Analyst Conference will be held at 09:30 a.m. (CET) at DnBNor Head Offices, Stranden 21 in Oslo.
Management will furthermore discuss the Q3 results in a conference call at 2.00 p.m. (CET) Call details are as follows:
+47 24 159585 (Norway)
+44 203 1474861 (UK)
+49 69 247501893 (Germany)
A replay of the call will be available from 15:45 p.m. on November 15, 2012 until 6.00 p.m. on November 22, 2012. Please use the following dial-in-numbers:
+49 30 868757040 (Germany);
+44 203 024 54 07 (UK)
+1 408 9160685 (US)
Pass code: 9418547#
Contacts
Martin Burkhalter / CEO / +41 22 365 75 01 / MBurkhalter@vizrt.com
Ofra Brown / CFO / +47 5351 8040 / OBrown@vizrt.com
Frank Schwarz / Schwarz Financial Communication / +49 611 1745 398 11 / schwarz@schwarzfinancial.com
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 un certainties 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.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.