Vizrt Reports Q1 2013 Results
- Continued softness in Europe
- Robust performance in AMECS
- Stable performance in APAC
Bergen, Norway, May 8, 2013, Vizrt Ltd. (Oslo Main List: VIZ)
Vizrt today reported its financial results for the first quarter 2013.
FIRST QUARTER HIGHLIGHTS
- Revenues of MUSD 27.0, down 15% compared to Q1 2012.
- EBITDA of MUSD 3.1, corresponding to a 12% margin.
- Continued softness in Europe, robust performance in AMECS, relatively stable performance in APAC.
- Continued profitability and cash generation from operating activities, though at lower levels.
BUSINESS HIGHLIGHTS
- Excellent customer reception at the NAB tradeshow, validating strategic direction and technology leadership.
- LiberoVision’s acquisition was completed on February 26, 2013.
- On May 3, 2013, a net dividend of NOK 0.66 (approx. USD 0.12) per outstanding share, related to the 2012 results was paid out. The Company’s Board of Directors resolved to distribute an additional special net dividend of USD 0.29 (approx. NOK 1.68), subject to approval by the Israeli District Court.
Management summary and outlook
Revenues came in at MUSD 27.0 for Q1 2013, 15% below Q1 2012 and 11% below Q4 2012 revenues.
Market and economic conditions in Europe continue to be difficult, attributable mainly to falling domestic demand for goods and services and lower exports. This general weakness strongly affected Vizrt’s sales in the region during the quarter.
As compared to Q1 2012 EMEA revenues decreased by 38%, partially offset by a very strong performance in The Americas, which posted revenue growth of 32%. Although certain macro-economic conditions in the U.S., such as reduced government spending, have had a somewhat dampening effect on Gross Domestic Product (GDP) development, overall the region posted solid economic growth.
In terms of product line revenues, BG performed in line with the Company’s expectations. MAM was more strongly affected by uncertainties in Europe, with revenues down substantially, both sequentially and year-over-year. A further lengthening of investment decision-making cycles was witnessed for MAM, especially with regard to larger projects. Yet, the pipeline for MAM still includes projects that were postponed or are currently under negotiations, neither lost nor cancelled. ONL performance continues to be below expectations and, as announced on April 30, 2013, an additional impairment charge of MUSD 3.0 for 2012 was recorded, following which no goodwill or intangible assets remain on Vizrt’s balance sheet in relation to the Escenic acquisition.
The Company’s results are behind those recorded for Q1 2012, which was the strongest of the past five quarters in revenue terms. Gross margin for Q1 2013 was 65.0%. EBITDA reached MUSD 3.1, corresponding to a 12% margin (Q1 2012: MUSD 5.6 and 18%). EBIT was MUSD 2.0, corresponding to a 7.5% margin (Q1 2012: MUSD 4.0 and 12.7%). Net income for Q1 2013 was MUSD 1.2 (Q1 2012: MUSD 2.1).
Despite the fall in revenues, the Company managed to keep its gross margin relatively stable, which is in part explained by a shift in product mix towards higher margin BG activities, and by a continued focus on cost control. OPEX was kept at a similar level to the 2012 average quarterly run rate, leading to continued profitability and cash generation from operating activities, though at lower levels.
Outlook
Despite existing uncertainties in the market, Management sees a number of positives. Although the economic slump in Europe continues to affect consolidated results, underlying strength is witnessed in other markets that Vizrt, due to its market leadership and global presence, is able to capitalize on. As customer response at NAB in Las Vegas in April showed, the Company’s product offering matches current challenges in the industry, and the competitive position is such that even in a weaker general environment, Vizrt continues to win premium deals.
Though management expects the economic uncertainties to continue affecting the business climate into 2013, it still believes that the second half of the year will start to show an improvement in the global economy in general, and bring a return to growth for Vizrt. The Company continues to be in robust financial health, has no interest bearing debt, is profitable, and continues to generate cash from operating activities. Focus for 2013 will remain on cost control, without compromising the Company’s ability to innovate and support our strategic growth ambitions.
FINANCIAL REVIEW Q1 2013
RESULTS OVERVIEW
| In KUSD | Q1 2013 | Q1 2012 | Change in% | Q4 2012 | Change in % |
| Revenue | 27,013 | 31,708 | -15% | 30,333 | -11% |
| Gross Profit | 17,556 | 21,088 | -17% | 21,293 | 18% |
| Gross Margin | 65% | 67% | 70% | ||
| Operational Gross Profit* | 17,872 | 21,737 | -18% | 21,957 | -19% |
| Operational Gross Margin | 66% | 69% | 72% | ||
| Recurring EBIT** | 2,013 | 4,013 | -50% | 7,014 | -71% |
| Recurring EBIT-Margin | 7% | 13% | 23% | ||
| EBITDA | 3,127 | 5,562 | -44% | 8,874 | -65% |
| EBITDA-Margin | 12% | 18% | 29% | ||
| Net Profit (loss) | 1,182 | 2,140 | -45% | 924 | 28% |
| Net Profit-Margin | 4% | 7% | 3% | ||
| EPS | 0.02 | 0.03 | 0.01 | ||
| Recurring EPS** | 0.02 | 0.03 | 0.06 | ||
| Backlog | 48,989 | 50,026 | -2% | 47,093 | 4% |
| Cash Flow from operating activities | 676 | 3,398 | -80% | 3,787 | -82% |
| Cash Position | 77,864 | 68,565 | 14% | 78,933 | -1% |
| Employees | 582 | 583 | - | 575 | 1% |
*Excluding amortization of intangible assets from acquisitions.
**Recurring figures in Q4 2012 exclude non-cash intangible impairment of MUSD 3.0 and MUSD 1.4 revaluation of contingent liability related to LiberoVision acquisition.
Product lines breakdown of revenues
| In KUSD | Q1 2013 | Q1 2012 | Change in% | Q4 2012 | Change in % |
| BG | 21,938 | 24,915 | -12% | 23,630 | -7% |
| MAM | 4,199 | 5,220 | -20% | 5,433 | -23% |
| Online | 876 | 1,573 | -44% | 1,270 | -31% |
| Revenues | 27,013 | 31,708 | -15% | 30,333 | -11% |
BG, MAM and ONL revenues in Q1 2013, accounted for 81%, 16% and 3% of the total revenues, respectively, compared with 79%, 16% and 5%, respectively in Q1 2012.
Geographic breakdown of revenues
| In KUSD | Q113 | Q112 | Change in% | Q412 | Change in% |
| EMEA | 11,135 | 17,909 | -38% | 13,921 | -20% |
| AMECS | 9,361 | 7,065 | 32% | 7,963 | 18% |
| APAC | 6,517 | 6,734 | -3% | 8,449 | -23% |
| Revenues | 27,013 | 31,708 | -15% | 30,333 | -11% |
Revenues in EMEA, AMECS and APAC, accounted for 41%, 35% and 24% of the Q1 2013 total revenues, respectively, compared with 57%, 22% and 21%, respectively in Q1 2012.
Recurring operating expenses
| In KUSD | Q113 | Q112 | Change in% | Q412 | Change in% | Average Q 2012 | Change in% |
| R&D | 5,025 | 5,108 | -2% | 3,837 | 31% | 4,519 | 11% |
| S&M | 7,721 | 8,932 | -14% | 7,762 | -1% | 8,339 | -7% |
| G&A | 2,797 | 3,035 | -8% | 2,680 | 4% | 2,795 | 0% |
| OPEX | 15,543 | 17,075 | -9% | 14,279 | 9% | 15,653 | -1% |
Q1 2012 OPEX included a variable compensation component based on annual targets. This variable component was reversed in Q4 2012. To adjust for the volatility this creates, OPEX comparisons should be made to the average quarterly run rate in 2012. Q1 2013 OPEX was kept at a level similar to the average for 2012.
Currency effects
Adjusted for the appreciation of the USD compared to Q1 2012 versus the other main currencies Vizrt deals with (Euro, NOK, SEK), revenues would have not changed materially as compared to the reported revenues. The net effect of the strengthening of the USD on EBIT was negligible due to the effect on operating expenses.
Order backlog
The order backlog as of April 30, 2013, was MUSD 49.0, down 2%, compared to same period LY MUSD 50.0, and up 4% compared to the Q4 2012 results release date. BG backlog was at MUSD 26.8, MAM backlog at MUSD 18.5 and ONL backlog at MUSD 3.7. BG backlog was up 7% compared to the same period LY, whereas for MAM and ONL the backlog was down 12% and 6% respectively, comparing to the same period LY.
Balance sheet, cash flow and liquidity
Cash flow generation from operating activities in Q1 2013 was MUSD 0.7 compared to MUSD 3.4 in Q1 2012. The lower cash flow generation from operating activities is also due to the revaluation of a contingent liability related to LiberoVision acquisition of MUSD 1.4 which was part of the final acquisition payment. Adjusted for this payment, the cash flow generation from operating activities was MUSD 2.1.
Vizrt has a strong financial position with no interest-bearing debt and a net cash position of MUSD 78.7 as of March 31, 2013 (including MUSD 0.8 restricted cash). Furthermore, shareholders’ equity as of March 31, 2013 was MUSD 120.0, which is equivalent to an equity ratio of 77%.
Taxes
Tax on income for Q1 2013 amounted to MUSD 0.6 with an effective tax rate of 33% compared to MUSD 1.3 (38%) in Q112. The decrease in the effective tax rate in Q113 is mainly a result of the dividend paid out in March 2012.
ANALYST CONFERENCE
An Analyst Conference will be held on May 8, 2013 at 09:30 a.m. (CET) at the Carnegie Conference Centre, Stranden 1B, Akker Brygge in Oslo.
Management will furthermore discuss the Q1 2013 results in a conference call at 1.45 p.m. (CET) Call details are as follows:
+47 24 159585 (Norway)
+44 203 1474861 (UK)
+49 69 247501899 (Germany)
A replay of the call will be available until May 15, 2013. Please use the following dial-in-numbers:
+49 30 868757360 (Germany); +44 203 024 54 07 (UK), +1 408 9160685 (US)
passcode: 9418547
COMPANY CALENDAR
The results for the second quarter of 2013 will be published on August 9, 2013.
The annual general meeting will be held on June 27, 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.