Vizrt Reports Q4 and 2014 Results

• Annual EBITDA growth of 31%
• Adjusted cash flow from operations
• up 80% Y-o-Y

Bergen, Norway, February 11, 2015. Vizrt Ltd. (Oslo Main List: VIZ)

Vizrt today reported its financial results for the fourth quarter and the full year 2014.

FOURTH QUARTER 2014 HIGHLIGHTS

• Quarterly revenues of MUSD 36.2, up 9% compared to Q4 2013.
• EBITDA of MUSD 9.0, corresponding to a 25% margin, up 14% compared to MUSD 7.9 (24%) in Q4 2013.
• Cash generation from operating activities of MUSD 7.3, up 25% compared to MUSD 5.8 in Q4 2013.

FULL YEAR 2014 HIGHLIGHTS

• Revenues of MUSD 141.5, up 16% compared to MUSD 122.4 in FY 2013.
• EBITDA of MUSD 32.4, corresponding to a 23% margin, up 31% compared to MUSD 24.7 (20%) in FY 2013.
• Adjusted cash generation from operating activities of MUSD 35.3, up 80%, as compared to MUSD 19.6 in FY 2013 (adjusted for MUSD 18.0 one-off taxes on income paid for the settlement reached with the Israeli tax authorities in Q2 2014). First time that adjusted cash flow from operating activities exceeded EBITDA for the year.

ANNUAL BUSINESS HIGHLIGHTS

• Revenue growth of MUSD 19.1 Y-o-Y consisted of MUSD 14.1 organic BG growth and MUSD 6.1 attributable to the Mosart acquisition, offset partially by a MUSD 1.1 decrease in MAM revenues.
• Geographically, EMEA achieved very strong annual revenue growth of 32% while APAC also achieved a double digit growth (11%) over last year. Having achieved 28% growth in 2013, AMECS revenues were relatively stable (2% down from LY).
• The improvement in profitability was mainly due to a change in product mix, consistent financial prudence and the acquisition of Mosart.
• The very strong cash generation from operating activities is attributable mainly to accelerated collection from customers.
• Solid backlog of MUSD 50.3.
• At the extraordinary annual meeting held on December 18, 2014, the majority of shareholders approved the entry of the Company into a merger agreement as announced on November 10, pursuant to which Nordic Capital Fund VIII* will pay a cash consideration of NOK 37 (less withholding tax, if applicable) per Vizrt share for 100% of the issued share capital of the Company by way of a reverse triangular merger. Final closing date of the transaction is subject to certain conditions, including the decision of Israeli tax authorities regarding tax withholding ruling, as announced on January 30, 2015.

* Nordic Capital VIII Limited, acting in its capacity as General Partner of Nordic Capital VIII Alpha, L.P. and Nordic Capital VIII, Beta L.P.

ANNUAL PRODUCT DEVELOPMENT HIGHLIGHTS

During 2014, we continued to develop our product offering, resulting in further strengthening of our technology and market leadership positions. Our solutions deliver faster live productions, from video and graphics production to multiplatform distribution, while utilizing fewer resources in the process.

• Launch of VizMultiplay: a control system for a variable number of studio screens, which together with our Viz engine, which can drive up to 8 simultaneous HD outputs, is already in use by several major stations. This combination is driving the largest screen set ups (video walls) in the industry.
• Launch of Viz Opus, a complete broadcast control and studio production solution running from a single system. Viz Opus won the News Technology Award back in October.
• The Viz One MAM system, which manages all content in a central repository, has become integrated with other product offerings and has met with success through application in several large and small installations.
• Fundamental expansion of functionalities and tasks performed by the Viz engine- the Viz engine can now be used as a video playout server, as well as a vision mixer, creating today´s most powerful rendering engines and real-time compositors of graphics and video.
• Further strengthening of Vizrt’s sports offering: major sports events, including the football world-cup, saw the application by multiple stations of Viz Arena virtual graphics insertion for sports, as well as Viz Libero with the new superfast player tracking. Viz Engine and Viz Trio were used for 4K world-cup productions.
• Continued strengthening of market leadership:
• All major US networks used Viz graphic systems for midterm election coverage.
• Continued expansion of the Company’s customer base in all regions.
• Several accolades awarded to customers, directly related to their excellent implementation of our technology.

Continued expansion of the Company’s customer base in all regions.

All of the abovementioned items contribute to the strength of our integrated solutions offering platform, making our platform stronger and even more future proof.

MANAGEMENT SUMMARY

Martin Burkhalter, Vizrt’s CEO, stated: “Our strong performance continued in Q4, despite the fact that we did not see the discretional spending towards the year-end that we normally have witnessed in previous years. Our strong performance is also reflected in our solid backlog going forward. I am particular pleased with the improvement of MAM results and the MAM backlog which increased by 37% compared to the same time last year.”

“With record revenues and a 36% improvement in our EBIT over 2013 and exceptional strong cash flow, this past year has been very good for Vizrt. We can also state already that the Mosart acquisition has proven to be a very valuable addition to our product portfolio. The strategic logic behind the acquisition is strongly validated by the market reception, the sound revenue generation in 2014, as well as the opportunities we see in our pipeline.”

“We continue to improve our product offering. Meeting and surpassing customer expectations is at the center of our focus today, as it has been since the very beginning of Vizrt. Staying relevant in a fast changing media industry, by addressing current and future industry needs of both traditional media houses and new players on the market, is at the very heart of our strategy and daily operational focus.”

SELECTED FINANCIAL INFORMATION (INCLUDING NON GAAP DATA)

RESULTS OVERVIEW

* The 2013 recurring EBIT excludes a MUSD 4.9 non-cash goodwill impairment charge related to the MAM cash generating unit, recorded in Q4 2013.

** Adjusted for MUSD 18.0 taxes on income paid as part of the settlement with the Israeli tax authorities in June 2014.

Product lines breakdown of revenues

BG and MAM revenues in Q4 2014, accounted for 85% and 15% of total revenues, respectively, as compared to 87% and 13%, respectively, in Q4 2013.

Geographic breakdown of revenues

Revenues in EMEA, AMECS and APAC, accounted for 47%, 25% and 28% of total revenues in Q4 2014, respectively, as compared to 41%, 31% and 28%, respectively, in Q4 2013.

Operating expenses

The increase in OPEX for Q4 2014, as compared to Q4 2013, is attributable mainly to the consolidation of Mosart starting from March 11, 2014, as well as to consulting related costs in connection with the expected merger transaction with Nordic Capital. OPEX stayed at a similar level compared to Q3 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 FY 2013.

Order backlog

Order backlog as of February 10, 2015, reached a level of MUSD 50.3, up 8%, compared to MUSD 46.5 at same time LY, and down 1% compared to the Q3 2014 results release date. BG backlog was at MUSD 35.6 and MAM backlog at MUSD 14.6. BG backlog was in a similar level as in the same time LY, and MAM backlog was up 37%, compared to the same time LY.

Balance sheet, cash flow and liquidity

Cash flow generation from operating activities in Q4 2014 was MUSD 7.3, up 25% compared to MUSD 5.8 in Q4 2013.

Vizrt has a strong financial position with no interest-bearing debt and a net cash position of MUSD 57.9 as of December 31, 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 33.1, 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 December 31, 2014 was MUSD 97.8, which is equivalent to an equity ratio of 69%.

Taxes 
Taxes on income for FY 2014 amounted to MUSD 10.9, reflecting an effective tax rate of 41%. Adjusted for MUSD 3.4 additional taxes on income related to the settlement reached with the Israeli tax authorities (“ITA”) in Q2 2014, effective tax rate for FY 2014 is 28%, as compared to MUSD 5.9 (29%) adjusted effective tax rate for FY 2013 (adjusted earnings for MUSD 4.9 MAM goodwill impairment and adjusted taxes on income mainly for additional accruals related to the dispute with the ITA).

Organization

At the end of Q4 2014, the Company had 584 employees compared to 542 at the end of Q4 2013.

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

ANALYST CONFERENCE

Management will discuss the results in a conference call at 09:30 a.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 5802 9290 / 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.