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Evertz Technologies reports results for the Second Quarter Ended October 31, 2016 and Special Dividend

BURLINGTON, ONTARIO -- (Marketwired) -- 12/01/16 -- Evertz Technologies Limited (TSX:ET), the leader in Software Defined Video Network ("SDVN") technology, today reported its results for the second quarter ended October 31, 2016.

Quarter Highlights


--  Revenue of $99.6 million, up 14% sequentially 
--  US/Canada revenue up 20% to $62.3 million sequentially 
--  Net earnings of $20.8 million for the quarter 
--  Fully diluted earnings per share of $0.27 for the quarter 
--  Cash and cash equivalents in excess of $133 million 
--  Discovery Communications partners with Evertz for first-of-its-kind
    "Cloud" playout on Amazon Web Services 
--  Special dividend declared of $1.10 per common share

                                                                            
Selected Financial Information                                              
Consolidated Statement of Earnings Data                                     
(in thousands of dollars, except earnings per                               
 share and share data)                                                      
                                                         Q2'17         Q2'16
                                                --------------  ------------
Revenue                                          $      99,592 $     100,560
Gross margin                                            57,111        57,534
Earnings from operations                                27,886        26,715
Net earnings                                            20,760        19,619
Fully-diluted earnings per share                 $        0.27 $        0.26
Fully-diluted shares                                75,140,335    74,795,927
Selected Financial Information                                              
Consolidated Balance Sheet Data                                             
(in thousands of dollars)                                                   
                                                       Q2 ' 17       YE ' 16
                                                --------------  ------------
Cash and cash equivalents                        $     133,359 $     123,102
Working capital                                        338,445       314,912
Total assets                                           464,091       448,314
Shareholders' equity                                   390,323       366,205

Revenue

For the quarter ended October 31, 2016, revenues were $99.6 million as compared to revenues of $100.6 million for the quarter ended October 31, 2015. For the quarter, revenues in the United States/Canada region were $62.3 million, an increase of 2% as compared to $61.2 million in the same quarter last year. The International region had revenues of $37.3 million as compared to $39.3 million for the quarter ended October 31, 2015.

Gross Margin

For the quarter ended October 31, 2016 gross margin was $57.1 million as compared to $57.5 million in the same quarter last year. Gross margin percentage was approximately 57.3% as compared to 57.2% in the quarter ended October 31, 2015.

Earnings

For the quarter ended October 31, 2016 net earnings were $20.8 million as compared to $19.6 million in the corresponding period last year.

For the quarter ended October 31, 2016 earnings per share on a fully-diluted basis were $0.27, compared to $0.26 in the corresponding period last year.

Operating Expenses

For the quarter ended October 31, 2016 selling and administrative expenses were $15.3 million as compared to $14.8 million for the quarter ended October 31, 2015.

For the quarter ended October 31, 2016 gross research and development expenses were $17.8 million as compared to $16.1 million in the corresponding period in 2015.

Liquidity and Capital Resources

The Company's working capital as at October 31, 2016 was $338.4 million as compared to $314.9 million on April 30, 2016.

Cash and cash equivalents were $133.4 million as at October 31, 2016 as compared to $123.1 million on April 30, 2016.

Cash generated from operations was $12.6 million for the quarter ended October 31, 2016 as compared to cash generated of $23.7 million for the quarter ended October 31, 2015. Before taking into account taxes and the changes in non-cash working capital and current taxes, the Company generated $24.4 million from operations for the quarter ended October 31, 2016 compared to $22.2 million for the same period last year.

For the quarter, the Company used $2.4 million in investing activities largely a result of purchases in capital assets.

For the quarter ended, the Company generated cash from financing activities of $0.1 million which was principally a result of the issuance of capital stock for $13.7 million, partially offset by the payment of dividends of $13.5 million.

Shipments and Backlog

At the end of November 2016, purchase order backlog was in excess of $72 million and shipments during the month of November 2016 were $39 million.

Dividend Declared

Evertz Board of Directors declared a regular quarterly dividend on December 1, 2016 of $0.18 per share.

The dividend is payable to shareholders of record on December 12, 2016 and will be paid on or about December 19, 2016.

Special Dividend

Evertz Board of Directors declared a special dividend on December 1, 2016 of $1.10 per common share, payable on December 19, 2016 to shareholders of record on December 12, 2016.

The special dividend reflects both the strong long-term operating performance of the company and its solid balance sheet, thereby enabling a distribution of cash over and above what is considered necessary to meet known commitments and maintain adequate reserves.

Selected Consolidated Financial Information

(in thousands of dollars, except earnings per share and percentages)


                            Three month period ended  Six month period ended
                                    October 31,             October 31,     
----------------------------------------------------------------------------
                                    2016        2015        2016        2015
----------------------------------------------------------------------------
Revenue                      $   99,592  $  100,560  $  186,618  $  185,429 
Cost of goods sold               42,481      43,026      79,641      80,066 
----------------------------------------------------------------------------
Gross margin                     57,111      57,534     106,977     105,363 
----------------------------------------------------------------------------
Expenses                                                                    
  Selling and administrative     15,289      14,827      30,175      29,629 
  General                         2,017       1,643       3,967       3,238 
  Research and development       17,780      16,127      35,273      32,379 
  Investment tax credits         (2,411)     (2,411)     (5,060)     (4,895)
  Foreign exchange (gain)                                                   
   loss                          (3,450)        633     (10,054)     (7,079)
----------------------------------------------------------------------------
                                 29,225      30,819      54,301      53,272 
----------------------------------------------------------------------------
Earnings before undernoted       27,886      26,715      52,676      52,091 
Finance income                      464         180         780         338 
Finance costs                       (69)       (200)       (122)       (322)
Other income and expenses           (32)        188          37         150 
----------------------------------------------------------------------------
Earnings before income taxes     28,249      26,883      53,371      52,257 
----------------------------------------------------------------------------
Provision for (recovery of)                                                 
 income taxes                                                               
  Current                         6,969       7,995      15,641      15,968 
  Deferred                          520        (731)     (1,653)     (1,928)
----------------------------------------------------------------------------
                                  7,489       7,264      13,988      14,040 
----------------------------------------------------------------------------
Net earnings for the period  $   20,760  $   19,619  $   39,383  $   38,217 
----------------------------------------------------------------------------
Net earnings attributable to                                                
 non-controlling interest           177         133         407         320 
----------------------------------------------------------------------------
Net earnings attributable to                                                
 shareholders                    20,583      19,486      38,976      37,897 
----------------------------------------------------------------------------
Net earnings for the period  $   20,760  $   19,619  $   39,383  $   38,217 
----------------------------------------------------------------------------
Earnings per share                                                          
Basic                        $     0.28  $     0.26  $     0.52  $     0.51 
Diluted                      $     0.27  $     0.26  $     0.52  $     0.51 
----------------------------------------------------------------------------


                                                                            
Consolidated Balance Sheet Data                          As at         As at
                                                   October 31,     April 30,
                                                          2016          2016
----------------------------------------------------------------------------
Cash and cash equivalents                        $     133,359 $     123,102
Inventory                                        $     165,233 $     155,957
Working capital                                  $     338,445 $     314,912
Total assets                                     $     464,091 $     448,314
Shareholders' equity                             $     390,323 $     366,205
Number of common shares outstanding:                                        
  Basic                                             75,348,496    74,188,746
  Fully -diluted                                    78,587,246    78,595,246
Weighted average number of shares outstanding:                              
  Basic                                             74,463,363    74,360,423
  Fully -diluted                                    75,001,329    74,843,493
----------------------------------------------------------------------------

Forward-Looking Statements

The report contains forward-looking statements reflecting Evertz's objectives, estimates and expectations. Such forward looking statements use words such as "may", "will", "expect", "believe", "anticipate", "plan", "intend", "project", "continue" and other similar terminology of a forward-looking nature or negatives of those terms.

Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, all forward-looking statements address matters that involve known and unknown risks, uncertainties and other factors. Accordingly, there are or will be a number of significant factors which could cause the Company's actual results, performance or achievements, or industry results to be materially different from any future results performance or achievements expressed or implied by such forward-looking statements.

Conference Call

The Company will hold a conference call with financial analysts to discuss the results on December 1, 2016 at 5:00 p.m. (EDT). Media and other interested parties are invited to join the conference call in listen-only mode. The conference call may be accessed by dialing 647-793- 2625 or toll-free (North America) 1-844-254-9270, access code 2269957 (NEW).

For those unable to listen to the live call, a rebroadcast will also be available until January 1, 2017. The rebroadcast can be accessed at 647-436-0148 or toll-free 1-888-203-1112. The pass code for the rebroadcast is 2269957.

About Evertz

Evertz Technologies Limited (TSX:ET) designs, manufactures and markets video and audio infrastructure solutions for the television, telecommunications and new-media industries. The Company's solutions are purchased by content creators, broadcasters, specialty channels and television service providers to support their increasingly complex multi-channel digital, and high and ultra-high definition television ("HDTV" and "UHD") and next generation high bandwidth low latency IP network environments and by telecommunications and new-media companies. The Company's products allow its customers to generate additional revenue while reducing costs through the more efficient signal routing, distribution, monitoring and management of content as well as the automation of previously manual processes.

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