RRsat Reports Record 2011 Full Year And Fourth Quarter Revenues
AIRPORT CITY BUSINESS PARK, Israel, March 5, 2012 /PRNewswire/ --
- Revenues totaled a record $28.8 million, an 11.6% increase year-over-year
- Operating income totaled $2.4 million, compared with $1.1 million last year
- Adjusted net income of $1.5 million, compared with $1.1 million last year. GAAP net income totaled $1.6 million, compared with $1.4 million last year.
- Adjusted EBITDA of $4.9 million, compared with $2.9 million last year.
- Ended the quarter with $33.2 million in cash, cash equivalents and marketable securities, a $4.5 million increase, compared with the end of the previous quarter.
- Backlog as of December 31, 2011 at $194 million.
RRsat Global Communications Network Ltd. (NASDAQ: RRST), a leading provider of comprehensive content management and global distribution services to the television and radio broadcasting industries, today announced its financial results for the fourth quarter and full year ended December 31, 2011.
Fourth Quarter 2011 Results:
Revenues in the fourth quarter of 2011 totaled a record $28.8 million, an 11.6% increase compared with $25.8 million in the fourth quarter of 2010 and an increase of 0.6% compared with $28.6 million in the previous quarter.
Gross profit in the fourth quarter of 2011 totaled $6.9 million, compared with $5.5 million in the fourth quarter of 2010 and $6.4 million in the previous quarter. Gross margin in the fourth quarter of 2011 was 23.8%, compared with 21.2% in the same quarter last year and 22.3% in the previous quarter.
Operating income for the fourth quarter of 2011 totaled $2.4 million, representing an operating margin of 8.5%, compared with $1.1 million in the fourth quarter of 2010, representing an operating margin of 4.4%. Operating income in the previous quarter totaled $1.8 million, representing an operating margin of 6.4%.
Net income on a GAAP basis for the fourth quarter of 2011 was $1.6 million, compared with $1.4 million in the fourth quarter of 2010 and a loss of $0.2 million in the previous quarter. Net income per share on a fully diluted basis under GAAP for the fourth quarter of 2011 was $0.09, compared with $0.08 in the fourth quarter of 2010 and a net loss per share of $0.01 in the previous quarter.
Adjusted net income totaled $1.5 million for the fourth quarter of 2011, compared with $1.1 million in the fourth quarter of 2010 and $0.8 million in the previous quarter. Adjusted net income per share on a fully diluted basis totaled $0.09 in the fourth quarter of 2011, compared with $0.07 in the fourth quarter of 2010 and $0.05 in the previous quarter. As described in more detail below under the header "Use of Non-GAAP Financial Measures," commencing this quarter our calculation of adjusted net income also excludes non-cash expenses resulting from amortization of acquired intangible assets. Comparable period results that are included in this report were adjusted accordingly.
Adjusted EBITDA for the fourth quarter of 2011 totaled $4.9 million, compared with $2.9 million in the fourth quarter of 2010 and $4.0 million in the previous quarter.
Cash, cash equivalents and marketable securities as of December 31, 2011 totaled $33.2 million, an increase of $4.5 million compared with $28.7 million as of September 30, 2011. The net increase in the cash balance is mainly attributable to a positive cash flow from operating activities of $6.2 million less capital expenditures of $1.8 million.
Backlog of signed agreements, as of December 31, 2011, totaled $194 million, including $86.6 million of revenues expected to be recognized during 2012, compared with a backlog of $195 million at the end of the previous quarter. Exchange rates changes in the fourth quarter had a negative $3 million impact on the backlog level.
Full Year 2011 Results
Revenues for the full year ended 2011 totaled a record $112.9 million, an increase of 10.7%, compared with $102.0 million in 2010. Operating income for 2011 totaled $8.8 million, compared with $10.5 million in 2010. Net income on a GAAP basis for 2011 totaled $4.3 million, compared with $8.7 million in 2010. Adjusted EBITDA for 2011 totaled $17.4 million, compared with $17.3 million in 2010. Adjusted net income for 2011 totaled $6.3 million, compared with $8.4 million in 2010.
Guidance for revenue in the first quarter of 2012 is in the range of $27.5 - $28.5 million, and for full year 2012 in the range of $115 - $121 million. Guidance for gross margin in the first quarter of 2012 is 21.5-23.5%. The first quarter guidance is mainly a result of the ending of a large TV project. We anticipate being back on track in the second quarter of 2012.
David Rivel, CEO of RRsat commented, "We finished 2011 on a positive note, with a record $113 million in revenues despite challenging economic conditions. In light of the challenges we experienced over the past 18 months, and following the improvements we implemented, I believe that the Company is now better positioned and I feel confident looking forward to 2012 and beyond."
Mr. Rivel continued, "We recently signed a few key contracts, among them, with a new client to broadcast the KHL, the Russian Ice Hockey League, across Europe and the Middle East, expanding our presence in the growing sports broadcast market. We have expanded our relationship with current client, Nickelodeon, adding playout services to their station, NickJunior. We are also now offering uplink and playout services to Tempo, a leading US based Caribbean music company, which will be broadcast across the Americas, the Caribbean and Western Europe. Looking forward to 2012, we expect our capital expenditures to decrease, which will likely have a positive impact on our free cash flow. In addition, we plan to expand our direct sales to North America, Africa, and Asia, thus working towards our goal of offering superior services to a larger group of customers, including major television networks."
Conference Call Information
Conference call scheduled later today, March 5, 2012 at 9:00 am ET (4:00 pm Israel time). On the call, Mr. David Rivel, Founder & CEO, Mr. Itzhak Zion, CFO, and Mr. Lior Rival, VP Sales and Marketing, will review and discuss the results and will be available to answer investor questions.
To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.
US Dial-in Number: 1-888-668-9141
UK Dial-in Number: 0-800-917-5108
Israel Dial-in Number: 03-918-0609
International Dial-in Number: +972-3-918-0609
at:
9:00 am Eastern Time; 6:00 am Pacific Time; 2:00 pm UK Time; 4:00 pm Israel Time
Replay
A replay of the call will be available from the day after the call. A link to the replay will be accessible from RRsat's website at: http://www.rrsat.com. In addition, a telephone replay will be available for two days following the call. To access the telephone replay dial one of the following numbers:
1-888-326-9310 (US) and +972 3-925-5901 (International).
Use of Non-GAAP Financial Measures
In addition to the GAAP results included in this press release, RRsat has also included non-GAAP measurements of results. RRsat uses three financial measures, adjusted net income, adjusted net income per share and adjusted EBITDA, which are non-GAAP financial measures. RRsat believes that these non-GAAP financial measures are principal indicators of the operating and financial performance of its business. We have provided these non-GAAP measurements to help investors better understand our core operating performance and enhance comparisons of core operating performance from period to period.
Adjusted net income is calculated based on the net income in our financial statements excluding non-cash equity-based compensation charges recorded in accordance with FASB ASC Topic 718, non-cash expense resulting from amortization of acquired intangible assets, non-cash income (loss) reflecting changes in the fair value of embedded currency conversion derivatives resulting from the application of FASB ASC Topic 815 and the resulting income tax (increase) decrease of the above items.
The adjustment for amortization of acquired intangible assets is included by us in this report for the first time. Comparable prior period results that are included in this report were adjusted accordingly. The company has excluded intangible assets amortization expense from its non-GAAP net income measurements, primarily because it represents a significant non-cash expense and because the company evaluates its performance excluding intangible assets amortization expense. Amortization of intangible assets is consistent in amount and frequency but is significantly affected by the timing and size of the company's acquisitions. Investors should note that the use of intangible assets contributed to the Company's revenues earned during the periods presented and will contribute to the Company's future period revenues as well. Intangible assets amortization expense will recur in future periods.
Adjusted EBITDA is calculated by adding to operating income, non-cash equity-based compensation charge, depreciation and amortization. Management uses these non-GAAP financial measures to assess its operational performance, for financial and operational decision-making, and as a means to evaluate period-to-period comparisons on a consistent basis. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance by excluding certain non-cash expenses that are not directly attributable to its core operating results.
The non-GAAP measurements are intended only as a supplement to the comparable GAAP measurements and the company compensates for the limitations inherent in the use of non-GAAP measurements by using GAAP measures in conjunction with the non-GAAP measurements. As a result, investors should consider these non-GAAP measurements in addition to, and not in substitution for, or as superior to, measurements of financial performance prepared in accordance with GAAP.
The Company expects to continue reporting non-GAAP financial measures, adjusting for the items described above, and the Company expects to continue to incur expenses similar to the non-cash, non-GAAP adjustments described above. Accordingly, the exclusion of these and other similar items in the presentation of non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring. Moreover, because not all companies use identical measures and calculations, the presentation of adjusted net income, adjusted net income per share and adjusted EBITDA may not be comparable to other similarly titled measures of other companies. These limitations are compensated for by using adjusted net income and adjusted EBITDA in conjunction with traditional GAAP financial measures.
Reconciliations of the non-GAAP measures (adjusted net income and adjusted EBITDA) to the most comparable GAAP measures (net income and operating income respectively), are provided in the schedules attached to this release.
About RRsat Global Communications Network Ltd.
RRsat Global Communications Network Ltd. (NASDAQ: RRST) provides global, end-to-end, content management and distribution services to the rapidly expanding television and radio broadcasting industries, covering more than 150 countries. Through its RRsat Global Network, composed of satellite and terrestrial fiber optic capacity and the public Internet, RRsat provides high-quality and flexible global distribution services 24/7 to more than 630 channels reaching multiplatform operators, Internet TV and direct-to-home viewers worldwide and also offers occasional use services for sports, news and events with a fleet of flyaways and over 10 transportable satellite news gathering services (SNG) units. More than 130 television and radio channels use RRsat's advanced production and playout centers comprising comprehensive media asset management services. Visit the company's website http://www.rrsat.com
Safe Harbor Statement
This press release contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding (i) guidance for revenue for the first quarter of 2012 and full year 2012 and gross margin in the first quarter of 2012;(ii) our expectations to decrease capital expenditures in 2012, and the corresponding effect on free cash flow;(iii) our planned expectations of our direct sales to North America, Africa and Asia; and (iv) our goal of offering superior services to a larger group of customers, including major television networks (v) our expectation to expand our client base and sell additional services to our existing client base, (vi) our ability to report future successes, and (vii) our intention to distribute dividends in the future and the size of any dividends declared. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry as of the date of this press release. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements, including the risks indicated in our filings with the Securities and Exchange Commission (SEC). For more details, please refer to our SEC filings and the amendments thereto, including our Annual Report on Form 20-F for the year ended December 31, 2010 and our Current Reports on Form 6-K.
FINANCIAL TABLES FOLLOW
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Operations
In thousands except share data
Year ended Three months ended
_______________________________________________________
Dec-31 Dec-31 Dec-31 Dec-31
2011 2010 2011 2010
_______________________________________________________
Revenues $ 112,920 $ 102,027 $ 28,826 $ 25,840
Cost of revenues 86,939 75,962 21,975 20,369
_______________________________________________________
Gross profit 25,981 26,065 6,851 5,471
_______________________________________________________
Operating expenses
Sales and marketing 7,067 6,380 1,735 1,620
General and administrative 10,130 9,194 2,667 2,714
Total operating expenses 17,197 15,574 4,402 4,334
_______________________________________________________
Operating income 8,784 10,491 2,449 1,137
Interest and marketable
securities income 400 681 81 247
Currency fluctuation and
other financing expenses, net (740) (1,268) (373) (327)
Changes in fair value of
embedded currency conversion
derivatives (2,130) 1,254 229 452
Other income (expenses), net (1) - 5 -
_______________________________________________________
Income before taxes on income 6,313 11,158 2,391 1,509
Income taxes 1,978 2,448 825 152
_______________________________________________________
Net income $ 4,335 $ 8,710 $ 1,566 $ 1,357
_______________________________________________________
Income per Ordinary Share
Basic income per Ordinary Share 0.25 0.50 0.09 0.08
_______________________________________________________
Diluted income per Ordinary
Share 0.25 0.50 0.09 0.08
_______________________________________________________
Weighted average number of Ordinary
Shares used to compute basic income per
Ordinary Share 17,346,561 17,330,024 17,346,561 17,339,946
_______________________________________________________
Weighted average number of Ordinary
Shares used to compute diluted income per
Ordinary Share 17,346,561 17,380,677 17,346,561 17,363,138
_______________________________________________________
RRsat Global Communications Network Ltd. and its Subsidiaries
Reconciliation of Adjusted Net Income and Adjusted EBITDA
In thousands except per share data
Year ended Three months ended
Dec 31 Dec 31
___________________ ___________________
2011 2010 2011 2010
___________________ ___________________
Reconciliation of Net Income to Adjusted Net
Income:
Net income - as reported $ 4,335 $8,710 $ 1,566 $ 1,357
Non-cash equity-based compensation charge 117 372 44 51
Intangible amortization 311 320 72 94
Changes in fair value of embedded currency
conversion derivatives 2,130 (1,254) (229) (452)
Income tax increase (decrease) of the above
items (601) 227 25 81
___________________ ___________________
Adjusted net income $6,292 $8,375 $ 1,478 $ 1,131
___________________ ___________________
Adjusted net income per diluted
ordinary share $ 0.36 $ 0.48 $ 0.09 $ 0.07
___________________ ___________________
Year ended Three months ended
Dec 31 Dec 31
___________________ ___________________
2011 2010 2011 2010
___________________ ___________________
Reconciliation of Net Income to
Adjusted EBITDA:
Operating income $ 8,784 $ 10,491 $ 2,449 $ 1,137
Non-cash equity-based compensation
charge 117 372 44 51
Depreciation and amortization 8,477 6,454 2,388 1,741
___________________ ___________________
Adjusted EBITDA $17,378 $17,317 $ 4,881 $ 2,929
___________________ ___________________
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Balance Sheets
In thousands except share data
As of As of
December December
31 31
2011 2010
____________________
Current assets
Cash and cash equivalents $ 14,443 $ 13,091
Marketable securities 18,764 22,516
Accounts receivable:
Trade (net of provision for doubtful accounts of $5,641
and $6,892 as of December 31, 2010 and 2011, respectively) 19,402 19,860
Other 686 1,312
Fair value of embedded currency conversion derivatives 206 893
Deferred taxes 2,449 1,657
Prepaid expenses 2,223 2,145
Total current assets 58,173 61,474
Fair value of embedded currency conversion derivatives 591 1,185
Deposits and long-term prepaid expenses 2,043 2,201
Long- term land lease prepaid expenses 7,642 7,709
Deferred taxes - 501
Assets held for employee severance payments 1,757 2,015
Fixed assets, at cost, less accumulated depreciation and
amortization 45,495 40,779
Goodwill 3,734 3,734
Intangible Assets, at cost, less accumulated amortization 586 897
____________________
Total assets $ 120,021 $120,495
____________________
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Balance Sheets (cont'd)
In thousands except share data
As of As of
December December
31 31
2011 2010
____________________
Liabilities and shareholders' equity
Current liabilities
Accounts payable:
Trade $ 11,547 $ 13,194
Other 2,335 2,510
Fair value of embedded currency conversion derivatives 990 349
Deferred income 8,787 8,456
Total current liabilities 23,659 24,509
Long - term liabilities
Deferred income 7,192 7,619
Fair value of embedded currency conversion derivatives 980 772
Liability in respect of employee severance payments 1,819 2,058
Deferred taxes 1,664 1,125
Total long - term liabilities 11,655 11,574
Total liabilities 35,314 36,083
Commitments, contingent liabilities and liens
Shareholders' equity
Share capital:
Ordinary share NIS 0.01 par value each (20,000,000 shares
authorized as of December 31, 2010 and 2011; 17,346,561
shares issued and fully paid as of
December 31, 2010 and 2011) 40 40
Additional paid in capital 53,010 52,893
Retained earnings 31,727 31,555
Accumulated other comprehensive loss (70) (76)
____________________
Total shareholders' equity $ 84,707 $ 84,412
____________________
Total liabilities and shareholders' equity $ 120,021 $ 120,495
____________________
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows
In thousands
Year ended Dec 31 Three months
ended Dec 31
__________________________________________
2011 2010 2011 2010
__________________________________________
Cash flows from operating activities
Net income $ 4,335 $ 8,710 $ 1,566 $ 1,357
Adjustments required to reconcile net income to net
cash provided by operating activities:
Deprecation and amortization 8,477 6,454 2,388 1,741
Provision for losses in accounts receivable 2,217 2,024 572 605
Deferred taxes 248 107 303 284
Discount accretion and premium amortization
of held- to- maturity securities, net - (15) - -
Discount accretion and premium amortization
of available- for- sale securities, net (325) (422) 13 (112)
Changes in liability for employee severance
payments, net 19 8 10 (90)
Capital gains on sale of fixed assets, net 1 - (5) -
Stock- based compensation 117 372 44 51
Changes in fair value of embedded currency
conversion derivatives 2,130 (1,254) (229) (452)
Loss (profit) from trading securities, net 158 (164) 20 (73)
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable - trade (1,759) (5,119) 777 172
Decrease (increase) in accounts
receivable - other 626 (753) (274) (685)
Decrease (increase) in prepaid expenses (78) (161) 105 (710)
Decrease (increase) in deposits and
long-term prepaid expenses 158 (1,171) (23) (517)
Increase (decrease) in accounts payable 17 (283) (541) 1,076
Increase (decrease) in deferred income (96) 1,018 1,479 1,527
__________________________________________
Net cash provided by operating activities $ 16,245 $ 9,351 $ 6,205 $ 4,174
__________________________________________
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows
In thousands
Year ended Three months ended
Dec 31 Dec 31
__________________________________________
2011 2010 2011 2010
__________________________________________
Cash flows from investing activities
Investment in fixed assets $ (14,657) (15,265) $ (1,804) $ (4,839)
Investment in other assets (27) - (5) -
Proceeds in short term deposits - 9,900 - 4,000
Investment in securities
available- for- sale (8,005) (10,298) (3,224) (6,172)
Increase in trading securities, net (231) (37) (210) (16)
Proceeds from securities
available- for- sale 12,161 10,281 4,217 5,161
Proceeds from securities
held- to- maturity - 780 - -
Proceeds from sale of fixed assets 29 - 5 -
__________________________________________
Net cash used in investing activities $ (10,730) $ (4,639) $ (1,021) $ (1,866)
__________________________________________
Cash flows from financing activities
Dividend paid $(4,163) $(6,562) $ - $ -
__________________________________________
Net cash used in financing activities $(4,163) $(6,562) $ - $ -
__________________________________________
Increase (decrease) in cash and cash
equivalents $ 1,352 $ (1,850) $ 5,184 $ 2,308
Balance of cash and cash equivalents
at beginning of Period $ 13,091 $ 14,941 $ 9,259 $ 10,783
__________________________________________
Balance of cash and cash equivalents
at end of Period $ 14,443 $ 13,091 $ 14,443 $ 13,091
__________________________________________
A. Non-cash transactions
Investment in fixed assets $ 1,293 $ 3,132 $ 1,293 $ 3,132
__________________________________________
B. Supplementary cash flow information
Income taxes paid, net $ 1,694 $ 3,027 $ 590 $ 391
__________________________________________
Company Contact Information:
Itzhak Zion, CFO
Tel: +972-3-928-0777
Email: [email protected]
External Investor Relations Contacts:
Ehud Helft / Porat Saar
Tel: +1-646-233-2161
[email protected]
SOURCE RRSat Global Communications Network Ltd
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