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RRsat Reports 20% Revenue Growth and 18 New Contracts Commenced in the Third Quarter of 2009
Adjusted net income up 23% YoY to $3.8 million; Backlog increases to $171 million
RE'EM, Israel, Nov. 12 /PRNewswire-FirstCall/ -- RRsat Global Communications Network Ltd. ( RRST), a rapidly growing provider of comprehensive content management and global distribution services to the television and radio broadcasting industries, today announced its financial results for the third quarter ended September 30, 2009.
Third Quarter 2009 Highlights
- Record revenues of $24.1 million, growing 20% over last year.
- Operating income reaches $4.2 million; adjusted EBITDA reaches $5.7 million;
- Net income reaches $2.9 million; adjusted net income reaches $3.8 million;
- 18 new contracts commenced in the quarter, 12 with new customers and 6 with existing customers; and
- Introduces fourth quarter guidance, forecasts sequential growth with revenues of $25.1 - $25.6 million.
Third Quarter 2009 Results
Revenues for the third quarter of 2009 totaled $24.1 million, an increase of 20% compared to $20.1 million in the third quarter of 2008.
Gross profit for the third quarter of 2009 totaled $7.5 million, an increase of 14% compared to $6.6 million in the third quarter of 2008. Gross margin for the third quarter of 2009 totaled 31.0% compared to 32.7% in the third quarter of 2008. The main factors that negatively affected the gross margins were the appreciation of the Israeli Shekel against the US Dollar during the quarter, and an increase in available capacity in anticipation of future demand.
Operating income for the third quarter of 2009 totaled $4.2 million, an increase of 5% compared to $4.0 million in the third quarter of 2008. Operating income was affected by the lower gross margins as described above and the weakness of the US Dollar versus the Israeli Shekel, in which a certain portion of operating expenses are denominated.
Net income on a GAAP basis for the third quarter of 2009 was $2.9 million, compared to $4.0 million in the third quarter of 2008. Net income per diluted share on a GAAP basis was $0.17, compared to $0.23 in the third quarter of 2008.
Adjusted EBITDA for the third quarter of 2009 totaled $5.7 million, an increase of 12% compared to $5.1 million in the third quarter of 2008.
Adjusted net income for the third quarter of 2009 totaled $3.8 million, an increase of 23% compared to $3.1 million in the third quarter of 2008. Adjusted net income per diluted share, totaled $0.22 in the third quarter, compared to $0.18 in the third quarter of 2008.
Backlog of signed contracts: During the quarter, the increased demand for new services contributed to the commencement of a net 18 new contracts. Backlog grew slightly to $171 million as of September 30, 2009 compared to $170 million as of June 30, 2009.
Cash, cash equivalents and marketable securities as at September 30, 2009 were $44.4 million, compared to $42.8 million as at June 30, 2009. During the quarter, the Company generated $6.5 million in operating cash flow, invested $2.1 million in capital expenditure, and paid out a dividend of $2.9 million in September 2009.
David Rivel, founder and CEO of RRsat commented, "We are very proud with our 18 new contracts, including 12 contracts with new clients. In addition, we have also more recently commenced contracts with two major networks, Fox Sports and Kidsco, a member of the NBC Universal Group. These developments have broadened and strengthened our customer base, and have increased our ability to sell additional services. We believe this growth in new contracts is a testament to the increase in demand for our services that we are experiencing, some of which is coming from the increasingly pervasive High-Definition market. To meet the consumer demand for HD, customers are increasingly looking to outsource their distribution to us, given our new HD platform utilizing a state-of-the-art playout facility, built on leading edge end-to-end technologies."
Mr. Rivel added, "We believe that the market is returning to its normal behavior, as is evident by the strong pipeline and demand that we see for our services, and the return to normal contract length. Given the market strength that we see, we are also stepping up our capacity, in anticipation of our future utilization requirements over the coming months."
"Based on our good visibility and healthy backlog, we are forecasting that revenues in the fourth quarter will be between $25.1-25.6 million," concluded Mr. Rivel.
Conference Call Information
Conference call scheduled later today, November 12, 2009 at 9:00 am ET. On the call, Mr. David Rivel, Founder & CEO and Mr. Gil Efron, CFO 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: 1-888-281-1167
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
Additionally, the call will be simultaneously webcast live through a link on RRSat's website at http://www.rrsat.com, or from the following link:
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. 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: 1 877 332 1104 (US) or +972 3 925 5901 (Intl).
Use of Non- GAAP Financial Measures
RRsat uses two financial measures, adjusted net income and adjusted EBITDA, which are non-GAAP financial measures. RRsat believes that both non-GAAP financial measures are principal indicators of the operating and financial performance of its business. 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 SFAS 123R, the non-cash income (loss) reflecting changes in the fair value of embedded currency conversion derivatives resulting from the application of SFAS 133 and the resulting income tax (increase) decrease.
Adjusted EBITDA is calculated by deducting from net income interest and marketable securities income, currency fluctuation and other financial income (expenses), net, changes in fair value of embedded currency conversion derivatives, and other income (expenses), net, income tax expense and adding non-cash equity-based compensation charge, and depreciation and amortization. Management believes the non-GAAP financial measures (adjusted net income and adjusted EBITDA) provided are useful to investors' understanding and assessment of RRsat's on-going core operations and prospects for the future. Management uses these non-GAAP financial measures in order to evaluate the performance of the company. However, such measures should not be considered in isolation or as substitutes for results prepared in accordance with GAAP. In addition, RRsat's adjusted EBITDA may not be comparable to adjusted EBITDA as reported by other companies.
Reconciliations of the non-GAAP measures (adjusted net income and adjusted EBITDA) to net income, the most comparable GAAP measure, are provided in the schedules attached to this release.
About RRsat Global Communications Network Ltd.
RRsat Global Communications Network Ltd. (Nasdaq: RRST) provides global, comprehensive, content management and distribution services to the rapidly expanding television and radio broadcasting industries. Through its proprietary "RRsat Global Network," composed of satellite and terrestrial fiber optic transmission capacity and the public Internet, RRsat is able to offer high-quality and flexible global distribution services for content providers. RRsat's comprehensive content management services include producing and playing out TV content as well as providing satellite newsgathering services (SNG). RRsat concurrently provide these services to more than 500 television and radio channels, covering more than 150 countries. Visit the company's website www.RRsat.com for more information.
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) the growth of our business and the television and radio broadcasting industries, (ii) our expectation to expand our client base and sell additional services to our existing client base, (iii) our ability to successfully integrate the teleports we acquired, (iv) our ability to develop and commercialize the RRsat Global Internet TV service, (v) our expectation to extend the average length of our contracts in the future, (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, 2008 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
Nine months ended Three months ended
------------------ ------------------
Sep-30 Sep-30 Sep-30 Sep-30
2009 2008 2009 2008
---- ---- ---- ----
Revenues $68,903 $57,039 $24,109 $20,075
Cost of revenues 46,572 38,793 16,631 13,501
------ ------ ------ ------
Gross profit 22,331 18,246 7,478 6,574
------ ------ ----- -----
Operating expenses
Sales and marketing 4,147 2,818 1,436 970
General and administrative 5,162 4,902 1,870 1,626
Total operating expenses 9,309 7,720 3,306 2,596
----- ----- ----- -----
Operating income 13,022 10,526 4,172 3,978
Interest and marketable
securities income 387 1,096 112 293
Currency fluctuation and
other financing income, net 514 330 243 (66)
Changes in fair value of
embedded currency conversion
derivatives (1,996) 154 (1,064) 1,347
Other income, net 25 12 - -
-- -- - -
Income before taxes on income 11,952 12,118 3,463 5,552
Income taxes (3,077) (2,271) (567) (1,597)
Net income $8,875 $9,847 $2,896 $3,955
====== ====== ====== ======
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Operations (cont'd)
In thousands, except share data
Nine months ended Three months ended
------------------ ------------------
Sep-30 Sep-30 Sep-30 Sep-30
2009 2008 2009 2008
---- ---- ---- ----
Income per ordinary share
Basic income per ordinary share $0.51 $0.57 $0.17 $0.23
===== ===== ===== =====
Diluted income per ordinary
share $0.51 $0.57 $0.17 $0.23
===== ===== ===== =====
Weighted average number of
ordinary shares used to compute
basic income per ordinary
share 17,306,783 17,286,762 17,306,783 17,286,762
========== ========== ========== ==========
Weighted average number of
ordinary shares used to
compute diluted income per
ordinary share 17,413,503 17,417,215 17,415,053 17,402,058
========== ========== ========== ==========
RRsat Global Communications Network Ltd. and its subsidiaries
Reconciliation of Adjusted Net Income and Adjusted EBITDA
In thousands except share data
Nine months ended Three months ended
----------------- ------------------
Sep-30 Sep-30 Sep-30 Sep-30
2009 2008 2009 2008
---- ---- ---- ----
Reconciliation of Net Income
to Adjusted Net Income:
Net income - as reported $8,875 $9,847 $2,896 $3,955
Non-cash equity-based
compensation charge 312 312 104 105
Changes in fair value of embedded
currency conversion derivatives 1,996 (154) 1,064 (1,347)
Change in deferred tax on
embedded derivatives (519) 40 (277) 350
---- -- ---- ---
Adjusted net income $10,664 $10,045 $3,787 $3,063
======= ======= ====== ======
Adjusted net income per diluted
ordinary share $0.61 $0.58 $0.22 $0.18
Reconciliation of Net Income to
Adjusted EBITDA:
Net income - as reported $8,875 $9,847 $2,896 $3,955
Interest and marketable
securities income (387) (1,096) (112) (293)
Currency fluctuation and other
financial income, net (514) (330) (243) 66
Changes in fair value of embedded
currency conversion derivatives 1,996 (154) 1,064 (1,347)
Other income, net (25) (12) - -
Income tax expense 3,077 2,271 567 1,597
Non-cash equity-based
compensation charge 312 312 104 105
Depreciation and amortization 4,105 2,770 1,448 991
----- ----- ----- ---
Adjusted EBITDA $17,439 $13,608 $5,724 $5,074
======= ======= ====== ======
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Balance Sheets
In thousands except share data
Sep-30 Dec-31
2009 2008
------- -------
Current assets
Cash and cash equivalents $12,752 $34,749
Short term deposits 10,200 -
Marketable securities 7,171 6,102
Accounts receivable:
Trade (net of provision for doubtful accounts of
$2,856 and $2,188 as of September 30, 2009 and
December 31, 2008 respectively) 16,897 11,227
Other 693 417
Fair value of embedded currency conversion derivatives 1,505 2,234
Deferred taxes 1,264 552
Prepaid expenses 1,176 1,390
------- -------
Total current assets 51,658 56,671
Deposits and long-term receivables 1,674 1,791
Marketable securities 14,266 5,743
Long term prepaid expenses 7,809 7,897
Assets held for employee severance payments 1,518 1,305
Fixed assets, at cost, less accumulated
depreciation and amortization 28,054 25,993
Goodwill 3,734 3,734
Intangible assets, at cost, less accumulated
amortization 1,296 1,353
------- -------
Total assets $110,009 $104,487
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Balance Sheets (cont'd)
In thousands except share data
Sep-30 Dec-31
2009 2008
------- -------
Liabilities and shareholders' equity
Current liabilities
Accounts payable:
Trade $10,979 $8,709
Other 2,438 1,944
Fair value of embedded currency conversion
derivatives 2,472 1,205
Related parties 58 25
Deferred income 5,540 5,440
----- -----
Total current liabilities 21,487 17,323
------ ------
Long - term liabilities
Deferred income 6,819 6,689
Liability in respect of employee severance
payments 1,673 1,378
Deferred taxes 815 747
--- ---
Total long - term liabilities 9,307 8,814
----- -----
Total liabilities 30,794 26,137
------ ------
Commitments, contingent liabilities and liens
Shareholders' equity
Share capital:
Ordinary share NIS 0.01 par value each
(20,000,000 shares authorized as of
September 30, 2009 and December 31, 2008;
17,306,783 shares issued and fully paid as
of September 30, 2009 and December 31, 2008) 40 40
Additional paid in capital 52,418 52,106
Retained earnings 26,704 26,309
Accumulated other comprehensive loss 53 (105)
Total shareholders' equity $79,215 $78,350
------- -------
Total liabilities and shareholders' equity $110,009 $104,487
======== ========
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows
In thousands
Nine months ended Three months ended
------------------ ------------------
Sep-30 Sep-30 Sep-30 Sep-30
2009 2008 2009 2008
---- ---- ---- ----
Cash flows from operating
activities
Net income $8,875 $9,847 $2,896 $3,955
Adjustments required to
reconcile net income
Depreciation and
amortization 4,105 2,770 1,448 991
Provision for losses in
account receivable 668 541 238 172
Deferred taxes (699) (89) (350) 278
Discount accretion and
premium amortization
of held- to- maturity
securities, net (264) (565) (174) (180)
Discount accretion and
premium amortization
of available- for- sale
securities, net 295 (178) 239 (58)
Changes in liability for
employee 82 184 (6) 13
Capital gains on sale of
fixed assets, net (25) (12) - -
Stock- based
compensation 312 312 104 105
Changes in fair value of
embedded 1,996 (154) 1,064 (1,347)
currency conversion
derivatives
Profit from trading
securities, net (320) (111) (115) 209
Changes in assets and
liabilities:
Decrease (increase) in
account receivable -
trade (6,338) 1,406 (1,703) 76
Decrease (increase) in
related parties, net 33 (34) 16 (6)
Decrease (increase) in
account receivable -
other (276) 290 (133) 616
Decrease (increase) in
prepaid expenses 214 (13) 447 358
Increase (decrease) in
deposits
and long-term receivables 117 (556) 100 (52)
Increase in account
payables 2,723 2,069 1,085 1,203
Increase (decrease) in
deferred income 230 294 1,320 834
Net cash provided by
operating activities $11,728 $16,001 $6,476 $7,167
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows
In thousands
Nine months ended Three months ended
------------------- ------------------
Sep-30 Sep-30 Sep-30 Sep-30
2009 2008 2009 2008
---- ---- ---- ----
Cash flows from investing
activities
Investment in fixed assets $(6,008) $(9,113) $(2,111) $(1,089)
Investment in other assets - (22) - (2)
Investment in short term
deposits (10,200) - (2,991) -
Payment in respect of
acquisition of activity - (3,525) - (100)
Investments in securities
available- for- sale (15,711) (19,188) (4,264) (8,795)
Decrease in trading
securities, net 62 2,144 (6) 327
Proceeds from securities
available- for- sale 2,540 4,000 1,470 -
Proceeds from securities held
to maturity 4,019 19,507 802 3,047
Proceeds from sale of fixed
assets 53 17 1 -
-- -- - -
Net cash provided by (used in)
investing activities $(25,245) $(6,180) $(7,099) $(6,612)
-------- ------- ------- -------
Cash flows from
financing
activities
Dividend paid $(8,480) $(5,532) $(2,942) $-
------- ------- ------- --
Net cash used in
financing activities $(8,480) $(5,532) $(2,942) $-
------- ------- ------- --
Increase (decrease) in cash
and cash equivalents $(21,997) $4,289 $(3,565) $555
Balance of cash and cash
equivalents at beginning of
period 34,749 28,409 16,317 32,143
------ ------ ------ ------
Balance of cash and cash
equivalents at end of
period $12,752 $32,698 $12,752 $32,698
======= ======= ======= =======
A. Non-cash transactions
Investment in fixed assets $347 $164 $347 $164
==== ==== ==== ====
B. Supplementary cash flow
information
Income taxes paid $4,245 $1,827 $1,334 $385
====== ====== ====== ====
Company Contact Information: External Investor Relations Contacts:
Gil Efron, CFO Ehud Helft / Kenny Green
Tel: +972 8 861 0000 Tel: 1 646 201 9246
investors@rrsat.com rrsat@gkir.com
SOURCE RRSat Global Communications Network Ltd.
RELATED LINKS
http://www.rrsat.com