2014

RRsat Reports First Quarter 2012 Adjusted Net Income Increases by 10.2% Over Last Year Adjusted Net Income Totaled $1.9 Million

AIRPORT CITY BUSINESS PARK, Israel, May 17, 2012 /PRNewswire/ --

2012 First Quarter Highlights

  • Revenues totaled $27.5 million, increasing by 2% year over year.
  • Adjusted Fully diluted earnings per share of $0.11 compared to $0.10 last year.
  • Adjusted EBITDA of $4.2 million, increasing by 5.7% from last year.
  • Backlog as of March 31, 2012 at $194 million.
  • Second quarter revenue guidance of $28.0 - $29.0 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 first quarter ended March 31, 2012.

First Quarter 2012 Results:

Revenues in the first quarter of 2012 totaled $27.5 million, a 2.0% increase compared with $26.9 million in the first quarter of 2011 and a decrease of 4.7% compared with $28.8 million in the previous quarter.  

Gross profit in the first quarter of 2012 totaled $6.1 million, compared with $6.2 million in the first quarter of 2011 and $6.9 million in the previous quarter. Gross margin in the first quarter of 2012 was 22.3%, compared with 23.0% in the same quarter last year and 23.8% in the previous quarter.  

Operating income for the first quarter of 2012 totaled $2.0 million, representing an operating margin of 7.1%, compared with $2.0 million in the first quarter of 2011, representing an operating margin of 7.4%.  Operating income in the previous quarter totaled $2.4 million, representing an operating margin of 8.5%.  

Net income on a GAAP basis for the first quarter of 2012 was $2.3 million, compared with $0.9 million in the first quarter of 2011 and $1.6 million in the previous quarter.  Fully diluted earnings per share on a GAAP basis for the first quarter of 2012 was $0.13, compared with $0.05 in the first quarter of 2011 and $0.09 in the previous quarter.  

Adjusted net income totaled $1.9 million for the first quarter of 2012, compared with $1.7 million in the first quarter of 2011 and $1.5 million in the previous quarter.  Adjusted fully diluted earnings per share totaled $0.11 in the first quarter of 2012, compared with $0.10 in the first quarter of 2011 and $0.09 in the previous quarter.

Adjusted EBITDA for the first quarter of 2012 totaled $4.2 million, compared with $4.0 million in the first quarter of 2011 and $4.9 million in the previous quarter.

Cash, cash equivalents and marketable securities as of March 31, 2012 totaled $34.4 million, an increase of $1.2 million compared with $33.2 million as of December 31, 2011.  The net increase in the cash balance is mainly attributable to a positive cash flow from operating activities of $3.1 million less capital expenditures of $2.3 million.

Backlog of signed agreements, as of March 31, 2012, totaled $194 million, including $69.1 million of revenues expected to be recognized during the remainder of 2012, compared with a backlog of $194 million at the end of the previous quarter.  

Guidance for revenue in the second quarter of 2012 is in the range of $28.0 - $29.0 million, and for full year 2012 remains in the range of $115 - $121 million.  Guidance for gross margin in the second quarter of 2012 is in the range of 22.5 - 23.5%.  

David Rivel, CEO of RRsat commented, "As we noted in the fourth quarter 2011 conference call, our first quarter results were mainly impacted by the ending of a large TV project which reduced our revenues compared with the previous quarter and resulted in excess capacity that had a negative impact on our margins.  However, we are seeing a healthy contract pipe line and expect to be back to sequential growth and better gross margins by the second quarter.  As anticipated, we are also seeing a reduction in our capital expenditures level and this will continue to have a positive impact on our free cash flow."

Mr. Rivel continued, "We otherwise had some positive activities at the Company during the quarter including the activation of five new services, with each contract worth over one million dollars.  We also announced the extension of our contract with the Vietnam TV channel for global distribution, as well as signing a contract with ETV, one of India's largest networks of satellite TV channels.  We are expanding our presence in the ever growing sports market, having signed an agreement with international sports broadcaster, Setanta, for the distribution of a Russian version of its sports channel across Russian speaking countries.  And finally, we extended our contract with Baby TV, which is part of FOX International, a major broadcaster.  Looking ahead to 2012, I believe we are on track with our strategy and goal of offering superior services to a larger group of customers, including major television networks."

Conference Call Information

Conference call scheduled later today, May 17, 2012 at 9:00 am ET (4:00 pm Israel time).  On the call, Mr. David Rivel, Founder & CEO, Dr. Shlomo Shamir, Chairman, 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:

1-888-782-4291 (US) and +972 3-925-5904 (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 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 second quarter of 2012 and full year 2012 and gross margin in the second 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 Africa and Asia; (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, 2011 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
 
                                                           Three months          Year
                                                              ended             ended
                                                      ----------------------  ----------                                                         March      March     December
                                                           31         31           31
                                                          2012       2011         2011
                                                      ----------- ----------- ----------
    Revenues                                           $ 27,459   $ 26,930    $ 112,920
    Cost of revenues                                     21,325     20,737       86,939
                                                      ----------- ----------- ----------    
    Gross profit                                          6,134      6,193       25,981
    Operating expenses
    Sales and marketing                                   1,611      1,744        7,067
    General and administrative                            2,570      2,447       10,130
                                                      ----------- ----------- ----------    
    Total operating expenses                              4,181      4,191       17,197
                                                      ----------- ----------- ----------   
    Operating income                                      1,953      2,002        8,784
    Interest and marketable securities income               154        116          400
    Currency fluctuation and other financing
    income (expenses), net                                  160        190         (740)
    Changes in fair value of embedded currency 
    conversion derivatives                                  627     (1,000)      (2,130)
    Other expenses, net                                       -          -           (1)
                                                     ----------- ----------- -----------
    Income before taxes on income                         2,894      1,308        6,313
    Income taxes                                           (616)      (439)      (1,978) 
                                                     ----------- ----------- -----------  
    Net income                                          $ 2,278      $ 869      $ 4,335
                                                     =========== =========== ===========
    Earning per Ordinary Share
    Basic earning per Ordinary Share                       0.13        0.05        0.25
                                                     =========== =========== ===========
    Diluted earning per Ordinary Share                     0.13        0.05        0.25
                                                     =========== =========== ===========
 
    Weighted average number of Ordinary
    Shares used to compute basic earning per
    Ordinary Share                                   17,346,561  17,346,561  17,346,561
                                                     =========== =========== ===========
    Weighted average number of Ordinary
    Shares used to compute diluted earning per
    Ordinary Share                                   17,346,561  17,359,092  17,346,561
                                                     =========== =========== ===========   



 


RRsat Global Communications Network Ltd. and its Subsidiaries

    Reconciliation of Adjusted Net Income and Adjusted EBITDA



 

    In thousands except per share data
                                                                 Three months ended
                                                              ---------------------- 
                                                                 March        March
                                                                   31           31
                                                                  2012         2011
    Reconciliation of Net Income to Adjusted Net              ---------    --------- 
    Income:
    Net income - as reported                                   $ 2,278        $ 869
    Non-cash equity-based compensation charge                       43           25
    Intangible assets amortization expense                          50           60
    Changes in fair value of embedded currency
    conversion derivatives                                       (627)        1,000
    Change in deferred tax on embedded derivatives                 157        (240)
                                                              ---------    ---------
    Adjusted net income                                        $ 1,901      $ 1,714
                                                              =========    =========
    Adjusted net income per diluted ordinary share              $ 0.11       $ 0.10
 
    Reconciliation of Net Income to Adjusted EBITDA:
    Operating income                                           $ 1,953      $ 2,002
    Non-cash equity-based compensation charge                       43           25
    Depreciation and amortization                                2,205        1,948
                                                              ---------    ---------
    Adjusted EBITDA                                            $ 4,201      $ 3,975
                                                              =========    =========



 


RRsat Global Communications Network Ltd. and its Subsidiaries

Consolidated Balance Sheets

    In thousands except share data
 
                                                                        March  December
                                                                         31        31
                                                                        2012      2011
                                                                     ---------- ----------
    Current assets
    Cash and cash equivalents                                        $ 17,082   $ 14,443
    Marketable securities                                              17,291     18,764
    Accounts receivable:
    Trade (net of provision for doubtful accounts of $7,572
    and $6,892 as of March 31, 2012 and December 31, 2011 
    respectively)                                                      20,255     19,402
    Other                                                               1,201        686
    Fair value of embedded currency conversion derivatives                260        206
    Deferred taxes                                                      2,399      2,449
    Prepaid expenses                                                    2,375      2,223
                                                                     ---------- ----------
    Total current assets                                               60,863     58,173
 
    Fair value of embedded currency conversion
    derivatives                                                           330        591
 
    Deposit and long- term prepaid expenses                             2,090      2,043
 
    Long-term land lease prepaid expenses                               7,630      7,642
 
    Assets held for employee severance payments                         1,854      1,757 
 
    Fixed assets, at cost, less accumulated depreciation 
    and amortization                                                   44,524     45,495
 
    Goodwill                                                            3,734      3,734
 
    Intangible Assets, at cost, less accumulated amortization             519        586
                                                                    ---------- ----------              
    Total assets                                                    $ 121,544  $ 120,021
                                                                    ========== ==========



 


RRsat Global Communications Network Ltd. and its Subsidiaries

Consolidated Balance Sheets (cont'd)

    In thousands except share data
                                                                              
                                                                March 31  December 31
                                                                   2012       2011
                                                                --------- -----------
    Liabilities and shareholders' equity
 
    Current liabilities
    Accounts payable:
     Trade                                                       $ 10,705   $ 11,547
    Dividend Payable                                                3,990          -
     Other                                                          2,458      2,335
    Fair value of embedded currency
    conversion derivatives                                            536        990
    Deferred income                                                 8,817      8,787
                                                                ---------- ----------
    Total current liabilities                                      26,506     23,659
                                                                ---------- ----------
    Long - term liabilities
    Deferred income                                                 7,463      7,192
    Fair value of embedded currency
    conversion derivatives                                            600        980
    Liability in respect of employee 
    severance payments                                              1,931      1,819
    Deferred taxes                                                  1,837      1,664
                                                                ---------- ----------
    Total long - term liabilities                                  11,831     11,655
                                                                ---------- ----------
    Total liabilities                                              38,337     35,314
                                                                ---------- ----------
    Commitments, contingent liabilities 
    and liens
 
    Shareholders' equity
    Share capital:
    Ordinary share NIS 0.01 par value each 
    (20,000,000 shares authorized as of 
    March 31, 2012 and December 31, 2011; 
    17,346,561 shares issued and fully
    paid as of March 31, 2012 and 
    December 31, 2011)                                                 40         40
    Additional paid in capital                                     53,053     53,010
    Retained earnings                                              30,015     31,727
    Accumulated other comprehensive income (loss)                      99        (70)
                                                                ---------- ----------
    Total shareholders' equity                                   $ 83,207   $ 84,707
                                                                ---------- ----------
    Total liabilities and shareholders' equity                  $ 121,544  $ 120,021
                                                                ========== ==========



 


RRsat Global Communications Network Ltd. and its Subsidiaries

Consolidated Statements of Cash Flows

    In thousands
                                                                               
                                                   Three months ended        Year ended
                                                ------------------------    ------------ 
                                                 March 31      March 31      December 31
                                                   2012        2011             2011
    Cash flows from operating activities        ----------  ------------    ------------
    Net income                                   $ 2,278       $ 869          $ 4,335
 
    Adjustments required to reconcile net 
    income to net cash provided by operating 
    activities:
    Depreciation and amortization                   2,205      1,948            8,477
    Provision for losses in accounts receivable       680        594            2,217
    Deferred taxes                                    166        234              248
    Discount accretion and premium amortization
    of available- for- sale securities, net          (113)      (106)            (325)
    Changes in liability for employee severance 
    payments, net                                      15         11               19
    Capital loss on sale of fixed assets, net          -          -                1
    Stock-based compensation                           43         25              117
    Changes in fair value of embedded currency
    conversion derivatives                           (627)     1,000            2,130
    Loss (Profit) from trading securities, net        (46)       (10)             158
    Changes in assets and liabilities:
    Increase in account receivable - trade         (1,533)      (536)          (1,759)
    Decrease (increase) in account receivable 
    - other                                          (515)       (41)             626
    Increase in prepaid expenses                     (152)      (429)             (78)
    Decrease (increase) in deposits and
    long-term prepaid expenses                        (47)       (34)             158
    Increase in account payable                       438      2,000               17
    Increase (decrease) in deferred income            301     (2,056)             (96)
                                                 ---------  ---------       ----------
    Net cash provided by operating activities     $ 3,093    $ 3,469         $ 16,245
                                                 ---------  ---------       ----------



 


RRsat Global Communications Network Ltd. and its Subsidiaries

Consolidated Statements of Cash Flows

In thousands

                                               Three months ended    Year ended
                                            ----------   ----------  ----------- 
                                              March 31     March 31  December 31
                                                2012         2011        2011
                                            ----------   ----------  -----------
    Cash flows from investing activities
    Investment in fixed assets               $ (2,330)    $ (6,534)  $ (14,657)
    Investment in long term prepaid expenses      (13)         (13)        (27)
    Investment in  available- 
    for- sale securities                       (2,777)      (3,523)     (8,005)
    Decrease (increase) in trading 
    securities, net                             1,512           30        (231)
    Proceeds from sale of securities available- 
    for- sale                                   3,123        5,295      12,161
    Proceeds from sale of fixed assets             31            -          29
                                            ----------   ----------  ----------
    Net cash used in investing activities      $ (454)    $ (4,745)  $ (10,730)
                                            ----------   ----------  ----------
    Cash flows from financing activities
    Dividend paid                                   -     $ (2,602)   $ (4,163)
                                            ----------   ----------  ----------
    Net cash used in financing activities           -     $ (2,602)   $ (4,163)
                                            ----------   ----------  ----------
    Increase (decrease) in cash and cash 
    equivalents                               $ 2,639     $ (3,878)    $ 1,352
 
    Balance of cash and cash equivalents 
    at beginning of Period                   $ 14,443     $ 13,091    $ 13,091
                                            ----------   ----------  ----------
    Balance of cash and cash equivalents 
    at end of Period                         $ 17,082      $ 9,213    $ 14,443
                                            ==========   ==========   =========
    A. Non-cash transactions
    Investment in fixed assets                  $ 136      $ 2,140     $ 1,293
                                            ==========   ==========   =========
    Dividend payable                          $ 3,990            -           -
                                            ==========   ==========   =========
    B. Supplementary cash flow information
    Income taxes paid                           $ 610        $ 383     $ 1,694
                                            ==========   ==========   =========



 

Company Contact Information:
Itzhak Zion, CFO
Tel: +972-3-928-0777
Email:  investors@rrsat.com  

External Investor Relations Contacts:
Ehud Helft / Porat Saar
Tel: 1-646-233-2161
rrsat@ccgisrael.com

 


 

SOURCE RRSat Global Communications Network Ltd




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