Publication on November 16, 2017, before market opening Regulated information - Press release quarterly results

EVS Broadcast Equipment S.A.: Euronext Brussels (EVS.BR), Bloomberg (EVS BB), Reuters (EVSB.BR)

EVS REPORTS THIRD QUARTER 2017 RESULTS

3Q17 highlights

  • Revenue of EUR 26.3 million, -10.7% compared to 3Q16 (excl. event rentals and at constant currency)

  • Opex decrease by 4.0% compared to a high 3Q16 that included one-time elements

  • EBIT margin of 21.2%

  • Net profit of EUR 3.8 million, EPS of EUR 0.28

    9M17 highlights

  • Revenue of EUR 79.0 million, -15.7% compared to 9M16 (excl. event rentals and at constant currency)

  • Operating expenses under control (+0.5% compared with 9M16)

  • EBIT margin of 23.3%

  • Net profit of EUR 12.9 million, EPS of EUR 0.95

    Gross interim dividend of EUR 0.50 per share

    Outlook

  • Order book of EUR 25.2 million on October 31, 2017 (to be invoiced in 2017)

    +55.6% compared to 2016, -19.7% compared to 2015 (last uneven year);

  • Additional order book of EUR 25.0 million for 2018 and beyond, including EUR 10.5 million of big event rentals

  • Revenue in 2017 is expected to be between EUR 115 million and EUR 125 million

  • Opex are expected to grow moderately in 2017

    KEY FIGURES

    Unaudited

    EUR millions, except earnings per share expressed in EUR

    Unaudited

    3Q17

    3Q16

    3Q17/3Q16

    9M17

    9M16

    9M17/9M16

    26.3

    37.1

    -29.3%

    Revenue

    79.0

    103.8

    -23.8%

    18.5

    28.3

    -34.6%

    Gross margin

    56.8

    78.0

    -27.2%

    70.5%

    76.3%

    -

    Gross margin %

    71.9%

    75.2%

    -

    5.6

    14.8

    -62.2%

    Operating profit - EBIT

    18.4

    39.7

    -53.6%

    21.2%

    39.7%

    -

    Operating margin - EBIT %

    23.3%

    38.3%

    -

    3.8

    10.5

    -64.2%

    Net profit (Group share)

    12.9

    28.0

    -54.0%

    0.28

    0.78

    -64.2%

    Basic earnings per share (Group share)

    0.95

    2.07

    -54.1%

    COMMENTS

    "While we expected higher revenue in 3Q17, we confirm our 2017 revenue guidance taking into account the existing pipeline. On the medium term, we are very pleased to see that our investments in innovation and to increase the agility of the organization are starting to bear fruits. Indeed, our new product ranges presented at the IBC tradeshow have generated strong interest from existing and new customers, and our developments around artificial intelligence are considered as pioneering by the industry", said Muriel De Lathouwer, Managing Director and CEO of EVS.

    Commenting on the results and prospects, Yvan Absil, CFO, said: "Our third quarter revenue of EUR 26.3 million reflects different dynamics in our activities, such as a continued soft environment in the US. Our third quarter has also been impacted by some contracts deliveries moving to the last quarter of the year, without changing the global dynamic. With a lower level of sales, but with operating expenses that remain under control, we posted a EBIT margin of 21.2%, and EPS amounted to EUR 0.28. The order book remains solid. For 2017, we expect revenue to be between EUR 115 million and EUR 125 million, and opex to grow moderately compared to 2016."

    Revenue in the 3Q17 and 9M17

    3Q17

    3Q16

    %3Q17/ 3Q16

    Revenue - EUR millions

    9M17

    9M16

    % 9M17/ 9M16

    26.3

    37.1

    -29.3%

    Total reported

    79.0

    103.8

    -23.8%

    26.6

    37.1

    -28.4%

    Total at constant currency

    79.0

    103.8

    -23.9%

    25.9

    29.0

    -10.7%

    Total at constant currency and excluding big event rentals

    77.3

    91.7

    -15.7%

    EVS revenue amounted to EUR 26.3 million in 3Q17, a 29.3% decrease (-10.7% at constant currency and excluding big event rentals) compared to 3Q16. Sales of solutions in Outside broadcast vans represented 53.2% of the total group sales. Studio & others sales represented 44.1% of total sales, and big events represented 2.7% in 3Q17.

    In 9M17, EVS revenue reached EUR 79.0 million, a decrease by 23.8% (-15.7% at constant currency and excluding the big event rentals) compared to 9M16. In the first nine months, Outside Broadcast vans represented 60.6%, Studio & others 37.2% and Big events rentals 2.2%.

    Geographically, sales (excl. big event rentals) are distributed in 9M17 as follows:

    • Europe, Middle-East and Africa ("EMEA"): EUR 36.9 million

    • "Americas": EUR 20.6 million

    • Asia & Pacific ("APAC"): EUR 21.5 million

Third quarter 2017 results

Consolidated gross margin was 70.5% for 3Q17, compared to 76.3% in 3Q16 due to lower sales and a less favorable sales mix. Operating expenses decreased by 4.0% compared to 3Q16 that included some one-time elements in the Selling & Administrative expenses, and despite the acceleration in developments in some areas. This leads to a 3Q17 EBIT margin of 21.2%. Group net profit amounted to EUR 3.8 million in 3Q17, compared to EUR 10.5 million in 3Q16. Basic net profit per share amounted to EUR 0.28 in 3Q17, compared to EUR 0.78 in 3Q16.

First nine months 2017 results

Consolidated gross margin was 71.9% for 9M17, compared to 75.2% in 9M16 due to lower sales. Operating expenses grew by 0.5% yoy, and remain under control. The Other income mainly relates to the reversal of a debt booked for the earn out portion of the acquisition of SVS at the end of 2014 (see note 5.11). This leads to a 9M17 EBIT margin of 23.3% (21.7% excluding other income). Group net profit amounted to EUR 12.9 million in 9M17, compared to EUR 28.0 million in 9M16. Basic net profit per share amounted to EUR 0.95 in 9M17, compared to EUR 2.07 in 9M16.

Staff

At the end of September 2017, EVS employed 482 people (FTE), compared to 481 at the end of 2016.

Balance sheet and cash flow statement

Total equity represented 68.9% of total balance sheet at the end of September 2017. Inventories amounted to EUR 15.3 million, including around EUR 3.0 million value of own equipment used for R&D and demos of EVS products. In the liabilities, provisions include mainly the provision for technical warranty on EVS products for labor and parts.

Lands and building mainly include the new headquarters in Liège. Depreciation is approximately EUR 2.1 million on a full year basis. Liabilities include EUR 16.2 million financial debt (including long term and short term portion of it), mainly relating to the new building. The company started to repay it in 2015 with installment of around EUR 5.2 million reimbursement per year.

The net cash from operating activities amounted to EUR 2.0 million in 9M17, mainly due to lower sales and the timing of tax payments in 2017. On September 30, 2017, the group balance sheet showed EUR 40.0 million in cash and cash equivalents.

At the end of September 2017, there were 13,625,000 EVS outstanding shares, of which 105,771 were owned by the company. At the same date, 197,100 warrants were outstanding with an average strike price of EUR 41.16 and an average maturity in September 2018.

Interim dividend

Given the solid balance sheet of the company, the Board of Directors has decided to pay an interim gross dividend of EUR 0.50 per share (or EUR 0.35 net per share after deduction of 30% withholding tax). The ex-date for Coupon # 25 is November 28, 2017, and the payment date is November 30, 2017.

2017 outlook

The order book (to be invoiced in 2017) on October 31, 2017 amounts to EUR 25.2 million, which is +55.6% compared to EUR 16.2 million last year, or -19.7% compared to 2015 (last uneven year).

In addition to this order book to be invoiced in 2017, EVS already has EUR 25.0 million of orders (including EUR 10.5 million of big event rentals) to be invoiced in 2018 and beyond.

Considering the 9M17 revenue and taking into account the existing pipeline, we confirm the guidance of 2017 revenue in the EUR 115 million to EUR 125 million range for 2017, with no major big sporting event. We also forecast a moderate increase of our operating expenses to sustain our efforts in innovation and acceleration of new product developments.

Conference call

EVS will hold a conference call in English today at 3:00 pm CET for financial analysts and institutional investors. Other interested parties may join the call in a listen-only mode. The presentation used during the conference call will be available shortly before the call on the EVS website.

Dial-in numbers: +44 (0)20 7162 9960 (United Kingdom), +32 (0)2 290 17 04 (Belgium), +1 646 851 2094 (United States) Conference call ID: 963130

Corporate Calendar:

Tuesday November 28, 2017: interim dividend: ex-date Wednesday November 29, 2017: interim dividend: record date Thursday November 30, 2017: interim dividend: payment date Thursday February 22, 2018: FY17 results

Wednesday May 9, 2018: 1Q18 results

Tuesday May 15, 2018: Ordinary General Meeting Thursday August 30, 2018: 2Q18 results

Thursday November 15, 2018: 3Q18 results

For more information, please contact:

Yvan ABSIL, CFO

Geoffroy d'OULTREMONT, Vice President Investor Relations & Corporate Communication

EVS Broadcast Equipment S.A., Liege Science Park, 13 rue du Bois Saint-Jean, B-4102 Seraing, Belgium Tel: +32 4 361 70 14. E-mail:corpcom@evs.com; www.evs.comwww.evs.com

Forward Looking Statements

This press release contains forward-looking statements with respect to the business, financial condition, and results of operations of EVS and its affiliates. These statements are based on the current expectations or beliefs of EVS'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. EVS 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.

About EVS

EVS provides its customers with reliable and innovative technology to enable the production of live, enriched video programming, allowing them to work more efficiently and boost their revenue streams. Its industry-leading broadcast and media production systems are used by broadcasters, production companies, post- production facilities, film studios, content owners and archive libraries around the globe. It spans four key markets - Sports, Entertainment, News and Media.

Founded in 1994, its innovative Live Slow Motion system revolutionized live broadcasting. Its reliable and integrated tapeless solutions, based around its market- leading XT server range, are now widely used to deliver live productions worldwide. Today, it continues to develop practical innovations, such as its C-Cast second- screen delivery platform, to help customers maximize the value of their media content.

The company is headquartered in Belgium and has 20 offices in Europe, the Middle East, Asia and North America. Around 500 EVS professionals sell its branded products in over 100 countries, and provide customer support globally. EVS is a public company traded on Euronext Brussels: EVS, ISIN: BE0003820371. For more information, please visit www.evs.com.

Condensed consolidated financial statements ANNEX 1: CONDENSED CONSOLIDATED INCOME STATEMENT

(EUR thousands)

Annex

9M17

Unaudited

9M16

Unaudited

3Q17

Unaudited

3Q16

Unaudited

Revenue

5.3

79,045

103,776

26,254

37,138

Cost of sales

-22,233

-25,761

-7,736

-8,809

Gross profit

56,812

78,015

18,518

28,328

Gross margin %

71.9%

75.2%

70.5%

76.3%

Selling and administrative expenses

-20,322

-21,076

-6,640

-7,192

Research and development expenses

-18,450

-17,500

-6,233

-6,221

Other income

1,293

1,091

38

22

Other expenses

-333

-328

-95

-134

Stock based compensation and ESOP plan

-579

-506

-15

-43

Operating profit (EBIT)

18,419

39,695

5,573

14,760

Operating margin (EBIT) %

23.3%

38.3%

21.2%

39.7%

Interest revenue on loans and deposits

38

5

27

-1

Interest charges

-292

-360

-117

-88

Other net financial income / (expenses)

5.6

-408

-499

79

9

Share in the result of the enterprise accounted for using the equity method

93

84

37

22

Profit before taxes (PBT)

17,850

38,924

5,600

14,702

Income taxes

5.7

-4,990

-10,951

-1,834

-4,195

Net profit

12,860

27,972

3,766

10,507

Attributable to :

Non controlling interest

Equity holders of the parent company

12,860

27,972

3,766

10,507

EARNINGS PER SHARE (in number of shares and in EUR)

9M17

Unaudited

9M16

Unaudited

3Q17

Unaudited

3Q16

Unaudited

Weighted average number of subscribed shares for the period less treasury

13,512,640

13,500,447

13,519,229

13,505,889

shares

Weighted average fully diluted number of shares

13,719,954

13,751,342

13,721,733

13,742,694

Basic earnings - share of the group

0.95

2.07

0.28

0.78

Fully diluted earnings - share of the group (1)

0.94

2.03

0.27

0.76

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(EUR thousands)

9M17

Unaudited

9M16

Unaudited

3Q17

Unaudited

3Q16

Unaudited

Net profit

12,860

27,972

3,763

10,507

Other comprehensive income of the period

-726

-124

-212

-29

Currency translation differences

Other increase/(decrease)

-447

-81

2

288

Total of recyclable elements

-1,173

-205

-210

259

Total comprehensive income for the period

11,687

27,767

3,553

10,766

Attributable to :

-

-

-

-

Non controlling interest

Group share

11,687

27,767

3,553

10,766

(1) Excluding 197,100 warrants that were not exercisable at the end of September 2017, fully diluted earnings per share in 9M17 would have been EUR 0.95.

EVS Broadcast Equipment SA published this content on 16 November 2017 and is solely responsible for the information contained herein.
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