OMER, Israel, January 29 /PRNewswire-FirstCall/ --
Fourth Quarter 2008 Highlights (compared to fourth quarter 2007)
- Revenues increase 34% reaching $22.0 million
- Operating income increases 38% to $5.0 million
- Adjusted EBITDA increases 39% to $5.8 million
- Reiterate 2009 revenue guidance of over $100 million
and introduce first quarter 2009 guidance
RRsat Global Communications Network Ltd. (NASDAQ: 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 fourth quarter and full year ended December 31, 2008.
Fourth Quarter 2008 Results:
Revenues for the fourth quarter of 2008 totaled $22.0 million, an increase of 34% compared to $16.3 million in the fourth quarter of 2007.
Backlog of signed agreements, as of December 31, 2008, reached $185.7 million, an increase from the $178.5 million backlog of signed agreements as of September 30, 2008.
Operating income for the fourth quarter of 2008 totaled $4.5 million, a 38% increase compared to $3.3 million in the fourth quarter of 2007.
Net income on a GAAP basis for the fourth quarter of 2008 was $3.6 million, an increase of 13% compared to $3.2 million in the fourth quarter of 2007. Net income per diluted share on a GAAP basis was $0.21, compared to $0.18 in the fourth quarter of 2007.
Adjusted EBITDA for the fourth quarter of 2008 totaled $5.7 million, an increase of 39% compared to $4.2 million in the fourth quarter of 2007.
Adjusted net income for the fourth quarter of 2008 totaled $2.8 million, compared to $3.6 million in the fourth quarter of 2007. Net income for the quarter was impacted by higher tax expense incurred following the strengthening of the US dollar against the Israeli shekel during the period, resulting in an appreciation of the Company's US dollar cash balance relative to the shekel. This appreciation in the cash balance is viewed as a taxable gain by the Israeli tax authorities. Adjusted net income per diluted share, which was similarly impacted by the higher tax expense, totaled $0.17, compared to $0.21 in the fourth quarter of 2007.
Cash, cash equivalents and marketable securities as at December 31, 2008 were $46.6 million, compared with $61.9 million as at September 30, 2008. During the quarter, the Company generated $3.7 million in operating cash flow, paid out the balance of $12.6 million for the acquisition of the Emek Ha'ela Teleport and distributed a dividend of $5 million to our shareholders.
Full Year 2008 Results:
Revenues for the full year 2008 totaled a record $79.0 million, an increase of 33% compared to $59.2 million in 2007. Operating income for 2008 totaled $15.0 million, a 25% increase compared to $12.0 million in 2007. Net income on a GAAP basis for 2008 was $13.4 million, an increase of 18% compared to $11.4 million in 2007. Adjusted EBITDA for 2008 totaled $19.3 million, an increase of 26% compared to $15.4 million in 2007. Adjusted net income for 2008 totaled $12.9 million, an increase of 5% compared to $12.3 million in 2007.
David Rivel, CEO of RRsat commented, "2008 was a year of major achievements and expansion for RRsat. Throughout the year our revenues increased to close to $80 million, we presented sequential quarterly increases in our gross profit and operating income, all, while continuing to generate cash on a steady and ongoing basis. Throughout 2008 we continued to expand our business, commencing a total of 60 new contracts, including 21 of which were follow-on contracts with existing customers, bringing the total number of channels we broadcast to 500. We culminated the year with a new record backlog of $185.7 million granting us good visibility well into 2009, a key asset in the current macro-economic environment. 2008 was also a milestone year in terms of business expansion. We acquired two important teleports, expanding our global presence to North America, while further enhancing our local base by acquiring a major strategically-located teleport."
"Looking ahead to 2009, we will continue to seek to enhance our customer base and navigate the current environment by further leveraging our premier global network, broad and diverse customer base, international reach and strong cash position. We are reiterating our 2009 annual revenues guidance to surpass $100 million, with revenues in the first quarter of 2009 expected to be in the range of $22.8 - $23.3 million." concluded Mr. Rivel.
Conference Call Information
Conference call scheduled later today, January 29, 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: 1-866-345-5855
UK Dial-in Number: 0-800-404-8418
Israel Dial-in Number: 03-918-0609
International Dial-in Number: +972-3918-0609
at: 9:00 am Eastern Time; 6:00 am Pacific Time; 2:00 pm UK Time; 4:00 pm
Israel Time
A replay of the call will be available from the day after the call. The 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 replay dial one of the following: 1-888-782-4291 (US) and +972-3-925-5925 (International).
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, other income (expenses), net, and adding non-cash equity-based compensation charge, 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 provides these services to more than 500 television and radio channels, covering more than 150 countries. Visit the company's website http://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, and (iv) our ability to report future successes. 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, 2007 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
2008 2007 2008 2007
Revenues $ 78,993 $ 59,221 $ 21,954 $ 16,332
Cost of revenues 53,499 38,419 14,706 10,769
Gross profit 25,494 20,802 7,248 5,563
Operating expenses
Sales and marketing 3,892 3,017 1,074 842
General and administrative 6,582 5,767 1,680 1,466
Total operating expenses 10,474 8,784 2,754 2,308
Operating income 15,020 12,018 4,494 3,255
Interest and marketable
securities income 1,111 2,631 15 720
Currency fluctuation and
other financing
income (expenses), net 177 329 (153) 211
Changes in fair value of
embedded currency
conversion derivatives 1,342 (646) 1,188 (420)
Other income, net 10 4 (2) -
Income before taxes on
income 17,660 14,336 5,542 3,766
Income taxes 4,228 2,932 1,957 553
Net income $ 13,432 $ 11,404 $ 3,585 $ 3,213
Income per Ordinary Share
Basic income per Ordinary
Share 0.78 0.66 0.21 0.19
Diluted income per Ordinary
Share 0.77 0.65 0.21 0.18
Weighted average number of
Ordinary Shares used to compute
basic income per
Ordinary Share 17,290,099 17,249,710 17,300,109 17,271,941
Weighted average number of
Ordinary Shares used to compute
diluted income per
Ordinary Share 17,399,375 17,418,180 17,350,765 17,472,282
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 Dec-31 Dec-31
2008 2007 2008 2007
Reconciliation of Net Income
to Adjusted Net
Income:
Net income - as reported $ 13,432 $ 11,404 $ 3,585 $ 3,213
Non-cash equity-based
compensation charge 415 411 103 102
Changes in fair value
of embedded currency
conversion derivatives (1,342) 646 (1,188) 420
Change in deferred tax on
embedded derivatives 362 (181) 320 (115)
Adjusted net income $ 12,867 $ 12,280 $ 2,820 $ 3,620
Adjusted net income per
diluted ordinary share $ 0.74 $ 0.71 $ 0.16 $ 0.21
Reconciliation of Net
Income to Adjusted EBITDA:
Net income - as reported $ 13,432 $ 11,404 $ 3,585 $ 3,213
Interest and marketable
securities income (1,111) (2,631) (15) (720)
Currency fluctuation and
other financial
(income) expenses, net (177) (329) 153 (211)
Changes in fair value of
embedded currency
conversion derivatives (1,342) 646 (1,188) 420
Other income, net (10) (4) 2 -
Income tax expense 4,228 2,932 1,957 553
Non-cash equity-based
compensation charge 415 411 103 102
Depreciation and amortization 3,971 2,979 1,201 810
Adjusted EBITDA $ 19,406 $15,408 $ 5,798 $ 4,167
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Balance Sheets
In thousands except share data
As of As of
Dec-31 Dec-31
2008 2007
Current assets
Cash and cash equivalents $ 34,749 $ 28,409
Marketable securities 6,102 28,291
Accounts receivable:
Trade (net of provision for doubtful
accounts of $1,882 and $2,188 as of
December 31, 2007 and 2008 respectively) 11,227 10,421
Other 417 518
Related parties - 14
Fair value of embedded currency
conversion derivatives 2,234 1,303
Deferred taxes 552 711
Prepaid expenses 1,390 919
Total current assets 56,671 70,586
Deposits and long-term receivables 1,791 1,104
Marketable securities 5,743 6,722
Other assets and prepaid expenses 7,897 1,025
Assets held for employee severance
payments 1,305 987
Fixed assets, at cost, less accumulated
amortization 25,971 14,966
Goodwill 3,734 -
Intangible Assets, at cost, less
accumulated depreciation
and amortization 1,375 -
Total assets $ 104,487 $ 95,390
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Balance Sheets (cont'd)
In thousands except share data
As of As of
Dec-31 Dec-31
2008 2007
Liabilities and shareholders' equity
Current liabilities
Accounts payable:
Trade $ 9,058 $ 5,040
Other 1,944 1,559
Fair value of embedded currency
conversion derivatives 1,205 1,616
Related parties 25 26
Deferred income 5,091 5,191
Total current liabilities 17,323 13,432
Long - term liabilities
Deferred income 6,689 5,169
Liability in respect of employee
severance payments 1,378 1,011
Deferred taxes 747 619
Total long - term liabilities 8,814 6,799
Total liabilities 26,137 20,231
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, 2007
and 2008; 17,286,762 and
17,306,783 shares issued and fully
paid as of December 31, 2007 and 2008) 40 40
Additional paid in capital 52,106 51,691
Retained earnings 26,309 23,429
Accumulated other comprehensive loss (105) (1)
Total shareholders' equity $ 78,350 $ 75,159
Total liabilities and shareholders'
equity $ 104,487 $ 95,390
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows
In thousands
Year ended Three months ended
Dec-31 Dec-31 Dec-31 Dec-31
2007 2008 2007 2008
Cash flows from operating activities
Net income $ 13,432 $ 11,404 $ 3,585 $ 3,213
Adjustments required to reconcile
net income to net cash provided
by operating activities:
Deprecation and amortization 3,971 2,971 1,201 802
Provision for losses in accounts
receivable 752 1,094 211 485
Deferred taxes 324 (329) 413 (169)
Discount accretion and premium
amortization of held- to- maturity
securities, net (635) (1,361) (70) (416)
Discount accretion and premium
amortization of available- for-
sale securities, net (246) (16) (68) (16)
Changes in liability for employee
severance payments, net 49 (10) (135) (121)
Capital gains on sale of fixed
assets, net (10) (4) 2 -
Expenses in relation to options
granted 415 411 103 102
Changes in fair value of embedded
currency conversion derivatives (1,342) 646 (1,188) 420
Changes in assets and liabilities:
Increase in accounts receivable
- trade (1,558) (1,328) (2,964) (1,596)
Decrease in related
parties, net 13 49 47 60
Decrease (increase) in accounts
receivable - other 101 279 (189) 568
Decrease (increase) in prepaid
expenses (472) (696) (459) 175
Increase in deposits and
long-term receivables (687) (86) (131) (292)
Increase in accounts payable 4,236 128 2,161 677
Increase in deferred income 1,420 2,423 1,126 761
Net cash provided by operating
activities $ 19,763 $ 15,575 $ 3,651 $ 4,653
RRsat Global Communications Network Ltd. and its Subsidiaries
Consolidated Statements of Cash Flows
In thousands
Year ended Three months ended
Dec-31 Dec-31 Dec-31 Dec-31
2008 2007 2008 2007
Cash flows from investing
activities
Investment in fixed assets $ (14,942) $ (5,352) $ (2,304) $ (1,314)
Investment in other assets (11,852) (1,033) (11,830) (28)
Investment in securities
available- for- sale (19,188) (3,048) - (3,048)
Investment in securities
held- to- maturity - (33,989) - 1,142
Decrease (increase) in
trading securities, net 2,427 (2,015) 394 842
Proceeds from securities
available- for- sale 17,980 1,062 13,980 1,062
Proceeds from securities
held- to- maturity 22,689 5,807 3,182 4,216
Proceeds from sale of
fixed assets 15 9 (2) (3)
Net cash used in investing
activities $ (2,871) $ (38,559) $ 3,420 $ (2,869)
Cash flows from financing activities
Increase in short term credit 0 (177)
Dividend paid $ (10,552) $ - $ (5,020) $ -
Net cash provided by (used in)
financing activities $ (10,552) $ - $ (5,020) $ (177)
Increase (decrease) in cash
and cash equivalents $ 6,340 $ (22,984) $ 2,051 $ 7,345
Balance of cash and cash
equivalents at beginning of
Period $ 28,409 $ 51,393 $ 32,698 $ 21,064
Balance of cash and cash
equivalents at end of Period $ 34,749 $ 28,409 $ 34,749 $ 28,409
A. Non-cash transactions
Investment in fixed assets $ 306 $ 138 $ 142 $ (75)
B. Supplementary cash flow
information
Income taxes paid $ 3,392 $ 3,650 $ 1,565 $ 711
Company Contact Information:
Gil Efron, CFO
Tel: +972-8-861-0000
investors@rrsat.com
External Investor Relations Contacts:
Ehud Helft / Kenny Green
Tel: +1-646-201-9246
info@gkir.com
