Last checked at 29 May 2008 07:45
Orad Hi-Tec Systems Ltd. ('Orad' or the 'Company')
Results for the first quarter of 2008
Revenues up by 62%, net profits up by 714%
Record revenues and profits with continued positive cash flow.
Revenues increased by 62% to US$7.7 million compared to US$ 4.7million in Q1/07 and by 12% compared to Q4/07.
Net profits increased by 714% to US$ 952 thousand compared to US$117 thousand in Q1/07 and by 35% compared to Q4/07.
Cash, cash equivalents and restricted cash increased to US$14.5million
Gross margin remained constant at 65%, in line with the average of 2007.
Significant improvement of sales in the Americas and continues successful penetration to the On-Air graphics market.
"We are proud to present the results for the first quarter of 2008", said Avi Sharir President and CEO of Orad and continued: "We continue to see the benefits of the company's change in strategy, to secure growth in sales and booking of the On-Air graphics systems and improvement in North American market. Since the beginning of 2008 the company has signed some high profile and high volume projects, such as the graphics systems for the Olympic Games with China's CCTV, and projects with Czech national TV, MTV3 from Finland and others.
The transition from standard definition to high definition and the pressure to reduce production costs is creating a demand for new virtual studios solutions. Since the beginning of 2008, Orad has signed a unique virtual studios contract with Canada's Global TV, with TV Globo from Brazil, the European Parliament and others. Part of the above mentioned projects were realised during Q1 of 2008".
For further information:
| Orad (www.orad.tv) Ehud Ben-Yair, CFO
| + 972 976 768 62 |
| Edicto Investor Relations Dr. Sonke Knop, Frankfurt Germany
| + 49 608494859-1 |
| Shore Capital (London) Graham Shore
| + 44 20 7408 4090 |
Orad Hi-Tec Systems Ltd ('Orad' or the 'Company')
Results for the first quarter of 2008
Financial and Operational highlights for the first quarter of 2008 compared to the first quarter of 2008 and fourth quarter of 2007:
Revenues, net profit and cash status:
Revenues in Q108 increased by 62% to US$7.7 million compared to US$4.7million on Q12007 and by 12% compared Q4/07. This is mainly due to the strong back-log, the on-going penetration to the On- Air graphics market and the winning of several large contracts.
Net profit increased dramatically by 714% to US$952 thousand compared to Q1/07 and by 35% compared to Q4/07.
In the first quarter of 2008 cash, cash equivalents and restricted cash increased to US$14.5 million.
The table below reflects the trend in the last five quarters:
| (in thousand USD) | Q1 7 | Q2/07 | Q3/07 | Q4/07 | Q1/08 |
| Revenue | 4,743 | 5,193 | 6,128 | 6,876 | 7,668 |
| Gross Profit | 3,221 | 3,602 | 3,917 | 4,354 | 5,005 |
| Net profit | 117 | 332 | 621 | 706 | 952 |
| Cash status | 10,629 | 11,443 | 13,306 | 14,050 | 14,543 |
Gross Margin
Gross margin for the first quarter of 2008 remained constant at 65% compared to the average gross margin in 2007.
Operational expenses:
Operational expenses in Q1/08 increased to US$4.1 million compared to US$3.1 million in Q1/07. This is mainly due to the increase in the sales and marketing efforts resulting from increasing territory coverage and the continued R&D effort deployed to release new applications to the market. The decline in the USD in all markets also put some pressure on the cost structure of the Company. However, the company also benefits from the fact that most of its sales are in Europe.
| (in thousand USD) | Q1/07 | Q4/07 | Q1/08 |
| Research and Development | 776 | 961 | 964 |
| Sales and Marketing | 1,904 | 2,195 | 2,471 |
| General and Administrative | 491 | 663 | 745 |
| Total Operating Expenses: | 3,171 | 3,819 | 4,180 |
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
| March 31, | December 31, | |||
| 2008 | 2007 | |||
| Unaudited | ||||
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | $13,454 | $12,981 | ||
| Restricted cash | 1,089 | 1,069 | ||
| Trade receivables, net | 2,585 | 1,869 | ||
| Other accounts receivable and prepaid expenses | 1,582 | 1,163 | ||
| Inventories | 2,963 | 2,920 | ||
| Work in process, net of advances from customers | - | 78 | ||
| Total current assets | 21,673 | 20,080 | ||
| SEVERANCE PAY FUND | 1,428 | 1,343 | ||
| PROPERTY AND EQUIPMENT, NET | 1,771 | 1,753 | ||
| Total assets | $24,872 | $23,176 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Trade payables | $2,447 | $2,115 | ||
| Deferred revenues | 1,964 | 2,280 | ||
| Other accounts payable and accrued expenses | 6,276 | 5,718 | ||
| Total current liabilities | 10,687 | 10,113 | ||
| ACCRUED SEVERANCE PAY | 2,065 | 1,950 | ||
| Total liabilities | 12,752 | 12,063 | ||
| SHAREHOLDERS' EQUITY: | ||||
| Share Capital | 29 | 29 | ||
| Additional paid-in capital | 75,530 | 75,475 | ||
| Foreign currency translation adjustments | (547) | (547) | ||
| Accumulated deficit | (62,892) | (63,844) | ||
| Total shareholders' equity | 12,120 | 11,113 | ||
| Total liabilities and shareholders' equity | $24,872 | $23,176 |
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
| | | Three months ended March 31, | | Year ended December 31, | ||
| | | 2008 | | 2007 | | 2007 |
| | | Unaudited | | | ||
| | | | | | | |
| Revenues: | | | | | | |
| Sales | | $7,668 | | $4,743 | | $22,940 |
| | | | | | | |
| Cost of sales | | 2,663 | | 1,522 | | 7,846 |
| | | | | | | |
| Gross profit | | 5,005 | | 3,221 | | 15,094 |
| | | | | | | |
| Operating expenses: | | | | | | |
| Research and development, net | | 964 | | 776 | | 3,207 |
| Sales and marketing | | 2,471 | | 1,904 | | 8,474 |
| General and administrative | | 745 | | 491 | | 2,207 |
| | | | | | | |
| Total operating expenses | | 4,180 | | 3,171 | | 13,888 |
| | | | | | | |
| Operating income | | 825 | | 50 | | 1,206 |
| Financial income, net | | 127 | | 70 | | 573 |
| Other expenses, net | | - | | 3 | | (4) |
| | | | | | | |
| Net income | | $952 | | $117 | | $1,775 |
| | | | | | | |
| Basic net earnings per share | | $0.086 | | $0.01 | | $0.16 |
| | | | | | | |
| Weighted average number of shares used in computing basic net earnings per share (in thousands) | | 10,821 | | 10,802 | | 10,821 |
| | | | | | | |
| Diluted net earnings per share | | $0.086 | | $0.01 | | $0.16 |
| | | | | | | |
| Weighted average number of shares used in computing diluted net earnings per share (in thousands) | | 11,084 | | 10,971 | | 10,982 |
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands, except share data
| Number of outstanding ordinary shares | Share capital | Additional paid-in capital | Foreign currency translation adjustments | Accumulated deficit | Total | |||||||
|
| ||||||||||||
| Balance as of January 1, 2007 | 10,800,621 | $28 | $75,357 | $(547) | $(65,619) | $9,219 | ||||||
| Comprehensive income: | ||||||||||||
| Net income | - | - | - | - | 1,775 | 1,775 | ||||||
| Issuance of shares upon exercise of employee share options | 19,929 | 1 | 22 | - | - | 23 | ||||||
| Share based compensation | - | - | 96 | - | - | 96 | ||||||
| Balance as of December 31, 2007 | 10,820,550 | 29 | 75,475 | (547) | (63,844) | 11,113 | ||||||
| Comprehensive income: | ||||||||||||
| Net income | 952 | 952 | ||||||||||
| Issuance of shares upon exercise of employee share options | ||||||||||||
| Share-based compensation | - | - | 55 | - | - | 55 | ||||||
| Balance as of March 31, 2008 (unaudited) | 10,820,550 | 29 | 75,530 | (547) | (62,892) | 12,120 | ||||||
| Balance as of January 1, 2007 |
10,800,621 | 28 | 75,357 | (547) | (65,619) | 9,219 | ||||||
| Comprehensive income: | ||||||||||||
| Net income | - | - | - | - | 117 | 117 | ||||||
| Issuance of shares upon exercise of employee share options | 1,500 | *) - | 3 | - | - | 3 | ||||||
| Share-based compensation | - | - | 20 | - | - | 20 | ||||||
| Balance as of March 31, 2007 (unaudited) | 10,802,121 | 28 | 75,380 | (547) | (65,502) | 9,359 |
*) Represent an amount lower than $ 1.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
| Three months ended March 31, | Year ended December 31, | ||||||||||||
| 2008 | 2007 | 2007 | |||||||||||
| Unaudited | |||||||||||||
| Cash flows from operating activities: | |||||||||||||
| Net income | $952 | $117 | $1,775 | ||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||
| Depreciation | 158 | 142 | 545 | ||||||||||
| Share-based compensation | 55 | 20 | 96 | ||||||||||
| Increase (decrease) in trade receivables, net | (716) | 435 | 553 | ||||||||||
| Decrease in other accounts receivable and prepaid expenses | (419) | (122) | (326) | ||||||||||
| Increase in inventories | (43) | (21) | (384) | ||||||||||
| Decrease in work in process, net of advances from customers | 15 | 290 | 442 | ||||||||||
| Increase (decrease) in trade payables | 332 | (334) | 761 | ||||||||||
| Increase in other accounts payable and accrued expenses | 621 | 395 | 951 | ||||||||||
| Increase in accrued severance pay, net | 30 | 29 | 121 | ||||||||||
| Increase (decrease) in deferred revenues | (316) | 81 | 439 | ||||||||||
| Other | - | 3 | - | ||||||||||
| Net cash provided by in operating activities | 669 | 1,035 | 4,973 | ||||||||||
| Cash flows from investing activities: | |||||||||||||
| Purchase of property and equipment | (176) | (80) | (656) | ||||||||||
| Proceeds from sale of property and equipment | - | 9 | 48 | ||||||||||
| Decrease (increase) in restricted cash | (20) | (511) | 498 | ||||||||||
| Net cash provided by (used) investing activities | (196) | (582) | 1,106 | ||||||||||
| Cash flows from financing activities: | |||||||||||||
| Issuance of shares upon exercise of employees share options | - | 3 | 23 | ||||||||||
| Net cash provided by financing activities | - | 3 | 23 | ||||||||||
| Increase in cash and cash equivalents | 473 | 456 | 3,890 | ||||||||||
| Cash and cash equivalents at the beginning of the period | 12,981 | 9,091 | 9,091 | ||||||||||
| Cash and cash equivalents at the end of the period | $13,454 | $9,547 | $12,981 | ||||||||||
| Non-cash transactions: | |||||||||||||
| Classification between property and equipment, and inventories, net | - | - | 160 | ||||||||||
a. The Company's shares and options held by members of the Board of Directors and officers of the Company:
| Number of | Number of | |||
| Ordinary shares | share options *) | |||
| Avi Sharir | 2,143,238 | 269,253 | ||
| Moshe Nissim | - | 40,000 | ||
| Ehud Ben-Yair | - | 60,000 | ||
| Orna Nehustan | - | 45,000 | ||
| Dan Falk | - | 20,000 | ||
| Shimon Ravid | - | 10,000 | ||
| Uzi Peled | - | 10,000 | ||
| Daniel Furman | 753,300 | 10,000 | ||
| Anat Segal | - | 20,000 |
*) Each share option is convertible into one Ordinary share.
b. As of March 31, 2008, the Company employs 159 employees.
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