ADB Group (ADB, Osmosys, Vidiom) Reports Higher Revenues, Earnings for First Half

Submitted by tracyswedlow on August 6, 2009 - 1:40am

ADB Group, the parent company of interactive TV software specialists, Vidiom Systems and Osmosys, and set-top vendor, ADB, has released financial results for the first half of 2009:

Revenues totaled $183.2 million, up 7.8% from the year-ago period. The company said that the main drivers of growth were strong demand from the cable and satellite industries, primarily in Europe.
Gross profit rose to $68.6 million.
Gross margin reached 37.4% of revenue. According to the company, this figure "represents a return to more typical gross margin levels compared to the year before" and was "according to the Group expectations."
Operating expenses, including costs for research and development, totaled $53.5 million, down 10.1% from the year-ago period. The company said that the largest contributors to this decrease were greater operational efficiencies and cost control, combined with a favorable foreign exchange rate environment.
Earnings before interest and taxes were $12.4 million, or $1.63 per share, compared to $11.1 million, or $1.26 per share, for the year-ago period.
At the end of the first half, the company had a net cash position of $58.3 million, compared to $28.3 million at the end of the year-ago period. Total cash and cash reserves totaled $82.9 million, compared to $67.7 million at the end of the year-ago period and $71 million at the end of 2008.

"I am pleased with our overall results during the first half of 2009," ADB Group chairman and CEO, Andrew Rybicki, said in a prepared statement. "At the beginning of this year, there was a great deal of uncertainty with the overall macroeconomic situation. We were convinced that our business was resilient, but given the circumstances it was difficult to quantify this precisely. The first half of this year has justified our view. I am particularly pleased to note the vigilance to costs and operational efficiency which our staff is exercising, and for which I want to give full credit to them. This is an excellent starting point for the second half of 2009." The company says that it expects revenues to continue growing over the rest of the year and that it expects to "maintain an acceptable level of profitability."

The company also provided breakdowns of the performance of its hardware and software segments, as well as a geographical breakdown:

The Digital TV Equipment segment generated $180 million in revenues, and earnings before interest and taxes of $13.3 million. The company said that a significant driver of its overall revenue was the composition of its product mix: HD products contributed 82% of the entire mix, compared to 70% for the first half of 2008 and 75% for the full-year 2008. Standard- and high-definition DVR's represented 63% of the product mix, compared to 31% for the year-ago period and 41% for 2008 as a whole. Hybrid products--which the company said continued to gain momentum with pay-TV operators during the first half--contributed 78% of product sales revenue. All in all, the company said, advanced products accounted for 87% of its digital TV product sales revenue during the first half. The company said that the main driver of the segment's growth was strong demand from the cable (responsible for 50% of the company's revenue) and satellite (responsible for 22%) industries. Terrestrial products represented 10% of the company's revenues (note: the company today announced a DTT set-top deal with Spain's Ikusi) and IPTV 15%.
The Software and Services segment recorded revenues of $6.9 million, of which $3.2 million were intra-company sales. The segment recorded a loss before interest and taxes of $0.7 million after an exceptional non-cash charge of $0.8 million, substantially breaking even with its ordinary activities. The company says that it continues to streamline the activities of the segment, as part of a strategy of "aligning the overall Group resources."
The company said that its revenue growth came from Eastern Europe, the Middle East and Africa, as well as from the Americas. Western Europe contributed 60% of overall revenues, while Eastern Europe contributed 25%. The Middle East and Africa accounted for 8%, the Americas for 6%, and Asia-Pacific for 1%. The company added that "it is worth noting that the IPTV segment demand in the United States of America contributed to the growth, thus bringing one of the Group's US IPTV distributors for the first time into the top-10 customers lists."

Europe