1st Quarter Results
Orad Hi-Tec Systems
16 May 2006
Orad Hi-Tec Systems Ltd. ('Orad' or the 'Company')
Results for the quarter ended 31 March 2006
Tel Aviv, May 16th, 2006 - Orad Hi-Tec Systems Ltd. (Frankfurt - Prime Standard;
London - AIM. Symbol: OHT), a leading developer, marketer and distributor of
state-of-the-art, 3D graphical solutions for the broadcasting, advertising and
visual simulation markets, today announced its results for the quarter ended 31
March 2006.
• Second consecutive quarter of profitability and third consecutive quarter
of positive cash-flow
• Revenues increased by 23% to $4.3 million from $3.5 million in Q1/05
• Gross margin of 58%
• Net profit of $0.1 million compared to a net loss of $1.1 million in Q1/05
• Net profit per share of $0.01
• Positive cash flow of $2.5 million in Q1-2006
• Increased back-log and improving the presence of the sport systems.
We are proud to present the results for the first quarter of 2006. As we
anticipated at the end of last year the results for this quarter are an
improvement on the first quarter of 2005, commented Avi Sharir, Orad's
President and Chief Executive Officer, and added: Despite the fact that the
first quarter is traditionally weak, we maintained profitability, achieved
positive cash flow and increased our backlog.
For further information:
Orad (www.orad.tv)
Ehud Ben-Yair, CFO 00 972 976 768 62
Shore Capital (London)
Graham Shore 00 44 20 7408 4090
Haubrok IR GmbH (Frankfurt) 00 49 211 301 260
Michael Kempkes
Orad Hi-Tec Systems Ltd ('Orad' or the 'Company')
Results for the quarter ended 31 March 2006
Chief Executive's Statement
Revenues for the first quarter of 2006 were $4.3 million, compared to $3.5
million in the first quarter of 2005 and $4.7 million in the fourth quarter of
2005. Gross margin in the first quarter of 2006 was 58% and the net profit
amounted to $0.1 million.
'The first quarter is traditionally weaker. In addition some of the new
agreements planned to be recognized in Q1/06 have been delayed to Q2/06.Despite
this fact, we are experiencing a general increase in our sales volume and
profitability. This is our third quarter with positive cash flow generated from
our internal resources. The backlog for 2006-7 has significantly increased
compared to the backlog a year ago' commented Avi Sharir, Orad's President and
Chief Executive Officer
Financial & Operational Highlights for the quarter ended 31 March 2006 compared
to the same period in 2005:
General:
The company has reclassified certain expenses which in 2005 were previously
recorded as general and administrative (G&A) , to Sales and Marketing (S&M),
Research and Development (R&D) and Cost of good sold in order to reflect better
the allocation of certain costs. The influence on the profit and Loss accounts
for Q1 2005 and for Q4 2005 is a decrease of G&A in the amount of $0.2 million ,
an increase of $0.13 million in cost of good sold, an increase of $0.04 million
in R&D and an increase of $0.03 million in S&M.
The company has also reclassified certain costs from the Sales and Marketing
expenses to the Cost of good sold in order to reflect better the allocation of
these costs. The influence on the Profit and Loss accounts of Q1 2005 and Q4
2005 was a decrease of S&M by $0.2 million and an increase in by the same
amount in the Cost of good sold.
These changes had no affect on the operating loss (income), on the net income
(loss) and on the basic and diluted earning (loss) per share of Q1 2005 and Q4
2005 as well as on the year 2005.
Revenues
The revenues for the first quarter of 2006 were $4.3 million, compared to $3.5
million for the first quarter of 2005, an increase of23%.
Gross Margin
Gross margin for the first quarter of 2006 was 58%, compared to 47% in the first
quarter of 2006, mainly as a result of different sales mix and the increase in
sales volume.
Research & Development
Research and development ('R&D') expenses were $0.7 million in the first quarter
of 2006, the same as in the first quarter of 2005.
Selling & Marketing
Selling and Marketing ('S&M') expenses were $1.5 million in the first quarter of
2006, compared to $1.4 million in the first quarter of 2005,
General & Administrative
General & Administrative ('G&A') expenses were $0.3 million in the first quarter
of 2006, compare to $0.4 million in the first quarter of 2005.
Financial income (expenses)
Financial income consists of exchange rate differences related to non-US dollar
balances and interest income earned on cash and cash equivalents offset by bank
charges. Financial income for the first quarter of 2006 was $0.1 million,
compared to financial expenses of $0.2 million in the first quarter of 2005. The
financial income in the first quarter of 2006 has been derived mainly from
exchange rate differences resulting from strengthening of the Euro against the
US Dollar during the period and an the increase in the interest rate on US
dollar deposits.
Net Profit/ (Loss)
Net profit for the first quarter of 2006 was $0.1 million, compared to net loss
of $1.1 million for the first quarter of 2005. The decrease in losses is due to
the increase in sales and gross profit, decrease in operational expenses and
increase in financial income.
Net Profit/ (loss) per share
Net profit per share for the first quarter of 2006 was $0.01, compared to a net
loss per share of $0.1for the first quarter of 2005.
Financial & Operational Highlights for the first quarter of 2006 compared to the
fourth quarter of 2005:
Revenues
Revenues for the first quarter of 2006 amounted to $4.3 million, compared to
$4.7 million in the fourth quarter of 2005.
Gross Margin
Gross margin in the first quarter of 2006 is 58% the same as in the fourth
quarter of 2005
Research & Development
R&D expenses in the first quarter of 2006 were $0.7 million, compared to $0.6
million in the fourth quarter of 2005.
Selling & Marketing
S&M expenses in the first quarter of 2006 were $1.5 million compared to $1.4
million in the fourth quarter of 2005,.
General & Administrative
G&A expenses were $0.3 million in the first quarter of 2006, compare to 0.4 in
the fourth quarter of 2005.
Financial income (expenses)
Financial income consists of exchange rate differences related to non-US dollar
balances and interest income earned on cash and cash equivalents offset by bank
charges. Financial income for the first quarter of 2006 was $0.1 million,
compared to financial expenses of $0.01 million in the fourth quarter of 2005.
The difference is largely as a result of exchange rate differences resulting
from strengthening of the Euro against the US Dollar, and from an increase in
the interest rate on the US Dollar deposits.
Net profit
Net profit for the first quarter of 2006 amounted to $0.1 million, compared to
$0.3 million in the fourth quarter of 2005.
Net profit per share
Net profit per share for the first quarter of 2006 was $0.01 compared to a net
profit per share of $0.02 for the fourth quarter of 2005
Cash Position.
As of March 31, 2006, cash and short-term bank deposits amounted to $8.3 million
compared to $5.8 million at the end of 2005 (an increase of $2.5 million)
Contact:
Orad Hi-Tec Systems Ltd.
Ehud Ben-Yair
Chief Financial Officer
PO Box 2177
Kfar Saba 44425, Israel
Tel: +972-9-767-6862
Fax: +972-9-767-6861
E-Mail: ehudb@orad.tv
www.orad.tv
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
December 31, March 31,
2005 2006
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,338 $ 8,029
Restricted cash 500 250
Trade receivables, net 3,754 2,553
Other accounts receivables and prepaid expenses 719 825
Inventories 2,817 2,766
Work in process, net of advances from customers 466 474
Total current assets 13,594 14,897
SEVERANCE PAY FUND 817 852
PROPERTY AND EQUIPMENT, NET 1,914 1,758
Total assets $ 16,325 $ 17,507
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 1,262 $ 1,369
Deferred revenues 1,201 2,880
Other accounts payables and accrued expenses 4,182 3,380
Total current liabilities 6,645 7,629
ACCRUED SEVERANCE PAY 1,173 1,232
SHAREHOLDERS' EQUITY:
Share capital 28 28
Additional paid-in capital 75,281 75,288
Accumulated other comprehensive loss (547) (547)
Accumulated deficit (66,255) (66,123)
Total shareholders' equity 8,507 8,646
Total liabilities and shareholders' equity $ 16,325 $ 17,507
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Year ended Three months ended
December 31, March 31,
2005 2005 2006
Unaudited
Revenues:
Product sales $ 14,485 $ 3,468 $
4,276
Long-term contracts 916 - -
Total revenues 15,401 3,468 4,276
Cost of revenues:
Cost of product sales *) 6,646 1,849 1,783
Cost of long-term contracts 1,047 - -
Total cost of revenues 7,693 1,849 1,783
Gross profit 7,708 1,619 2,493
Operating expenses:
Research and development, net *) 2,451 676 650
Sales and marketing *) 6,078 1,418 1,510
General and administrative *) 1,754 428 325
Total operating expenses 10,283 2,522 2,485
Operating income (loss) (2,575) (903) 8
Financial income (expenses), net (316) (170) 131
Other expenses, net - 5 7
Net income (loss) $ (2,891) $ (1,078) $ 132
Basic net earnings (loss) per share $ (0.27) $ (0.10) $ 0.01
Diluted net earnings (loss) per share $ (0.27) $ (0.10) $ 0.01
Weighted average number of shares used in computing basic 10,781 10,779 10,791
net earnings (loss) per share (in thousands)
Weighted average number of shares used in computing 10,781 10,779 10,813
diluted net earnings (loss) per share (in thousands)
*) Reclassified- see note a
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
U.S. dollars in thousands, except share data
Number of Share Additional Accumulated Accumulated Total
outstanding paid-in other deficit
ordinary capital capital comprehensive
shares income (loss)
Balance as of January 1, 2005 10,750,726 $ 28 $ 75,241 $ (547) $ (63,364) $ 11,358
Comprehensive loss:
Net loss - - - - (2,891) (2,891)
Total comprehensive loss (2,891)
Issuance of earn-out shares 28,645 *) - 31 - - 31
Issuance of shares upon 11,250 *) - 9 - - 9
exercise of employees' share
options
Balance as of December 31, 2005 10,790,621 28 75,281 (547) (66,255) 8,507
Comprehensive income:
Net income - - - - 132 132
Total comprehensive income 132
Share-based compensation - - 7 - - 7
Balance as of March 31, 2006 10,790,621 28 75,288 (547) (66,123) 8,646
(unaudited)
Balance as of January 1, 2005 10,750,126 $ 28 $ 75,241 $ (547) $ (63,364) $ 11,358
Comprehensive loss:
Net loss - - - - (1,078) (1,078)
Total comprehensive loss (1,078)
Balance as of March 31, 2005 10,750,126 $ 28 $ 75,241 $ (547) $ (64,442) $ 10,280
(unaudited)
*) Represent an amount lower than $ 1.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended Three months ended
December 31, March 31,
2005 2005 2006
Unaudited
Cash flows from operating activities:
Net income (loss) $ (2,891) $ (1,078) $ 132
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation 623 167 140
Share based compensation - - 7
Decrease in trade receivables, other accounts receivable 591 674 1,095
and prepaid expenses
Decrease in inventories 591 274 45
Decrease (increase) in work in process, net of advances 597 (57) (8)
from customers
Increase (decrease) in trade payables, other accounts 429 (204) (671)
payable and accrued expenses and accrued severance pay, net
Increase (decrease) in deferred revenues 460 (157) 1,679
Other 31 5 7
Net cash provided by (used) in operating activities 431 (376) 2,426
Cash flows from investing activities:
Purchase of property and equipment (231) (145) (16)
Proceeds from sale of property and equipment 127 10 31
Decrease in restricted cash 250 250 250
Net cash provided by investing activities 146 115 265
Cash flows from financing activities:
Issuance of shares upon exercise of employees' share 9 - -
options
Net cash provided by financing activities 9 - -
Increase (decrease) in cash and cash equivalents 586 (261) 2,691
Cash and cash equivalents at the beginning of the period 4,752 4,752 5,338
Cash and cash equivalents at the end of the period $ 5,338 $ 4,491 $ 8,029
Supplemental disclosure of cash flows activities:
Cash received during the period for:
Interest, net $ 109 $ 22 $ 53
a. The company reclassified certain expenses which in 2005 were recorded
in the general and administrative expenses ('G&A') and sales and marketing
expenses ('S&M') to other operating expenses and to the cost of product sales
('COS'). The influence on the consolidated statements of operations for the
three months ended March 31, 2005 is a decrease of the G&A in the amount of $0.2
million, an increase of $0.33 million in COS, an increase of $0.04 million in
research and development costs ('R&D') and a decrease of $0.17 million of S&M.
The influence on the consolidated financial statements for the year ended
December 31, 2005 was a decrease in G&A of $0.8 million, an increase of $1.4
million of COS, an increase of $0.2 million in R&D and an decrease of $0.8 in S&
M. These changes had no effect on the reported operating loss, net loss and
basic and diluted loss per share.
b. The Company's shares and options held by members of the Board of Directors
and officers of the Company:
Number of Number of
Ordinary share
shares options *)
Avi Sharir 2,143,238 184,932
Daniel Furman 753,300 -
Moshe Nissim - 20,000
Ehud Ben-Yair - 25,000
Orna Nehustan - 20,000
Amos Horev - 10,000
Dan Falk - 10,000
Anat Segal - 10,000
*) Each share option is convertible into one Ordinary share.
c. As of March 31, 2006, the Company employs 114 employees.
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