RRST

RRSat Global Communications Network Ltd. (RRST)

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Exchange: NASDAQ
Industry: Consumer Services
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RRSat Global Communications Network Ltd. (RRST)

Q4 2012 Earnings Call

March 11, 2013 9:00 am ET

Executives

Brett Maas – Investor Relations

Avi Cohen – Chief Executive Officer

Itzhak Zion – Chief Financial Officer

Analysts

Martin Yang – Oppenheimer Securities

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the RRSat Global Communications Network Fourth Quarter and Full Year 2012 Conference Call. At this time, all participants are in a listen-only mode. During today presentation there will be a question-and-answer session and instructions will be provided. (Operator Instructions).

And I would now like to turn the conference over to Mr. Brett Maas of Hayden IR. Please go ahead.

Brett Maas

Thank you, Operator. Good morning everyone and thanks for joining us. We are excited to start working together with RRST and its impressive management team. We will be reaching out to shareholders over the next few weeks and we’d like to take this opportunity to request you, contact us if you wish to be added to our distribution list or require more info on the company. I can be reached at brett@haydenir.com.

Joining us today on the call is Mr. Avi Cohen, CEO; Mr. Itzhak Zion, CFO; and Mr. Lior Rival, VP Sales and Marketing. Following the prepared statements by management, we will open the call to question-and-answer session. I would like to remind our listeners that comments made today will contain forward-looking statements and management may make additional forward-looking statements in response to your questions. Such written or oral disclosures are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Please note that the Safe Harbor statement in today’s press release only applies to this conference call. Please also note that the results presented today includes results that are on a non-GAAP basis. A full reconciliation table of the non-GAAP measures to GAAP measures can be found in the Company's press release issued earlier today. If you have not received it, please contact us at 646-536-7331 or 917-607-8654.

And with that, I’d like to turn the call over to Avi Cohen, CEO of RRSat. Avi, please go ahead.

Avi Cohen

Thank you, Brett. Good day everyone and welcome to our conference call. We are glad to start working with Hayden and MS IR team and we are confident that together we will be able to enhance shareholder value and expand our outreach to investors globally. We would also like to take this opportunity to thank our previous IR team [CCG] for working with us and supporting us for many years.

We reported today a record finish to a record year, delivering our highest ever revenue for both the quarter and full year period. Our gross and operating margin reached 10 quarters highest. Across the board our financial metrics demonstrates that this was a successful year concluding with an excellent fourth quarter. Clearly we are on track producing year-over-year improvements in our key financial metrics, and I certainly believe that our focus will enable us to further improve on this financial performance.

In the fourth quarter, we continued our sequential revenue growth reaching $29.4 million, while overcoming some competitive negative currency effects upon which Itzhak will elaborate later.

We increased our backlog while maintaining our average consolidation building an expanding base of contracted long-term recurring business and finally we again managed to sequentially increase our EBITDA, and a strong balance sheet providing resources to fuel our growth well into the future including a selected potential few strategic investments which are further discussed during the call and which should further improve profitability.

As most of you know, I joined RRSat last year on July 1, I am fortunate to have taken over such a strong business, strategically positioned to benefit from the continued positive trends in our industry.

Television viewership particularly in the United States has continued to increase in the recent years, while in parallel new means of viewing content such as Internet streaming, grew in popularity. Even with an increasing array of streaming and online entertainment option available to consumers, the amount of traditional television watching by consumer is growing especially when it comes to sports and specialized events.

High definition TV popularity and by the way the emerging promise of Ultra HD or also known as 4K over the not too distant horizon also creates challenges for our industry. Challenges that RRsat is uniquely positioned to address. As a result we continue to experience strong interest in our services, leading to new consumer wins for digital media broadcasting services.

Let me speak briefly about Ultra HD or 4K, the next generation of high quality television. Over the next few years, the average size of television sets will likely to become steadily larger, requiring larger number of dots to fill up the screen. On 9 inch screen, HD picture viewed from the distance of 20 meters will be viewed as pixelated image, the desire for high quality TV entertainment is the main driver for the trend towards HD and Ultra HD, this continuing trend will contribute to our revenues in the coming years.

The recent report by Deloitte claims that by year-end 24k television set models will be available and during this year, a range of content will become available as well. 4K is four times the resolution of high definition television, and in terms more sophistication in terms of the technical solution. It also requires a tremendous demand of bandwidth, which is one of the major bottlenecks to offer a 4K services.

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