Avigilon Q3 Results

Investment Analysis Clubs Saul’s Investing Discussions
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Third Quarter 2014 Financial Highlights:

* Record quarterly revenue, gross margin, net income, Adjusted EBITDA, Adjusted Earnings and Fully Diluted Adjusted Earnings Per Share

* Revenue was $71.0 million, an increase of 39% over Q3 2013 revenue of $51.2 million.

* Gross margin percentage was 57%, up from 53% a year earlier.

* Adjusted EBITDA was $15.7 million, a 27% increase over Q3 2013 Adjusted EBITDA of $12.4 million.

* Net income was $11.6 million, a 35% increase over Q3 2013 net income of $8.6 million.

* Adjusted Earnings were $11.2 million, a 20% increase over Q3 2013 Adjusted Earnings of $9.3 million.

* Fully Diluted Adjusted Earnings Per Share of $0.24, compared with $0.22 in Q3 2013.

“Avigilon delivered another record sales quarter in Q3, underpinned by particularly strong growth in the U.S. and EMEA, as well as robust sales of new products,” said Alexander Fernandes, founder, president, CEO and chairman of the Board of Avigilon. “Ongoing innovation remains a key pillar of our strategy to increase market share. In the third quarter we had several important new product introductions, including the low cost HD Video Appliance series, Avigilon Control Center 5.4, and the HD dome and bullet cameras with adaptive video analytics. Avigilon continues to make substantial investments in the business, with an eye on continued profitability, as we grow toward our goal of $500 million in run-rate revenue by the end of 2016.”

http://ir.avigilon.com/Investor-Relations/News/News-Details/…

Neil
Long AVO

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The market mostly looks at earnings and these don’t seem to be keeping up with revenue growth.
If they do get to $500 million run rate the markets will still be looking mostly at profits. The company seems to be focusing on sales right now.

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The market mostly looks at earnings and these don’t seem to be keeping up with revenue growth.
If they do get to $500 million run rate the markets will still be looking mostly at profits. The company seems to be focusing on sales right now.

Yep. That’s the reason I haven’t added to my position. Next quarter (Dec 31) should also show poor earnings growth. If you believe management then next calendar year’s growth rate should look good. I still believe that optimal buy time may be next April/May…before the March 2015 results come out.

Chris

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Neil,

I am invested as AIOCF (rather than AVO) I don’t think that makes a material difference in the investment. I have bought three or four small allotments, at what has not proved the best timing. I am negative in my return by a little more than 12%. These are good numbers in this earnings report. I expect to see the value climb back up eventually. I wouldn’t mind a short-term jump in the stock price just for the ‘feel-good’ affect.

Two things:
1- They state a goal of $500 million in run-rate revenue over the next 25 months, by end of 2016. That is roughly a 7-fold increase to today, correct? These guys sure believe that they have great opportunity ahead.
2- I read an analyst report (somewhere?) that labels them outperform and a price target of $22 down from previous PT of $29. However, that is still nearly a 70% upside from where we are today.

Thanks for posting the info,
KLVanLiew

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They state a goal of $500 million in run-rate revenue over the next 25 months, by end of 2016. That is roughly a 7-fold increase to today, correct?

No, it’s about double. The $71 million in revenue is for the quarter, and they’re aiming for $500 million per year. If they can continue growing revenue at their current pace (39% per year), they’ll get there.

Neil

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Thanks for the correction.

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Wow, up 26% right now. I would not have expected that.

Neil

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Pretty thinly traded Neil, but it is QUITE a move.

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Neil,

In my novice ignorance, I did have the expectation of a marked move higher, and am glad for it. No, I did not peg a percentage of 10, 20, or 25. I have been finding that several of the companies that we discuss a lot on this board have big intra-quarter swings in share price. However, they also show general upward annual appreciation. Most of the companies are rock solid and growing. (a few ‘fliers’ are thrown in for good measure; eg. AEYE “batter up and swing for the fences!”) Pick your entry points in growing and profitable companies wisely (which I am learning to do better and better) and positive returns will come. Sometimes they come overnight and certainly they come over the years. Avigilon is doing great in their business and should be rewarded. When that happens, I as a co-owner am rewarded.

I’m rambling. I’m not telling you, nor probably anyone reading this, anything you don’t already know. I’m simply espousing in my own words some of the application of the great education that you, Saul, other Saulites, & greater Fooldom have given me.

Anyway, thanks and congratulations (if I remember right you had a recent entry point around $12).

Onward and Upward,
KLVanLiew

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Common guys show some excitements! Even when one of our stocks is up, we can’t believe it!!

The CEO is energized and he is brilliant! Listen to the conference call if you can and see how he handled the analysts. He is on top of his stuff and really know his company and market.

Conference:
http://seekingalpha.com/article/2640345-avigilons-aiocf-ceo-…

Pardeep Sangha with PI Financial - PI Financial
In order to reach $500 million run rate goal, do you need Latin America, Asia, China, do you need all these markets to really start ramping up significantly, or do you feel US, Europe, UK and those kinds of markets can pretty much get most of the way?
Alexander Fernandes - Founder, President and Chief Executive Officer
Obviously the EMEA and North America are our two main markets. And the answer is we could grow within our core markets, yes. But being maximizers and having our goal as a global company, we don’t want to limit ourselves. If we chose not to pursue these other more distant markets, the danger is you allow competitors to gain a foothold. And so for competitive reasons and just for good business reasons, it makes sense to go global and not just restrict ourselves. But North America and Europe provide ample growth.

Again, just to give perspective, by 2016, our total adjustable market will be approaching $30 billion if you factor in analytics, video surveillance as well as access control. And assuming we do $500 million, that’s a very small percentage of the global market. So there is massive growth opportunity both domestically and abroad.

The tone was aggressive from this analyst. Also, maybe the company is going to buy something soon.

Michael Urlocker - GMP Securities
Alex, I’m a little bit surprised at the kind of non-committal view of share buyback. I mean the stocks are roughly 50%. You are sitting on quite a healthy amount of cash. You generated cash in the quarter. In terms of offsetting earnings dilution, wouldn’t buying back shares be a very strong investment for the company?

Alexander Fernandes - Founder, President and Chief Executive Officer
Yes, but there are other factors that go into doing a buyback, Michael. I don’t know that we can get into all of them. But there are periods where for the same reasons, executives and directors cannot always be trading stock. As you’re aware, there’re black-outs that are imposed on insiders that are different than general black-outs. There are strategic considerations. If we can deploy the money and make an acquisition and generate greater shareholder value, then that’s generally is a better business decision than simply buying shares back. And then there is the timing of all these different activities.

And another aspect of it is if we do decide to do a buyback, I mean we have to disclose that to everyone at the same time. So I can’t just, from a legal governance perspective, speculate on things that may or may not happen. I mean we’ll make decisions at the appropriate times and we’ll disclose those decisions as they’re made.

LegoAbs

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Pretty thinly traded Neil, but it is QUITE a move.

For AIOCF, that’s true. But on its native Toronto Exchange (ticker AVO), it looks like 2.37M shares traded compared to an average daily volume of 433,000. So over 5 times normal volume.

Not that it means it can’t drop back down tomorrow :wink:

Neil
Long AVO

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some discussion of Avigilon on the New Paradigm investing board for those interested