MELVILLE, N.Y., November 6, 2008 -- Chyron (NASDAQ: CHYR), a leading provider of Graphics as a Service for On Air, Online, Out of Home, and Mobile Applications, today announced its financial results for the third quarter and nine months ended September 30, 2008.
Key Financial Highlights:
Net income for the third quarter and nine months ended September 30, 2008 included a non-recurring income tax benefit of $16.4 million ($1.05 per share) and $16.9 million ($1.08 per share), respectively, from the reversal of a portion of the Company's valuation allowance for deferred tax assets, and an income tax provision of $0.3 million and $0.8 million, respectively. The Company recorded the income tax benefit based on its determination, at the end of the fiscal quarter, that it is more likely than not that most of its deferred tax assets previously reserved through a valuation allowance will be realized. The portion of the Company's deferred tax assets that it reversed the valuation allowance against relate to net operating loss carryforwards ("NOLs") and temporary differences that the Company expects will be realized by offsetting otherwise taxable income for U.S. federal tax purposes. In arriving at its determination to reverse the valuation allowance, the Company evaluated its expectations for current and future years' taxable income, and concluded that it is more likely than not that it will generate sufficient taxable income to fully realize the NOLs and other temporary differences. Net income of $0.9 million ($0.06 per share) and $1.6 million ($0.10 per share) for the third quarter and nine months ended September 30, 2007, respectively, did not reflect such an income tax benefit. The income tax benefit is a non-cash item in the three and nine month periods ended September 30, 2008. The future realization of the related deferred tax assets will result in the Company not having to pay income tax that it otherwise would.
For the third quarter ended September 30, 2008, revenues were $9.3 million, an increase of 7% from revenues of $8.7 million in the third quarter of 2007. Income before taxes for the third quarter of 2008 was $0.6 million as compared to $0.9 million for the prior year's third quarter, with most of the decrease due to lower net interest income, and a foreign exchange loss of $0.1 million in the third quarter of 2008 as opposed to a foreign exchange gain of $0.1 million in the third quarter of 2007. Net income for the quarter was $16.7 million, or $1.07 per share, as compared to $0.9 million, or $0.06 per share, in the third quarter of 2007. Adjusted EBITDA for third quarter 2008 was $1.1 million as compared to $1.2 million for the prior year's third quarter. The Company defines Adjusted EBITDA as GAAP net income plus interest, income tax expense (benefit), depreciation, amortization and non-cash share-based compensation expense. An explanation of management's use of this measure of results and a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure of net income is set forth at the end of this press release.
For the nine months ended September 30, 2008, revenues were $27.7 million, an increase of 20% from revenues of $23.0 million in the prior year period. Income before taxes for the nine months ended September 30, 2008 was $2.0 million, up 25% over the $1.6 million reported for the comparable 2007 period. Net income for the first nine months of 2008 was $18.1 million, or $1.16 per share, as compared to $1.6 million, or $0.10 per share, for the first nine months of 2007. Adjusted EBITDA for the nine month period ended September 30, 2008 was $3.5 million as compared to $2.3 million for the prior year's nine month period.
Michael Wellesley-Wesley, Chyron President and CEO, commented, "Over the past few years Chyron has made continued progress towards our goal of becoming the leading provider of digital graphics workflow solutions for broadcast, online and out of home applications, and this recent quarter was no different. We reported solid gains in revenue from the previous year, as well as another quarter of profitability. The worldwide shift from analog to digital television, as well as the adoption of high definition television, continue to be the primary drivers behind our growth. We believe that we will continue to benefit from these established trends because we offer systems and services that allow for easy content creation and which best showcase high-quality digital graphics in a most cost-effective way."
"One of the more exciting events for Chyron during the quarter was the use of our products in the 2008 Beijing Summer Olympics," Mr. Wellesley-Wesley said. "Our systems were used extensively by a number of major broadcasters to provide graphics content, such as score updates and eye-catching graphics throughout this magnificent sporting event. Another recent highlight is Gannett Broadcasting Group's successful deployment of our AXIS web-based content creation solutions across all 23 TV stations in the group. Today all Gannett TV stations news graphics are being created within AXIS. We believe that the return on investment case for AXIS is proving very compelling and we are experiencing great interest as a result."
Mr. Wellesley-Wesley continued, "While we expect that the global economy to slow significantly in 2009, we will continue to focus on our growth strategy in order to emerge stronger when the recovery takes hold. We will seek to gain market share in broadcast and online graphics content workflow solutions and expand the use and penetration of our AXIS online graphic creation platform. We believe that because our addressable market opportunity is no longer restricted to broadcast television we have additional opportunities for long-term success."
Conference Call and Webcast: Third Quarter Financial Results:
Chyron Corporation management will host a conference call on Friday, November 7, 2008, at 10:00 AM eastern time, to review the third quarter and nine month results. Participants using the telephone should dial (888) 713-4213 (U.S. and Canada) or (617) 213-4865 (International) and refer to passcode 56418922. Web participants are encouraged to go to either www.chyron.com or www.earnings.com at least 15 minutes prior to the start of the call to register, download, and install any necessary audio software. The replay numbers and passcode are (888) 286-8010 (U.S. and Canada) or (617) 801-6888 (International) and refer to passcode 92171604. The online archives will be available on both sites shortly after the conclusion of the call. Each replay will continue for seven days, through November 14, 2008.