Highlighting that sectors of the industry are in rude health at the moment, latest figures show that Chyron's second quarter 2006 revenues increased 48% and net income increased ten fold over the same quarter last year.
All told, for Q2 2006, Chyron generated net income of $1.7 million on revenues of $8.6 million. For the first half of 2006 the company reported net income of $1.2 million on revenues of $13.4 million.
Second quarter revenues of $8.6 million were $2.8 million or an impressive 48% higher than the $5.8 million reported for the comparable prior year's quarter. The revenues included approximately $0.2 million in sales from the company's ChyTV product line. The $1.7 million net income for the second quarter was the highest quarterly net income generated by the company in nearly 10 years, and represented a significant improvement over the net loss of $0.2 million reported for the comparable prior year's quarter. For the first half of the year, the company reported net income of $1.2 million, which compares to a $0.4 million net loss for the prior year's first half.
Gross margins for the second quarter were 67% compared to 65% in last year's comparable quarter, and for the first six months were 67% compared to 62% for the same period in 2005. The gross margin increases resulted from a combination of lower materials costs and product mix, with newer products providing higher average gross margins in 2006.
Michael Wellesley-Wesley, Chyron president and CEO, commented: "Our second quarter revenue growth and net income evidence strong year over year improvement as well as significant growth over the first quarter results. Although the second quarter benefited from orders that were delayed from the first quarter, the revenue turnaround was even stronger than I had expected and I am optimistic about the outlook for the remainder of the year. The revenue increase over the prior quarter was mainly due to strong domestic broadcast graphics systems sales. Domestic demand for these products continues at satisfactory levels and in the second half of 2006 I also expect a stronger performance in our international business as a result of new products we will showcase at the IBC tradeshow in Amsterdam in September.
"The strength in domestic demand for our broadcast graphics systems is particularly focused around our HyperX HD/SD switchable systems which offer our broadcast customers a highly flexible, scalable and cost effective migration path to high definition broadcasting. The transition to high definition television is a worldwide phenomenon with positive implication for Chyron's business. The gross margin improvement we experienced in the second quarter reflects this product mix as well as economies of scale derived from the higher sales volume. We will continue to seek out ways to increase the gross profit margin while maintaining tight control over operating expenses."
Operating profit of $1.7 million in the second quarter is after a $0.5 million operating loss by the company's ChyTV product line. For the first half of the year, operating profit of $1.2 million is after a $0.8 million operating loss by the ChyTV product line.
Referencing ChyTV, Mr. Wellesley-Wesley commented: "I expect ChyTV revenues to grow in the second half of 2006 as we successfully win multi unit enterprise level opportunities. With the imminent rollout of ChyTV.net, we will be in a position to offer potential video and digital signage customers a full service, web based solution to distributing information and messaging across multiple locations."