It's probably safe to say that Pace Plc (LSE: PIC.L) has recovered from the problems that caused turmoil within the company's product lines and a management shakeup a couple years ago.
Pulli (Image source: Pace)
The British set-top box maker, ostensibly the world's leader in the set-top space, rode strong North American demand for media servers to a 31 percent increase in first half revenues to $1.38 billion versus $1 billion a year ago and said that demand for the products is now moving into Europe as well.
Revenue from North America was up 62 percent to $839 million, driven by demand for media servers and set-top boxes from DirecTV (Nasdaq: DTV), Comcast (Nasdaq: CMCSA) and AT&T (NYSE: T), the company reported.
It was the third consecutive half of strong cash generation, CEO Mike Pulli said in an earnings release.
In addition to revenues, Pace's basic earnings per share were up 221.6 percent to 16.4 cents and adjusted basic EPS was up 72.7 percent to 22.1 cents. Adjusted EBITDA was up 57 percent to $96.7 million and free cash flow was $92 million.
"Pace had a strong first half," Pulli said. "Revenue growth in the period was driven largely by the continuing demand for media server products in North America. We continue to make good headway on executing our strategy. Key wins of both integrated Pace solutions and next generation hardware with major customers along with ongoing operational improvements give management confidence that we will make further progress in the second half of 2013 and beyond."
In the product space, Pace said it shipped over two million advanced whole-home HD DVRs for DirecTV since its launch in June 2012 and that next-generation devices are now in production. Pace said it was selected by GCI to deploy a TiVo (Nasdaq: TIVO)-enabled media server solution and won deals with Liberty Global (Nasdaq: LBTYA) and Get TV, the press release said.
"The move to media servers is gaining speed beyond North America," the company noted in a business review. Liberty Global is providing them to "a number of their operations in Europe" and Get TV in Norway launched a whole home solution with the product marking the first media server deployment outside North America.
In the telecom space, Pace said that Brazilian telecom GVT selected its VDSL gateways.
Pace also reported that the "transformation (of its) supply chain is progressing well (with) 85 percent of volume with … core electronic manufacturing services (EMS) partners."
The supply chain took a disastrous hit several years ago when Japan was struck by a major earthquake, disrupting business and, in the end, resulting in a management shakeout that saw Pulli replace Neil Gaydon in the top spot.
Overall, Pace said, it is following the guidelines of a 2011 strategic review to "maintain leadership in hardware, widen out into software services and integrated solutions and transform the core economics of the group" and that "progress has been made against these goals in H1 2013 and we are … on track to achieve our medium-term target of 9 percent operating margin in 2015."
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