Circa Reports Sales and Operating results for Second Quarter Ended June 30, 2010
Wednesday, August 11, 2010
Return to News & Media ReleasesCalgary, AB – Circa Enterprises Inc. (CTO-TSXV) (the "Company" or "Circa"), a manufacturer of equipment for the telecommunication, electrical utility, and construction industries, reports results of operations for the second quarter ended June 30, 2010 and the issuance of common shares under a share acquisition plan.
SECOND QUARTER RESULTS
Summary of second quarter operating results:
-
Consolidated sales of $6.8 million were 1% less than the second quarter 2009 sales of $6.9 million
-
Adjusted EBITDA of $0.8 million for the quarter compared to $0.5 million in the second quarter of 2009 (see below for calculation of Adjusted EBITDA)
-
Net income of $0.5 million or $0.05 per share, as compared to a net loss of $0.3 million or $0.04 per share in the second quarter of 2009
-
Operating cash flow increased $0.5 million to $0.2 million compared to the second quarter of 2009
Summary of year-to-date operating results:
-
Consolidated sales of $12.1 million for the six-month period ended June 30, 2010, which were 6% lower than the six-month period ended June 30, 2009, sales of $12.9 million
-
Adjusted EBITDA of $1.0 million for the six-month period ended June 30, 2010 compared to negative $0.2 million for the six-month period ended June 30, 2009 (see below for calculation of Adjusted EBITDA)
-
Net income of $0.6 million or $0.06 per share as compared to a net loss of $1.0 million or $0.10 per share for the first six months of 2009
-
Debt reduction of over $0.6 million during the six month period ended June 30, 2010
Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization and is adjusted for other non-recurring items and non-cash items, including asset impairment charges and restructuring costs. Adjusted EBITDA is a non-GAAP financial measure and does not have any standardized meaning prescribed by Canadian generally accepted accounting principles and is, therefore, unlikely to be comparable to similar measures presented by other issuers. Management believes that EBITDA is a useful supplemental measure, which provides an indication of the results generated by Circa's primary business activities prior to consideration of how those activities are financed, amortized or taxed. Readers are cautioned, however, that EBITDA should not be construed as an alternative to net earnings (loss) determined in accordance with GAAP as an indicator of the Company's financial performance. Adjusted EBITDA is calculated by the Company as follows:
|
|
(unaudited)Three months ended June 30, 2010 |
(unaudited) Three months ended June 30, 2009 |
(unaudited) Six months ended June 30, 2010 |
(unaudited) Six months ended June 30, 2009 |
|
|
$ |
$ |
$ |
$ |
|
Net earnings (loss) and comprehensive earnings (loss) |
502 |
(338) |
574 |
(985) |
|
Provision for (recovery of) income taxes |
151 |
82 |
217 |
(151) |
|
Interest |
27 |
28 |
45 |
58 |
|
Depreciation and amortization |
104 |
103 |
199 |
209 |
|
Foreign currency translation loss (gain) |
(14) |
244 |
(49) |
203 |
|
Restructuring costs |
- |
392 |
- |
450 |
|
|
770 |
511 |
986 |
(216) |
Circa’s consolidated sales in the second quarter of 2010 were $6.8 million -- a $0.1 million or 1% less than over the same period in 2009 -- the decline in sales were attributable to a decrease in the surge protection division. The decrease in the quarter was largely driven by the exchange rate as the bulk of this division’s sales are denominated in US dollars and the US dollar weakened compared to the Canadian dollar when compared to the prior year. Sales in the Circa Metals business increased in the quarter compared to the prior year.
The Company’s gross profit, defined as sales less cost of sales, was consistent in the second quarter of 2010 at $1.7 million compared to the prior year. Both sales and margins were relatively consistent, despite a slightly different product mix compared to the prior year.
The cost reductions in 2009 from the Company’s restructuring efforts, which involved streamlining operations, reductions in the cost of certain raw materials, moving product manufacturing offshore and the consolidating operations have allowed the Company to achieve positive earnings from operations for the second straight quarter. These restructuring changes helped improve net earnings from a loss of $0.3 million in Q2 2009 to net earnings of $0.5 million in Q2 2010. The Company was able to boost Adjusted EBITDA from $0.5 million in Q2 2009 to $0.8 million in Q2 2010.
CIRCA ENTERPRISES INC.
Consolidated Balance Sheets
(000’s of Canadian dollars)
Unaudited
|
As at
|
June 30, 2010 |
December 31, 2009 |
|
|
$ |
$ |
|
ASSETS |
|
|
|
Current |
|
|
|
Cash |
153 |
350 |
|
Accounts receivable |
4,017 |
3,588 |
|
Income taxes recoverable |
- |
58 |
|
Inventory |
5,605 |
5,842 |
|
Prepaid expenses |
263 |
295 |
|
|
10,038 |
10,133 |
|
Property, plant and equipment |
990 |
1,086 |
|
Assets held for sale |
105 |
105 |
|
Deferred charges |
224 |
286 |
|
Intangible assets |
19 |
17 |
|
Future income taxes |
616 |
782 |
|
|
11,992 |
12,409 |
|
|
|
|
|
LIABILITIES |
|
|
|
Current |
|
|
|
Bank indebtedness |
2,749 |
3,391 |
|
Accounts payable and accrued liabilities |
2,093 |
2,476 |
|
Current income taxes |
60 |
- |
|
|
4,902 |
5,867 |
|
Future income taxes |
12 |
38 |
|
|
4,914 |
5,905 |
|
SHAREHOLDERS' EQUITY |
|
|
|
Share capital |
2,710 |
2,710 |
|
Contributed surplus |
2 |
2 |
|
Retained earnings |
4,366 |
3,792 |
|
|
7,078 |
6,504 |
|
|
11,992 |
12,409 |
CIRCA ENTERPRISES INC.
Consolidated Statements Operations and Retained Earnings
(000’s of Canadian dollars, except per share amounts)
Unaudited
|
|
Three months ended June 30, 2010 |
Three months ended June 30, 2009 |
Six months ended June 30, 2010 |
Six months ended June 30, 2009 |
|
|
$ |
$ |
$ |
$ |
|
SALES |
6,817 |
6,885 |
12,088 |
12,904 |
|
COST OF SALES |
|
|
|
|
|
Direct costs |
5,128 |
5,160 |
9,210 |
10,396 |
|
Depreciation and amortization |
37 |
45 |
75 |
90 |
|
|
1,652 |
1,680 |
2,803 |
2,418 |
|
EXPENSES |
|
|
|
|
|
Selling, general and administrative |
909 |
1,211 |
1,882 |
2,723 |
|
Depreciation and amortization |
67 |
58 |
124 |
119 |
|
Restructuring costs |
- |
392 |
- |
450 |
|
Interest |
27 |
28 |
45 |
58 |
|
Loss on disposal of assets |
10 |
3 |
10 |
1 |
|
Foreign currency translation (gain) loss |
(14) |
244 |
(49) |
203 |
|
|
999 |
1,936 |
2,012 |
3,554 |
|
EARNINGS (LOSS) BEFORE INCOME TAXES |
653 |
(256) |
791 |
(1,136) |
|
PROVISION FOR (RECOVERY OF) INCOME TAXES |
|
|
|
|
|
Current |
30 |
(232) |
77 |
(192) |
|
Future |
121 |
314 |
140 |
41 |
|
|
151 |
82 |
217 |
(151) |
|
NET EARNINGS (LOSS) AND COMPREHENSIVE EARNINGS (LOSS) |
502 |
(338) |
574 |
(985) |
|
RETAINED EARNINGS, BEGINNING OF PERIOD |
3,864 |
4,376 |
3,792 |
5,023 |
|
RETAINED EARNINGS, END OF PERIOD |
4,366 |
4,038 |
4,366 |
4,038 |
|
EARNINGS (LOSS) PER SHARE |
|
|
|
|
|
Basic and diluted |
0.05 |
(0.04) |
0.06 |
(0.10) |
CIRCA ENTERPRISES INC.
Consolidated Statements of Cash Flows
(000’s of Canadian dollars)
Unaudited
|
|
Three months ended June 30, 2010 |
Three months ended June 30, 2009 |
Six months ended June 30, 2010 |
Six months ended June 30, 2009 |
|
|
|
$ |
$ |
$ |
$ |
|
|
CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES: |
|
|
|
|
|
|
OPERATING |
|
|
|
|
|
|
Net earnings (loss) |
502 |
(338) |
574 |
(985) |
|
|
Adjustments for: |
|
|
|
|
|
|
Depreciation and amortization |
104 |
103 |
199 |
209 |
|
|
Loss on disposal of assets |
10 |
3 |
10 |
1 |
|
|
Stock compensation expense |
- |
5 |
- |
5 |
|
|
Future income taxes |
121 |
314 |
140 |
41 |
|
|
|
737 |
87 |
923 |
(729) |
|
|
Changes in non-cash working capital |
(491) |
(330) |
(444) |
390 |
|
|
|
246 |
(243) |
479 |
(339) |
|
|
FINANCING |
|
|
|
|
|
|
(Decrease) increase in bank indebtedness |
(374) |
676 |
(642) |
791 |
|
|
INVESTING |
|
|
|
|
|
|
Purchase of property, plant and equipment |
(36) |
(7) |
(50) |
(32) |
|
|
Proceeds from sale of property, plant and equipment |
- |
- |
- |
6 |
|
|
Additions to deferred charges |
- |
(9) |
- |
(41) |
|
|
Additions to intangible assets |
- |
(1) |
(3) |
(6) |
|
|
Changes in non-cash working capital |
5 |
(2) |
19 |
(24) |
|
|
|
(31) |
(19) |
(34) |
(97) |
|
|
NET (DECREASE) INCREASE IN CASH |
(159) |
414 |
(197) |
355 |
|
|
CASH, BEGINNING OF PERIOD |
312 |
196 |
350 |
255 |
|
|
CASH, END OF PERIOD |
153 |
610 |
153 |
610 |
|
COMMON SHARES ISSUED UNDER ACQUISITION PLAN
On August 11, 2010 the Company issued an aggregate of 62,500 common shares to its directors pursuant to the Company's share acquisition plan at a deemed price of $0.40 per share in lieu of the cash annual retainer otherwise payable to such directors.
Circa Enterprises Inc. is a public company with offices in Alberta, Ontario and Florida. The outstanding common shares of Circa Enterprises Inc. are listed and trade on the TSX Venture Exchange under the trading symbol CTO. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The Company's first quarter financial statements and related management's discussion and analysis have been filed with certain securities regulatory authorities in Canada and may be accessed electronically through the SEDAR website at www.sedar.com and the Company's website at www.circaent.com.
Contact:
Mr. Cory Tamagi
VP Finance and CFO
Circa Enterprises Inc.
(403) 258-2011
investor@circaent.com
www.circaent.com