20-20 Technologies Reports First Quarter Results for Fiscal 2010
LAVAL, QC, March 16 /CNW Telbec/ - 20-20 Technologies Inc. (TSX: TWT), the world leader in 3D interior design and furniture manufacturing software, today announced its results for the first quarter ended January 31, 2010. All amounts are in US dollars unless otherwise indicated.
First Quarter Highlights
- Revenues stood at $16.6 million, up 6.3%
- Overall license sales increased by 15.0% largely fuelled by residential
sector
- EBITDA of $2.5 million or 15.3%
- Net earnings of $0.5 million or $0.02 per share, compared with
$0.2 million, or $0.01 per share, in first quarter of 2009
- Cash position increased to $22.2 million from $10.6 million last year
Revenues
First quarter revenues increased by 6.3% to $16.6 million compared with $15.6 million a year ago. The improvement was due to favorable currency exchange rates (4.6%) and organic growth (1.7%) in the context of relatively stable market conditions.
North America accounted for 51.1% of revenues or $8.5 million for 2010, representing a 1.4% increase year-over-year, largely attributable to improving market conditions in the residential sector offset by a week commercial sector. Europe accounted for 45.6% of revenues or $7.6 million for 2010, an increase of $0.6 million or 7.9% over last year, essentially from favorable exchange rates. International revenues accounted for $0.6 million or 3.3% compared $0.2 million or 1.5% in 2009.
Starting in the first quarter of 2010, management will be reporting four revenue types. With the expected growth in subscription based agreements, recurring licenses will be reported separately from maintenance and other recurring services. This will also allow readers to identify revenues as either one-time or recurring in nature.
Maintenance and other recurring services continued to perform relatively well supported by last year's license revenues with an increase of 6.9% to $7.4 million and 10.8% to $7.7 million taking into account the impact of foreign exchanges. First quarter revenues from perpetual license sales increased by 9.9% to $4.6 million and by 15.2% to $4.8 million, including currency fluctuations. Recurring licenses increased by 10.7% to $1.1 million and by 14.3% with exchange rates. Professional services revenues declined in all sectors due to fewer projects underway, including less catalog updates, by 20.6% to $2.8 million and by 15.3% to $3.0 million with the impact of foreign exchanges.
Excluding the impact of currency fluctuations, revenues from the residential sector increased by 11.0%. The success of 20-20 Virtual Planner in a subscription based model increased residential recurring license sales by 34.0%. On a constant dollar basis, revenues in manufacturing were down by less than 1.0% as new manufacturing projects initiated during the quarter were responsible for an 18.4% increase in license sales revenues.
Operating income was $1.5 million compared with $1.6 million last year. In the first quarter of 2009, the Company recorded a $0.4 million recovery of restructuring costs. In addition, unfavorable exchange rates had a negative impact of $0.4 million on the first quarter of 2010. EBITDA of $2.5 million for the quarter was flat when compared to 2009 and matched the highest level attained in the past nine quarters.
The Company generated net earnings of $0.5 million for the quarter, or $0.02 per share, compared with $0.2 million, or $0.01 per share, a year ago.
The balance sheet improved significantly over 2009 with cash, cash equivalents and short-term investments totaling $22.2 million at the end of the quarter compared with $10.6 million last year. Long-term debt, including installments due within one year, was $17.7 million compared with $11.9 million for the same period in 2009.
"We regard the rising trend in license sales on a sequential or year-over-year basis during the first quarter as an indication of building momentum in the recovery," said Jean-François Grou, Chief Executive Officer. "Specifically our increased sales of 20-20 Virtual Planner and manufacturing solutions represent a clear departure from our experience of the last few quarters. Such sales demonstrate that our larger customers on both the retail and manufacturing sides have begun to re-invest".
Outlook
"Throughout 2010 we expect the market to continue a gradual recovery," said Jean-François Grou. "We see among our clients a general readying for a progressive return to normal levels of business activity and growth. Many of them have signaled that they are poised to make targeted investments in add-on products or to enter new niches of the business."
"While challenges certainly remain, and as we persist in strict operational efficiencies to protect our margins, we will also be implementing our long-term strategic plan to maximize the ongoing growth of our industry-leading end-to-end solution," indicated Mr. Grou.
"The open platform and business model now under development provides one of many reasons why we are looking forward with great confidence. Our recent partnership agreements with Cadsoft and Alpha-Vision to enter the Home Builder market are concrete examples of an efficient way to leverage combined assets, knowledge and relationships to accelerate the business development of our partners and ourselves for the benefits of our respective customer bases" indicated Jean Mignault, Executive Chairman and Chief of Strategic Direction.
Conference Call Information
20-20 will host a conference call to discuss the first quarter results March 16, 2010 at 2 p.m. (EDT). The call will be accessible by telephone at 514-807-9895 and 1-888-231-8191. An audio replay of the conference call will be available until midnight, March 23, 2010. To access it, dial 1 800-642-1687 and enter the pass code: 60671759.
Please note that 20-20 Technologies' full financials and MD&A are available on SEDAR as well as on the Company's web site, www.2020technologies.com .
About 20-20 Technologies Inc.
20-20 Technologies is the world's leading provider of computer-aided design, business and software solutions tailored for the interior design and furniture industries. Dealers and retailers use its desktop and Web-based products and solutions for the residential and commercial markets. 20-20 offers a unique proprietary end-to-end solution, integrating the entire breadth of functions in interior design. It provides a bridge for data communication from the point-of-sale to manufacturing and world-leading enterprise resource planning (ERP) systems, including computer-aided engineering and plant floor automation software. Operating in twelve countries with more than 500 employees, 20-20 is a publicly traded company (TWT) on the Toronto Stock Exchange (TSX). For more information, visit www.2020technologies.com.
Non-GAAP Measures
References in this press release to the term "EBITDA" are related to cash earnings. EBITDA is defined for these purposes as Operating Income before restructuring charges plus amortization and depreciation expenses. EBITDA is not a recognized measure under GAAP in Canada and may not be comparable to similar measures used by other companies.
Forward-Looking Statements
Certain statements contained in this news release constitute forward-looking information within the meaning of securities laws.
Implicit in this information, particularly in respect of future operating results and economic performance of the Company are assumptions regarding projected revenue and expenses. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general economic, market and business conditions and could differ materially from what is currently expected.
For more exhaustive information on these risks and uncertainties, please refer to our most recently filed annual information form, available at www.sedar.com. Forward-looking information contained in this report is based on management's current estimates, expectations and projections, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to do so, we are under no obligation and do not undertake to update this information at any particular time unless required by applicable securities law.
20-20 Technologies Inc.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of U.S. dollars)
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January 31, October 31,
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2010 2009
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(Unaudited) (Audited)
$ $
ASSETS
Current assets
Cash and cash equivalents 22,237 23,221
Accounts receivable 22,938 18,910
Income taxes receivable 6 24
Contracts in progress 168 253
Prepaid expenses 964 1,243
Future income taxes 501 421
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46,814 44,072
Property and equipment 2,272 2,322
Intangibles 8,541 9,099
Goodwill 58,838 58,161
Future income taxes 3,103 3,131
Other assets 711 451
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120,279 117,236
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LIABILITIES
Current liabilities
Bank loan 149 149
Accounts payable 10,393 11,040
Income taxes payable 1,196 1,674
Deferred revenue 17,745 14,665
Installment on long-term debt 2,586 3,024
Future income taxes 759 903
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32,828 31,455
Long-term debt 15,203 14,645
Leasehold inducements 327 343
Non-controlling interest 48 37
Future income taxes 3,640 3,853
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52,046 50,333
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
SHAREHOLDERS' EQUITY
Capital stock 58,582 58,582
Common stock options and warrants 1,362 1,279
Contributed surplus 1,015 1,015
Deficit (3,806) (4,268)
Accumulated other comprehensive income 11,080 10,295
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
7,274 6,027
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68,233 66,903
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120,279 117,236
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20-20 Technologies Inc.
CONSOLIDATED EARNINGS
(Amounts in thousands of U.S. dollars, except per share data)
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Three months ended
January 31
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2010 2009
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(Unaudited) (Unaudited)
$ $
Revenues 16,604 15,620
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Cost of revenues 4,268 4,077
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Gross margin 12,336 11,543
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Operating expenses
Sales and marketing 3,937 4,021
Research and development 3,301 3,178
General and administrative 3,498 2,810
Stock-based compensation 83 (103)
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10,819 9,906
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Operating income 1,517 1,637
Financial expenses 828 1,148
Non-controlling interest 10 (20)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Earnings before income taxes 679 509
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Income taxes
Current 699 324
Future (482) 6
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217 330
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Net earnings 462 179
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Earnings per share
Basic 0.02 0.01
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Diluted 0.02 0.01
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20-20 Technologies Inc.
CONSOLIDATED CASH FLOWS
(Amounts in thousands of U.S. dollars)
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Three months ended
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January 31
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2010 2009
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(Unaudited) (Unaudited)
$ $
OPERATING ACTIVITIES
Net earnings 462 179
Non-cash items
Amortization 1,024 929
Leasehold inducements (20) 11
Stock-based compensation 83 (113)
Capitalized interest on long term debt 25 7
Non-controlling interest 10 (20)
Future income taxes (482) 6
Unrealized loss (gain) on long term debt
exchange (134) 225
Unrealized loss (gain) on forward exchange
contracts 57 63
Changes in working capital items (2,110) (1,620)
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Cash flows used in operating activities (1,085) (333)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
INVESTING ACTIVITIES
Short-term investments - (1,631)
Short-term investments dispositions - 1,616
Property and equipment (246) (79)
Product of disposition capital asset (net of gain) 33 -
Other assets (11) 67
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Cash flows used in investing activities (224) (27)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FINANCING ACTIVITIES
Long-term debt 699 -
Repayment of long-term debt (685) (3,752)
Options forfeited - (54)
Common shares repurchased - (5)
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Cash flows from (used in) financing activities 14 (3,811)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Effect of changes in exchange rate on cash held
in foreign currencies 311 (392)
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Net decrease in cash and cash equivalents (984) (4,563)
Cash and cash equivalents, beginning of period 23,221 13,487
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Cash and cash equivalents, end of period 22,237 8,924
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For further information: Pierre Boucher, MaisonBrison, (514) 731-0000
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