Circa Reports Operating Results for the Quarter Ended September 30, 2010
CALGARY, Nov. 3 /CNW/ - 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 third quarter ended September 30, 2010.
THIRD QUARTER RESULTS
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Summary of third quarter operating results:
- Consolidated sales of $6.9 million were 1% less than the third
quarter 2009 sales of $7.0 million
- Net income of $0.4 million or $0.05 per share, as compared to a
net loss of $85,000 or $0.01 per share in the third quarter of
2009
- Cash flow from operations increased $0.3 million to $0.7 million
compared to the third quarter of 2009
- Adjusted EBITDA of $0.8 million for the quarter compared to $0.7
million in the third quarter of 2009 (see below for calculation of
Adjusted EBITDA)
Summary of year-to-date operating results:
- Consolidated sales of $19 million for the nine-month period ended
September 30, 2010, which were 5% lower than the nine-month period
ended September 30, 2009, sales of $19.9 million
- Net income of $1 million or $0.11 per share as compared to a net
loss of $1.1 million or $0.11 per share for the first nine months
of 2009
- Debt reduction of over $1.2 million during the nine-month period
ended September 30, 2010
- Adjusted EBITDA of $1.8 million for the nine-month period ended
September 30, 2010 compared to $0.5 million for the nine-month
period ended September 30, 2009 (see below for calculation of
Adjusted EBITDA)
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:
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(unaudited) (unaudited) (unaudited) (unaudited)
Three Three Nine Nine
months months months months
ended ended ended ended
Sep 30, Sep 30, Sep 30, Sep 30,
2010 2009 2010 2009
$ $ $ $
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Net earnings (loss) and
comprehensive
earnings (loss) 447 (85) 1,021 (1,070)
Provision for (recovery
of) income taxes 209 306 426 155
Interest 24 24 69 82
Depreciation and
amortization 100 117 299 326
Foreign currency
translation loss (gain) 29 251 (20) 454
Restructuring costs - 126 - 576
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809 739 1,795 523
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Circa's consolidated sales in the third quarter of 2010 were $19 million - $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 sales. 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 as demand for the Company's Hydel brand product increased in 2010.
The Company's gross profit, defined as sales less cost of sales, was slightly lower in the third quarter of 2010 at $1.7 million compared to $1.8 million in the prior year, 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 select product manufacturing offshore and consolidating operations have allowed the Company to achieve positive earnings from operations for the third consecutive quarter. These restructuring changes improved net earnings from a loss of $1.1 million in the first nine months of 2009 to positive net earnings of $1.0 million in the first nine months of 2010. The Company was able to boost Adjusted EBITDA from $0.7 million in Q3 2009 to $0.8 million in Q3 2010 and from $0.5 million in the nine month period ended September 30, 2009 to $1.8 million in the same period in 2010.
Ivan Smith, Circa's President and Chief Executive officer, stated:
"Management is pleased that the Company has posted its third consecutive quarter of positive earnings and believes the Company has turned the corner from being unprofitable to having a sustainable and profitable business model. Management and staff are continuing to improve operations and the focus will now expand to increasing topline sales while achieving strong bottom line results."
CIRCA ENTERPRISES INC.
Consolidated Balance Sheets
(000's of Canadian dollars)
Unaudited
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As at September 30, December 31,
2010 2009
$ $
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ASSETS
Current
Cash 266 350
Accounts receivable 4,629 3,588
Income taxes recoverable - 58
Inventory 6,213 5,842
Prepaid expenses 257 295
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11,365 10,133
Property, plant and equipment 959 1,086
Assets held for sale 105 105
Deferred charges 203 286
Intangible assets 19 17
Future income taxes 441 782
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13,092 12,409
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LIABILITIES
Current
Bank indebtedness 2,187 3,391
Accounts payable and accrued liabilities 3,257 2,476
Current income taxes 90 -
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5,534 5,867
Future income taxes 8 38
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5,542 5,905
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SHAREHOLDERS' EQUITY
Share capital 2,735 2,710
Contributed surplus 2 2
Retained earnings 4,813 3,792
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7,550 6,504
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13,092 12,409
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CIRCA ENTERPRISES INC.
Consolidated Statements Operations and Retained Earnings
(000's of Canadian dollars, except per share amounts)
Unaudited
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Three Three Nine Nine
months months months months
ended ended ended ended
Sep 30, Sep 30, Sep 30, Sep 30,
2010 2009 2010 2009
$ $ $ $
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SALES 6,900 6,978 18,988 19,882
COST OF SALES
Direct costs 5,148 5,181 14,358 15,577
Depreciation and
amortization 40 43 115 133
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1,712 1,754 4,515 4,172
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EXPENSES
Selling, general and
administrative 943 1,049 2,825 3,772
Depreciation and
amortization 60 74 184 193
Restructuring costs - 126 - 576
Interest 24 24 69 82
Loss on disposal of assets - 9 10 10
Foreign currency
translation (gain) loss 29 251 (20) 454
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1,056 1,533 3,068 5,087
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EARNINGS (LOSS) BEFORE
INCOME TAXES 656 221 1,447 (915)
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PROVISION FOR (RECOVERY OF)
INCOME TAXES
Current 38 203 115 11
Future 171 103 311 144
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209 306 426 155
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NET EARNINGS (LOSS) AND
COMPREHENSIVE EARNINGS
(LOSS) 447 (85) 1,021 (1,070)
RETAINED EARNINGS,
BEGINNING OF PERIOD 4,366 4,038 3,792 5,023
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RETAINED EARNINGS, END
OF PERIOD 4,813 3,953 4,813 3,953
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EARNINGS (LOSS) PER SHARE
Basic and diluted 0.05 (0.01) 0.11 (0.11)
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CIRCA ENTERPRISES INC.
Consolidated Statements of Cash Flows
(000's of Canadian dollars)
Unaudited
-------------------------------------------------------------------------
Three Three Nine Nine
months months months months
ended ended ended ended
Sep 30, Sep 30, Sep 30, Sep 30,
2010 2009 2010 2009
$ $ $ $
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CASH FLOWS RELATED TO
THE FOLLOWING
ACTIVITIES:
OPERATING
Net earnings (loss) 447 (85) 1,021 (1,070)
Adjustments for:
Depreciation and
amortization 100 117 299 326
Loss on disposal of
assets - 9 10 10
Stock compensation
expense 25 6 25 11
Future income taxes 171 103 311 144
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743 150 1,666 (579)
Changes in non-cash
working capital (7) 226 (451) 616
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736 376 1,215 37
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FINANCING
Decrease in bank
indebtedness (562) (898) (1,204) (107)
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INVESTING
Purchase of property,
plant and equipment (48) - (98) (32)
Proceeds from sale of
property, plant and
equipment - - - 6
Additions to deferred
charges - 1 - (40)
Additions to intangible
assets - (2) (3) (8)
Changes in non-cash
working capital (13) - 6 (24)
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(61) (1) (95) (98)
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NET INCREASE (DECREASE)
IN CASH 113 (523) (84) (168)
CASH, BEGINNING OF
PERIOD 153 610 350 255
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CASH, END OF PERIOD 266 87 266 87
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Circa Enterprises Inc. is a public company with operations 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 third 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.
%SEDAR: 00002951E
For further information: Mr. Ivan Smith, President and CEO, Circa Enterprises Inc., (403) 258-2011; Mr. Cory Tamagi, VP Finance and CFO, Circa Enterprises Inc., (403) 258-2011; E-Mail: [email protected], Website: www.circaent.com
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