Circa Reports Sales and Operating results for the First Quarter Ended March
31, 2010
CALGARY, May 18 /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 first quarter ended March 31, 2010.
Summary of first quarter operating results:
- Consolidated sales of $5.3 million, representing a 12.4% decrease
compared to Q1 2009 sales of $6.0 million
- Net income of $0.1 million or $0.01 per share in the first quarter of
2010 as compared to a loss of $0.6 million or $0.07 per share in
Q1 2009
- Adjusted EBITDA of $0.2 million for the quarter compared to
($0.7 million) for Q1 2009 (see below for explanation and 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)
Quarter Quarter
ended ended
March 31, March 31,
2010 2009
$ $
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Net earnings (loss) and comprehensive
earnings (loss) 72 (647)
Provision for (recovery of) income taxes 66 (233)
Interest 18 30
Depreciation and amortization 95 106
Foreign currency translation loss (gain) (35) (41)
Restructuring costs - 58
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216 (727)
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Circa's consolidated sales in the first quarter of 2010 were $5.3 million - a $0.7 million or 12.4% decrease over the same period in 2009 - the decline in sales continued the trend experienced throughout 2009. The decrease was the result of lower sales in the Circa Metals business as there was a notable decline in the custom metals sales in the quarter compared to the prior year. The surge protection remained consistent in the quarter compared to the prior year.
The Company's gross profit, defined as sales less cost of sales, increased in the first quarter of 2010 to $1.2 million from $0.7 million in the prior year, despite the decline in sales. The impact of lower sales was more than offset by higher selling prices of products and lower labour, materials and overhead costs. The cost reductions were the result of the Company's 2009 restructuring efforts, which involved streamlining operations, reductions in the cost of certain raw materials, moving product manufacturing offshore and the consolidating operations. The Company was able to achieve positive earnings from operations during the quarter as a result of these restructuring changes and net earnings improved from a loss of $0.6 million in Q1 2009 to net earnings of $0.1 million. The Company was able to boost Adjusted EBITDA by $0.9 million, from $(0.7 million) in Q1 2009 to $0.2 million in Q1 2010.
Circa's President and Chief Executive Officer, Ivan Smith stated: "While consolidated sales for the quarter ended March 31, 2010 are lower than those achieved in the first quarter of 2009, the Company's profits are up. The Company has benefitted from a reduction in its cost structure and is hopeful that it can increase its sales and see a benefit from a rebound in the economy."
CIRCA ENTERPRISES INC.
Consolidated Balance Sheets
(000's of Canadian dollars)
Unaudited
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As at March 31, December 31,
2010 2009
$ $
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ASSETS
Current
Cash 312 350
Accounts receivable 2,941 3,588
Income taxes recoverable 32 58
Inventory 6,086 5,842
Prepaid expenses 284 295
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9,655 10,133
Property, plant and equipment 1,026 1,086
Assets held for sale 105 105
Deferred charges 265 286
Intangible assets 20 17
Future income taxes 755 782
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11,826 12,409
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LIABILITIES
Current
Bank indebtedness 3,123 3,391
Accounts payable and accrued liabilities 2,097 2,476
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5,220 5,867
Future income taxes 30 38
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5,250 5,905
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SHAREHOLDERS' EQUITY
Share capital 2,710 2,710
Contributed surplus 2 2
Retained earnings 3,864 3,792
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6,576 6,504
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11,826 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 months Three months
ended ended
March 31, March 31,
2010 2009
$ $
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SALES 5,271 6,019
COST OF SALES
Direct costs 4,082 5,236
Depreciation and amortization 38 45
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1,151 738
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EXPENSES
Selling, general and administrative 973 1,510
Depreciation and amortization 57 61
Restructuring costs - 58
Interest 18 30
Foreign currency translation gain (35) (41)
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1,013 1,618
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EARNINGS (LOSS) BEFORE INCOME TAXES 138 (880)
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PROVISION FOR (RECOVERY OF) INCOME TAXES
Current 47 40
Future 19 (273)
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66 (233)
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NET EARNINGS (LOSS) AND COMPREHENSIVE
EARNINGS (LOSS) 72 (647)
RETAINED EARNINGS, BEGINNING OF PERIOD 3,792 5,023
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RETAINED EARNINGS, END OF PERIOD 3,864 4,376
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EARNINGS (LOSS) PER SHARE
Basic and diluted 0.01 (0.07)
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CIRCA ENTERPRISES INC.
Consolidated Statements of Cash Flows
(000's of Canadian dollars)
Unaudited
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Three months Three months
ended ended
March 31, March 31,
2010 2009
$ $
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CASH FLOWS RELATED TO THE FOLLOWING ACTIVITIES:
OPERATING
Net earnings 72 (647)
Adjustments for:
Depreciation and amortization 95 106
Loss on disposal of assets - (2)
Future income taxes 19 (273)
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186 (816)
Changes in non-cash working capital 47 720
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233 (96)
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FINANCING
(Decrease) increase in bank indebtedness (268) 115
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INVESTING
Purchase of property, plant and equipment (14) (25)
Proceeds from sale of property, plant
and equipment - 6
Additions to deferred charges - (32)
Additions to intangible assets (3) (5)
Changes in non-cash working capital 14 (22)
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(3) (78)
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NET DECREASE IN CASH (38) (59)
CASH, BEGINNING OF PERIOD 350 255
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CASH, END OF PERIOD 312 196
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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.
%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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