Prestige Telecom reports record sales and improved profitability in Q2 2011

MONTREAL, Dec. 1 /CNW Telbec/ - Prestige Telecom Inc. ("Prestige" or "the Company") (TSX-V: PR) reported its unaudited financial results today for the second quarter and six-month period ended September 30, 2010, and filed its financial statements and MD&A for the period. All figures are in Canadian dollars.

Prestige posted record sales of $38.6 million for the second quarter of fiscal 2011, an 11% increase compared to $34.8 million a year ago. Revenues for the construction segment were up 34% to $21.8 million on the strength of continuing significant business from the new wireless entrants. Engineering segment revenues increased 2% to $12.2 million, with volume increases from a major customer in the current year being offset by a large wireless project completed last year. Installation segment revenues were down 30% to $4.6 million due to a decline in wireline business activity and a prolonged delay in capital spending by a major wireless telecommunications carrier. For the six-month period, sales increased to $72.1 million from $65.9 million last year.

Gross margin of $8.1 million (21% of sales) for the second quarter was down $0.7 million from $8.8 million (25% of sales) last year, but was up from $6.8 million (20% of sales) in Q1 2011. The decrease compared to last year was mainly due to the installation segment, where gross margin as a percentage of sales fell from 26% to 16%. Lower installation sales volumes had a negative impact on recovering indirect costs.

Pierre Yves Méthot, Chairman and CEO of Prestige, said, "We are pleased with our record sales numbers, which show substantial organic growth and improved market share in the wireless business. As for profitability, in the wake of our Q1 results, we reduced our workforce and took cost-cutting measures in September to better reflect the level of our sales. These measures, which entailed a $637,000 reorganization charge in Q2, allowed us to achieve the desired results in terms of net earnings in the second quarter, and we expect them to generate over $4 million in cost savings on an annual basis. With these actions, Prestige has committed fully to achieve profitable growth for the coming years."

General and administrative expenses stood at $5.3 million (13.7% of sales) for the second quarter, compared to $5.2 million (15.0% of sales) a year ago. For the six-month period, general and administrative expenses increased to $10.1 million (14.0% of sales), compared to $9.8 million (14.9% of sales). General and administrative expenses as a percentage of sales decreased for the second quarter and six-month period, due to the impact of cost-cutting measures introduced in the last fiscal year.

EBITDA¹ for the second quarter was $2.6 million (7% of sales), compared to $3.4 million (10% of sales) last year. For the six-month period, EBITDA was $4.3 million (6% of sales), compared to $6.3 million (10% of sales) a year ago.

For the second quarter ended September 30, 2010, Prestige recorded a net loss of $1,931 or $0.000 per share, compared to net earnings of $1.0 million or $0.008 per share for the same period last year. For the six-month period, the Company recorded a net loss of $0.4 million or $0.004 per share, compared to net earnings of $1.1 million or $0.009 per share.

Working capital stood at $2.3 million as at September 30, 2010, compared to $6.9 million as at March 31, 2010. On August 26, 2010, the Company executed a second amending agreement to its credit facility that provides access to an authorized amount of $18 million from December to May and $24 million from June to November, of which $17.4 million was used as at September 30, 2010. Subsequent to the second quarter ended September 30, 2010, the bank provided a term sheet to extend to January 15, 2011 the authorized amount of $24 million applicable under the credit facility.

At September 30, 2010, total assets were $69.4 million, shareholders' equity was $13.7 million and net debt was $36.5 million. A total of 118.2 million shares were outstanding.

On September 15, 2010, Prestige announced the creation of Prestige Energis ("Energis"), a renewable energy division specializing in the design, engineering, project management and installation of both meteorological towers and wind turbine generator towers (WTGs). Energis offers a unique set of skills that sets it apart from its competitors, with hundreds of successful meteorological and wind energy projects and thousands of tall-tower sites worldwide. The combination of expertise gained over 30 years of existence and strategic acquisitions have enabled Prestige to start this venture into a known, complementary business with strong market potential.

Mr. Méthot concluded by saying, "Business activity is presently strong in the construction and engineering sectors and improving in the installation sector, and we expect that this will continue into Q3 and Q4. Also, the effect of our cost-cutting measures will mostly be seen in the coming quarters, which should have a positive impact on Prestige's topline and bottomline performance. Finally, we believe that our continuous efforts to improve our market share should further consolidate our position as an outsourcing partner of choice to the Canadian telecommunications industry."

(1)

Earnings before interest, taxes, depreciation and amortization, stock-based compensation, foreign exchange, transaction and reorganization costs.

About Prestige Telecom Inc.

Prestige Telecom is a leading provider of network engineering, materials furnishing, installation and support services (commonly referred to as EF&I services) required to construct, operate and maintain wireline, wireless and cable television networks. Prestige assists telecommu-nications original equipment manufacturers and service providers to engineer, install and upgrade their infrastructures to support enhanced voice, high-speed data and video services. Prestige Telecom also provides technical and aerial services to the Canadian communications and broadcast industries, including tower supply, engineering, site construction, and infrastructure and equipment maintenance.

Prestige has over 1,000 professional and technical personnel. In Canada, Prestige operates from 19 service locations in 9 provinces. Prestige's head office is located in Baie-D'Urfé (Montreal), Quebec.

Forward-Looking Statements

This press release contains certain forward-looking statements with respect to the Company. Such forward-looking statements are dependent upon a certain number of factors and are subject to risks and uncertainties. Actual results may differ from those expected. The information contained in this press release is dated November 29, 2010, the date on which the Directors approved the press release. Management does not assume any obligation to update or revise any forward-looking statements, whether as a result of new information or future events, except when required by the regulatory authorities.

Note to readers: Complete unaudited consolidated financial statements and Management's Discussion & Analysis of Financial Position and Operating Results have been posted on SEDAR and are available at www.sedar.com.

The TSX Venture Exchange accepts no responsibility for the adequacy or accuracy of this press release.

For further information:

Contact Maryanne Golden, Director - Corporate Affairs of Prestige at [phone], Ext. 273. www.prestige-tel.com