Pareto announces first quarter financial results
Revenue of $16.2 million; EBITDA of $1.4 million, up 20%
TORONTO, May 8 /CNW/ - Pareto Corporation (TSX: PTO), a leading marketing
services company, today announced its financial results for the three months
ended March 31, 2009.
"I'm pleased that we were able to grow EBITDA and earnings significantly
in a challenging economic environment. Overall, our revenue held steady, due
to the continuing strength of our retail promotions business," said Kerry
Shapansky, Pareto's President and CEO. "I believe we will continue to deliver
improved EBITDA margins in 2009 as we remain focused on cost and operational
efficiency improvements. We are working closely with new and existing
customers to develop marketing programs that will help them stand out in this
market, when driving sales lift is more important than ever. I believe we have
a good opportunity to grow our revenues over the full year."
Financial and Operating Highlights
- Revenue was $16.2 million in the first quarter, compared to
$16.5 million in Q1 2008.
- EBITDA(*) was $1.4 million, an increase of 20% from $1.2 million a
year earlier.
- Net earnings were $656,770, up 44% from $456,773 in the first quarter
of 2008.
- Diluted earnings per share were $0.015, compared to $0.01 a year
earlier.
Financial Review
Pareto's revenues for the three months ended March 31, 2009 were $16.2
million, a decrease of $0.3 million from revenues of $16.5 million in the
first quarter of 2008. A revenue increase in the retail promotion business
unit was offset by decreases in the field merchandising and managed services
business units. Revenues in the Company's other business units were relatively
flat compared to the first quarter of last year.
EBITDA in the first quarter of 2009 was $1.4 million, representing 8.7%
of revenues, compared to $1.2 million, or 7.2% of revenues a year earlier.
EBITDA growth was attributable to reduced infrastructure costs and improved
operating efficiencies. Operating and administrative expenses were $14.8
million in the quarter, a decrease of 3% from $15.3 million in Q1 2008.
Net earnings in the first quarter were $656,770, an increase of 44% over
$456,773 of earnings in Q1 2008. Basic and diluted earnings were $0.015 per
share, compared to $0.01 per share a year earlier.
At March 31, 2009, Pareto had net bank indebtedness of $2.0 million
compared to indebtedness of $654,573 at December 31, 2008. The Company
generated $477,433 of cash from operations in Q1 2009, compared to $231,195 a
year earlier. The Company used $1.8 million of cash for investing activities
in the first quarter, primarily for the payment of dividends, compared to $0.8
million, primarily for the repurchase of common shares, in Q1 2008.
Pareto had 42,931,148 common shares issued and outstanding at March 31,
2009.
As indicated last quarter, some of Pareto's event business from 2008 will
not be recurring in 2009, and therefore the Company expects revenues in the
second quarter to be down from 2008 levels. Due to efficiency improvements and
product mix, the Company expects EBITDA in the second quarter to be comparable
to last year.
(*) Non-GAAP Measures
Pareto presents EBITDA information as supplemental figures because
management believes they provide useful information regarding operating
performance. EBITDA (earnings before amortization, net interest and finance
charges, share based compensation, non-recurring expenses, and income taxes)
is not a recognized measure under Canadian generally accepted accounting
principles (GAAP), does not have standardized meaning, and is unlikely to be
comparable to similar measures used by other companies. Accordingly, investors
are cautioned that EBITDA should not be construed as an alternative to
revenue, net earnings or loss determined in accordance with GAAP as an
indicator of the financial performance of the Company or as a measure of the
Company's liquidity and cash flows.
About Pareto Corporation
Pareto Corporation is a marketing services company that offers marketing
execution solutions to leading companies in a broad range of industry sectors.
Pareto provides measurable, quantifiable services that complement our clients'
marketing and sales departments. For more information, please visit our
website at www.pareto.ca.
This press release contains forward-looking statements related to
expected future events and financial operating results of Pareto that involve
risks and uncertainties. Actual results may differ materially from management
expectations as projected in such forward-looking statements for a variety of
reasons, including market and general economic conditions and the risks and
uncertainties detailed from time to time in Pareto's SEDAR filings.
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Pareto Corporation
Consolidated Balance Sheets
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March 31 December 31
As at 2009 2008
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Assets
Current assets
Accounts receivable $ 13,607,256 $ 16,460,617
Inventories 2,209,544 1,746,355
Prepaid expenses 707,957 466,040
Current future income tax assets 44,604 38,167
-----------------------------
16,569,361 18,711,179
-----------------------------
Loans receivable and other assets 1,301,830 1,299,045
Long-term future income tax assets 429,479 258,209
Capital assets 3,233,170 3,340,697
Intangible assets 1,290,714 1,343,493
Goodwill 21,058,577 21,058,577
-----------------------------
$ 43,883,131 $ 46,011,200
-----------------------------
Liabilities and Shareholders' Equity
Current liabilities
Bank indebtedness $ 2,029,277 $ 654,573
Accounts payable and accrued liabilities 9,391,236 12,032,039
Dividends payable 643,967 1,717,246
Deferred revenue 1,693,685 2,023,252
Income taxes payable 1,291,592 983,915
Current portion of capital lease
obligations 327,231 314,275
Current portion of lease inducements 42,482 42,482
-----------------------------
15,419,470 17,767,782
-----------------------------
Long-term future income tax liabilities 325,920 194,192
Long-term capital lease obligations 306,678 395,004
Deferred lease inducements 332,121 342,742
-----------------------------
Total liabilities 16,384,189 18,699,720
-----------------------------
Shareholders' equity
Share capital 16,501,855 16,501,855
Contributed surplus 1,667,206 1,492,547
Retained earnings and accumulated other
comprehensive income 9,329,881 9,317,078
-----------------------------
Total shareholders' equity 27,498,942 27,311,480
-----------------------------
$ 43,883,131 $ 46,011,200
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Pareto Corporation
Consolidated Statements of Operations and Retained Earnings
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March 31, March 31,
For the three months ended (unaudited) 2009 2008
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Revenue $ 16,182,996 $ 16,453,170
Operating and administrative expenses 14,771,869 15,274,092
-----------------------------
1,411,127 1,179,078
-----------------------------
Amortization of capital assets 167,050 158,952
Amortization of intangible assets 52,779 52,778
Interest, net 12,409 106,993
Share-based compensation 189,659 207,780
-----------------------------
421,897 526,503
-----------------------------
Earnings before income taxes 989,230 652,575
Income taxes 332,460 195,802
-----------------------------
Net earnings and comprehensive income
for the year 656,770 456,773
Retained earnings, beginning of year 9,317,078 7,877,806
Dividends declared (643,967)
Excess price paid over carrying value
on repurchase of common shares - (394,256)
-----------------------------
Retained earnings, end of year $ 9,329,881 $ 7,940,323
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Basic and diluted earnings per share $ 0.015 $ 0.01
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Weighted average number of common
shares outstanding:
Basic 42,931,148 43,408,981
Diluted 44,860,685 45,036,864
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Pareto Corporation
Consolidated Statements of Cash Flows
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March 31, March 31,
For the three months ended (unaudited) 2009 2008
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Operating activities
Net earnings for the year $ 656,770 $ 456,773
Items not involving cash:
Amortization of capital assets 167,050 158,952
Amortization of intangible assets 52,779 52,778
Amortization of lease inducement (10,621) -
Non-cash interest (27,785) -
Share-based compensation 189,659 207,780
Future income tax provision (45,979) 206,061
-----------------------------
981,873 1,082,344
Changes in non cash operating accounts (504,440) (851,149)
-----------------------------
477,433 231,195
-----------------------------
Investing activities
Capital asset additions (59,521) (52,459)
Loans receivable and other assets - (550,000)
Acquisitions, net of cash - (3,000,000)
-----------------------------
(59,521) (3,602,459)
-----------------------------
Financing activities
Dividends Paid (1,717,246) -
Repayment of capital lease obligations (75,370) (67,552)
Share issue costs - (2,051)
Repurchase of common shares - (760,979)
-----------------------------
(1,792,616) (830,582)
-----------------------------
Decrease in cash for the year (1,374,704) (4,201,846)
(Bank Indebtedness)/Cash, beginning
of year (654,573) (368,291)
-----------------------------
Bank Indebtedness, end of year $ (2,029,277) $ (4,570,137)
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For further information: Kerry Shapansky, President and Chief Executive
Officer, Pareto Corporation, (416) 790-2350; Karen Trudell, Chief Financial
Officer, Pareto Corporation, (416) 790-2360; Jeff Codispodi, Investor
Relations, Equicom Group, (416) 815-0700 ext 261
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