Circa reports sales and operating results for the third quarter ended September 30, 2011

CALGARY, Nov. 16, 2011 /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, 2011.

THIRD QUARTER RESULTS

Summary of third quarter operating results:

  • Consolidated sales of $5.9  million, representing a 15.1% decrease compared to Q3 2010 sales of $6.9 million
  • Loss from continuing operations for the third quarter of 2011 of $77,000 compared to profit of $0.5 million for Q3 2010
  • EBITDA of negative $23,000 for the third quarter compared to $0.8 million for Q3 2010 (see below for explanation and calculation of EBITDA)
  • Adjusted EBITDA of $6,000 for the third quarter compared to $0.8 million for Q3 2010 (see below for explanation and calculation of Adjusted EBITDA)

Summary of year-to-date operating results:

  • Consolidated sales of $17.2 million, representing a 9.6% decrease compared to Q3 2010 sales of $19.0 million
  • Loss from continuing operations for the nine months ended September 30, 2011 of $23,000 compared to profit of $1.0 million for the nine months ended September 30, 2010
  • EBITDA of $0.3 million for the nine months ended September 30, 2011 compared to $1.8 million for the same period in 2010 (see below for explanation and calculation of EBITDA)
  • Adjusted EBITDA of $0.4 million for the nine months ended September 30, 2011 compared to $1.8 million for the same period in 2010 (see below for explanation and calculation of Adjusted EBITDA)

EBITDA is earnings before interest, taxes, depreciation and amortization.  Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization and is adjusted for other non-recurring items and non-cash items. EBITDA and Adjusted EBITDA are a non-IFRS financial measures and do not have any standardized meaning prescribed by International Financial Reporting Standards and, therefore, may not to be comparable to similar measures presented by other issuers.  Management believes that EBITDA and Adjusted EBITDA are useful supplemental measures, 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 and Adjusted EBITDA should not be construed as an alternative to comprehensive income (loss) determined in accordance with IFRS as an indicator of the Company's financial performance. EBITDA and Adjusted EBITDA are calculated by the Company as follows:

  (unaudited)
Nine months
30 Sep 2011
  (unaudited)
Nine months
30 Sep 2010
  (unaudited)
Three months
30 Sep 2011
  (unaudited)
Three months
30 Sep 2010
  $000's   $000's   $000's   $000's
(Loss) profit for the period from continuing operations (23)   1,038   (77)   507
Income taxes (7)   402   (42)   182
Interest 27   75   9   25
Depreciation and amortization 271   299   87   100
EBITDA 268   1,814   (23)   814
Non-recurring severance charges 147   -   29   -
Adjusted EBITDA 415   1,814   6   814

Circa's consolidated sales in the third quarter of 2011 were $5.9 million -- a $1.0 million or 15.1% decrease over the same period in 2010. The continued weak sales were experienced in both segments in the quarter with telecom sales down $0.4 million and sales in the Circa Metals segment down $0.6 million. The decrease in telecom division sales was due to primarily to lower sales to the Company's largest OEM customer under a supply agreement; however the Company expects this business to improve and the customer has asked the Circa to position itself to receive orders for surge protection units and commence manufacturing an increased number of units beginning in the fourth quarter of 2011.  The sales decline was compounded by the strengthening of the Canadian dollar relative to the U.S. dollar when compared to the prior year.

The decrease in Circa Metals' sales can be attributed to several factors. Firstly, the division experienced weaker demand for electrical and poleline equipment due to slow housing activity and unseasonably poor weather. The Company has also faced increased competition from both local and offshore manufacturers, resulting in declining sales to certain customers. The Company is addressing these issues with increased and expanded internal sales resources going forward.

The Company's gross profit, defined as sales less cost of sales, decreased along with sales in the third quarter of 2011 to $1.0 million from $1.7 million in Q3 2010. In addition, gross profit as a percent of sales decreased as lower sales tend to generate lower margins due to the impact of fixed costs within business. This was compounded by pricing pressures on custom work in the Circa Metals division as well as higher costs on purchased materials from offshore suppliers. Operating profit decreased significantly compared to the prior year as a result of lower sales and the Company recorded higher selling, general and administrative expenses as the Company continues to put more resources towards expanding its markets and boosting sales.

Circa's President and Chief Executive Officer, Ivan Smith stated:

"Circa is continuing to make efforts to increase its topline sales revenue and will continue to work on opening new sales channels and exploiting existing channels. Management is not satisfied with current sales levels and believes that boosting sales, along with becoming more flexible in its operations has the ability to significantly improve profitability."

CIRCA ENTERPRISES INC.
Consolidated statement of comprehensive income

Unaudited                
    Nine months
ended
30 Sep 2011
  Nine months
ended
30 Sep 2010
  Three months
ended
30 Sep 2011
  Three months
ended
30 Sep 2010
    $000's   $000's   $000's   $000's
                 
Revenue   17,164   18,988   5,861   6,900
Cost of sales   (13,701)   (14,381)   (4,906)   (5,157)
Gross profit   3,463   4,607   955   1,743
Selling, general and administrative expenses   (3,465)   (3,082)   (1,065)   (1,029)
Operating (loss) profit   (2)   1,525   (110)   714
Loss on sale of assets   (1)   (10)   -   -
Finance costs   (27)   (75)   (9)   (25)
(Loss) profit before tax   (30)   1,440   (119)   689
Income tax expense   7   (402)   42   (182)
(Loss) profit for the period from continuing operations attributable to owners of the Company   (23)   1,038   (77)   507
Other comprehensive income (loss):                
Exchange differences on translating foreign operations, net of tax   65   4   129   (83)
Total comprehensive income for the period attributable to owners of the Company   42   1,042   52   424
                 
Earnings (loss) per share (in $'s)                
Basic and diluted   (0.00)   0.11   (0.01)   0.05



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 second 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

 

SOURCE Circa Enterprises Inc.

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:  investor@circaent.com
Website:  www.circaent.com

 


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