20-20 Technologies reports second quarter results



    LAVAL, QC, June 11 /CNW Telbec/ - 20-20 Technologies Inc. (TSX: TWT), the
world leader in 3D interior design and furniture manufacturing software, today
announced its results for the second quarter and six months ended April 30,
2009. All amounts are in US dollars unless otherwise indicated.

    
    Second Quarter Highlights

    - Revenues of $15.2 million compared to $21.9 million for the same period
      in 2008, and to $15.6 million in Q1 2009
    - EBITDA increased to $2.6 million or 17.1% from $1.1 million or 5.2%
      in 2008
    - Operating income of $1.7 million compared to a loss of $0.2 million a
      year ago
    - Restructuring and cost reductions result in savings on expenses of
      $2.9 million
    - Net earnings of $621,000 compared to $37,000 in 2008
    

    "Restructuring and cost reduction plans implemented in 2008 and early in
2009 continued to generate positive effects on our bottom line as we exceeded
our $2 million EBITDA goal for a third consecutive quarter and achieved higher
profitability despite a 30% decrease in revenues. In this difficult economic
context, we were successful in achieving the critical task of realigning our
costs with our revenues. We were also able to strengthen our balance sheet in
the second quarter," said Jean Mignault, Co-Chairman of the Board and CEO.
    Jean-Francois Grou, President and COO added "I am pleased to report these
results, despite the impact on revenues due to challenging circumstances that
20-20 faced in what is usually one of our strongest quarters of the year,
where clients suspended and deferred projects, re-evaluated their investments
and operating budgets and reduced the number of active licenses renewed under
support and maintenance"

    Revenues

    Second quarter revenues decreased by 30.7% to $15.2 million, compared
with $21.9 million a year ago. The decrease is due to prevailing difficult
economic conditions ($5.1 million) and weakness of the European currencies
versus the US dollar ($1.6 million). Revenues for the six-month period
declined by 20.3% to $30.8 million, from $38.6 million last year, as
acquisitions made in the first quarter of 2008 contributed an additional $2.5
million in 2009, offsetting in part the fall in organic revenues. Europe
accounted for 40.8% of revenues or $6.2 million for the second quarter, a
decrease of 38.1% over last year, essentially due to weaker currencies against
the U.S. Dollar. North American revenues were down 24.7% to $8.7 million.
Although there was a slight variation in the geographic distribution of
revenues, this is not indicative of any trend as all markets were affected by
the economic downturn.
    Revenues from license sales declined by 48.2%, or $3.7 million, to $4.0
million for the second quarter. The decline in revenues was felt in all
geographic and market sectors. For the first six months of the year, license
sales decreased by 39.0%, or $5.2 million, over last year. Maintenance and
other recurring revenues decreased by 16.5%, or $1.6 million, to $7.9 million,
and by 8.1% or $1.4 million for the six months. Revenues from professional
services decreased by 30.8%, or $1.4 million, to $3.2 million. For the first
six months of the year, revenues from professional services decreased by
15.7%, or $1.3 million, over last year.

    Operating Income

    Operating income for the second quarter was $1.7 million, compared with a
loss of $231,000 last year. For the six-month period, operating income stood
at $3.3 million, compared to a loss of $831,000. Adjusted operating income
increased to $2.4 million in the second quarter, versus $664,000 last year.
For the six-month period, adjusted operating income increased from $542,000 in
2008 to $4.6 million in 2009. EBITDA increased to $2.6 million (17.1% of
revenues) for the second quarter from $1.1 million (5.2% of revenues) a year
ago, and increased to $5.2 million (16.8% of revenues) from $1.4 million (3.6%
of revenues) for the six-month period.
    This improvement reflects the restructuring and cost reduction plans
implemented in 2008 and early in 2009. Those plans generated cost reductions
for the second quarter of approximately $2.9 million, while exchange rate
variations lowered expenses by approximately $2.8 million compared with last
year. For the six-month period, savings amounted to $5.2 million and exchange
rate variations reduced expenses by $5.4 million from a year ago.

    Net Earnings

    The Company generated net earnings of $621,000 for the second quarter, or
$0.03 per share, compared with net earnings of $37,000, or $0.00 per share, a
year ago. For the six-month period, net earnings stood at $801,000, or $0.04
per share, compared to $561,000, or $0.03 per share for the same period in
2008. During the second quarter, the Company strengthened its balance sheet by
increasing cash and cash equivalents to $12.6 million and reducing long-term
debt, including installments due within one year to $10.9 million.

    
    Key Events of Q2

    - 20-20 Technologies will implement its Enterprise inSight manufacturing
      solution at Mobelwerk Svoboda, a leading Austrian office furniture
      manufacturer. Svoboda is well-known for its innovative, premium office
      furniture products, and in particular, its custom-tailored workplace
      solutions.

    Subsequent to Q2

    - 20-20 Technologies and Elica jointly unveiled the hoods manufacturer's
      new catalog now available on 20-20 Design, the industry-leading
      kitchen and bath design software. The electronic catalog contains 3D
      shapes of Elica's sleek, modern hoods, where 20-20 Design users can
      create custom projects for a realistic representation of kitchen
      designs.

    - S.P. Richards, a leading wholesale distributor of business and office
      supplies, launched a new and improved version of its Design Made
      Easy(TM) furniture space-planning and sales visualization tool built
      upon 20-20 Technologies cutting-edge 3D web application, 20-20 Virtual
      Planner.

    - 20-20 Technologies has redesigned its business portal - www.2020.net -
      that centralizes data interchange between manufacturers and their
      dealers. The enhanced functionality includes catalog downloads and
      software updates, easier access to technical support, a sales lead
      generation tool and a project financing service.
    

    Outlook

    "20-20's objective is to continue achieving a minimum EBITDA of $2
million in the coming quarters," said Jean Mignault. "The Company has reached
this goal for the past three consecutive quarters and expects to continue to
attain it."
    In the all-important U.S. market, pending home sales rose 6.7 percent in
April 2009. This represented the biggest monthly jump in more than seven
years. It is a sign that the residential real estate market is reviving, and
that the slide in home values could soon be reversed. "It is 20-20's
expectation that once home values begin to rise, so too will the confidence of
consumers to invest in their homes," said Jean-Francois Grou. "The rise in
values will also eventually unleash pent-up renovation demand both on
foreclosed homes - many of which will be renovated once bought - and other
home purchases.
    "Market conditions in North America appear to have stabilized during our
second quarter. However, retailers and manufacturers who continue to look for
solutions are still not committing to large projects. In both the residential
and commercial sectors, selected new dealers are acquiring our design
solutions while the majority is still not investing in technology. In general,
our business in the commercial sector slightly deteriorated in the quarter for
licenses and services while recurring revenues are holding. We expect that
these conditions will remain similar in the coming months.
    In our European markets, conditions remained the same as in our previous
quarter. In general, our business has not been impacted by the recession at
the same level as our business in North America, while as reported before, the
lower Pound Sterling and Euro year over year have both negatively impacted our
overall revenue. Still a fairly small portion of our operations, our
International business has slightly recovered in China while our business in
Brazil and with our distributors is still severely impacted by the global
downturn. As in North America, we expect little change in this situation for
the coming months," concluded Mr. Grou.

    Conference Call Information

    20-20 will host a conference call to discuss the second quarter results
June 11, 2009 at 2 p.m. (EDT). The call will be accessible by telephone at
514-807-8791 and 1-800-732-9307. An audio replay of the conference call will
be available until midnight, June 18, 2009. To access it, dial 1-877-289-8525
and enter the pass code: 21307800#.
    Please note that 20-20 Technologies' full financials and MD&A are
available on SEDAR as well as on the Company's web site,
www.2020technologies.com.

    About 20-20 Technologies Inc.

    20-20 Technologies is the world's leading provider of computer-aided
design, business and software solutions tailored for the interior design and
furniture industries. Dealers and retailers use its desktop and Web-based
products and solutions for the residential and commercial markets. 20-20
offers a unique proprietary end-to-end solution, integrating the entire
breadth of functions in interior design. It provides a bridge for data
communication from the point-of-sale to manufacturing and world-leading
enterprise resource planning (ERP) systems, including computer-aided
engineering and plant floor automation software. Operating in twelve countries
with more than 500 employees, 20-20 is a publicly traded company (TWT) on the
Toronto Stock Exchange (TSX). For more information, visit
www.2020technologies.com.

    Non-GAAP Measures

    References in this press release to the term "EBITDA" are related to cash
earnings. EBITDA is defined for these purposes as Operating Income before
restructuring charges plus amortization and depreciation expenses. EBITDA is
not a recognized measure under GAAP in Canada and may not be comparable to
similar measures used by other companies.
    Reference in this press release to the term "Adjusted operating income"
is defined for these purposes as operating income excluding stock-based
compensation, amortization of business acquisition-related intangibles and
non-recurring items. Adjusted operating income is a supplemental measure and
should not be construed as an alternative to operating income as defined under
Canadian GAAP as a measure of profitability. Our method of measuring adjusted
operating income is unlikely to be comparable to similar measures provided by
other companies.

    Forward-Looking Statements

    Certain statements contained in this news release constitute
forward-looking information within the meaning of securities laws.
    Implicit in this information, particularly in respect of future operating
results and economic performance of the Company are assumptions regarding
projected revenue and expenses. These assumptions, although considered
reasonable by the Company at the time of preparation, may prove to be
incorrect. Readers are cautioned that actual future operating results and
economic performance of the Company are subject to a number of risks and
uncertainties, including general economic, market and business conditions and
could differ materially from what is currently expected.
    For more exhaustive information on these risks and uncertainties, please
refer to our most recently filed annual information form, available at
www.sedar.com. Forward-looking information contained in this report is based
on management's current estimates, expectations and projections, which
management believes are reasonable as of the current date. You should not
place undue importance on forward-looking information and should not rely upon
this information as of any other date. While we may elect to do so, we are
under no obligation and do not undertake to update this information at any
particular time unless required by applicable securities law.

    
    ((*)) Planit is a trademark of Planit Holdings Limited (used with
          permission).


    20-20 Technologies Inc.
    CONSOLIDATED BALANCE SHEETS
    (Amounts in thousands of U.S. dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                           April     October
                                                              30,         31,
    -------------------------------------------------------------------------
                                                            2009        2008
                                                                    Restated
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                      (Unaudited)   (Audited)
                                                               $           $
    ASSETS
    Current assets
      Cash and cash equivalents                           12,555      13,487
      Short-term investments                                   -       1,644
      Accounts receivable                                 19,848      17,538
      Income taxes receivable                                184         585
      Contracts in progress                                  282         267
      Prepaid expenses                                     1,306       1,244
      Future income taxes                                    532         598
    -------------------------------------------------------------------------
                                                          34,707      35,363
    Property and equipment                                 2,437       2,894
    Intangibles                                            9,368      10,417
    Goodwill                                              52,689      52,367
    Future income taxes                                    1,734       1,500
    Other assets                                             529         519
    -------------------------------------------------------------------------
                                                         101,464     103,060
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    LIABILITIES
    Current liabilities
      Accounts payable                                     9,401      12,665
      Income taxes payable                                 2,128       1,465
      Deferred revenue                                    16,325      12,481
      Long-term debt                                          37       3,805
      Future income taxes                                    157           -
    -------------------------------------------------------------------------
                                                          28,048      30,416
    Long-term debt                                        10,819      11,824
    Leasehold inducements                                    394         364
    Non-controlling interest                                   1          33
    Future income taxes                                    3,656       3,756
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                          42,918      46,393
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY
    Capital stock                                         58,582      58,647
    Common stock options                                   1,091       1,145
    Contributed surplus                                    1,015         961

    Deficit                                               (6,048)     (6,883)
    Accumulated other comprehensive income                 3,906       2,797
    -------------------------------------------------------------------------
                                                          (2,142)     (4,086)
    -------------------------------------------------------------------------
                                                          58,546      56,667
    -------------------------------------------------------------------------
                                                         101,464     103,060
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    20-20 Technologies Inc.
    CONSOLIDATED EARNINGS
    (Amounts in thousands of U.S. dollars,
     except earnings per share, unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                            April 30                April 30
    -------------------------------------------------------------------------
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                       $           $           $           $
    Revenues
      License sales                3,991       7,699       8,135      13,342
      Maintenance and other
       recurring revenues          7,934       9,498      15,880      17,272
      Professional services        3,233       4,673       6,763       8,025
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  15,158      21,870      30,778      38,639
    -------------------------------------------------------------------------
    Cost of revenues
      License sales                  488         815         936       1,496
      Maintenance and services     3,327       5,314       6,956       9,653
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   3,815       6,129       7,892      11,149
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Gross margin                  11,343      15,741      22,886      27,490
    -------------------------------------------------------------------------
    Operating expenses
      Sales and marketing          4,213       7,611       8,234      13,062
      Research and development     2,703       4,285       5,881       7,871
      General and administrative   2,623       4,014       5,434       7,275
      Stock-based compensation       113          62          10         113
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   9,652      15,972      19,559      28,321
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operating income (loss)        1,691        (231)      3,327        (831)

    Financial expenses (income)      550        (178)      1,696      (1,032)
    Non-controlling interest         (11)         25         (31)         25
    -------------------------------------------------------------------------

    Earnings before income taxes   1,152         (78)      1,662         176
    -------------------------------------------------------------------------
    Income taxes
      Current                        675        (217)        999        (395)
      Future                        (144)        102        (138)         10
    -------------------------------------------------------------------------
                                     531        (115)        861        (385)
    -------------------------------------------------------------------------

    Net earnings                     621          37         801         561
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
      Basic                         0.03        0.00        0.04        0.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
      Diluted                       0.03        0.00        0.04        0.03
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    20-20 Technologies Inc.
    CONSOLIDATED CASH FLOWS
    (Amounts in thousands of U.S. dollars, unaudited)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                            April 30                April 30
    -------------------------------------------------------------------------
                                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net earnings                     621          37         801         561
    Non-cash items
      Amortization                   909       1,364       1,838       2,230
      Leasehold inducements           11          13          22          27
      Stock-based compensation       107          12          (6)         31
      Capitalized interest on
       long term debt                  7          13          14          13
      Non-controlling interest       (11)         25         (31)         25
      Future income taxes           (144)        102        (138)         10
      Unrealized loss (gain) on
       long term debt exchange         7           -         232           -
      Unrealized loss (gain) on
       forward exchange contracts      6          72          69           -
      Changes in working
       capital items                 879     (42,004)       (757)     (2,182)
    -------------------------------------------------------------------------
    Cash flows from (used in)
     operating activities          2,392     (40,366)      2,044         715
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Business acquisitions              -        (107)          -     (40,830)
    Short-term investments             6           -      (1,625)          -
    Short-term investments
     dispositions                  1,619       6,694       3,235      17,597
    Property and equipment           (67)       (448)       (146)       (687)
    Other assets                      14         (27)          -         655
    -------------------------------------------------------------------------
    Cash flows from (used in)
     investing activities          1,572       6,112       1,464     (23,265)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Increased in long-term debt        -      15,000           -      15,000
    Repayment of long-term debt   (1,037)        (52)     (4,789)        (55)
    Options exercised                  -          53           -          53
    Common shares repurchased          -        (126)        (31)       (203)
    -------------------------------------------------------------------------
    Cash flows from (used in)
     financing activities         (1,037)     14,875      (4,820)     14,795
    -------------------------------------------------------------------------

    Effect of changes in
     exchange rate on cash held
     in foreign currencies           704         393         380      (1,269)
    -------------------------------------------------------------------------
    Net increase (decrease) in
     cash and cash equivalents     3,631     (18,986)       (932)     (9,024)
    Cash and cash equivalents,
      Beginning of period          8,924      35,242      13,487      25,280
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                12,555      16,256      12,555      16,256
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Rick Leckner, MaisonBrison, (514) 731-0000

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