Adeptron reports second quarter 2008 results



    
    Stock Symbol: ATQ
    Listing: Toronto Stock Exchange (TSX)
    Outstanding Shares: 96.7 Million
    Web Site: www.adeptron.com
    

    TORONTO, Aug. 14 /CNW/ - Adeptron Technologies Corporation (ATQ: TSX)
("Adeptron" or the "Company"), a specialist at delivering integrated product
solutions and support to the global technology and electronics industry, today
reports unaudited second quarter financial results for the three-month and
six-month periods ended June 30, 2008.
    For the three-month period ended June 30, 2008 Adeptron reported a loss
of $939,000 ($0.01 loss per share) compared to net income of $10,000
($0.00 earnings per share) for the second quarter of 2007. The second quarter
loss in 2008 includes a one-time charge of $638,000 for the early settlement
of the subordinated debenture. Also included in the second quarter of 2008 is
a restructuring charge of $158,000.
    Adjusted EBITDA(1) for the second quarter of 2008 was approximately
$484,000 compared to approximately $481,000 in the corresponding quarter of
2007.
    F. Michael Marti, President and CEO of Adeptron, commented, "The end of
the second quarter of 2008 signifies a turning point for the Company. We enter
the third quarter of 2008 with a much improved balance sheet and significantly
lower interest costs as a result of closing the $6 million equity financing
with RH Global Technologies Ltd. ("RGT")"
    Marti continued, "Just as important, however, is that as part of the RGT
group Adeptron now operates as part of an affiliated group of companies in the
EMS sector having annual global revenues of approximately $250 million.
Adeptron is now able to provide manufacturing services out of six
manufacturing locations worldwide. These locations include Markham and Ottawa
in Ontario, San Jose and Livermore in California, Israel and through its
partner, China. This is an attractive value proposition for our current and
future customers."
    "The positive effects of the affiliation with RGT also enhance Adeptron's
sales and marketing activities and have already positively influenced our
supply chain and procurement activities," said Marti.
    Marti ended by stating, "We expect that the fruition of new customer
relationships will have a positive impact on Adeptron revenues in the fourth
quarter of 2008 and beyond. During the second half of 2008 we will stabilize
our operations to prepare for new customer opportunities as a result of being
part of a global group of EMS companies."
    For the three months ended June 30, 2008, sales were $10.2 million
unchanged from the corresponding quarter of 2007. During the second quarter of
2008 approximately 72% of the Company's sales were derived from USA-based and
domestic-based customers with sales denominated in US$. The impact of the
strengthening Canadian dollar relative to the US dollar during the six month
period ended June 30, 2008 in comparison to the prior year comparative period
had an adverse effect on reported revenues and consequently, gross profit.
    Gross profit, expressed as a percentage of sales, for the second quarter
of 2008 was 14.9% compared to 15.5% for the corresponding period of 2007. The
slight decrease in gross profit percentage in the second quarter of 2008 in
comparison to the second quarter of 2007 is attributable to the change in mix
in customers.
    Selling, general and administrative ("SG&A") expenses for the
three-months ended June 30, 2008 were $1.2 million, essentially unchanged from
the corresponding period in 2007. This resulted from the reduction of expenses
in the Canadian operations in the second half of 2007 and the first half of
2008, offset by the expenses now reflected in the second quarter of 2008 for
the San Jose operation as a result of the acquisition of PCA on May 31, 2007.
    Working capital, defined as current assets less current liabilities, as
at June 30, 2008, was approximately $1.4 million compared to a working capital
deficit of $2.3 million at December 31, 2007, or an improvement of $3.7
million. This increase in working capital is primarily explained by the net
loss incurred in the first half of 2008 and cash used in operating activities,
offset by the significant $6 million private placement equity financing and
subordinated debenture repayment completed during the second quarter.

    
    2008 - Second Quarter Financial Summary

    Selected comparative financial information for the three-month and
six-month periods ended June 30, 2008 and 2007 is shown below. (All numbers
below expressed in thousands, except per share information and gross margin
percentages):

    Income Statement                3-Month    3-Month    6-Month    6-Month
                                    --------   --------   --------   --------
                                     Period     Period     Period     Period
                                     -------    -------    -------    -------
                                    June 30,   June 30,   June 30,   June 30,
                                       2008       2007       2008       2007
                                   ---------  ---------  ---------  ---------

    Sales                           $10,191    $10,149    $20,010    $20,309
    Gross Profit                     $1,518     $1,571     $2,786     $3,295
    Gross Profit %                    14.9%      15.5%      13.9%      16.2%
    Net Income (loss)                 ($939)       $10    ($1,555)      $173
    Net Income (loss) per share
     -basic & diluted                ($0.01)     $0.00     ($0.03)     $0.00
    Weighted average number of
     shares outstanding - diluted    63,081     37,317     49,894     38,450


    Adjusted EBITDA(*) reconciliation to GAAP Net Income/(Loss) for the 
three-month and six-month periods ended June 30, 2008 and 2007 is shown below.
(All numbers below expressed in thousands):


                                    3-Month    3-Month    6-Month    6-Month
                                    --------   --------   --------   --------
                                     Period     Period     Period     Period
                                     -------    -------    -------    -------
                                    June 30,   June 30,   June 30,   June 30,
                                       2008       2007       2008       2007
                                   ---------  ---------  ---------  ---------

    Net income (loss) per GAAP        ($939)       $10    ($1,555)      $173
    Add:
    Interest on term loan                 8         14         18         30
    Interest on subordinated
     debenture                          167        190        418        380
    Income Tax expense (recovery)         0        (14)         0        (14)
    Interest on bank operating
     loan                               103         68        182        117
    Interest on notes payable            17          6         34          6
    Depreciation and amortization       301        186        597        339
    Stock-based compensation             32         21         36         52
    Restructuring                       158          0        508          0
    Loss on settlement of
     subordinated debenture             638          0        638          0
    Adjusted EBITDA(1)                 $484       $481       $875      1,083

    (*) "Adjusted EBITDA" represents Earnings before Interest, Taxes,
    Depreciation, Amortization, Goodwill impairment, and Stock-based
    Compensation, restructuring expenses, and loss on settlement of
    subordinated debenture.
    

    Adjusted EBITDA(1) is not a recognized measure under Canadian generally
accepted accounting principles. However, management believes that Adjusted
EBITDA(*) is a useful supplemental measure to net income (loss), as it provides
investors with an indication of cash earnings prior to debt service, capital
expenditure, income tax, other non-cash items and restructuring charges.
Readers should be cautioned, however, that Adjusted EBITDA(*) should not be
construed as an alternative to net income (loss) determined in accordance with
generally accepted accounting principles as an indicator of the Company's
performance or to cash flows from operating, investing and financing
activities as a measure of liquidity and cash flows. The Company's method of
calculating Adjusted EBITDA(*) may differ from the methods by which other
companies calculate Adjusted EBITDA(*) and, accordingly, the Adjusted EBITDA(*)
used herein may not be comparable to measures used by other companies.
    Adeptron's 2008 unaudited second quarter financial statements and MD&A
will be available on Adeptron's web site on August 15, 2008 at
www.adeptron.com and the System for Electronic Document Analysis and Retrieval
("SEDAR") at www.sedar.com.

    About Adeptron:

    Adeptron's business is Integrating Ideas with Solutions(TM) within the
technology and electronics industries, to enhance our customers' competitive
advantage. Adeptron delivers global product solutions and support for the
complete product life cycle, including design, prototyping, supply chain
management, manufacturing, assembly, testing, product assurance, distribution
and after-sales service solutions. Adeptron's facilities are ISO 9001:2000
registered.
    Adeptron is a public company whose common shares are listed for trading
on The Toronto Stock Exchange under the symbol: "ATQ". The Company has
approximately 96.7 million common shares outstanding. Visit Adeptron at:
www.adeptron.com or www.investorfile.com.

    THIS NEWS RELEASE MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION
RELATING TO SUCH MATTERS AS EXPECTED FINANCIAL PERFORMANCE, BUSINESS
PROSPECTS, TECHNOLOGICAL DEVELOPMENTS, DEVELOPMENT ACTIVITIES AND LIKE
MATTERS. THESE STATEMENTS INVOLVE RISK AND UNCERTAINTIES, INCLUDING BUT NOT
LIMITED TO RISK FACTORS DESCRIBED IN DOCUMENTS FILED WITH REGULATORY
AUTHORITIES, SUCH AS THE COMPANY'S MOST RECENTLY FILED ANNUAL AND QUARTERLY
REPORTS AND ANNUAL INFORMATION FORM. ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THOSE PROJECTED AS A RESULT OF THESE RISKS AND SHOULD NOT BE RELIED UPON
AS A PREDICTION OF FUTURE EVENTS. ADEPTRON TECHNOLOGIES CORPORATION UNDERTAKES
NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE ON WHICH SUCH STATEMENT IS MADE, OR TO REFLECT
THE OCCURRENCE OF UNANTICIPATED EVENTS.

    %SEDAR: 00012076E




For further information:

For further information: Adeptron Company Contact: F. Michael Marti,
President & Chief Executive Officer, Tel: (416) 705-6534,
fmmarti@adeptron.com; Adeptron Investor Relations: Gerry Wimmer,
INVESTORFILE.com, Tel: (416) 360-8895, Toll Free: 1-888-894-8222,
gwimmer@investorfile.com

Organization Profile

ADEPTRON TECHNOLOGIES CORPORATION

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