Divcom Lighting posts first quarter 2007 financial results



    MONTREAL, April 13 /CNW Telbec/ - Divcom Lighting Inc. ("Divcom" or the
"Company") (TSX: DVQ) announced today its unaudited consolidated financial
results for the three-month period ending February 28, 2007.

    FIRST QUARTER 2007 FINANCIAL RESULTS

    All results are for the three-month period ending February 28, 2007
("first quarter of 2007") compared to the three-month period ending
February 28, 2006 ("first quarter of 2006"):

    
    - Consolidated revenues totalled $7.4 million the first quarter of 2007,
      compared to $8.3 million for the first quarter of 2006;
        - Revenues for the first quarter of 2007 from the Diversified
          commercial product manufacturer and Linogene indoor retail product
          manufacturer power center divisions increased by 44% and 8%
          respectively compared to the comparable 2006 period.
        - Revenues from the Adjusta Post and Snoc power centers, both outdoor
          product manufacturers, decreased by 28% due to seasonal factors.
          The first quarter of the fiscal year is traditionally the slowest
          quarter of the year in the exterior lighting market, due to weather
          conditions in the Northern U.S. and Canada.
        - Divcom's order backlog currently stands at $1.2 million.

    - Cost of Goods Sold was $4.9 million or 66% of sales for the first
      quarter of 2007 compared to cost of goods sold of $5.2 million or 63%
      of sales for the first quarter of 2006. The decrease in gross margins
      is directly attributable to the decline in revenue. In the first
      quarter of 2007, Divcom undertook a significant inventory build -up
      phase whereby the benefits of current expenditures will be realized
      in subsequent quarters;

    - Selling General and Administrative Expenses improved in the first
      quarter of 2007 by decreasing to $2.1 million or 29% of sales, compared
      to $2.4 million during the first quarter of 2006;

    - Earnings before interest, taxes, depreciation and amortization (EBITDA)
      were $364,000 in the first quarter of 2007, compared to an EBITDA of
      $715,000 for the three-month period ending February 28, 2006. The
      decrease in EBITDA is directly attributable to the decrease in
      revenues. EBITDA is a non-GAAP measure of the Company's operating
      performance. EBITDA is usually at its lowest levels during the first
      three months of the fiscal year, due to seasonal softness in sales
      combined with inventory building ahead of the stronger second and third
      quarters;

    - Net loss for the three-month period amounted to $240,000 or
      ($0.005) per share, versus $104,000 or $0.002 per share in the first
      quarter of fiscal 2006. The net loss is due to the timing of revenues
      and an overall seasonal weakness.

    Comment on First Quarter Results

    "While we have always considered the first quarter to be dependent on
seasonal factors, we are very happy with our consolidation efforts," said
Aslam Khatri, President and Chief Executive Officer. "The first quarter is
traditionally a very slow quarter for the entire industry, especially for the
retail side of the business. Yet while our outdoor subsidiaries are affected
by seasonal factors, bringing revenues temporarily down during the first three
months of the fiscal year, the Company's overall performance is quite positive
thanks to our growth strategy. Our Diversified and Linogene power centers have
recorded 44% and 8% growth respectively in the first quarter, and our backlog
is currently peaking at $1.2 million. These will provide a solid platform for
second and third quarter revenues."
    "Another factor to consider is the fact that we are keenly aware of how
seasonal fluctuations affect our business. In this regard, it becomes very
important for us to build enough inventories for later quarters when sales are
typically strong across all our subsidiaries. As a result, we raise
expenditures on inventory building during the first quarter to meet our
growing customer demand. This also contributes to the general slowdown of
revenue generation typically seen in the first quarter," said Mr. Khatri.
    "Some have expressed concern about the slowdown in the U.S. housing
market. While this concern is genuine, Divcom has always kept an eye on what
lies ahead and as a result we have been careful to diversify our risk. This is
why we began some years ago to invest in energy efficient lighting, which is a
huge and largely untapped market which is becoming increasingly important.
Thanks to our efforts, Divcom is now truly poised to take advantage of this
opportunity," added Mr. Khatri.

    CONFERENCE CALL

    Shareholders, financial analysts and the media are invited to listen to
the Company's first quarter results conference call live and archived. The
conference call is scheduled for Monday, April 16 at 10:00 a.m. (Eastern
Standard Time).
    Mr. Aslam Khatri, President and Chief Executive Officer of Divcom, and Mr.
Deric Vourantonis, C.A., Vice-President of Finance, will comment on earnings
and operations and the outlook for 2007.
    The dial-in number for the conference call is (514) 868-1042 or toll free
at 1-866-898-9626. A replay of the conference call can be accessed after
5:00 p.m. (EST) on April 16 until April 30, 2007 by calling (514) 861-2272 or
toll free at 1-800-408-3053 and entering pass code 3220290#.

    ABOUT DIVCOM

    Divcom is a rapidly growing North American manufacturer of architecturally
designed energy-efficient lighting products for retail and commercial markets
across Canada and the United States. The Company's strategy is to acquire
lighting companies in the highly fragmented North American lighting market,
then grow sales organically by integrating the acquired companies and their
products lines into Divcom's extensive North American marketing and
distribution network, which includes more than 2,000 distributors and agents.
The Company's products are used in residential, urban communities, roads and
tunnels, and in lighting for public, commercial, industrial, hospitality and
custom installations.

    FORWARD-LOOKING STATEMENTS

    Certain statements made in this press release and other statements
regarding our strategy, future operations, financial position, future
revenues, projected costs, prospects, plans and objectives other than
statements of historical facts are forward-looking statements. We cannot
guarantee that we actually will achieve the results, plans, intentions or
expectations disclosed in our forward-looking statements and you should not
place undue reliance on them. There are a number of important factors that
could cause our actual results to differ materially from those indicated or
implied by forward-looking statements including, but not limited to, the
impact of any special items or of any dispositions, monetization, mergers,
acquisitions, business combinations or other transactions that may be
announced or that may occur after the date hereof. Risks that could cause
actual results to differ materially from those projected include, but are not
limited to, the effect of general economic conditions, decreases in demand for
the Company's products, increases in costs of raw materials, changes in the
relative value of the Canadian and U.S. currencies, and fluctuations in
selling prices. For a description of material risk factors, please refer to
the Company's annual information form and to our periodic filings with
securities regulatory authorities, which are available on SEDAR at
www.sedar.com. These factors should be read as being applicable to all related
forward-looking statements wherever they appear in this press release. The
information in this press release, including any forward-looking statements,
is provided as of the date of this release and should not be relied upon as
representing our estimates as of any subsequent date. We do not assume any
obligation to update or revise any forward-looking statements except as
required by law, whether as a result of new information, future events or
otherwise.

    Selected Financial Information follows.


    Divcom Lighting Inc.

    Consolidated Balance Sheets
    As at February 28, 2007 and November 30, 2006
    (Unaudited - Tabular amounts in thousands of dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                   February 28,  November 30,
                                                          2007          2006
                                                             $             $
    ASSETS

    Current assets
      Cash                                                 156            83
      Accounts receivable                                6,104         7,637
      Inventories                                        9,244         8,017
      Income taxes receivable                              697           589
      Prepaid expenses                                   1,360           867
      Future income taxes                                  875           813
    -------------------------------------------------------------------------
    Total current assets                                18,436        18,006

    Deferred financing costs                               308           336
    Loan receivable                                        374           374
    Future income taxes                                  1,026         1,026
    Property, plant and equipment                       10,981        10,953
    Definite-life and indefinite-life intangibles        3,531         3,513
    Goodwill                                             6,262         6,262
    -------------------------------------------------------------------------

    Total assets                                        40,918        40,470
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Bank indebtedness                                  8,440         6,798
      Accounts payable and accrued liabilities           5,627         6,401
      Current portions of long-term debt                   570           568
      Current portions of balances of purchases
       payable                                             920           533
    -------------------------------------------------------------------------
    Total current liabilities                           15,557        14,300

    Convertible debenture                                  250           250
    Long-term debt                                       6,835         6,966
    Balances of purchases payable                          387           760
    Future income taxes                                  1,357         1,386
    -------------------------------------------------------------------------

    Total liabilities                                   24,386        23,662
    -------------------------------------------------------------------------

    Shareholders' equity
      Capital stock                                     14,969        15,026
      Other                                                637           607
      Retained earnings                                    926         1,175
    -------------------------------------------------------------------------

    Total common shareholders' equity                   16,532        16,808
    -------------------------------------------------------------------------

    Total common shareholders' equity and
     liabilities                                        40,918        40,470
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Divcom Lighting Inc.

    Consolidated Statements Of Earnings And Retained Earnings
    For the Period Ended February 28, 2007 and February 28, 2006
    (Unaudited - Tabular amounts in thousands of dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                      Three (3)     Three (3)
                                                   month ended   month ended
                                                   February 28,  February 28,
                                                          2007          2006
                                                             $             $

    Sales                                                7,365         8,324
    -------------------------------------------------------------------------

    Operating Expenses
      Cost of goods sold                                 4,858         5,219
      Foreign exchange                                     (15)           (1)
      Administrative and selling expenses                2,143         2,391
      Stock-based compensation                              30             -
      Amortization                                         326           303
      Interest and bank charges                            156            98
      Interest on long-term debt                           243           175
    -------------------------------------------------------------------------
                                                         7,741         8,185
    -------------------------------------------------------------------------

    (Loss) earnings before income taxes                   (376)          139
    -------------------------------------------------------------------------

    (Recovery of) provision for income taxes
      Current                                              (45)           69
      Future                                               (91)          (34)
    -------------------------------------------------------------------------

                                                          (136)           35
    -------------------------------------------------------------------------

    Net (loss) earnings                                   (240)          104

    Retained earnings, beginning of period               1,175         1,143

    Premium on redemption of shares                         (9)            -
    -------------------------------------------------------------------------

    Retained earnings, end of period                       926         1,247
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings (loss) per share

      Basic:
      Net (loss) earnings                              (0.0055)       0.0024

    Net earnings per common share - basic

      Diluted:
      Net (loss) earnings                              (0.0055)       0.0024

    Weighted average common shares outstanding
      Shares used in per-share calculation - basic      43,744        42,734
      Shares used in per-share calculation - diluted    43,751        43,743
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Divcom Lighting Inc.

    Consolidated Statements Of Cash Flows
    For the Period Ended February 28, 2007 and February 28, 2006
    (Unaudited - Tabular amounts in thousands of dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                                                      Three (3)     Three (3)
                                                   month ended   month ended
                                                   February 28,  February 28,
                                                          2007          2006
                                                             $             $

    Cash flows from operating activities
      Net (loss) earnings                                 (240)          104
    Items not requiring an outlay of cash:
      Amortization                                         326           303
      Future income taxes                                  (91)          (34)
      Stock-based compensation                              30             -
    -------------------------------------------------------------------------
                                                            25           373
    Net change in non-cash assets and liabilities
     related to operations                              (1,069)         (798)
    -------------------------------------------------------------------------
    Cash flows from operating activities                (1,044)         (425)
    -------------------------------------------------------------------------

    Cash flows from investing activities
      Acquisition of property, plant and equipment        (309)         (341)
      Acquisition of deferred financing costs                -          (122)
      Business acquisition, net of cash                      -        (5,028)
      Adjustment to business acquisition                   (35)            -
    -------------------------------------------------------------------------
    Cash flows from investing activities                  (344)       (5,491)
    -------------------------------------------------------------------------

    Cash flows from financing activities
      Bank indebtedness                                  1,642         2,192
      Proceeds from long-term debt                           -         3,485
      Repayment of long-term debt                         (129)          (85)
      Proceeds from (repayment of) balances
       of purchases payable                                 14            (6)
      Redemption of capital stock                          (66)            -
    -------------------------------------------------------------------------
    Cash flows from financing activities                 1,461         5,586
    -------------------------------------------------------------------------

    Decrease in cash                                        73          (330)
    Cash, beginning of period                               83           620
    -------------------------------------------------------------------------
    Cash, end of period                                    156           290
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: please contact: Mr. Aslam Khatri, President and
Chief Executive Officer, (514) 693-2117; Mr. Deric Vourantonis C.A.,
Vice-President, Finance, (514) 693-2117; Questions or comments may also be
addressed to the Company by e-mail at info@divcomlighting.com

Organization Profile

DIVCOM LIGHTING INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890