20-20 Technologies Reports Third Quarter Results
LAVAL, QC,
Highlights
- Third quarter revenues of $16.1 million compared to $20.4 million for
the same period in 2008, and $15.2 million in Q2 2009
- EBITDA increased to $2.2 million or 13.5% for the quarter from
$0.9 million or 4.4% in 2008. The fourth consecutive quarter with
EBITDA exceeding $2 million
- Net earnings of $1.0 million, or $0.06 per share, compared to a loss of
$1.6 million, or 0.08 per share, for the third quarter of last year
"The significant year-over-year improvement is a reflection of our continuing cost reduction initiatives. During the third quarter, we again successfully protected our EBITDA, cash position as well as our recurring revenues and market share in all of our key markets. Although above our set target of
Jean-François Grou, Chief Operating Officer stated that market conditions in
"In European markets, conditions are very similar to those in
Revenues
Third quarter revenues decreased by 20.9% to
Revenues from license sales declined by 25.7%, or
Operating Income
Operating income for the third quarter was
EBITDA increased to
This improvement reflects the restructuring and cost reduction plans implemented in 2008 and early in 2009 which reduced staff by approximately 135 positions and annual operating expenses by
Net Earnings
The Company generated net earnings of
Key Events of Q3
- 20-20 Technologies and Elica jointly unveiled the hoods manufacturer's
new catalog on 20-20 Design, the industry-leading kitchen and bath
design software.
- 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 3D web application, 20-20 Virtual Planner.
- Hickory Business Furniture (HBF), with the help of 20-20 Technologies'
professional services team, implemented 20-20's Enterprise inSight.
- 20-20 Technologies redesigned its business portal: www.2020.net. The
portal centralizes data interchange between manufacturers and their
dealers.
- Indiana Furniture, a U.S. independent mid-market case goods
manufacturer, deepened its longstanding relationship with 20-20 by
selecting 20-20's Enterprise inSight solution as its new Enterprise
Resource Planning solution for its five plants in Jasper, Indiana.
- 20-20 launched ShopWare Solutions, a line of manufacturing solutions
dedicated to improving the business processes of small and medium-sized
cabinet makers.
- Thermwood, a manufacturer of CNC router systems and a technology leader
in nested based applications, joined with 20-20 to offer an integrated,
highly productive manufacturing system for cabinet manufacturers.
- Optima, China's largest Kitchen and Closet manufacturer has signed a
deal for 20-20's Closet Design solution
Subsequent to Q3
- 20-20 announced that it has entered into a seven (7) year term loan
agreement with Investissement Québec of C$5 million. The funds will be
used for general working capital purposes. 20-20 has amended the
Canadian banking arrangements with its principal lenders to take this
loan into account and address all outstanding covenant issues.
- 20-20 launched its 2010 versions of 20-20 CAP Studio, 20-20 Worksheet,
20-20 Giza Studio, and 20-20 Office Sales, all of which offer new
features developed to simplify our customers' daily business routine.
Outlook
"It is still too early to report any material signs of recovery in the majority of our markets, but improvement is expected through 2010 supported by many leading indicators to our business bottoming out or turning positive in recent months. In the
"Our International business continues to show signs of improvement, mostly in
Conference Call Information
20-20 will host a conference call to discuss the third quarter results
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
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
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.
20-20 Technologies Inc.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of U.S. dollars)
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July 31, October 31,
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2009 2008
Restated
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(Unaudited) (Audited)
$ $
ASSETS
Current assets
Cash and cash equivalents 15,534 13,487
Short-term investments - 1,644
Accounts receivable 18,327 17,538
Income taxes receivable 279 585
Contracts in progress 296 267
Prepaid expenses 1,306 1,244
Future income taxes 484 598
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36,226 35,363
Property and equipment 2,567 2,894
Intangibles 9,697 10,417
Goodwill 58,378 52,367
Future income taxes 1,940 1,500
Other assets 587 519
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109,395 103,060
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LIABILITIES
Current liabilities
Accounts payable 9,828 12,665
Income taxes payable 2,079 1,465
Deferred revenue 16,251 12,481
Long-term debt 37 3,805
Future income taxes 261 -
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28,456 30,416
Long-term debt 10,817 11,824
Leasehold inducements 448 364
Non-controlling interest 10 33
Future income taxes 3,771 3,756
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43,502 46,393
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SHAREHOLDERS' EQUITY
Capital stock 58,582 58,647
Common stock options 1,091 1,145
Contributed surplus 1,015 961
Deficit (5,003) (6,883)
Accumulated other comprehensive income 10,208 2,797
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5,205 (4,086)
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65,893 56,667
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109,395 103,060
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20-20 Technologies Inc.
CONSOLIDATED EARNINGS
(Amounts in thousands of U.S. dollars, except earnings per share,
unaudited)
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Three months ended Nine months ended
July 31 July 31
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2009 2008 2009 2008
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$ $ $ $
Revenues
License sales 4,816 6,479 12,951 19,821
Maintenance and other
recurring revenues 8,460 9,314 24,340 26,586
Professional services 2,872 4,614 9,635 12,639
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16,148 20,407 46,926 59,046
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Cost of revenues
License sales 605 709 1,541 2,205
Maintenance and services 3,574 4,631 10,530 14,284
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4,179 5,340 12,071 16,489
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Gross margin 11,969 15,067 34,855 42,557
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Operating expenses
Sales and marketing 4,281 7,026 12,515 20,088
Research and development 3,193 4,985 9,074 12,856
General and administrative 3,192 3,486 8,627 10,761
Restructuring costs - 968 - 968
Stock-based compensation 89 (46) 99 67
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10,755 16,419 30,315 44,740
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Operating income (loss) 1,214 (1,352) 4,540 (2,183)
Financial expenses (income) 7 537 1,703 (495)
Non-controlling interest 8 (9) (24) 17
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Earnings before income taxes 1,199 (1,880) 2,861 (1,705)
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Income taxes
Current 256 (288) 1,255 (683)
Future (102) (6) (240) 4
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154 (294) 1,015 (679)
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Net earnings 1,045 (1,586) 1,846 (1,026)
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Earnings per share
Basic 0.06 (0.08) 0.10 (0.05)
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Diluted 0.06 0.10
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20-20 Technologies Inc.
CONSOLIDATED CASH FLOWS
(Amounts in thousands of U.S. dollars, unaudited)
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Three months ended Nine months ended
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July 31 July 31
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2009 2008 2009 2008
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$ $ $ $
OPERATING ACTIVITIES
Net earnings 1,045 (1,586) 1,846 (1,026)
Non-cash items
Amortization 972 1,290 2,810 3,520
Leasehold inducements 12 (27) 33 -
Stock-based compensation 89 (37) 83 (6)
Capitalized interest on
long term debt 7 6 21 19
Non-controlling interest 8 - (24) -
Future income taxes (102) (6) (240) 4
Unrealized loss (gain) on
long term debt exchange (1,182) 243 (1,416) 353
Unrealized loss (gain) on
forward exchange contracts (186) - (117) -
Changes in working capital
items 1,000 128 242 (2,054)
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Cash flows from (used in)
operating activities 1,663 11 3,238 810
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INVESTING ACTIVITIES
Business acquisitions 664 (757) 664 (41,587)
Short-term investments - - (1,625) -
Short-term investments
dispositions - - 3,235 17,597
Property and equipment (156) (125) (301) (812)
Other assets (2) (1) (2) 654
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Cash flows from (used in)
investing activities 506 (883) 1,971 (24,148)
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FINANCING ACTIVITIES
Increased in long-term debt - - - 15,000
Repayment of long-term debt (9) (32) (4,798) (87)
Options exercised - 11 - 63
Common shares repurchased - (40) (31) (243)
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Cash flows from (used in)
financing activities (9) (61) (4,829) 14,733
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Effect of changes in exchange
rate on cash held in foreign
currencies 819 (43) 1,667 (1,395)
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Net increase (decrease) in
cash and cash equivalents 2,979 (976) 2,047 (10,000)
Cash and cash equivalents,
Beginning of period 12,555 16,256 13,487 25,280
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Cash and cash equivalents,
end of period 12,534 15,280 15,534 15,280
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For further information: Media Relations: MaisonBrison: Rick Leckner, (514) 731-0000
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