Burntsand Releases Third Quarter 2009 Results

TORONTO, ON, November 5, 2009 /CNW/ - Burntsand Inc. (Burntsand) (TSX:BRT) a North American business consulting and technology services company today reported revenue and earnings results for its third quarter ended September 30, 2009.

    
    Third Quarter 2009 Financial Results Highlights (000's) - unaudited

                          Three months ended          Nine months ended
                             September 30,               September 30,
                          2009          2008          2009          2008
                      ------------- ------------- ------------- -------------
    Service revenue   $      4,564  $      5,577  $     15,855  $     15,736
    Adjusted EBITDA
     (loss)(1)                 (47)          350           (21)          153
    Net income (loss)         (140)          217          (394)         (235)


                                        As at         As at         As at
                                      30-Sep-09     31-Dec-08     30-Sep-08
                                    ------------- ------------- -------------
    Cash and cash
     equivalents                    $      3,664  $      4,876  $      4,697
    Working capital                        5,903         6,359         5,111
    

Results for the Third Quarter ended September 30, 2009

Service revenues for the third quarter of 2009 were $4.6 million compared to $5.6 million for the third quarter of 2008. US operations contributed $3.3 million (US$3.0 million) of service revenue for the quarter, compared to $4.1 million (US$3.9 million) for the third quarter of 2008. The US$0.9 million decline in service revenue included a US$0.4 million decrease in revenue from the US Collaborative practice with the balance of US$0.5 million in the US Enterprise Content Management Practice. The reductions in service revenue are primarily related to the completion of 4 large projects subsequent to the end of the third quarter of 2008. Gross profit on services revenue was 32.2% for the third quarter of 2009 compared to 34.5% for the third quarter of 2008.

Adjusted EBITDA(1) (loss) for the third quarter of 2009 was ($47,138) compared to Adjusted EBITDA of $350,153 for the third quarter of 2008. Net loss for the third quarter of 2009 was ($140,446) or ($0.00) per share compared to net income of $216,821 or $0.00 per share for the third quarter of 2008.

Backlog as at September 30, 2009 was $4.6 million compared to $8.0 million as at September 30, 2008.

Results for the Nine Month Period ended September 30, 2009

Service revenues for the nine month period ended September 30, 2009 were $15.9 million compared to $15.7 million for the same period in 2008. US operations contributed $11.3 million (US$9.7 million) of service revenue for the nine month period ended September 30, 2009 compared to $11.1 million (US$10.9 million) for the same period in 2008. Gross profit on services revenue was 29.3% for the nine month period ended September 30, 2009 compared to 31.2% for the same period in 2008.

Adjusted EBITDA (loss) for the nine month period ended September 30, 2009 was ($20,905) compared to Adjusted EBITDA of $153,074 for the same period in 2008. Net loss for the first nine months of 2009 was ($393,841) or ($0.01) per share compared to a net loss of ($234,810) or ($0.00) per share for the first nine months of 2008. The net loss for the first nine months of 2009 included a non-recurring realized currency translation loss of $53,550.

Financial Position at September 30, 2009

As at September 30, 2009 the Company held cash and short-term investments of $3.7 million and working capital of $5.9 million. This compared to $4.7 million of cash and short-term investments and working capital of $5.1 million as at September 30, 2008. The Company has not borrowed under its US $2.5 million line of credit.

"While our cash, working capital and balance sheet remain healthy we are intensely focused on sales and marketing activities to begin to create growth," said Martin Glover, Burntsand's President and Chief Executive Officer. "We continue to focus on delivering cost effective solutions in our Collaboration, Enterprise Content Management and Service Management practices in order to enhance our competitive position," added Mr. Glover.

The Company has filed its financial statements and management's discussion and analysis on SEDAR at www.sedar.com. This information includes various metrics and performance measurements used by the company, including utilization, project data, new customers and new contract information.

As always we invite your comments and encourage you to follow the progress of the company on the Burntsand website at www.burntsand.com.

About Burntsand

Burntsand is a leader in the delivery of technology consulting services for customers with complex information processing and information management requirements in three practice areas - Enterprise Content Management, Collaboration and Service Management - aligned around our strategic partners, EMC, Microsoft and BMC. The Company delivers strategic design, technology architecture and custom application development through our proven Time-to-Value methodology, which mitigates business risk and speeds process improvements and returns. Headquartered in Toronto, Burntsand operates from locations across North America. The Company's shares (TSX: BRT) are traded on the Toronto Stock Exchange. Learn more about Burntsand at www.burntsand.com.

Forward Looking Statements

Certain information in this press release and in other public announcements contains forward-looking information. Such statements include, but are not limited to, statements which indicate the results, events or activities that Burntsand expects or anticipates will or may occur in the future, including statements which give guidance as to future revenues or other financial results of Burntsand and statements regarding the growth of business or operations, competitive strengths and strategic initiatives and plans. Such forward-looking statements can generally be identified by words such as "outlook", "guidance", "estimate", "forecast", "objective", "anticipate", "intend", "likely", "will", "may", "should", "could", "expect", "believe", and similar expressions and statements relating to matters that are not historical facts.

The forward-looking statements in these documents are based upon the reasonable beliefs of Burntsand and its management as of the date the information; however, forward-looking statements involve risks and uncertainties and are based upon factors that may change and assumptions that may prove, with the passage of time, to be incorrect. Accordingly, undue reliance should not be placed upon such statements. If factors materially change or assumptions are materially incorrect, the actual results, performance or achievements of Burntsand may be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements.

Important factors that could cause actual results, events or activities to differ materially from the forward-looking statements contained in this press release include: general economic business conditions; loss of key employees; integration of acquisitions; stock market volatility; supply and demand for services offered by Burntsand; changes in laws and regulations; Burntsand's ability to compete successfully, protect its intellectual property rights, and adapt to technological advances and changing industry standards and other factors. Important assumptions that were used in making the forward-looking statements include: effective daily rates, estimated utilization, estimated new bookings and realization on contracts.

All statements made in these documents that contain forward-looking information are made as of the date of this document. Burntsand disclaims any intention and undertakes no obligation to update or revise any forward-looking statements to reflect new information, future events or otherwise.

    
    Note

    (1) Adjusted EBITDA
    -------------------
    Adjusted EBITDA is defined as earnings before interest, taxes,
    depreciation, amortization, stock-based compensation expense as well as
    any realized foreign currency translation losses or gains. Burntsand uses
    Adjusted EBITDA, amongst other measures, to assess the operating
    performance of its on-going businesses. The term Adjusted EBITDA does not
    have a standardized meaning prescribed by Canadian generally accepted
    accounting principles and therefore may not be comparable to similarly
    titled measures presented by other companies. Adjusted EBITDA should not
    be construed as the equivalent of net cash flows from operating
    activities. The following is a reconciliation of net income (loss) to
    Adjusted EBITDA for the periods indicated:

                          Three months ended          Nine months ended
                             September 30,               September 30,
                      --------------------------- ---------------------------
                          2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

    Net income (loss)
     for the period   $   (140,446) $    216,821  $   (393,841) $   (234,810)
    Amortization of
     capital assets
     and intangibles        61,196        78,554       202,769       249,097
    Interest and
     investment income      (6,062)      (13,908)      (21,728)      (54,477)
    Interest expense and
     financing costs         4,307        10,260        44,600        28,216
    Income tax expense           -        13,477             -        38,674
                      --------------------------- ---------------------------
    Standardized EBITDA    (81,005)      305,204      (168,200)       26,700
    Realized currency
     translation loss            -             -        53,550             -
    Stock-based
     compensation           33,867        44,949        93,745       126,374
                      --------------------------- ---------------------------
    Adjusted EBITDA
     (loss)           $    (47,138) $    350,153  $    (20,905) $    153,074
                      --------------------------- ---------------------------
                      --------------------------- ---------------------------



    BURNTSAND INC.
    Consolidated Balance Sheets

    -------------------------------------------------------------------------
                                                  September 30,  December 31,
                                                       2008          2007
                                                  ------------- -------------

                                                   (unaudited)
    ASSETS

    CURRENT
      Cash and cash equivalents                   $  3,663,574  $  4,876,377
      Accounts receivable                            3,775,880     5,216,377
      Prepaid expenses                                 599,553       241,252
    -------------------------------------------------------------------------
                                                     8,039,007    10,334,006
    Capital assets                                     490,180       815,441
    Goodwill                                           156,092       177,566
    -------------------------------------------------------------------------
                                                  $  8,685,279  $ 11,327,013
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued liabilities    $  1,773,768  $  2,828,319
      Deferred revenue                                 332,450     1,046,277
      Current portion of obligations under
       capital leases                                   29,883       100,089
    -------------------------------------------------------------------------
                                                     2,136,101     3,974,685
    Long-term portion of obligations under
     capital leases                                          -         4,926
    -------------------------------------------------------------------------
                                                     2,136,101     3,979,611
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
      Common shares                                  9,611,454     9,611,454
      Contributed surplus                            1,418,762     1,325,017

      Deficit                                       (2,632,902)   (2,239,061)
      Accumulated other comprehensive loss          (1,848,136)   (1,350,008)
    -------------------------------------------------------------------------
                                                    (4,481,038)   (3,589,069)
    -------------------------------------------------------------------------
                                                     6,549,178     7,347,402
    -------------------------------------------------------------------------
                                                  $  8,685,279  $ 11,327,013
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BURNTSAND INC.
    Consolidated Statements of Operations

    -------------------------------------------------------------------------
                          Three months ended          Nine months ended
                             September 30,               September 30,
                      --------------------------- ---------------------------
                          2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

                       (unaudited)   (unaudited)   (unaudited)   (unaudited)

    REVENUE
      Services        $  4,563,787  $  5,576,956  $ 15,854,591  $ 15,736,434
      License and
       maintenance          33,010       845,259       134,364     1,432,195
      Other revenue        175,054       254,042       611,156       676,592
    --------------------------------------------- ---------------------------
                         4,771,851     6,676,257    16,600,111    17,845,221
    --------------------------------------------- ---------------------------

    COSTS
      Cost of services   3,095,493     3,652,635    11,203,371    10,829,516
      Cost of license
       and maintenance      27,378       813,969       107,081     1,366,443
      Cost of other
       revenue             162,032       237,915       566,882       628,106
    --------------------------------------------- ---------------------------
                         3,284,903     4,704,519    11,877,334    12,824,065
    --------------------------------------------- ---------------------------
    GROSS PROFIT         1,486,948     1,971,738     4,722,777     5,021,156
    --------------------------------------------- ---------------------------
    EXPENSES
      Sales and
       marketing           485,264       498,253     1,599,884     1,468,231
      General and
       administrative      645,053       599,045     1,868,729     1,849,133
      Other expenses       437,636       569,236     1,368,814     1,677,092
    --------------------------------------------- ---------------------------
                         1,567,953     1,666,534     4,837,427     4,994,456
    --------------------------------------------- ---------------------------

    Income (loss)
     before the
     undernoted            (81,005)      305,204      (114,650)       26,700
      Realized currency
       translation loss          -             -       (53,550)            -
      Amortization of
       capital assets      (61,196)      (78,554)     (202,769)     (249,097)
      Interest and
       investment
       income                6,062        13,908        21,728        54,477
      Interest expense
       and financing
       costs                (4,307)      (10,260)      (44,600)      (28,216)
    --------------------------------------------- ---------------------------
    Income (loss)
     before income
     taxes                (140,446)      230,298      (393,841)     (196,136)
    Income tax expense           -       (13,477)            -       (38,674)
    --------------------------------------------- ---------------------------
    NET INCOME (LOSS)
     FOR THE PERIOD   $   (140,446) $    216,821  $   (393,841) $   (234,810)
    --------------------------------------------- ---------------------------
    --------------------------------------------- ---------------------------

      Net income
       (loss), basic
       and diluted,
       per share      $      (0.00) $       0.00  $      (0.01) $      (0.00)
    --------------------------------------------- ---------------------------
    --------------------------------------------- ---------------------------

    Weighted average
     number of common
     shares used to
     calculate per
     share amounts,
     basic and diluted  72,660,220    72,660,220    72,660,220    72,622,264
    --------------------------------------------- ---------------------------



    BURNTSAND INC.
    Consolidated Statements of Cash Flows

    -------------------------------------------------------------------------
                          Three months ended          Nine months ended
                             September 30,               September 30,
                      --------------------------- ---------------------------
                          2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

                       (unaudited)   (unaudited)   (unaudited)   (unaudited)

    CASH FLOWS FROM
     OPERATING
     ACTIVITIES
      Net income
       (loss) for the
       period         $   (140,446) $    216,821  $   (393,841) $   (234,810)
      Items not
       affecting cash:
        Amortization of
         capital assets
         and intangibles    61,196        78,554       202,769       249,097
        Amortization of
         assets used in
         outsourcing
         contract           36,883        44,260       125,403       132,780
        Realized
         currency
         translation
         loss                    -             -        53,550             -
         Stock-based
          compensation      33,867        44,949        93,745       126,374
         ---------------------------------------- ---------------------------
                            (8,500)      384,584        81,626       273,441
      Changes in
       operating assets
       and liabilities:
        Accounts
         receivable       (615,272)      (55,412)    1,133,032      (129,029)
        Prepaid expenses  (349,117)      (58,946)     (371,530)     (128,102)
        Accounts payable
         and accrued
        liabilities         42,123       752,460      (932,707)      528,112
        Deferred revenue    81,150       586,676      (711,186)      484,819
    --------------------------------------------- ---------------------------
                          (849,616)    1,609,362      (800,765)    1,029,241
    --------------------------------------------- ---------------------------

    CASH FLOWS FROM
     INVESTING ACTIVITIES
      Purchase of capital
       assets, net of
       related accounts
       payable              (6,099)      (10,300)       (8,873)     (115,400)
    --------------------------------------------- ---------------------------
                            (6,099)      (10,300)       (8,873)     (115,400)
    --------------------------------------------- ---------------------------

    CASH FLOWS FROM
     FINANCING ACTIVITIES
      Payments on capital
       lease obligations   (30,301)      (31,645)      (98,747)      (94,324)
      Issue of common
       shares                    -             -             -             -
    --------------------------------------------- ---------------------------
                           (30,301)      (31,645)      (98,747)      (89,324)
    --------------------------------------------- ---------------------------
    NET CASH INFLOW
     (OUTFLOW)            (886,016)    1,567,417      (908,385)      824,517
    EFFECT OF FOREIGN
     EXCHANGE RATE
     CHANGES ON CASH      (184,966)      134,471      (304,418)      228,774
    CASH (EXCLUDING
     SHORT TERM
     INVESTMENTS),
     BEGINNING OF
     PERIOD              4,734,556     2,995,335     4,876,377     3,643,932
    --------------------------------------------- ---------------------------
    CASH (EXCLUDING
     SHORT TERM
     INVESTMENTS),
     END OF PERIOD    $  3,663,574  $  4,697,223  $  3,663,574  $  4,697,223
    --------------------------------------------- ---------------------------
    --------------------------------------------- ---------------------------
    

%SEDAR: 00007529E

SOURCE BURNTSAND INC.

For further information: For further information: Martin Glover, President & CEO, Voice: (617) 923-6611, Email: MGlover@burntsand.com; Stephen W. Massel, CFO, Voice: (416) 234-3852, Email: SMassel@burntsand.com

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BURNTSAND INC.

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