Circa Reports a Strong Improvement in Profitability in the Second Quarter
Ended June 30, 2010 and Common Shares Issued Under Share Acquisition Plan
CALGARY, Aug. 11 /CNW/ - Circa Enterprises Inc. (CTO-TSXV) (the "Company" or "Circa"), a manufacturer of equipment for the telecommunication, electrical utility, and construction industries, reports results of operations for the second quarter ended June 30, 2010 and the issuance of common shares under a share acquisition plan.
SECOND QUARTER RESULTS
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Summary of second quarter operating results:
- Consolidated sales of $6.8 million were 1% less than the second
quarter 2009 sales of $6.9 million
- Adjusted EBITDA of $0.8 million for the quarter compared to $0.5
million in the second quarter of 2009 (see below for calculation
of Adjusted EBITDA)
- Net income of $0.5 million or $0.05 per share, as compared to a
net loss of $0.3 million or $0.04 per share in the second quarter
of 2009
- Operating cash flow increased $0.5 million to $0.2 million
compared to the second quarter of 2009
Summary of year-to-date operating results:
- Consolidated sales of $12.1 million for the six-month period ended
June 30, 2010, which were 6% lower than the six-month period ended
June 30, 2009, sales of $12.9 million
- Adjusted EBITDA of $1.0 million for the six-month period ended
June 30, 2010 compared to negative $0.2 million for the six-month
period ended June 30, 2009 (see below for calculation of Adjusted
EBITDA)
- Net income of $0.6 million or $0.06 per share as compared to a net
loss of $1.0 million or $0.10 per share for the first six months
of 2009
- Debt reduction of over $0.6 million during the six month period
ended June 30, 2010
Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization and is adjusted for other non-recurring items and non-cash items, including asset impairment charges and restructuring costs. Adjusted EBITDA is a non-GAAP financial measure and does not have any standardized meaning prescribed by Canadian generally accepted accounting principles and is, therefore, unlikely to be comparable to similar measures presented by other issuers. Management believes that EBITDA is a useful supplemental measure, which provides an indication of the results generated by Circa's primary business activities prior to consideration of how those activities are financed, amortized or taxed. Readers are cautioned, however, that EBITDA should not be construed as an alternative to net earnings (loss) determined in accordance with GAAP as an indicator of the Company's financial performance. Adjusted EBITDA is calculated by the Company as follows:
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(unaudited) (unaudited) (unaudited) (unaudited)
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
$ $ $ $
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Net earnings (loss) and
comprehensive
earnings (loss) 502 (338) 574 (985)
Provision for (recovery of)
income taxes 151 82 217 (151)
Interest 27 28 45 58
Depreciation and
amortization 104 103 199 209
Foreign currency
translation loss (gain) (14) 244 (49) 203
Restructuring costs - 392 - 450
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770 511 986 (216)
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Circa's consolidated sales in the second quarter of 2010 were $6.8 million -- a $0.1 million or 1% less than over the same period in 2009 -- the decline in sales were attributable to a decrease in the surge protection division. The decrease in the quarter was largely driven by the exchange rate as the bulk of this division's sales are denominated in US dollars and the US dollar weakened compared to the Canadian dollar when compared to the prior year. Sales in the Circa Metals business increased in the quarter compared to the prior year.
The Company's gross profit, defined as sales less cost of sales, was consistent in the second quarter of 2010 at $1.7 million compared to the prior year. Both sales and margins were relatively consistent, despite a slightly different product mix compared to the prior year.
The cost reductions in 2009 from the Company's restructuring efforts, which involved streamlining operations, reductions in the cost of certain raw materials, moving product manufacturing offshore and the consolidating operations have allowed the Company to achieve positive earnings from operations for the second straight quarter. These restructuring changes helped improve net earnings from a loss of $0.3 million in Q2 2009 to net earnings of $0.5 million in Q2 2010. The Company was able to boost Adjusted EBITDA from $0.5 million in Q2 2009 to $0.8 million in Q2 2010.
CIRCA ENTERPRISES INC.
Consolidated Balance Sheets
(000's of Canadian dollars)
Unaudited
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As at June 30, December 31,
2010 2009
$ $
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ASSETS
Current
Cash 153 350
Accounts receivable 4,017 3,588
Income taxes recoverable - 58
Inventory 5,605 5,842
Prepaid expenses 263 295
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10,038 10,133
Property, plant and equipment 990 1,086
Assets held for sale 105 105
Deferred charges 224 286
Intangible assets 19 17
Future income taxes 616 782
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11,992 12,409
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LIABILITIES
Current
Bank indebtedness 2,749 3,391
Accounts payable and accrued liabilities 2,093 2,476
Current income taxes 60 -
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4,902 5,867
Future income taxes 12 38
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4,914 5,905
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SHAREHOLDERS' EQUITY
Share capital 2,710 2,710
Contributed surplus 2 2
Retained earnings 4,366 3,792
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7,078 6,504
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11,992 12,409
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CIRCA ENTERPRISES INC.
Consolidated Statements Operations and Retained Earnings
(000's of Canadian dollars, except per share amounts)
Unaudited
-------------------------------------------------------------------------
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
$ $ $ $
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SALES 6,817 6,885 12,088 12,904
COST OF SALES
Direct costs 5,128 5,160 9,210 10,396
Depreciation and
amortization 37 45 75 90
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1,652 1,680 2,803 2,418
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EXPENSES
Selling, general and
administrative 909 1,211 1,882 2,723
Depreciation and
amortization 67 58 124 119
Restructuring costs - 392 - 450
Interest 27 28 45 58
Loss on disposal of assets 10 3 10 1
Foreign currency
translation (gain) loss (14) 244 (49) 203
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999 1,936 2,012 3,554
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EARNINGS (LOSS) BEFORE
INCOME TAXES 653 (256) 791 (1,136)
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PROVISION FOR (RECOVERY OF)
INCOME TAXES
Current 30 (232) 77 (192)
Future 121 314 140 41
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151 82 217 (151)
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NET EARNINGS (LOSS) AND
COMPREHENSIVE
EARNINGS (LOSS) 502 (338) 574 (985)
RETAINED EARNINGS,
BEGINNING OF PERIOD 3,864 4,376 3,792 5,023
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RETAINED EARNINGS,
END OF PERIOD 4,366 4,038 4,366 4,038
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EARNINGS (LOSS) PER SHARE
Basic and diluted 0.05 (0.04) 0.06 (0.10)
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CIRCA ENTERPRISES INC.
Consolidated Statements of Cash Flows
(000's of Canadian dollars)
Unaudited
-------------------------------------------------------------------------
Three Three Six Six
months months months months
ended ended ended ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
$ $ $ $
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CASH FLOWS RELATED TO THE
FOLLOWING ACTIVITIES:
OPERATING
Net earnings (loss) 502 (338) 574 (985)
Adjustments for:
Depreciation and
amortization 104 103 199 209
Loss on disposal
of assets 10 3 10 1
Stock compensation
expense - 5 - 5
Future income taxes 121 314 140 41
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737 87 923 (729)
Changes in non-cash
working capital (491) (330) (444) 390
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246 (243) 479 (339)
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FINANCING
(Decrease) increase in
bank indebtedness (374) 676 (642) 791
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INVESTING
Purchase of property,
plant and equipment (36) (7) (50) (32)
Proceeds from sale of
property, plant and
equipment - - - 6
Additions to deferred
charges - (9) - (41)
Additions to intangible
assets - (1) (3) (6)
Changes in non-cash
working capital 5 (2) 19 (24)
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(31) (19) (34) (97)
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NET (DECREASE) INCREASE
IN CASH (159) 414 (197) 355
CASH, BEGINNING OF PERIOD 312 196 350 255
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CASH, END OF PERIOD 153 610 153 610
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COMMON SHARES ISSUED UNDER ACQUISITION PLAN
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On August 11, 2010 the Company issued an aggregate of 62,500 common shares to its directors pursuant to the Company's share acquisition plan at a deemed price of $0.40 per share in lieu of the cash annual retainer otherwise payable to such directors.
Circa Enterprises Inc. is a public company with offices in Alberta, Ontario and Florida. The outstanding common shares of Circa Enterprises Inc. are listed and trade on the TSX Venture Exchange under the trading symbol CTO. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The Company's first quarter financial statements and related management's discussion and analysis have been filed with certain securities regulatory authorities in Canada and may be accessed electronically through the SEDAR website at www.sedar.com and the Company's website at www.circaent.com.
%SEDAR: 00002951E
For further information: Mr. Ivan Smith, President and CEO, Circa Enterprises Inc., (403) 258-2011; Mr. Cory Tamagi, VP Finance and CFO, Circa Enterprises Inc., (403) 258-2011; E-Mail: [email protected], Website: www.circaent.com
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