Coastal Contacts reports fourth consecutive quarter of record revenues


    TSX Symbol: COA

    VANCOUVER, June 14 /CNW/ - Coastal Contacts Inc. (TSX:COA) today
announced its unaudited financial results for its second fiscal quarter ended
April 30, 2007. Revenue for the second quarter grew 40% to a new quarterly
record of $24.6 million, an increase of $7.0 million versus the same period in
2006. EBITDA during the quarter was $1.0 million versus $0.5 million in the
second quarter of 2006. Although earnings per share on a fully diluted basis
remained at a break-even level, net income for the quarter grew to
$0.3 million versus $0.1 million for the same period in 2006.
    Roger Hardy, Coastal Contacts' President and CEO commented, "Our
financial results for the second fiscal quarter of 2007 reflect our ongoing
commitment to building a strategic presence in key markets for vision care
products around the world. We continue to add thousands of new customers each
quarter, the majority of whom become repeat customers, building a recurring
revenue opportunity in our core product category. We believe that there are
significant untapped opportunities to further monetize the relationship we are
building with our customers through product line expansions, some of which
will carry premium margins."
    The Company noted the following highlights for the second fiscal quarter
of 2007:

    -   Total orders shipped for the quarter increased 21% to 254,921, an
        increase of 45,027 orders over the same period in 2006

    -   Returning customers accounted for 54% of orders shipped during the

    -   Gross profit margin increased to 27% in the quarter compared to 24%
        in the second fiscal quarter of 2006

    -   Selling, general and administrative expenses (SG&A) decreased to 23%
        of sales in the quarter compared to 24% in the same period in 2006

    Mr. Hardy continued, "We believe our global platform for vision care
products represents a key strategic advantage that will provide us with
unparalleled opportunities in the coming years. We will remain focused on
leveraging our developing global infrastructure to further this advantage and
are confident that we will emerge as the worldwide leader in this market. We
believe that our combination of global presence, excellent execution, and
superior service model will enable us to deliver excellent value and returns
to our shareholders."
    The Company was pleased to note that, during the second quarter, its
wholly-owned Swedish subsidiary, Lensway, was awarded first place in the
annual Q-Survey awards for customer service in its European operations.
Lensway received the award twice in the last three years. Q-Survey is a
European company offering benchmarking and quality assurance of call centre
services through surveys and analysis. The relevant judgment criteria for the
competition included general attitude, treatment of customers, commitment,
accuracy, knowledge of products, initiative and efficiency. Lensway was set
apart from the competition due to its consistency of service across multiple
languages servicing numerous markets throughout Europe.
    Subsequent to the end of the second quarter Coastal was ranked:

    -   128th out of the top 500 e-tailers in the United States by industry
        leading Internet Retailer magazine

    -   18th in the Profit 100 listing of the fastest growing companies in
        Canada for the past five fiscal years

    The Company believes it will achieve another record quarter of revenues
in its third fiscal quarter of 2007, with gross margins to be consistent with
recent ranges. The Company expects to incur additional SG&A expense to address
a traditionally strong marketing environment in Europe, and currently expects
to incur unrealized foreign exchange losses relating to inter-company monetary
assets and liabilities that are within the Coastal group of companies. The
Company expects EBITDA to range between $0.6 million to $1.0 million without
giving effect to foreign exchange gains or losses.
    The following selected financial information is qualified in its entirety
by, and should be read in conjunction with, our unaudited consolidated
financial statements as at and for the three month period ended April 30, 2007
and related notes and Management's Discussion and Analysis of Financial
Condition and Results of Operations filed on SEDAR.
    Coastal Contacts' risks and uncertainties are discussed in detail in the
Company's 2006 Annual Information Form (AIF) filed January 29, 2007. The AIF
is available on SEDAR.
    EBITDA as referenced in this release is a non-GAAP figure and is defined
as earnings before interest, income taxes, depreciation, amortization and
share-based compensation.

                         CONSOLIDATED BALANCE SHEETS
                             (Unaudited) ($000's)

                                                       April 30,  October 31,
                                                           2007         2006

    Cash and cash equivalents                            16,688       24,273
    Short-term investments                                3,892            -
    Accounts receivable                                   6,566        7,127
    Inventory                                            12,066       12,262
    Prepaid expenses                                      1,363          702
    Due from related parties                                624          610
                                                         41,199       44,974
    Property, equipment and leasehold improvements        2,958        2,773
    Intangible assets                                    12,631       13,632
    Goodwill                                              8,323        6,697
                                                         65,111       68,076


    Accounts payable and accrued liabilities              9,541       11,793
    Income taxes payable                                    726          212
    Deferred revenue                                        241          205
    Current portion of lease inducement                      54           53
                                                         10,562       12,263
    Long-term lease inducement                              107          133
    Future income tax liability                           3,920        4,227
                                                         14,589       16,623

    Shareholders' equity
    Share capital
        Unlimited common shares without par value
        Unlimited Class A preferred shares without
         par value
      Issued and outstanding:
        73,180,412 common shares (2006 - 74,681,712)     52,439       53,515
      Shares held in Treasury
        674,500 common shares (2006 - 42,700)              (605)         (41)
    Contributed surplus                                     713          530
    Accumulated other comprehensive income               (2,083)      (2,135)
    Retained earnings (deficit)                              58         (416)
                                                         50,522       51,453
                                                         65,111       68,076

                             (Unaudited) ($000's)

                                                        Three months ended
                                                       April 30     April 30
                                                           2007         2006

    Sales                                                24,602       17,603
    Cost of sales                                        17,977       13,315
    Gross profit                                          6,625        4,288

    Selling, general and administration expenses          5,767        4,277
    Share-based compensation                                 77           19
    Amortization on property, equipment and
     leasehold improvements                                 214          172
    Amortization on intangible assets                       243          118
    Foreign exchange gains                                 (149)        (464)
    Interest income, net                                   (198)        (271)
    Income before income taxes                              671          437
    Income tax expense - current                            385          154
    Income tax expense (recovery) - future                  (27)         183
    Net income                                              313          100

    Coastal Contacts will host a conference call on Thursday, June 14, 2007
at 4:30pm (EST) to discuss financial results and Company operations.
    To attend the conference call, participants in Toronto may dial
416-850-9140. Participants outside the greater Toronto area may dial the North
American toll-free number 1-866-400-3320.
    A replay of the call will be available for 7 days. To access the replay
in Toronto listeners may dial 416-915-1035. The North American toll-free
number for the replay is 1-866-245-6755. The passcode to access the replay is

    About Coastal Contacts:

    Coastal Contacts is the world's fastest-growing vision care supplier.
Leveraging its world class operations in Europe, North America and Asia,
Coastal is building a predictable recurring revenue stream in the contact lens
segment and is developing complementary branded vision care products. Already
No.1 in most of its markets, Coastal is rapidly advancing toward its goal of
becoming the dominant global vision care supplier.

    This news release contains certain forward-looking statements that
reflect the current views and/or expectations of Coastal Contacts Inc. with
respect to its performance, business and future events. Investors are
cautioned that all forward-looking statements involve risks and uncertainties
including, without limitation, those relating to changes in the market,
potential downturns in economic conditions, limited suppliers, inventory risk,
disruption in our distribution facilities, foreign exchange fluctuations,
regulatory requirements, demand for contact lenses, competition and dependence
on the internet. These risks, as well as others, could cause actual results
and events to vary significantly. Coastal Contacts does not undertake any
obligations to release publicly any revisions for updating any voluntary
forward-looking statements.

    Neither the TSX nor any other regulatory body has reviewed and therefore
    does not accept responsibility for the adequacy or accuracy of this

For further information:

For further information: Terry Vanderkruyk, Vice President, Corporate
Development, Coastal Contacts Inc., (604) 676-4498,

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