DEQ Reports its 2012 Third Quarter Results
LEVIS, QC, Oct. 25, 2012 /CNW Telbec/ - DEQ Systems Corp. (TSXV: DEQ) ("DEQ" or the "Company") announces today the filing of its third quarter financial results for the period ended August 31, 2012. The Consolidated Financial Statements are available on SEDAR (www.sedar.com) and DEQ's website. A conference call will be held on Friday, October 26, 2012 at 11am EST to present and discuss these results. Those interested in participating should dial toll free 1 (800) 768-5121 or (416) 981-9000. A visual presentation (PowerPoint) will be available on DEQ's website in the Investors/Financial Reports/Presentation section to support the call content.
2012 THIRD QUARTER HIGHLIGHTS:
- Revenue
- 58% increase in direct leasing revenue from $708,000 in the third quarter of 2011 to $1,116,000 in the third quarter of 2012.
- 75% increase in direct leasing revenue from $1,750,000 for the nine month period ending August 31, 2011 to $3,055,000 for the nine month period ending August 31, 2012.
- 23% increase in gross profit from $1,041,000 in the third quarter of 2011 to $1,280,000 in the third quarter of 2012.
- Operating Costs
- Third quarter operating cost increased 27% to $1,194,000 from $939,000 due to a significant increase in installations in Asia and the readjustment of operations to support growth including permanent staff in Asia.
- On a sequential basis from the second quarter of 2012, operating costs declined 11% due to ongoing cost reductions and seasonality.
- EBITDA
- EBITDA of $85,000 in the third quarter of 2012 versus EBITDA of $102,000 in the third quarter of 2011, however on a sequential basis EBITDA for the third quarter improved significantly from a loss of $178,000 in the second quarter of 2012.
- Cash Flow
- During the third quarter of 2012, our cash position decreased by $346,000 to $910,000. This is explained mostly by purchase of inventory for an amount of $125,000 as well as variation of working capital items (accounts receivable, prepaid and accounts payable) for a net amount of $180,000.
- Product Installations
- 106 net installations during the third quarter of 2012 at an average lease price of $3,500 per annum, representing an increase of approximately $370,000 of new recurring revenue per year.
- As of August 31, 2012 a total of 1,636 units installed worldwide with an average net recurring revenues of $3,500. DEQ operates 1,291 products directly worldwide and another 345 are operated by distributors.
"DEQ has once again delivered a strong growth quarter," stated Earle G. Hall, President & CEO of DEQ. "Our core business is growing in all product segments and we are entering a new economy of scale with regards to our operational costs. The Asian and the Australian markets are becoming significant sources of revenue and growth while the USA and Canada are growing at an accelerating pace. Our next significant benchmark is to increase our cash position which we expect in the very near future and we are very confident that we have sufficient funds to sustain our growth."
| Statement of Earnings | |||||||||
| (unaudited) | Third Quarter | Nine-month Period | |||||||
| August 31, 2011 |
August 31, 2012 |
August 31, 2011 |
August 31, 2012 |
||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||
| Direct leasing | 708,000 | 1,116,000 | 1,750,000 | 3,055,000 | |||||
| Royalties (1) | 376,000 | 279,000 | 1,017,000 | 874,000 | |||||
| Total recurring revenue | 1,084,000 | 1,395,000 | 2,767,000 | 3,929,000 | |||||
| Non recurring revenue (1) | 90,000 | 17,000 | 611,000 | 59,000 | |||||
| Total Revenue | 1,174,000 | 1,412,000 | 3,378,000 | 3,988,000 | |||||
| Gross Profit | 1,041,000 | 1,279,000 | 2,764,000 | 3,505,000 | |||||
| % Gross margin | 87 % | 91 % | 82 % | 88 % | |||||
| Operating Costs | 939,000 | 1,194,000 | 3,193,000 | 3,795,000 | |||||
| EBITDA (2) | 102,000 | 85,000 | (429,000) | (290,000) | |||||
| Stock based compensation | 26,000 | 20,000 | 319,000 | 66,000 | |||||
| Amortization expenses | 629,000 | 711,000 | 1,872,000 | 2,103,000 | |||||
| Interest expenses | - | 3,000 | 12,000 | 9,000 | |||||
| Foreign exchange (gain) loss | (29,000) | 39,000 | 57,000 | 28,000 | |||||
| Future income taxes | (21,000) | - | (64,000) | - | |||||
| Other items | - | - | (198,000) | - | |||||
| Net Income (Loss) | (503,000) | (688,000) | (2,427,000) | (2,496,000) | |||||
| Net Income (Loss ) per share | $(0.007) | $(0.010) | $(0.035) | $(0.036) | |||||
| Note 1: | On March 3, 2011, the Company entered into a settlement agreement with DEK International on the Severn Project and the royalty from Severn is terminated as of February 28, 2011. Therefore, the royalties for the nine-month period ending August 31, 2012 is excluding royalties from Severn Enterprises and is presented in the non recurring revenue. |
| Note 2: | We use EBITDA (Earnings before stock based compensation, Interest, Taxes, Depreciation and Amortization and foreign exchange impact), a non-IFRS measure, to evaluate the Company's operating performance. Securities regulators require that issuers caution readers that measures adjusted to a basis other than IFRS do not have standardized meaning under IFRS and are unlikely to be comparable to similar measures used by other companies. |
| Balance Sheet | |||||||
| Nov 30, 2011 | May 31, 2012 | Aug. 31, 2012 | |||||
| (unaudited) | (unaudited) | (unaudited) | |||||
| Cash and cash equivalents | 1,843,000 | 1,256,000 | 910,000 | ||||
| Current assets (other than cash) | 2,001,000 | 1,988,000 | 1,976,000 | ||||
| Long-term assets | 10,962,000 | 9,926,000 | 9,421,000 | ||||
| Total Assets | $14,806,000 | $13,170,000 | $12,307,000 | ||||
| Current liabilities | 1,243,000 | 1,367,000 | 1,174,000 | ||||
| Shareholders' equity | 13,562,000 | 11,803,000 | 11,133,000 | ||||
| Total Liabilities and Equity | $14,805,000 | $13,170,000 | $12,307,000 | ||||
| Number of shares outstanding | 69,182,000 | 69,182,000 | 69,182,000 |
ABOUT DEQ
DEQ Systems Corp. (TSXV: DEQ) is a customer centric company that delivers best of breed table game technology related products to the global gaming industry that adds value and increases client revenue. DEQ provides table game bonusing technology, table games, table game results tracking and jackpot connectivity solutions to more than 275 casinos in 30 countries. DEQ is an intellectual property focused company that has an extensive patent portfolio of more than 20 patents recognized in 50 countries. For further information, please visit: www.deq.com
TSX Venture does not accept any responsibility regarding the accuracy of the information contained in this press release.
Forward-looking statements contained in this Press Release involve known and unknown risks, uncertainties and other factors that may cause actual results, performance and achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the said forward-looking statements.
SOURCE: DEQ SYSTEMS CORP.
Earle G. Hall
President & CEO
DEQ Systems Corp.
P. (418) 839-3012
E. [email protected]
Francois Proulx
Chief Financial Officer
DEQ Systems Corp.
P. (418) 839-3012
E. [email protected]
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