OTTAWA, May 23, 2013 /CNW/ - In-Touch Survey Systems Ltd. ("In-Touch") (TSXV: INX) today announced its operating and financial results for the quarter ended March 31, 2013.
Revenue for the first quarter was $2,282,441, which was 18% lower than revenue of $2,790,339 in the same quarter in 2012. The Company previously announced the loss of two major customers in the fall of 2012 and this loss was the primary reason for the reduction in first quarter revenues. A decrease in revenue from the IMS division was a second driver of lower revenue for the first quarter. The company expects to return to normal revenue targets by third quarter 2013 with increased revenue from new customers from organic growth and customers obtained through acquisition.
Net loss before taxes for the first quarter was $145,339 compared to net income of $129,584 reported in the same quarter in 2012. The company anticipated the bottom line challenges in the quarter but did not initiate any major restructuring initiatives to reduce expenses as revenues are expected to rebound in the second and third quarters. Human and physical resources will be required to support third and fourth quarter revenue such that cutting costs in the first quarter would have been counterproductive.
Gross Margin increased significantly to 52.4% in the first quarter compared to 43.7% for the same quarter in 2012. The team has been working on integration, technological optimization and service improvement initiatives since the acquisition of Service Intelligence in the summer of 2011. The dramatic improvement in gross margin bodes well for the future.
Company-defined adjusted EBITDA decreased to ($52,000) for the first quarter, compared to an EBITDA of $279,000 for the same quarter in 2012. Again, the Company decided not to make any significant cost cutting activities during the first quarter as these resources are expected to be needed as revenues rebound later in the year. EBITDA is expected to be positive and improving for the remainder of the fiscal year.
"The last few quarters have been challenging from the perspective of having to replace the revenue lost from major customers and also putting the final touches on a multi-year plan to improve operating margins. We are confident that revenue will rebound in future quarters and that we will show significant improvements in revenue and profitability compared to the first quarter of 2013," said Michael Gaffney, Chief Executive Officer.
"The acquisition of GCS Field Research on May 2, 2013 will also help open new markets and increase revenues for the second quarter and the rest of the year", said Gaffney.
|Consolidated Statements of Operations||Q1 2013||Q1 2012|
|Revenue||$ 2,282,441||$ 2,790,339|
|Cost of services||1,086,823||1,570,711|
|Total operating expenses||1,326,070||1,055,920|
|Earnings from operating activities||(130,452)||163,708|
|Change in fair value of contingent consideration||1,129||(349)|
|Net earnings before income taxes||$ (145,339)||$ 129,58|
Certain statements included in this news release contain forward looking statements, which by their nature are necessarily subject to risks and uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements reflect the Company's current views with respect to future events, and are based on information currently available to the Company and on hypotheses which it considers to be reasonable; however, management warns the reader that hypotheses relative to future events which are beyond the control of management could prove to be false, given that they are subject to certain risks and uncertainties.
The TSX Venture Exchange has not reviewed the foregoing and has neither approved or disapproved the contents of this press release.
SOURCE: In-Touch Survey Systems Ltd.
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