TORONTO, Sept. 16 /CNW Telbec/ - Semcan Inc. ("Semcan" or the "Company")
(TSXV: STT) today reported financial results for its quarter ended June 30,
2008. Revenues for the quarter were $24.43 million, an increase of 333.9% over
revenues of $5.63 million for the quarter ended June 30, 2007. For the six
month period ended June 30, 2008 revenues were $34.62 million compared with
$8.85 million for the corresponding period in 2007 - an increase of 291%.
Net loss for the second quarter 2008 was $0.578 million, or $0.022 per
share, compared to a net income of $0.18 million, or $0.011 per share in 2007.
For the six month period ended June 30, 2008 the net loss was $0.173 million,
or $0.007 per share compared with net income of $0.15 million, or $0.009 per
share for the six months ended June 30, 2007.
Net income for the current quarter 2008 includes non-cash charges
totaling $1.87 million; $0.14 million expense relating to stock compensation,
$1.3 million relating to amortization of acquired backlog and $0.43 million
relating to other amortization.
Non-GAAP EBITDA (earnings before interest, taxes, depreciation and
amortization) for the quarter was $1.76 million, compared to $0.66 million for
the same quarter last year. For the six month period ended June 30, 2008
non-GAAP EBITDA was $3.03 million compared with $0.96 million for the six
months ended June 30, 2007.
As was expected - due to the acquisition of Naston Ltd in April 2008 -
Semcan's gross margins fell during the second quarter in 2008 to 20.4%.
However, the current quarter's cost of sales has been affected by the
accounting treatment for intangible assets relating to acquired order
backlogs. The Company is required to attribute a value to the acquired backlog
and write the ascribed value off over the life of the underlying orders, which
is expected to be two years. Consequently, the Company's cost of sales has
been charged with $1.3 million for "Amortization of acquired backlog". This is
a non cash cost and is not operational in nature. If the effect of this is
removed, the gross margin achieved by operations was 25.8% for the quarter and
28.1% for the six months ended June 30, 2008. This compares with 34.4% for the
same quarter last year and 33.4% for the six month period ended June 30, 2007.
The general, administration and selling expenses (SG&A) for the current
quarter were 18.7% of gross revenues, compared with 21.4% for the quarter
ended June 30, 2007. For the six months ended June 30, 2008 SG&A were 19.7%
compared with 21.8% for the six months ended June 30, 2007.
At June 30, 2008, the Company was not in compliance with two of the
covenants governing its agreement with Toronto-Dominion Bank. This was due to:
i) accounting for intangible assets arising from acquisitions; and ii)
intercompany payments in excess of the amounts allowed under the banking
terms. The bank has waived the non-compliance and is working with the Company
to revise the facility in light of Semcan's rapid growth and desire for a
group-wide lending agreement rather than having separate facilities for each
"Semcan continues along its growth path, now with an international
footprint through the Naston acquisition in April 2008," said John Wilby, CFO
of Semcan. "We are pleased with our top line growth, our gross margins are in
line with expectations but are under constant review, and the rate of
improvement in the SG&A expenses. The outlook for the balance of the year
looks to be on track as the current confirmed order backlog of Semcan Inc. is
approximately $60 million and we continue to quote on larger contracts."
The detailed financial statements and MD&A for the quarter ended June 30,
2008 are available at www.sedar.com.
About Semcan Inc.
Semcan is a rapidly growing company expanding through acquisitions within
the Industrial and Distribution sectors. Semcan seeks out well managed
profitable companies that meet certain financial parameters. Semcan works with
existing management to grow the acquired companies both organically and
through further complementary acquisitions. Semcan is fast becoming a
worldwide supplier of industrial processes and environmental solutions with
specific emphasis on water remediation, emission control systems and earth
decontamination. Semcan provides the central finance and administrative
functions, allowing operational management to remain focused on bottom line
profitability thereby increasing shareholder value.
Caution Regarding Forward-Looking Information and Non-GAAP Measures
This news release contains certain forward-looking statements. These
statements relate to future events or future performance and reflect
management's current expectations and assumptions regarding the growth,
results of operations, performance, and business prospects and opportunities.
Such forward-looking statements reflect management's current beliefs and
expectations and are based on information currently available to management of
Semcan. In some cases, forward-looking statements can be identified by
terminology such as "may", "will", "should", "believes", "continue" or the
negative of these terms or other similar expressions concerning matters that
are not historical facts. In particular, statements regarding the future
operating results and economic performance are forward-looking statements.
Forward-looking statements involve significant risks and uncertainties. A
number of factors could cause actual events or results to differ materially
from the events and results discussed in the forward-looking statements,
including risks outlined under "Risk Factors" in Semcan's Annual Information
Form, which is posted at www.sedar.com. In evaluating these statements,
investors should specifically consider various factors, including such risks
as i) Investment Risk; ii) Business Valuations; iii) Condition of Capital
Markets; iv) Dependence on Key Personnel; v) General Economic Factors; vi)
Interest Rate Risk; vii) Competition; and viii) Reliance on Key Suppliers. One
or more of these "Risk Factors" may cause actual events or results to differ
materially from any forward-looking statement. These factors should not be
considered exhaustive. Although the forward-looking statements contained in
this press release are based on what management of Semcan considers to be
reasonable assumptions based on information currently available to them, there
can be no assurance that actual events or results will be consistent with
these forward-looking statements, and management's assumptions may prove to be
incorrect. These forward-looking statements are made as of the date of this
press release, and none of Semcan nor its directors assume any obligation to
update or revise them to reflect new events or circumstances. Undue reliance
should not be placed on forward-looking statements.
The term "EBITDA" is a financial measure used in this press release which
is not a standard measure under Canadian generally accepted accounting
principles (GAAP). Semcan's method of calculating EBITDA may differ from the
methods used by other issuers. Therefore, Semcan's measure of EBITDA, as
presented in this press release, may not be comparable to similar measures
presented by other issuers. EBITDA refers to net earnings of Semcan determined
in accordance with GAAP, before depreciation and amortization, interest
expense, non-controlling interest and income tax expense. Management believes
that EBITDA is a useful supplemental measure of cash available for debt
service, working capital, capital expenditures, income taxes, and
distribution. Investors are cautioned that EBITDA, as a non-GAAP measure, is
not an alternative to measures under GAAP and should not, on its own, be
construed as an indicator of performance or cash flows, a measure of liquidity
or as a measure of actual return.
The TSX Venture Exchange has neither approved nor disapproved the
contents of this press release.
For further information:
For further information: Semcan Inc.: Phil Jamieson, Chairman, (416)
703-1692 x 221; Renmark Financial Communications Inc.: Victoria Stepanova,
firstname.lastname@example.org; John Boidman, email@example.com,
(514) 939-3989, Fax: (514) 939-3717; www.renmarkfinancial.com