Circa Reports Sales and Operating results for the Second Quarter Ended June 30, 2017
CALGARY, Aug. 10, 2017 /CNW/ - Circa Enterprises Inc. (TSXV:CTO) (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, 2017.
Summary of second quarter operating results:
-- Q2 2017 consolidated sales of $6.6 million, representing a 5.3% increase
over the Q2 2016 sales of $6.3 million
-- Cash flow from operations during the quarter of $1.0 million
-- Profit for the period from continuing operations for Q2 2017 of
$223,000, or $0.02 per share compared to profit from continuing
operations of $161,000, or $0.02 per share for Q2 2016
-- EBITDA and Adjusted EBITDA of $384,000 for Q2 2017 compared to EBITDA of
$316,000 and Adjusted EBITDA of $338,000 for Q2 2016 (see below for
explanation and calculation of EBITDA and Adjusted EBITDA)
-- Working capital of $8.4 million, including $1.3 million in cash and no
outstanding debt at June 30, 2017
-- Subsequent to quarter end, the Company acquired substantially all of the
assets of Guardian Telecom Inc. for approximately $3.5 million
Summary of year-to date operating results:
-- Consolidated sales of $12.1 million for the six months ended June 30,
2017, compared to sales of $12.0 million for the six months ended June
30, 2016
-- Profit for the period from operations for the six months ended June 30,
2017 of $273,000, being $0.03 per share compared to loss for the period
from operations of $193,000, or $(0.02) for the same period in 2016
-- EBITDA and Adjusted EBITDA of $462,000 for the six months ended June 30,
2017 compared to EBITDA of negative $(34,000) and Adjusted EBITDA of
$275,000 for the six months ended June 30, 2016 (see below for
explanation and calculation of EBITDA and Adjusted EBITDA)
EBITDA is earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization and is adjusted for restructuring costs related to the acquisition of Alberta Computer Cables. EBITDA and Adjusted EBITDA are a non-IFRS financial measures and do not have any standardized meaning prescribed by International Financial Reporting Standards and, therefore, may not to be comparable to similar measures presented by other issuers. Management believes that EBITDA and Adjusted EBITDA are useful supplemental measures, 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 and Adjusted EBITDA should not be construed as an alternative to comprehensive income determined in accordance with IFRS as an indicator of the Company's financial performance. EBITDA and Adjusted EBITDA are calculated by the Company as follows:
(unaudited) (unaudited) (unaudited) (unaudited)
Six months Six months Three months Three months
30 June 2017 30 June 2016 30 June 2017 30 June 2016
$000's $000's $000's $000's
------ ------ ------ ------
Profit (loss) for the period from operations 273 (193) 223 161
Income taxes 79 26 106 89
Interest - - - -
Depreciation and amortization 110 133 55 66
----------------------------- --- --- --- ---
EBITDA 462 (34) 384 316
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Restructuring costs - 309 - 22
------------------- --- --- --- ---
Adjusted EBITDA 462 275 384 338
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Consolidated sales for the second quarter of 2017 were $6.6 million -- a $0.3 million or 5.3% increase over the same period in 2016. Sales in the Metals segment were up $0.4 million on strong orders across most regions and in the custom metal portfolio. This was partially offset by a reduction in Telecom sales of $0.1 million as the Company saw a continuing decline in demand for its surge protection equipment due to a technology shift away from copper-based infrastructure.
The Company posted after tax profit of $223,000 in the second quarter of 2017 compared to $161,000 in the second quarter of 2016. This earnings improvement was due to higher overall sales combined with lower selling, general and administrative costs in the Telecom segment with the absence of redundant and restructuring costs associated with the operations of the acquisition of Alberta Computer Cables. The increased Metals segment sales generated higher gross profit and operating profit. The stronger earnings were slightly hampered by high selling commissions paid on the higher sales and legal fees incurred on the acquisition of the Guardian Telecom business, which closed early in the third quarter.
As a result of the higher sales and lower overall expenses, the Company posted after tax earnings of $223,000, compared to after tax profit of $161,000 in the second quarter of 2016.
Grant Reeves, Circa's President and Chief Executive Officer, stated:
"It was a very good quarter for Circa with positive revenue momentum and strong earnings, the completion of a strategic acquisition and the commissioning of a new CNC punch press at our Metals facility. We are pleased with our revenue growth in the Metals segment that reflects new products, increased capacity and efficiencies from new equipment. Telecom revenue grew for cable and connectivity products, which offset waning demand for surge protection products. The Guardian Telecom acquisition is expected to boost Telecom revenues with a broad range a new products and invigorate the segment. We are excited to realize the potential of our recent investments and build on the solid operating performance of our team."
CIRCA ENTERPRISES INC.
Condensed Consolidated Statements of Comprehensive (Loss) Income
Unaudited
Six months Six months Three months Three months
ended ended ended ended
30 June 2017 30 June 2016 30 June 2017 30 June 2016
$000's $000's $000's $000's
------ ------ ------ ------
Sales 12,117 11,994 6,632 6,301
Freight (329) (310) (178) (134)
------- ---- ---- ---- ----
Net sales 11,788 11,684 6,454 6,167
Cost of sales (8,824) (8,683) (4,722) (4,496)
------------- ------ ------ ------ ------
Gross profit 2,964 3,001 1,732 1,671
Selling, general and administrative expenses (2,612) (2,862) (1,403) (1,401)
Restructuring costs - (309) - (22)
Operating profit (loss) 352 (170) 329 248
Other income - 3 - 2
Finance costs - - - -
Profit (loss) before tax 352 (167) 329 250
Income tax expense (79) (26) (106) (89)
------------------ --- --- ---- ---
Profit (loss) for the period from operations attributable to shareholders of
the Company 273 (193) 223 161
Other comprehensive (loss) income
Exchange differences on translating foreign (78) (108) (79) 40
operations, net of tax
----------------------
Total comprehensive income (loss) for the period attributable to shareholders
of the Company 195 (301) 144 201
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Earnings (loss) per share (in $'s)
Basic and diluted 0.03 (0.02) 0.02 0.02
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Circa Enterprises Inc. is a public company with operations 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 quarterly 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.
SOURCE Circa Enterprises Inc.
