2008-08-19 08:46:00
CALGARY, ALBERTA–(EMWNews – Aug. 19, 2008) – Xentel DM Incorporated (TSX VENTURE:XDM) –
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Period ended June 30 Three months Six months
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2008 2007 2008 2007
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($ 000's, except per share amounts)
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Revenue 24,056 $ 24,853 48,490 $ 52,999
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Gross Margin 5,427 4,734 11,108 11,204
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Net (loss) earnings 307 (590) 592 (473)
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EBITDA 1,158 (142) 2,448 1,355
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EPS, fully diluted 0.01 $ (0.02) 0.02 $ (0.02)
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EBITDA, per share, fully diluted 0.04 $ (0.00) 0.09 $ 0.05
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(i)EBITDA - Net Earnings before income taxes, interest, depreciation and
amortization. Since Gross Margin, EBITDA and diluted EBITDA per share have
no standardized GAAP meaning, the comparability of these amounts to other
enterprises may not be possible if the basis of calculation of differs.
Xentel DM Incorporated a North American specialty entertainment and relationship marketing company, today reported its financial results for the three and six months ended June 30, 2008.
For the second quarter 2008, net earnings were $307 thousand compared to a net loss of $590 thousand for the second quarter 2007. Revenues amounted to $24,056 thousand compared to $24,853 thousand for the same period in 2007. EBITDA for the three months ended June 30, 2008 was $1,158 thousand compared to negative EBITDA of $142 thousand for the same period in 2007.
Year to date for the six months ended June 30, revenues for 2008 and 2007 were $48,490 thousand and $52,999 thousand respectively. For the six months ended June 30, 2008 the net earnings were $592 thousand compared to a net loss of $473 thousand for the same period in 2007.
The improvement in net earnings is the result of the capacity utilization program in the US wherein the model for labour utilization was revamped and in Canada where changes in call centre management and improved data management significantly improved margins.
In early August 2008, the Company renewed its senior credit facilities with revised financial covenants and its lenders agreed to waive the prior period defaults associated with not maintaining the requisite financial covenants.
The Chairman, Michael Platz stated, “The 2008 second quarter results were very positive, particularly coming off a loss in the comparable period in 2007. Cost cutting measures, changes in call centre management and improved data management are having the desired effect on operational profitability.”
David Winograd, President, added, “The capacity utilization program in the US is clearly having the effect of improving profitability, although, as anticipated, we did experience a decline in revenues.”
In the interest of improved governance practices, Michael Platz recommended to the Board of Directors he resign his responsibilities as President and that David Winograd be appointed President of Xentel DM Incorporated in addition to his current responsibilities as President of US operations. The Board adopted this proposal effective immediately.
Xentel DM Incorporated is one of North America’s leading relationship-marketing concerns and producers of cause related entertainment events. The Company’s success is attributable to proprietary sales tools including technologically advanced teleservices and sophisticated customer databases. Xentel DM Incorporated has over 400 clients and 2,100 employees in over 30 offices across North America.
Certain statements in this press release may constitute “forward looking statements” and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any performance or achievement expressed or implied by such “forward looking statements”.
Xentel DM Incorporated
Consolidated Balance Sheets
($ '000s)
June 30, June 30, December 31,
2008 2007 2007
(unaudited) (unaudited) (audited)
Assets
Current assets
Cash and cash equivalents $ 267 $ 365 $ 205
Accounts receivable, net
of allowances 6,250 6,459 6,488
Inventory 594 474 628
Work in process 5,385 6,157 5,630
Prepaid expenses 975 981 838
Due from related party 460 1,384 -
Income taxes receivable - 283 -
Future income taxes - 498 230
-------- -------- --------
13,931 16,601 14,019
Due from related party 854 - 1,288
Equipment 3,177 3,110 2,987
Future income taxes 3,119 2,606 3,163
Other intangible assets 555 2,153 1,277
Goodwill 1,023 1,079 1,004
-------- -------- --------
$ 22,659 $ 25,549 $ 23,738
-------- -------- --------
-------- -------- --------
Liabilities
Current liabilities
Bank indebtedness $ 242 $ 457 $ 1,303
Accounts payable and
accrued liabilities 5,534 5,036 5,913
Income taxes payable 106 3 64
Current portion of
long term liabilities 840 2,211 1,343
Due to related party 653 - -
Future income taxes 662 1,016 662
-------- -------- --------
8,037 8,723 9,285
Long term debt 10 61 24
Due to related party 1,961 2,648 2,488
Future income taxes 1,048 1,488 1,028
Deferred tenant inducement 264 330 306
-------- -------- --------
11,320 13,250 13,131
Shareholders' equity
Share capital 9,280 9,280 9,280
Warrants 205 205 205
Contributed surplus 79 70 79
Accumulated other
comprehensive income (4,084) (3,710) (4,224)
Retained earnings 5,859 6,454 5,267
-------- -------- --------
11,339 12,299 10,607
-------- -------- --------
$ 22,659 $ 25,549 $ 23,738
-------- -------- --------
-------- -------- --------
Xentel DM Incorporated
Consolidated Statements of Operations and Retained Earnings
('000s, except per share amount, unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Revenue $ 24,056 $ 24,853 $ 48,490 $ 52,999
Cost of revenue 18,629 20,119 37,382 41,795
-------- -------- -------- --------
Gross margin 5,427 4,734 11,108 11,204
-------- -------- -------- --------
Corporate expenses
Branch overhead and
corporate administration 4,269 4,876 8,660 9,849
Interest expense 137 214 241 454
Amortization of equipment 94 216 385 616
Amortization of
intangible assets 372 405 743 836
-------- -------- -------- --------
4,872 5,711 10,029 11,755
-------- -------- -------- --------
Earnings (loss) before
undernoted items 555 (977) 1,079 (551)
Expenses related to 2003
privatization lawsuit 17 43 26 137
-------- -------- -------- --------
Earnings (loss) before
income taxes 538 (1,020) 1,053 (688)
-------- -------- -------- --------
Income tax expense
(recovery)
Current income tax
expense (recovery) 33 (312) 123 (313)
Future income tax
expense (recovery) 198 (118) 338 98
-------- -------- -------- --------
231 (430) 461 (215)
-------- -------- -------- --------
Net earnings (loss) 307 (590) 592 (473)
Retained earnings,
beginning of period 5,552 7,044 5,267 6,927
-------- -------- -------- --------
Retained earnings,
end of period $ 5,859 $ 6,454 $ 5,859 $ 6,454
-------- -------- -------- --------
-------- -------- -------- --------
Basic and diluted net
earnings (loss) per share $ 0.01 $ (0.02) $ 0.02 $ (0.02)
-------- -------- -------- --------
-------- -------- -------- --------
Basic and diluted
weighted average number
of shares outstanding 26,195 26,195 26,195 26,195
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-------- -------- -------- --------
Xentel DM Incorporated
Consolidated Statements of Contributed Surplus
('000s, unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Balance, beginning of period $ 79 $ 70 $ 79 $ 70
-------- -------- -------- --------
Balance, end of period $ 79 $ 70 $ 79 $ 70
-------- -------- -------- --------
-------- -------- -------- --------
Xentel DM Incorporated
Consolidated Statements of Comprehensive Income (Loss)
('000s, unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Net earnings (loss)
for the period $ 307 $ (590) $ 592 $ (473)
Foreign currency translation
adjustment from self
sustaining foreign operations (75) (631) 140 (713)
-------- -------- -------- --------
Comprehensive income (loss) $ 232 $ (1,221) $ 732 $ (1,186)
-------- -------- -------- --------
-------- -------- -------- --------
Xentel DM Incorporated
Consolidated Statements of Accumulated Other Comprehensive Income
('000s, unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Balance, beginning of period $ (4,009) $ (3,079) $ (4,224) $ (2,997)
Foreign currency translation
adjustment from self
sustaining foreign operations (75) (631) 140 (713)
-------- -------- -------- --------
Balance, end of period $ (4,084) $ (3,710) $ (4,084) $ (3,710)
-------- -------- -------- --------
-------- -------- -------- --------
Xentel DM Incorporated
Consolidated Statements of Cash Flows
('000s, unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2008 2007 2008 2007
Cash flows from (used in)
operating activities
Net earnings (loss)
for the period $ 307 $ (590) $ 592 $ (473)
Non cash transactions
reflected in net earnings
Amortization 466 620 1,128 1,452
Future income tax
expense (recovery) 198 (117) 338 98
Adjustment for non
cash interest 62 96 123 198
-------- -------- -------- --------
1,033 9 2,181 1,275
-------- -------- -------- --------
Net change in non cash
working capital items
Accounts receivable 867 1,540 298 2,174
Inventory and work in process 329 59 344 99
Prepaid expenses 1 98 (132) 73
Other current assets - - 4 (2)
Income taxes payable 18 (416) 40 (645)
Accounts payable and
accrued liabilities 424 (467) (424) (1,417)
-------- -------- -------- --------
Net change in non cash
working capital items 1,639 814 130 282
-------- -------- -------- --------
2,672 823 2,311 1,557
-------- -------- -------- --------
Cash flows from (used in)
financing activities
Bank indebtedness (1,922) (37) (1,071) (761)
Long term debt acquired - - 389 -
Long term debt repaid (512) (506) (1,016) (1,020)
-------- -------- -------- --------
(2,434) (543) (1,698) (1,781)
-------- -------- -------- --------
Cash flow (used in)
investing activities
Investment in equipment (80) (99) (547) (227)
-------- -------- -------- --------
Effect of exchange rate
fluctuations on cash balances (5) 23 (4) 21
-------- -------- -------- --------
Net increase (decrease) in
cash and cash equivalents 153 204 62 (430)
Cash and cash equivalents,
beginning of period 114 161 205 795
-------- -------- -------- --------
Cash and cash equivalents,
end of period $ 267 $ 365 $ 267 $ 365
-------- -------- -------- --------
-------- -------- -------- --------
The TSX Venture Exchange has neither approved nor disapproved the contents of this announcement.
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