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Circa Reports Improved Operating Results for the Third Quarter Ended September 30, 2012 and Declares a Special Cash Dividend

CALGARY, Nov. 2, 2012 /CNW/ - Circa Enterprises Inc. (CTO-TSXV) (the "Company" or "Circa"), a manufacturer of equipment for the telecommunication, electrical utility, and construction industries, reports results of operations for the third quarter ended September 30, 2012 and the declaration of a special cash dividend.

THIRD QUARTER RESULTS

Summary of third quarter operating results:

  • Consolidated sales of $5.87 million, representing a 0.1% increase compared to Q3 2011 sales of $5.86 million
  • Profit for the period from continuing operations for the third quarter of 2012 of $84,000 compared to a loss from continuing operations of $77,000 for Q3 2011
  • EBITDA of $210,000 for Q3 2012 compared to EBITDA of $(23,000) for Q3 2011 (see below for explanation and calculation of EBITDA)
  • Adjusted EBITDA of $218,000 for Q3 2012 compared to Adjusted EBITDA of $6,000 for Q3 2011 (see below for explanation and calculation of Adjusted EBITDA)

Summary of year-to date operating results:

  • Consolidated sales of $17.21 million, representing a 0.3% increase compared to sales of $17.16 million for the same nine month period in 2011
  • Profit from continuing operations for the nine months ended September 30, 2012 of $379,000 compared to a loss of $23,000 for the same period in 2011
  • EBITDA of $803,000 for the nine month period ended September 30, 2012 compared to EBITDA of $268,000 for the same period in 2011
  • Adjusted EBITDA of $856,000 for the nine month period ended September 30, 2012 compared to Adjusted EBITDA of $415,000 for the same period in 2011
  • Cash flow from operations for the nine months ended September 30, 2012 of $1.1 million, which has enabled the Company to eliminate its debt in 2012

EBITDA is earnings before interest, taxes, depreciation and amortization.  Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization and is adjusted for other non-recurring items and non-cash items. 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 (loss) 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)
Nine months
30 Sep 2012
(unaudited)
Nine months
30 Sep 2011
(unaudited)
Three months
30 Sep 2012
(unaudited)
Three months
30 Sep 2011
  $000's $000's $000's $000's
Profit for the period from continuing
operations 379 (23) 84 (77)
Income taxes 217 (7) 66 (42)
Interest 14 27 1 9
Depreciation and amortization 193 271 59 87
EBITDA 803 268 210 (23)
Non-recurring severance charge 53 147 8 29
Adjusted EBITDA 856 415 218 6

Consolidated sales for the third quarter of 2012 were consistent at $5.9 million compared to the same period in 2011. Sales in both divisions were consistent, despite month to month volatility in sales. Telecom segment sales were $2.5 million and Circa Metals' sales were $3.3 million in each of Q3 2012 and Q3 2011.

The Company's earnings increased significantly in the quarter when compared to the prior year due to operational efficiencies.  The Company was able to improve productivity and efficiencies and, in turn, reduce its direct labour costs which resulted in higher gross margins and operating margins.  The Company posted after tax profit of $84,000 for the quarter compared to after tax loss of $77,000 reported in 2011.

The Company was able to generate positive EBITDA of $210,000 for the quarter and $0.8 million for the nine months ended September 30, 2012.  This cash flow allowed the Company to eliminate its operating line of credit during the 2012 fiscal year.

Ivan Smith, Circa's President and Chief Executive officer, stated:

"The third quarter 2012 financial results are an improvement over the results achieved over the third quarter of 2011.  The Company is continuing to achieve stronger margins as a result of efficiency and productivity improvements in its operations.  This has reduced costs and improved profitability compared to the prior year.

The Company's balance sheet is strong and the business is stable.  We are continuing to pursue new opportunities to grow top line revenue.  In the coming year, we will continue to concentrate our efforts towards revenue growth, efficient operations and improving on our financial results for our shareholders."

CIRCA ENTERPRISES INC.
Consolidated Statements of Comprehensive Income
           
Unaudited          
    Nine months
ended
30 Sep 2012
Nine months
ended
30 Sep 2011
Three months
ended
30 Sep 2012
Three months
ended
30 Sep 2011
    $000's $000's $000's $000's
           
Revenue   17,214 17,164 5,869 5,861
Cost of sales   (13,317) (13,701) (4,653) (4,906)
Gross profit   3,897 3,463 1,216 955
Selling, general and administrative
expenses
  (3,287) (3,465) (1,065) (1,065)
Operating profit (loss)   610 (2) 151 (110)
Loss on sale of assets   - (1) - -
Finance costs   (14) (27) (1) (9)
Profit (loss) before tax   596 (30) 150 (119)
Income tax expense   (217) 7 (66) 42
Profit (loss) for the period from
continuing operations attributable to
shareholders of the Company
  379 (23) 84 (77)
Other comprehensive income (loss):          
Exchange differences on translating
foreign operations, net of tax
  (58) 65 (88) 129
Total comprehensive income (loss) for
the period attributable to shareholders
of the Company
  321 42 (4) 52
           
Earnings (loss) per share (in $'s)          
Basic and diluted   0.04 (0.00) 0.01 (0.01)

DECLARATION OF SPECIAL DIVIDEND

The Company announced today that its Board of Directors has declared a special cash dividend of $0.05 per share on its common shares payable December 12, 2012 to shareholders of record at the close of business November 28, 2012.  The Dividend is deemed to be an eligible dividend for purposes of the Income Tax Act (Canada).

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.

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