Circa Enterprises Inc. (CTO-TSX), a manufacturer of equipment for the telecommunication, electrical utility, and construction industries, reports results of operations for the third quarter and nine months ended September 30, 2008.
Summary of third quarter operating results:
- Consolidated sales of $8.7 million, representing an 3.6% increase over the third quarter of 2007
- Net loss of $0.2 million or $0.02 per share as compared to a loss of $0.4 million or $0.04 per share in the third quarter of 2007
Summary of year-to-date operating results:
- Consolidated sales of $26.2 million, representing a 7.4% increase over 2007
- Net loss of $0.3 million or $0.03 per share as compared to a loss of $0.9 million or $0.09 per share for the first nine months of 2007
Consolidated sales for the third quarter of 2008 were $8.7 million, a $0.3 million or 3.6% increase over the same period in 2007, and continued the trend of quarterly sales increases in 2008 as compared to 2007. This increase is primarily attributed to a $0.7 million improvement in Hydel Enterprises sales, offset by a reduction in third party supply agreement sales. Sales to the U.S. market continued to improve, despite adverse economic conditions. On a year-to-date basis, consolidated sales of $26.2 million represent an increase of $1.8 million or 7.4% over the first nine months of 2007.
Circa's gross profit continued to be slightly lower than 2007 and reflects, amongst other things, the negative effect of the appreciated Canadian dollar experienced earlier in 2008, and higher raw material and freight costs, partially offset by improved margins on products supplied to the Canadian electrical industry by the Hydel business.
Circa reported a third quarter net loss of $0.2 million, an improvement over the $0.4 million loss reported in the third quarter of 2007. The improvement from 2007 reflects increased sales generated by Hydel as well as Circa brand products to the U.S. market, and a foreign currency translation gain, offset by reduced third party supply agreement sales, as well as lower than expected gross profits. The nine-month results reflect favorably when compared to 2007 with the net loss of $0.3 million, as compared to a net loss of $0.9 million in 2007.
At September 30, 2008 the Company's working capital was $4.7 million, including $0.3 million in cash. Circa ended the quarter with $3.4 million in current bank indebtedness, including $0.4 million representing the December 2007 repayment of the outstanding current balance owing on the term loan facility. As a result, Circa has no outstanding long-term debt. The Company had total shareholders' equity of $9.4 million and 9.5 million shares outstanding at September 30, 2008.
Circa's President and Chief Executive Officer, Rick Schmidt stated: "Consolidated sales for the third quarter exceeded 2007 results. This continues the trend experienced in the first half of 2008, and reflects the results of determined marketing and sales efforts to overcome market and economic challenges. The third quarter loss was consistent with second quarter results and reflects the ongoing challenge to overcome more costly raw materials, as well as higher freight costs arising from fuel price increases. Over the quarter we began to see the effect of initiatives aimed at cost reductions, and we intend to accelerate those plans in the fourth quarter." -- www.cnxmarketlink.com
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