Calgary, Alberta--(Newsfile Corp. - May 6, 2021) - 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 quarter ended March 31, 2021.
Summary of first quarter operating results:
- Q1 2021 sales of $8.1 million, an increase of $1.0 million or 14.5% from Q1 2020 sales of $7.1 million
- Net income and comprehensive income of $163,000 for Q1 2021 compared to net income and comprehensive income of $146,000 for Q1 2020
- Q1 2021 EBITDA of $829,000, an increase of $159,000 compared to Q1 2020 EBITDA of $670,000 (see below for explanation and calculation of EBITDA)
- Q1 2021 EBITDAaL of $591,000, an increase of $175,000 compared to EBITDAaL of $416,000 for Q1 2020 (see below for explanation and calculation of EBITDAaL)
- Earnings per share of $0.02 in Q1 2021 compared to earnings per share of $0.01 in Q1 2020
- Working capital of $8.0 million
- Dividend of $0.06 per share declared and paid in the quarter
- Subsequent to quarter end, the Company entered into a definitive agreement to acquire Westronic Inc. for $3.3 million, subject to certain terms and adjustments
EBITDA is earnings before interest, taxes, depreciation and amortization. EBITDAaL is earnings before interest, taxes, depreciation and amortization and is adjusted for cash lease payments and therefore comparative EBITDA prior to the adoption of IFRS 16. EBITDA and EBITDAaL 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 EBITDAaL 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 EBITDAaL 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 EBITDAaL are calculated by the Company as follows:
| $000's | (unaudited) Three months 31 Mar 2021 | (unaudited) Three months 31 Mar 2020 | |
| Net income and comprehensive income | 163 | 146 | |
| Income taxes | 89 | 68 | |
| Interest | 52 | 32 | |
| Depreciation and amortization | 525 | 424 | |
| EBITDA | 829 | 670 | |
| Less: Cash lease payments | 238 | 254 | |
| EBITDAaL | 591 | 416 |
Sales for the first quarter of 2021 were $8.1 million -- a $1.0 million or 14.5% increase compared to the same three-month period in 2020. This increase is due to higher Metals segment sales, offset by a decrease in Telecom segment sales.
Sales in the Metals segment increased $1.5 million to $5.7 million in Q1 2021, compared to $4.2 million in Q1 2020 on strong sales of Hydel metering products and custom metal sales. Telecom segment sales decreased $0.4 million from $2.9 million in Q1 2020 compared to $2.5 million in Q1 2021. Telecom sales were lower due to the lack of large project sales, which were prevalent in the first quarter of 2020. Sales in the cable and connectivity line increased slightly in the quarter and sales of surge protection products saw a modest increase in Q1 2021 when compared to Q1 2020.
The Company posted after tax profit of $163,000 in the first quarter of 2021 compared to $146,000 in the same quarter of 2020. This earnings improvement was due to higher sales in the Metals segment, efficient operations and partially offset by higher selling, general and administrative expenses.
The higher selling, general and administrative expenses posted in Q1 2021 compared to Q1 2020, were mainly due to the legal and transaction costs of the Westronic acquisition and higher sales commissions in the Metals segment. In addition, the Company had increased spending on engineering resources related to new product development, inflation and cost of living adjustments on salaries and wages. These increases were partially offset by a reduction in discretionary spending due to reduced travel related to the COVID-19 pandemic restrictions.
Cory Tamagi, Circa's President and Chief Executive Officer, stated:
"Circa posted a solid first quarter in 2021 with strong sales and earnings. The Metals segment has continued its positive sales trend into 2021 as demand for metering equipment and custom products remains strong. Telecom segment sales decreased compared to Q1 2020, however sales and earnings were higher when compared to the previous three quarters -- the segment is showing increased quoting activity and the resumption of projects that were delayed in 2020 due to the pandemic.
"The remainder of 2021 looks promising and management is optimistic sales activity will improve in the Telecom segment as large projects in the Guardian Telecom line pick up. We expect Metals segment sales to remain strong although increased steel prices and rising costs will put downward pressure on margins beginning in the second quarter. The decreases in margins are expected to be partially mitigated with price increases to customers.
"We are also pleased to have signed a definitive agreement to acquire Westronic Inc. which we expect to close later in May. This is the second acquisition the Company will have completed in less than a year.
"Circa continues to deal with the ongoing developments and government rules resulting from the COVID-19 pandemic, particularly those that affect the Company's labour force, operations and travel. Management is hopeful the ongoing vaccination of the population will have a significant positive impact on health and result in a strong bounce back in economic activity."
CIRCA ENTERPRISES INC.
Condensed Interim Statements of Income and Comprehensive Income
Unaudited
| $000's | Three months ended March 31, 2021 | Three months ended March 31, 2020 | |
| Sales | 8,146 | 7,115 | |
| Freight | 186 | 167 | |
| Net sales | 7,960 | 6,948 | |
| Cost of sales | 5,514 | 4,768 | |
| Gross profit | 2,446 | 2,180 | |
| Selling, general and administrative expenses | 2,142 | 1,934 | |
| Operating profit | 304 | 246 | |
| Interest expense | 52 | 32 | |
| Profit before tax | 252 | 214 | |
| Income tax expense | 89 | 68 | |
| Net income and comprehensive income | 163 | 146 | |
| Earnings per share (in $'s) | |||
| Basic and diluted | 0.02 | 0.01 |
Circa Enterprises Inc. is a public company with operations in Alberta and Ontario. 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.
Contact: Mr. Cory Tamagi
President and CEO
Circa Enterprises Inc.
(403) 258-2011
Mrs. Angela Hulshof
VP Finance and CFO
Circa Enterprises Inc.
(403) 258-2011
E-Mail: investor@circaent.com
Website: www.circaent.com
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