Coretec Inc. Announces Q3 Earnings from Continuing Operations of $0.03 per Share vs. a Loss of $0.02 in Third Quarter 2003.
Quarterly revenue increase of 40% to $21.7 million year-over-year
Gross Profit increase year-over-year of 30% to $5.4 million
Free cash flow increase year-over-year of 70% to $1.7 million
UK manufacturing operations closed
Coretec Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :CYY) today reported its 2004 third quarter financial results. Continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the : Sales in the 2004 third quarter were $21.7 million, the highest quarterly revenues since the first quarter of 2001. This sales level represents a sequential One after the other in some consecutive order such as by name or number. 3% increase from sales of $21.0 million in the second quarter of 2004 and an increase of 40% over third quarter 2003 sales of $15.5 million. For the three-month period ending September September: see month. 30, 2004, Coretec reported income of $0.6 million or $0.03 per share versus a net loss of $0.4 million or $0.02 per share for the same period in 2003. For the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. period, the Company reported income of $2.2 million or $0.12 per share on sales of $61.1 million compared to a loss of $4.0 million or $0.22 per share on sales of $48.3 million in the 2003 period. Gross profit in the quarter as a percentage of sales decreased to 24.9% versus the prior year period of 26.7% as the Company's profit margins were reduced by the integration costs associated with its recently acquired Ohio facility as well as by increases in the cost of raw materials. Earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. : During the quarter, the company announced the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of its UK operations, a move that included the closing of its Biggleswade Coordinates: ''See also: Biggleswade (hundred). Biggleswade is a market town on the River Ivel in Bedfordshire, England. It is well served by transport routes, being close to the A1 road between London and the North, as well as the main , Bedfordshire Bedfordshire or Bedford, county (1991 pop. 514,200), 473 sq mi (1,225 sq km), central England. It is also called Beds. The county seat is Bedford. The terrain is generally flat, with low chalk hills in the south. manufacturing site and the appointment of an administrator under Part II of the Insolvency insolvency Condition in which liabilities exceed assets so that creditors cannot be paid. It is a financial condition that often precedes bankruptcy. In the context of equity, insolvency is the inability to pay debts as they become due; insolvency under the balance-sheet Act of the United Kingdom to administer To give an oath, as to administer the oath of office to the president at the inauguration. To direct the transactions of business or government. Immigration laws are administered largely by the Immigration and Naturalization Service. the winding up of Coretec Limited, the Company's UK operating subsidiary An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. . As a result of these developments the assets and liabilities of this business segment have been deconsolidated from the consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge of the Company. Prior year's financial statements have been restated to present Coretec Limited as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . The write down of the subsidiary's assets and liabilities resulted in a loss of $3.6 million. In addition, the Company wrote off a security deposit of $0.8 million that had been advanced by the Company to Coretec Limited's landlord. The Company's portion of the estimated proceeds of the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy will be subject to the court's assessment of the priority of its claim and the net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of the liquidation, both of which are still to be determined. The Company has not recorded any receivable due from the liquidation at this time. "The third quarter of 2004 proved to be a turning point for our organization as a result of our decision to shutter (1) An opaque window that is moved in one direction to let light in and in another to close off the light. In fixed-lens cameras, one shutter often suffices for aperture and speed. our UK plant. With the closing of this facility we have effectively put an end to the continued losses from the UK operations, allowing us to better focus our resources towards our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. which continue to show top line growth. In fact, since the closure, we have been able to retain and service the product needs of many of the UK facility's former customers out of our North American facilities" said Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. Langston Langston is the name of two places in the United States:
With respect to continuing operations we are pleased with the ongoing top line expansion we achieved, particularly given the challenges we experienced with currency translation and the historic seasonal demand softness during the third quarter. Our focus continued to be on gaining market share and generating free cash, both of which we achieved in the quarter. Our profitability during the third quarter although up significantly year-over-year was down slightly as compared to the prior quarter. We attribute (1) In relational database management, a field within a record. (2) In object technology, a single element of data. See instance attribute and static attribute. this to the impact of the declining value of the US Dollar vis-a-vis the Canadian Dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents , inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. pressures on raw materials and supplies, and the fact that we are in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of ramping up our Ohio site, which has not achieved its targeted output at this point. In addition we made significant personnel additions during the quarter at our Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. and Toronto Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing sites in an effort to expand capacity, reduce cycle time and increase our engineering depth." added Mr. Langston. Mr. Langston continued, "We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op for the balance of 2004 with respect to our particular end markets and the demand for prototype Prototype A first or original model of hardware or software. Prototyping involves the production of functionally useful and trustworthy systems through experimentation with evolving systems. and quick turn services. Although the industry Book-to-Bill ratio Book-to-Bill Ratio The technology industry's demand-to-supply ratio for orders on a "firm's book" to number of orders filled. Notes: This ratio tells whether the company has more orders than it can deliver (if greater than 1), has the same amount of orders that it can has softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. measurably meas·ur·a·ble adj. 1. Possible to be measured: measurable depths. 2. Of distinguished importance; significant: a measurable figure in literature. over the past several months we believe that our end market and account diversity will once again serve us well. In addition, our relatively unleveragedbalance sheet has continued to prove to be a competitive advantage. As of September 30, 2004 our working capital was $8 million and we had additional un-utilized bank lines of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $7 million". Coretec is one of the leading designers and fabricators of printed circuit boards for the prototype and quick turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. production segments of the North American and European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. markets. Coretec distinguishes itself from its competitors by providing complete printed circuit board solutions, including design, advanced prototyping and quick turnaround production across an outstanding range of product technologies. This news release may include statements about future expectations, plans and prospects that may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Please be cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties. Actual results or developments may vary materially from those projected or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. in the forward-looking statements as a result of any number of factors, including currency exchange rate fluctuations; variability of operating results; dependence on certain industries; management of growth and expansion; integration of operations; ability to attract and retain key personnel; nature of sales; product complexity and product defects; international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. ; material cost fluctuations and limited availability When customers of the PSTN make telephone calls, they commonly make use of a telecommunications network called a switched-circuit network. In a switched-circuit network, devices known as switches are used to connect the caller to the callee. of raw materials; potential loss of customers; competition; industry contraction contraction, in physics contraction, in physics: see expansion. contraction, in grammar contraction, in writing: see abbreviation. contraction - reduction and slow economic growth; technological change and process development; environmental liability; need for additional financing; product liability; pricing pressure; ability to reduce costs; and other risks listed in Coretec's public disclosure documents and other filings with securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities found at www.sedar.com. Additional information about Coretec Inc. is available at www.coretec-inc.com.
Coretec Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands - unaudited)
September 30, December 31,
2004 2003
$ $
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ASSETS
Current
Cash 511 910
Accounts receivable 14,675 10,394
Inventories 5,027 3,329
Prepaid expenses 1,510 782
Income taxes recoverable - 451
Current assets of discontinued operations - 3,170
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Total current assets 21,723 19,036
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Long-lived assets held for sale 5,146 5,146
Capital assets, net 26,014 25,296
Other assets 423 194
Future income taxes 119 -
Non-current assets of discontinued operations - 1,935
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53,425 51,607
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 935 863
Accounts payable and accrued liabilities 10,911 7,782
Current portion of long-term debt 1,897 1,155
Current liabilities of discontinued operations - 1,255
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Total current liabilities 13,743 11,055
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Long-term debt 7,181 5,349
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Total liabilities 20,924 16,404
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Shareholders' equity
Share capital 60,999 60,979
Contributed surplus 259 56
Deficit (28,757) (25,832)
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Total shareholders' equity 32,501 35,203
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53,425 51,607
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Coretec Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands - unaudited)
Three months ended Nine months ended
September 30 September 30
------------------ ------------------
2004 2003 2004 2003
$ $ $ $
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Sales 21,693 15,523 61,095 48,308
Cost of sales 16,300 11,378 44,186 36,953
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Gross profit 5,393 4,145 16,909 11,355
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Expenses
Selling, general and
administrative 3,123 2,670 9,305 8,573
Depreciation and amortization 1,624 1,738 4,958 5,208
Restructuring charges - - - 531
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4,747 4,408 14,263 14,312
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Income (loss) from operations 646 (263) 2,646 (2,957)
Interest and other expenses 261 210 639 578
Foreign exchange loss (gain) (210) (51) (228) 513
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Income (loss) before income taxes 595 (422) 2,235 (4,048)
Provision for income taxes 13 - 33 -
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Income (loss) from continuing
operations 582 (422) 2,202 (4,048)
Loss from discontinued
operations (4,710) (126) (5,127) (872)
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Net loss for the period (4,128) (548) (2,925) (4,920)
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Earnings (loss) per share
From continuing operations:
Basic and Diluted $ 0.03 $(0.02) $ 0.12 $(0.22)
Loss per share
Basic and Diluted $(0.22) $(0.03) $(0.16) $(0.26)
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Coretec Inc.
CONSOLIDATED STATEMENTS OF DEFICITS
(in thousands - unaudited)
Nine months ended
September 30
------------------------
2004 2003
$ $
---------------------------------------------------------------------
Deficit, beginning of period (25,832) (20,722)
Net loss for the period (2,925) (4,920)
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Deficit, end of period (28,757) (25,642)
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Coretec Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
Three months ended Nine months ended
September 30 September 30
------------------ ------------------
2004 2003 2004 2003
$ $ $ $
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OPERATING ACTIVITIES
Income (loss) from continuing
operations for the period 582 (422) 2,202 (4,048)
Non-cash items
Depreciation and amortization 1,624 1,738 4,958 5,208
Unrealized foreign exchange loss
(gain) 11 (8) 139 651
Amortization of deferred finance
charge 38 22 95 67
Future income taxes - (71) - (86)
Stock-based compensation 86 10 208 17
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2,341 1,269 7,602 1,809
Net change in non-cash working
capital balances related to
operations (1,550) 332 (4,464) (940)
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Cash provided by operating
activities 791 1,601 3,138 869
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FINANCING ACTIVITIES
Increase in long-term debt - - 4,454 -
Repayments of long-term debt (718) (290) (2,248) (836)
Increase (decrease) in bank
indebtedness 546 (1,092) 72 473
Proceeds of shares issued - - 14 -
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Cash provided by (used in)
financing activities (172) (1,382) 2,292 (363)
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INVESTING ACTIVITIES
Purchase of capital assets (508) (312) (1,458) (3,625)
Decrease (increase) in other assets (40) 3 (324) 10
Advance to Proto Circuit - - (3,798) -
Business acquisitions - - (236) -
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Cash used in investing activities (548) (309) (5,816) (3,615)
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Effect of exchange rate changes on
cash 5 67 (13) (65)
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Net increase (decrease)in cash
during the period 76 (23) (399) (3,174)
Change in cash from discontinued
operations (477) (219) (432) 55
Cash, beginning of period
including cash from discontinued
operations 912 1,319 1,342 4,196
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Cash, end of period 511 1,077 511 1,077
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Supplemental cash flow information
Interest paid 140 184 476 481
Income taxes paid - - 144 -
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Coretec Inc.
Selected financial Information (000's)
CHG
Q3/04 Q3/03 CHG Q2/04 Q3/Q2 YTD04 YTD03 CHG
------------- ----- --------------
Continuing
operations:
Revenue 21,693 15,523 40% 20,969 3% 61,095 48,308 26%
Gross Margin 5,393 4,145 30% 6,232 -13% 16,909 11,355 49%
Income (loss) 582 (422) 238% 826 -30% 2,202 (4,048) 154%
Reconciliation of EBITDA from continuing operations
CHG
Q3/04 Q3/03 CHG Q2/04 Q3/Q2 YTD04 YTD03 CHG
------------- ----- --------------
Income (loss)
for the
period from
continuing
operations 582 (422) 826 2,202 (4,048)
Add/(Deduct):
Interest 261 210 222 639 578
Depreciation
and
amortization 1,624 1,738 1,722 4,958 5,208
Income taxes
expense 13 20 33 0
------------- ----- --------------
EBITDA from
continuing
operations 2,480 1,526 63% 2,790 -11% 7,832 1,738 351%
Reconciliation of Free Cash Flow from continuing operations
CHG
Q3/04 Q3/03 CHG Q2/04 Q3/Q2 YTD04 YTD03 CHG
------------- ----- --------------
Income (loss)
for the
period from
continuing
operations 582 (422) 826 2,202 (4,048)
Add:
Depreciation
and
amortization 1,624 1,738 1,722 4,958 5,208
Amortization
of deferred
finance
charges 38 22 39 95 67
------------- ----- --------------
2,244 1,338 2,587 7,255 1,227
Deduct:
Capital
expenditures (508) (312) (619) (1,458) (3,625)
------------- ----- --------------
Free Cash
Flow from
continuing
operations 1,736 1,026 69% 1,968 -12% 5,797 (2,398) 342%
Coretec Inc. (TSX:CYY) |
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