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Calgary, Alberta–(Newsfile Corp. – August 4, 2022) – 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 second quarter ended June 30, 2022, and the granting of stock options.

SECOND QUARTER ENDED JUNE 30, 2022

Summary of second quarter operating results:

  • Q2 2022 sales of $11.4 million, an increase of $2.7 million or 30.5% from Q2 2021 sales of $8.7 million

  • Net income and comprehensive income of $620,000 for Q2 2022, being $0.06 per share compared to net income and comprehensive income of $504,000 for Q2 2021, or $0.05 per share

  • Q2 2022 EBITDA of $1.5 million, an increase of $0.3 million compared to Q2 2021 EBITDA of $1.2 million (see below for explanation and calculation of EBITDA)

  • Q2 2022 EBITDAaL of $1.1 million, an increase of $0.2 million compared to EBITDAaL of $0.9 million for Q2 2021 (see below for explanation and calculation of EBITDAaL)

  • Working capital of $8.3 million

Summary of year-to date operating results:

  • Sales of $20.8 million for the six months ended June 30, 2022, an increase of 23.4% compared to sales of $16.9 million for the six months ended June 30, 2021

  • Net income and comprehensive income for the six months ended June 30, 2022 of $765,000, being $0.07 per share compared to net income and comprehensive income of $667,000, or $0.07 per share for the same period in 2021

  • EBITDA of $2.4 million for the six months ended June 30, 2022 compared to EBITDA of $2.0 million for the six months ended June 30, 2021

  • EBITDAaL of $1.7 million for the six months ended June 30, 2022 compared to EBITDAaL of $1.5 million for the six months ended June 30, 2021

EBITDA is earnings before interest, taxes, depreciation and amortization. EBITDAaL is earnings before interest, taxes, depreciation and amortization, 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)
Six months
30 Jun 2022
(unaudited)
Six months
30 Jun 2021
(unaudited)
Three months
30 Jun 2022
(unaudited)
Three months
30 Jun 2021
Profit for the period from operations 765 667 620 504
Income taxes 252 161 154 72
Interest 154 113 84 61
Depreciation and amortization 1,187 1,042 594 517
EBITDA 2,358 1,983 1,452 1,154
Cash lease payments (653) (508) (315) (270)
EBITDAaL 1,705 1,475 1,137 884

 

Sales for the second quarter of 2022 were $11.4 million — a $2.7 million or 30.5% increase compared to the same three month period in 2021 on higher sales activity in the Metals segment and the acquisition of Westronic, which is included in the Telecom segment.

Metals segment sales increased $2.1 million to $8.5 million in Q2 2022, compared to $6.4 million in Q2 2021 on high demand for Hydel metering products across Canada and increased custom metal sales. Sales in the Telecom segment were up from $2.3 million in Q2 2021 to $2.9 million in Q2 2022. This increase is due to the addition of the Westronic sales to the segment and improved Guardian and cable and connectivity product line sales.

Circa reported higher selling, general and administrative expenses of $2.6 million in Q2 2022 compared to $2.3 million Q2 2021. The main reason for the increase was the inclusion of the Westronic business in the results. The Company also recorded higher non-cash amortization related to the intangible assets from the Westronic acquisition.

The Company posted net income and comprehensive income of $620,000 in the second quarter of 2022 compared to $504,000 in the same quarter of 2021. This increase in earnings is a result of strong sales and higher operating profit.

Cory Tamagi, Circa’s President and Chief Executive Officer, stated:

“Circa posted net income of $620,000, or $0.06 per share, on sales of $11.4 million in the second quarter of 2022. Sales were higher in both segments in the second quarter and for the six month period when compared to the same period in 2021. Sales of Hydel metering products continued to surge on strong demand across Canada. The Telecom line saw a year over year improvement despite the lack of significant project sales in the quarter, largely due to the acquisition of Westronic in May 2021.

“We expect sales in the Metals segment to remain strong throughout 2022 as the demand for metering products continues to grow. The Company is also seeing increased quoting activity in the Telecom segment, mainly in the Guardian Telecom product line. The resumption of in-person customer visits and the addition of new distributor representatives have begun to generate increased activity, which management is optimistic will result in higher sales.

“The Company’s supply chain challenges continue to hamper operations and product delivery as key materials are delayed. Much higher than typical inflation on materials and services is putting pressure on margins and the Company is responding with price increases to customers where possible. The economic forecast is for these factors to continue to impact Circa through the rest of the 2022 and into 2023.

“The Company is also experiencing labour shortages in certain areas and upward pressure on wages with the high inflation. Job vacancies are up and competition for skilled trades is affecting the Company’s output and sales, particularly in the Metals segment.

“Management is optimistic the economic and geopolitical situation will improve and supply chain disruptions will ease throughout 2022. Until then, Circa will continue to actively monitor and manage these operational challenges.”

CIRCA ENTERPRISES INC.
Condensed Consolidated Interim Statements of Income and Comprehensive Income

Unaudited        
$000’s Six months ended
30 Jun 2022
Six months
ended
30 Jun 2021
Three months ended
30 Jun 2022
Three months ended
30 Jun 2021
      
Sales 20,811 16,863 11,372 8,717
Freight 487 401 285 215
Net sales 20,324 16,462 11,087 8,502
Cost of sales 13,960 11,120 7,661 5,606
Gross profit 6,364 5,342 3,426 2,896
Selling, general and administrative expenses 5,234 4,446 2,609 2,304
Operating profit 1,130 896 817 592
Other income 41 45 41 45
Interest expense 154 113 84 61
Profit before tax 1,017 828 774 576
Income tax expense 252 161 154 72
Net income and comprehensive income 765 667 620 504
        
Earnings per share (in $’s)
Basic 0.07 0.07 0.06 0.05
Diluted 0.07 0.06 0.06 0.05

 

GRANT OF STOCK OPTIONS 
The Company announced today that it has granted a total of 235,000 stock options to directors, officers and employees of the Company pursuant to the Company’s stock option plan. Of these stock options, 145,000 were granted to directors and officers of Circa. The stock options are exercisable for a period of five years at an exercise price per share equal to the closing price of the common shares of the Corporation on the TSX Venture

Exchange as at the close of trading on August 5, 2022. One third of these options will vest on the anniversary from the date of the grant over the next three years.

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: [email protected]
Website: www.circaent.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/132868

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