|
| |||||||||||||||
Coretec Announces Third Quarter 2008 Results Q3 Loss of $0.03 per Share on Revenues of $20.3 Million TORONTO, ONTARIO--(MARKET WIRE)--Nov 7, 2008 -- Coretec Inc. (Toronto:CYY.TO - News) today reported its financial results
for the third quarter ended September 30, 2008. Sales in
the 2008 third quarter were $20.3 million, an increase of
$0.9 million sequentially or 4.6% as compared to sales of
$19.4 million in Q2 2008, and down $1.6 million or 7.3%
from sales of $21.9 million in the same period of the prior
year.
In the 2008 third quarter, the Company recorded gross profit of $3.5 million or 17.1% of sales, a decrease of $0.2 million sequentially or 5.4% as compared to gross profit of $3.7 million in Q2 2008, and down $0.4 million or 10.3% from gross profit of $3.9 in the comparable period in 2007. A loss of $0.5 million or $0.03 per share was recorded in the 2008 third quarter, a higher loss by $0.3 million sequentially as compared to a loss of $0.2 million or $0.01 per share in Q2 2008, and an improvement of $0.1 million as compared to the prior year quarter which had a net loss of $0.6 million or $0.3 per share. Contributing to the loss in the third quarter was the write off of $0.4 million of accounts receivable that are considered uncollectable. In Q3 2007 the accounts receivable write off was nil. Year to date in 2008 the Company has written off $0.5 million of accounts receivable. These amounts are significant for the Company as compared to prior periods and represent the highest amount of write offs recorded on a quarterly and annual basis in the Company's history. Earnings before interest, taxes, depreciation, amortization and foreign exchange ("EBITDA") (a non-Canadian GAAP term) in the third quarter of 2008 was $0.6 million, as compared to EBITDA of $1.0 million in Q2 2008 and $0.8 million in the third quarter of 2007. During the third quarter of 2008 the Company concluded a financing with Business Development Bank of Canada (BDC) to allow the borrowing of CDN$3.0 million related to building infrastructure for the consolidation of its Ellesmere facility into the Sheppard facility. BDC also provided a US$3.0 million loan for the purchase of equipment. In September the Company borrowed CDN$2.0 and US$1.6 million against the loan facilities. "The transfer and start-up of new processes at the Company's Sheppard facility was intense during Q3 2008. In particular, several large plating platforms were installed during the quarter. Although the equipment installations were on schedule the process start-up, as expected, has consumed significant internal and external resources as well as negatively affected throughput. We are pleased to say that we are making good progress with respect to process optimization of these key platforms and are looking forward to the meaningful quality and throughput improvements that will be achieved in the near term. In Q4, we will be relocating the majority of our test and quality assurance tools and associated personnel from our Ellesmere plant to the Sheppard site. This phase of transfers will significantly reduce the amount of inter-facility transport of product as well as liberate a meaningful amount of floor space at the Company's Ellesmere facility. By the end of the year we will have reduced our premises costs associated with the leased Ellesmere facility by one third, commencing January 2009. By mid 2009 we will realize further savings in this regard as we vacate an additional third of the facility and by the beginning of 2010 we will have achieved full consolidation", said Mr. Langston, Coretec's President & CEO. Mr. Langston said, "Our US plants continue to operate at very strong operational and business activity levels. As such we are pleased with the growth prospects at these two sites. Our offshore business is also demonstrating good operational performance metrics and is poised for growth as a result of several new customer approvals and program awards." Coretec is one of the leading designers and fabricators of printed circuit boards for the prototype and quick turnaround production segments of the North American and European markets. Coretec distinguishes itself from its competitors by providing an extensive suite of printed circuit board services including field applications engineering support and education; technology roadmap consulting, CAD layout; rapid response manufacturing for prototypes; quick turn production for small-to-middle volume quantity requirements; and facilitation of higher volume requirements via partnerships in lower cost jurisdictions. The Company is also differentiated by its broad range of PCB technologies. This news release contains "forward-looking statements" within the meaning of the United States Securities Litigation Reform Act of 1995, and applicable Canadian Securities Legislation. Forward-looking statements include, but are not limited to, statements with respect to financial performance, opportunities, new market for growth and financial position. Generally these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecast", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". 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 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; material cost fluctuations and limited availability of raw materials; potential loss of customers; competition; industry contraction 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 discussed in the section entitled "Risk Factors" in Coretec's Annual Information Form dated March 18, 2008 which can be obtained at www.sedar.com.
Coretec Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands - unaudited)
September 30, December 31,
2008 2007
$ $
----------------------------------------------------------------------------
ASSETS
Current
Cash 313 1,829
Accounts receivable 13,214 12,389
Mortgage receivable - 1,050
Inventories 4,869 4,009
Prepaid expenses 862 688
----------------------------------------------------------------------------
Total current assets 19,258 19,965
Property, plant and equipment, net 31,278 30,250
Other assets 370 756
----------------------------------------------------------------------------
50,906 50,971
----------------------------------------------------------------------------
----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness 1,285 4,021
Accounts payable and accrued liabilities 9,453 7,886
Current portion of long-term debt 1,898 1,887
----------------------------------------------------------------------------
Total current liabilities 12,636 13,794
Long-term debt 10,274 7,479
----------------------------------------------------------------------------
Total liabilities 22,910 21,273
Shareholders' equity
Share capital 61,066 61,066
Share capital held by long term incentive plan (28) (100)
Contributed surplus 794 750
Deficit (33,836) (32,018)
----------------------------------------------------------------------------
Total shareholders' equity 27,996 29,698
----------------------------------------------------------------------------
50,906 50,971
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Coretec Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands except per share amounts - unaudited)
Three months ended Nine months ended
September 30 September 30
----------------------------------------------------------------------------
2008 2007 2008 2007
$ $ $ $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales 20,299 21,895 58,201 66,530
Cost of sales 16,822 17,951 48,210 53,746
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gross profit 3,477 3,944 9,991 12,784
----------------------------------------------------------------------------
Expenses
Selling, general and administrative 2,925 3,013 8,019 9,820
Depreciation and amortization 1,039 1,192 3,274 3,704
----------------------------------------------------------------------------
3,964 4,205 11,293 13,524
----------------------------------------------------------------------------
Loss from operations (487) (261) (1,302) (740)
Interest and other expenses 145 256 512 687
Foreign exchange (gain) loss (58) 131 51 582
Gain on disposal of equipment, net (42) (3) (52) (156)
----------------------------------------------------------------------------
Loss before income taxes (532) (645) (1,813) (1,853)
----------------------------------------------------------------------------
Provisions for (recovery of) income
taxes - - 5 (15)
----------------------------------------------------------------------------
Loss for the periods (532) (645) (1,818) (1,838)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Loss per share
Loss per share, basic and diluted ($0.03) ($0.03) ($0.10) ($0.10)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Coretec Inc.
CONSOLIDATED STATEMENTS OF DEFICIT
(in thousands - unaudited)
Three months ended Nine months ended
September 30 September 30
2008 2007 2008 2007
$ $ $ $
----------------------------------------------------------------------------
Deficit, beginning of period (33,304) (30,000) (32,018) (28,807)
Net loss for the period (532) (645) (1,818) (1,838)
----------------------------------------------------------------------------
Deficit, end of period (33,836) (30,645) (33,836) (30,645)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Coretec Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands - unaudited)
Three months ended Nine months Ended
September 30 September 30
2008 2007 2008 2007
$ $ $ $
----------------------------------------------------------------------------
OPERATING ACTIVITIES
Loss for the period (532) (645) (1,818) (1,838)
Non-cash items
Depreciation 1,039 1,192 3,274 3,704
Stock-based compensation 29 54 44 84
Gain on disposal of equipment (42) (3) (52) (156)
Unrealized foreign exchange (gain)
loss (189) 744 117 1,349
Long-term incentive plan
compensation 18 10 71 30
Amortization of deferred finance
charges 21 42 61 89
----------------------------------------------------------------------------
344 1,394 1,697 3,262
Net change in non-cash working
capital balances related to
operations 153 785 (138) (1,957)
----------------------------------------------------------------------------
Cash provided by operating activities 497 2,179 1,559 1,305
----------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in long-term debt 3,690 1,491 3,690 4,992
Repayment of long-term debt (629) (1,947) (1,134) (2,495)
Increase (decrease) in bank
indebtedness (2,678) 418 (2,735) 2,562
Decrease in other liabilities (674) - - -
Issuance of share capital - - - 3
----------------------------------------------------------------------------
Cash (used in) provided by financing
activities (291) (38) (179) 5,062
----------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of capital assets (363) (1,810) (4,298) (7,390)
Decrease in mortgage receivable - - 1,050 -
Decrease (increase) in other assets (49) (16) 325 546
----------------------------------------------------------------------------
Cash used in investing activities (412) (1,826) (2,923) (6,844)
----------------------------------------------------------------------------
Effect of exchange rate changes on
cash (10) (102) 27 (129)
Net increase (decrease) in cash
during the period (216) 213 (1,516) 606
Cash, beginning of period 529 902 1,829 1,721
----------------------------------------------------------------------------
Cash, end of period 313 1,115 313 1,115
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Supplemental cash flow information
Interest paid 150 200 364 571
Income taxes paid - - -
----------------------------------------------------------------------------
----------------------------------------------------------------------------Contact: Contacts:
Coretec Inc.
Andre Kern
Chief Financial Officer
(416) 208-2165
Email: akern@coretec-inc.com
Coretec Inc.
Susan Nemchin
Executive Assistant
(416) 208-2157
Email: snemchin@coretec-inc.com
Source: Coretec Inc.
|  | ||||||||||||||
