- Positive earnings swing of $1 million to operating break-even
- Focus on sales growth to drive profitability
MONTREAL, May 13 /CNW Telbec/ - Mindready Solutions Inc. (TSX: MNY), a
leading supplier of innovative solutions for test and embedded systems, today
reported its financial results for the first quarter ended March 31, 2005.
"We are very pleased to report a near break-even bottom line despite a
slight reduction in sales resulting mostly from currency exchange factors. Our
financial performance represents a positive swing of $1 million dollars
compared to the first quarter of 2004 and confirms the benefits of the
restructuring completed during the second half of last year. Now that we have
a sound operating structure in place, all of our efforts are focused on top
line growth through targeted sales and marketing strategies, partnerships and
acquisitions," said Claude Delage, President and Chief Executive Officer.
Sales for the first quarter of 2005 declined to $4.3 million compared to
$4.5 million for the same period in 2004. The year-over-year decline in the
value of the US dollar and Pound Sterling against the Canadian dollar reduced
sales by approximately $180 000 in the latest quarter. Net loss, which takes
into account stock-based compensation expenses of $87 000 in the first quarter
of 2005, was $0.2 million compared to a net loss of $1.1 million in 2004. This
turn-around is ever more impressive if we consider that no R&D expense was
capitalized in the first quarter of 2005 whereas $337 000 was capitalized in
the first quarter of 2004.
Operating loss before certain items was $37 000 compared to an operating
loss of $1.0 million for the first quarter of 2004. The principal factors in
the improvement were a reduction of $0.4 million in cost of sales and a
$0.6 million decrease in selling and administrative expenses, reflecting the
restructuring completed in the second half of 2004. With this lower cost
structure, management is confident that future sales growth will have a
favourable impact on earnings.
In addition to the efforts of its own sales and marketing team, Mindready
is pursuing sales growth through multiple initiatives. These include a broader
coverage through Manufacturer's Representatives in target vertical markets in
United States and Europe.
In the United States, Mindready is currently bidding on defense projects
that will be undertaken through its own US Department of defense-compliant
production facility that should be fully operational by the end of the second
quarter of 2005. With this facility, the company will be eligible for defense
projects where its expertise is well recognized.
"Because the first quarter is historically the slowest of the year, we
are proud to have come close to break-even. Our sales and marketing team is
actively pursuing new business and we are broadening our market coverage. We
are confident that our focused efforts will be rewarded," concluded Claude
Delage.
Operating loss before certain items excludes amortization of property and
equipment, interest income, exchange gains, stock-based compensation and non
recurring charges.
Forward-looking Statements
The statements regarding the company's future operating results,
performance and business prospects contained in this press release, and any
other statements not constituting historical information, are forward-looking
statements. These forward-looking statements reflect the company's current
opinions and assumptions with respect to future business decisions and
results, and are based on the information currently available to the company.
Accordingly, these statements are subject to risks, uncertainties and
contingencies which could cause the company's future operating results,
performance or business prospects to differ from those expressed in, or
implied by, these statements.
About Mindready
Mindready Solutions Inc. (TSX: MNY) is a leading supplier of innovative
solutions for test and embedded systems serving the military/aerospace,
automotive/transportation and telecommunications markets from design to
manufacturing. Mindready's clients include companies such as Lockheed Martin,
Raytheon, Northrop Grumman, Boeing, Daimler Chrysler, BMW, Nissan, Bose,
Nortel Networks and Alcatel. More information about Mindready and its
products, systems and engineering services can be found at www.mindready.com .
<<
Consolidated Balance Sheets
(in thousands of dollars)
------------------------------------------------------------------------
March 31, December 31,
2005 2004
(unaudited) (audited)
------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,027 $ 2,336
Accounts receivable 3,869 4,215
Tax credits receivable 225 99
Work in process 1,586 1,014
Inventories 1,412 1,401
Prepaid expenses 156 92
----------------------------------------------------------------------
9,275 9,157
Property and equipment 559 895
Goodwill 2,079 2,097
------------------------------------------------------------------------
$ 11,913 $ 12,149
------------------------------------------------------------------------
------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,386 $ 1,037
Accrued liabilities 3,382 3,975
Income taxes payable 55 30
Deferred revenue 172 228
----------------------------------------------------------------------
4,995 5,270
Shareholders' equity:
Share capital (note 2) 6,942 6,740
Contributed surplus 116 96
Deficit (449) (265)
Cumulative translation adjustment 309 308
----------------------------------------------------------------------
6,918 6,879
------------------------------------------------------------------------
$ 11,913 $ 12,149
------------------------------------------------------------------------
------------------------------------------------------------------------
Consolidated Statements of Operations
(in thousands of dollars, except per share amounts)
(unaudited)
Three month periods ended
------------------------------------------------------------------------
March 31, March 31,
2005 2004
------------------------------------------------------------------------
Sales $ 4,333 $ 4,521
Cost of sales 2,865 3,215
------------------------------------------------------------------------
------------------------------------------------------------------------
Gross margin 1,468 1,306
------------------------------------------------------------------------
------------------------------------------------------------------------
Expenses:
Selling and administrative 1,366 1 985
Research and development 139 300
----------------------------------------------------------------------
1,505 2,285
------------------------------------------------------------------------
------------------------------------------------------------------------
Loss before the following items: (37) (979)
Amortization of property and equipment 132 185
Interest income (7) (78)
Exchange gains (71) (49)
Stock-based compensation 87 -
Non recurring charges - 53
----------------------------------------------------------------------
----------------------------------------------------------------------
141 111
------------------------------------------------------------------------
Loss before income taxes (178) (1,090)
Current income taxes 6 7
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Net loss $ (184) $ (1,097)
------------------------------------------------------------------------
------------------------------------------------------------------------
Basic and diluted net loss per share $ (0.01) $ (0.09)
Weighted average number of common
shares outstanding 13,065,179 11,999,409
------------------------------------------------------------------------
------------------------------------------------------------------------
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