Press Release
Creative Vistas today reported its financial results for the third quarter and nine months ended September 30, 2009.
Revenues Reflect Continued Economic Weakness in North America
Revenues for the third quarter ended September 30, 2009 totaled $11.32 million, down 19% from $13.99 million in the third quarter of 2008. The decrease was due to lower sales at Dependable HomeTech (DHT), the larger of Creative Vistas’ two principal operating divisions, partially offset by increased revenues at the other principal operating unit, AC Technical Systems Ltd.
DHT, which delivers installation, repair and other services to broadband providers under the brand Dependable HomeTech, experienced a 25% year-over-year drop in revenues, to $8.89 million from $11.81 million. Most of the decrease was due to lower sales to DHT’s largest customer, which experienced a decline of 27%, to $5.37 million from $7.34 million a year earlier. DHT’s revenues from its U.S. customers decreased year-over-year by 24%, to $1.70 million from $2.24 million. The drop in revenues reflected the slowing economy and fluctuations in exchange rates.
Gross Margins Improve, Operating and Net Profit Return
Gross profit (after direct costs and project costs) for the third quarter of 2009 totaled $2.91 million, or 26% of revenues, up from $2.47 million, or 18% of revenues, in the third quarter of 2008. Creative Vistas said the improvement primarily reflects the higher set-up and training costs in 2008, when the Company was establishing its operations in the U.S.
The gross margin improvements and lower operating costs resulted in a year-over-year swing to operating profit. Income from operations in the third quarter of 2009 was $0.59 million, compared to an operating loss of ($1.45 million) a year earlier.
EBITDA (earnings before interest, taxes, depreciation and amortization) in the third quarter of 2009 totaled $1.32 million, compared to ($0.53 million) in the third quarter of 2008. EBITDA represents, for any relevant period, income (loss) before income taxes, depreciation of property, plant and equipment, interest expense (including amortization of debt issuance costs) and amortization of intangible assets. As in prior quarters, the Company’s net income and earnings per share (EPS) results for the third quarter of 2009 have been affected substantially by non-cash adjustments related to its capital structure. For that reason, the Company believes EBITDA provides a useful tool, in conjunction with GAAP reporting, for gauging the ongoing performance of its operating units.
Net income for the third quarter of 2009 was $0.72 million, or $0.02 per fully diluted share, compared to a net loss of ($3.33 million), or ($0.09) per fully diluted share, a year earlier. The net results for the third quarter of 2008 reflect a one-time loss of $0.83 million on the Company’s sale of its common stock in the broadband servicing firm 180 Connect Inc. Also, the foreign currency translation gain for the third quarter of 2009 was $0.76 million, compared to a foreign currency translation loss of ($0.38 million) for the comparable period of 2008.
On a sequential basis, the third quarter 2009 operating and net results show a return to profitability after an operating loss of ($0.57 million) and a net loss of ($0.43) in the second quarter ended June 30, 2009.
CEO Says High-Margin BI Software Initiative Is “Gaining Traction”
Commenting on the third quarter 2009 results, Creative Vistas Chief Executive Officer Dominic Burns said, “While we would have been happy to see a more robust economic environment for our business lines, our performance in the latest quarter shows some reason for optimism. Significantly, our cost-cutting efforts and the end of our launch phase in the U.S. placed us back in the black on both an operating and net basis. We also remain confident that our capital resources, including operating cash flows, will be sufficient to fund further operations and expansion. Finally, we are beginning to see the beginnings of licensing revenue for our OSS-IM View business intelligence (BI) software, which has proven its worth as part of our service to broadband providers and is now being offered as a stand-alone product to customers in a much broader range of industries. The BI product is clearly gaining traction with new and potential customers. It was not yet producing significant revenue in the third quarter of 2009, but we expect it to make a growing contribution both to overall sales and margins in 2010.”
Subsequent to the end of the third quarter, Creative Vistas noted in an October 20, 2009 release that one of its broadband-service customers, Rudder Capital Corp., reported a six-month cost saving of $175,000 from deployment of the OSS-IM View software. Rudder expected its full-year savings to reach $400,000. OSS-IM View is a next-generation business intelligence tool that provides automated intelligent decision-making for managing customer transactions, vehicles, technicians, supply chains, HR-related functions and other activities. It automates and reports on virtually every aspect throughout the supply/delivery chain.
If you would like to be added to Creative Vistas’ investor email lists or have additional questions, please contact Haris Tajyar with Investor Relations International at htajyar@irintl.com.
For further information on Creative Vistas, please visit www.creativevistasinc.com.
About Creative Vistas
Creative Vistas Inc. is a leading provider of broadband-related services as well as security technologies and systems. Through its subsidiary, Dependable HomeTech, Creative Vistas provisions the deployment and servicing of broadband technologies to the commercial and residential market in Canada and the U.S. Through its subsidiaries AC Technical Systems Ltd. and Iview Digital Video Solutions Inc., it offers proprietary and non-proprietary technologies to the integrated electronic security and surveillance market. Its growing list of customers for broadband-related services include major cable-system operators in Ontario, Canada and U.S. metropolitan markets including New Orleans and Baton Rouge, La., Charlotte, N.C. Its security and surveillance systems are used by numerous high-profile clients including government, school boards, retail outlets, banks and hospitals. Creative Vistas is based in Ontario, Canada.
Forward-Looking Statements: Statements about the Company's future expectations, including future revenues and earnings, and all other statements in this press release other than historical facts are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and as the term is defined in the Private Securities Litigation Reform Act of 1995. The Company's actual results could differ materially from expected results for reasons described from time to time in the Company's public filings. The Company undertakes no obligation to update forward-looking statements to reflect subsequently occurring events.
Creative Vistas, Inc.
Condensed Consolidated Balance Sheets |
|
September 30, 2009 |
|
December 31, 2008 |
|
|
(Unaudited) |
|
|
Assets |
|
|
|
|
Current Assets |
|
|
|
|
Cash and bank balances |
|
$ |
2,576,425 |
|
|
$ |
4,770,337 |
|
Accounts receivable, net of allowance for doubtful accounts of $228,096 and $323,183 |
|
|
5,367,214 |
|
|
|
4,571,327 |
|
Income tax recoverable |
|
|
329,585 |
|
|
|
188,525 |
|
Inventory and supplies |
|
|
793,428 |
|
|
|
829,318 |
|
Prepaid expenses |
|
|
521,324 |
|
|
|
289,638 |
|
Due from related parties |
|
|
2,388 |
|
|
|
2,094 |
|
Total current assets |
|
|
9,590,364 |
|
|
|
10,651,239 |
|
Property plant and equipment, net of depreciation |
|
|
7,142,906 |
|
|
|
9,214,623 |
|
Deposits |
|
|
116,588 |
|
|
|
460,376 |
|
Intangible assets |
|
|
650,623 |
|
|
|
850,136 |
|
Deferred financing costs, net |
|
|
419,398 |
|
|
|
483,331 |
|
Deferred income taxes |
|
|
36,673 |
|
|
|
35,343 |
|
|
|
$ |
17,956,552 |
|
|
$ |
21,695,048 |
|
Liabilities and Shareholders' (Deficit) |
|
|
|
|
Current Liabilities |
|
|
|
|
Bank Indebtedness |
|
$ |
2,307,548 |
|
|
$ |
1,581,912 |
|
Accounts payable and accrued liabilities |
|
|
4,882,072 |
|
|
|
5,800,061 |
|
Current portion of obligation under capital leases |
|
|
1,470,402 |
|
|
|
2,125,312 |
|
Deferred income |
|
|
122,151 |
|
|
|
118,595 |
|
Deferred income taxes |
|
|
25,858 |
|
|
|
25,858 |
|
Current portion of term notes |
|
|
7,387,500 |
|
|
|
1,750,000 |
|
Current portion of other payable |
|
|
280,374 |
|
|
|
245,902 |
|
Due to related parties |
|
|
7,174 |
|
|
|
6,292 |
|
Total current liabilities |
|
|
16,483,079 |
|
|
|
11,653,932 |
|
Term notes |
|
|
8,260,524 |
|
|
|
14,062,290 |
|
Notes payable to related parties |
|
|
1,500,000 |
|
|
|
1,500,000 |
|
Obligation under capital lease |
|
|
3,870,707 |
|
|
|
4,554,240 |
|
Due to related parties |
|
|
215,766 |
|
|
|
189,237 |
|
|
|
|
30,330,076 |
|
|
|
31,959,699 |
|
Shareholders' (deficit) |
|
|
|
|
Share capital |
|
|
|
|
Authorized |
|
|
|
|
50,000,000 no par value preferred shares undesignated, none issued or outstanding |
|
|
|
|
100,000,000 no par value common shares 37,488,714 at September 30, 2009 and 37,224,926 at December 31, 2008 issued and outstanding |
|
|
|
|
Common stock |
|
|
6,555,754 |
|
|
|
6,488,137 |
|
Additional paid-in capital |
|
|
14,127,379 |
|
|
|
14,005,627 |
|
Accumulated (deficit) |
|
|
(32,241,221 |
) |
|
|
(31,357,923 |
) |
Accumulated other comprehensive income (loss) |
|
|
(815,436 |
) |
|
|
599,508 |
|
|
|
|
(12,373,524 |
) |
|
|
(10,264,651 |
) |
|
|
$ |
17,956,552 |
|
|
$ |
21,695,048 |
|
Creative Vistas, Inc. |
Condensed Consolidated Statements of Operations |
(Unaudited) |
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
Contract and service revenue |
|
|
|
|
|
|
|
|
Contract |
|
$ |
2,039,619 |
|
|
$ |
1,756,739 |
|
|
$ |
4,368,893 |
|
|
$ |
5,022,254 |
|
Service |
|
|
9,281,162 |
|
|
|
12,204,635 |
|
|
|
25,217,432 |
|
|
|
32,299,736 |
|
Other |
|
|
1,662 |
|
|
|
33,208 |
|
|
|
12,117 |
|
|
|
48,807 |
|
|
|
|
11,322,443 |
|
|
|
13,994,582 |
|
|
|
29,598,442 |
|
|
|
37,370,797 |
|
Direct Expenses (excluding depreciation) |
|
|
|
|
|
|
|
|
Contract |
|
|
1,152,944 |
|
|
|
1,169,824 |
|
|
|
2,411,632 |
|
|
|
3,153,590 |
|
Service |
|
|
7,034,600 |
|
|
|
10,082,945 |
|
|
|
19,704,627 |
|
|
|
26,159,547 |
|
Project expenses |
|
|
229,520 |
|
|
|
269,309 |
|
|
|
666,687 |
|
|
|
861,381 |
|
Selling expenses |
|
|
205,248 |
|
|
|
259,436 |
|
|
|
610,888 |
|
|
|
739,415 |
|
General and administrative expenses |
|
|
1,370,361 |
|
|
|
2,745,487 |
|
|
|
4,193,898 |
|
|
|
8,783,283 |
|
Depreciation expense |
|
|
657,033 |
|
|
|
728,492 |
|
|
|
2,028,390 |
|
|
|
1,847,254 |
|
Amortization of intangible assets |
|
|
86,515 |
|
|
|
188,622 |
|
|
|
253,238 |
|
|
|
568,557 |
|
|
|
|
10,736,221 |
|
|
|
15,444,115 |
|
|
|
29,869,360 |
|
|
|
42,113,027 |
|
Income (Loss) from operations |
|
|
586,222 |
|
|
|
(1,449,533 |
) |
|
|
(270,918 |
) |
|
|
(4,742,230 |
) |
Interest and other expenses (income) |
|
|
|
|
|
|
|
|
Net financing expenses |
|
|
585,668 |
|
|
|
603,392 |
|
|
|
1,766,402 |
|
|
|
6,419,775 |
|
Realized loss on disposal of available for sale securities |
|
|
- |
|
|
|
822,916 |
|
|
|
- |
|
|
|
822,916 |
|
Amortization of deferred charges |
|
|
41,008 |
|
|
|
69,666 |
|
|
|
120,537 |
|
|
|
159,581 |
|
Foreign currency translation (gain) loss |
|
|
(760,897 |
) |
|
|
384,502 |
|
|
|
(1,274,559 |
) |
|
|
520,277 |
|
|
|
|
(134,221 |
) |
|
|
1,880,476 |
|
|
|
612,380 |
|
|
|
7,922,549 |
|
Income (Loss) before income taxes |
|
|
720,443 |
|
|
|
(3,330,009 |
) |
|
|
(883,298 |
) |
|
|
(12,664,779 |
) |
Income taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net income (loss) |
|
|
720,443 |
|
|
|
(3,330,009 |
) |
|
|
(883,298 |
) |
|
|
(12,664,779 |
) |
Other comprehensive (loss): |
|
|
|
|
|
|
|
|
Unrealized gain – available for sale securities |
|
|
- |
|
|
|
916,649 |
|
|
|
- |
|
|
|
- |
|
Foreign currency translation adjustment |
|
|
(880,690 |
) |
|
|
327,939 |
|
|
|
(1,414,943 |
) |
|
|
411,719 |
|
Comprehensive (loss) |
|
$ |
(160,247 |
) |
|
$ |
(2,085,421 |
) |
|
$ |
(2,298,241 |
) |
|
$ |
(12,253,060 |
) |
Basic weighted-average shares |
|
|
37,478,649 |
|
|
|
37,224,926 |
|
|
|
37,426,516 |
|
|
|
36,834,445 |
|
Diluted weighted-average shares |
|
|
44,508,726 |
|
|
|
37,224,926 |
|
|
|
37.426,516 |
|
|
|
36,834,445 |
|
Basic earnings (loss) per share |
|
$ |
0.02 |
|
|
$ |
(0.09 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.34 |
) |
Diluted earnings (loss) per share |
|
$ |
0.02 |
|
|
$ |
(0.09 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.34 |
) |
Investor Relations International for Creative Vistas
Haris Tajyar, 1-818-382-9702
htajyar@irintl.com
|