TORONTO, Feb. 13 /PRNewswire-FirstCall/ -- Xenos Group Inc. (TSX:XNS), today reported a return to profitability on year over year growth in its first quarter financial results.
Xenos revenues for the first quarter ended December 31, 2006 rose to $3,931,000 compared to revenues of $3,619,000 for the same quarter last year. Xenos reported EBITDA of $226,000, compared to negative EBITDA of $828,000, for the same period last year.
In October, Xenos announced senior management changes designed to "support its refocused strategic direction, enhance operating efficiency and reduce or eliminate its cash burn in the fiscal first quarter." Operating efficiencies have been gained by centralizing management of the corporation at the Company's head office in Richmond Hill, Ontario. "We exceeded our financial objectives for the first quarter by posting a small profit. We have continued to rationalize and right size our operations in the second quarter with a view to building a platform for consistent quarterly profitability and long term revenue growth," said Stuart Butts, Chairman, President and CEO. Xenos' staff complement has been reduced from a high of 110 in September, 2006 to a current staffing level of 80.
Total operating expenses in the first quarter decreased 21% to $3,258,000, from $4,102,000 in the first quarter of fiscal 2006. Sales and marketing expenses were cut to $1,542,000 from $2,281,000. "We completed an expensive marketing and market development program in 2006," said Mr. Butts. "Now that we have created greater awareness of Xenos in our chosen markets we are able to reduce our marketing budget and focus on programs and strategies that are delivering measurable financial returns."
Xenos reported first quarter net earnings of $16,000, or $0.002 per share, compared with a net loss of $927,000, or ($0.09) per share, for the first quarter of fiscal 2006.
At December 31, 2006, Xenos held cash of $6,555,000, or $0.66 per common share and no significant long-term debt.
Financial Highlights - (complete statements are attached):
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Three Months
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Period Ended December 31, 2006 2005
(in CDN$000s except per share amounts)
Sales 3,931 3,619
Gross profit 3,182 2,999
EBITDA 226 (828)
Net income (loss) 16 (927)
Net income (loss) per share 0.002 (0.09)
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Cash & short-term investments 6,555 11,123
Cash per Share $0.66 1.12
Common Shares Outstanding 9,937 9,934
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See discussion of non-GAAP financial measures below.
Xenos' solid first quarter revenues were achieved through significant new license revenues and consistent performance in professional services. A number of important contracts were in hand at the end of the quarter and these will contribute to revenue in the current quarter and beyond. "We are particularly encouraged by the success we are enjoying in the enterprise content management (ECM) systems consolidation and document migration aspect of our Information Supply Chain business," said Mr. Butts.
Annual General Meeting Notice
Xenos will hold its Annual General Meeting of shareholders at 10:00 am eastern time on February 16th, 2007 at the Toronto Stock Exchange Media Centre. Shareholders and prospective investors are encouraged to attend to discuss the first quarter financial results, and meet with management and members of the Board of Directors. A review of fiscal 2006 and the outlook for 2007 will be presented at the meeting. An audio recording of the meeting will be available through the Company's website at http://www.xenos.com/.
About Xenos
Xenos (TSX: XNS) is a leading global provider of high-performance software solutions that automate the processing and delivery of electronic data and documents. Xenos solutions enable organizations to reduce costs and increase organizational efficiency, agility and accountability by streamlining and simplifying the transformation and repurposing of data and documents into actionable business information, without reengineering legacy applications.
Xenos solutions are embraced worldwide across a wide variety of industries including financial services, insurance, healthcare, telecommunications, manufacturing, logistics, transportation, retail and government sectors.
Xenos trades on the Toronto Stock Exchange under the trading symbol 'XNS.' For more information, visit http://www.xenos.com/
Certain statements made in this press release are forward-looking within the meaning of certain securities laws. Such forward-looking statements are based on a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or developments in the Company's business or its industry to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. The Company urges you not to place undue reliance on these estimates, opinions and projections. The Company assumes no obligation to update forward-looking statements if assumptions or these plans, estimates, opinions or projections should change.
The Company uses financial measures including, but not limited to, "EBITDA" to supplement its consolidated financial statements, which are presented in accordance with GAAP. EBITDA is not a recognized measure under GAAP and should not be construed as an alternative to net income (loss). Xenos' method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies.
Cash per share is a non-GAAP measure and is calculated by dividing the cash and short term investments by the number of common shares outstanding.
For further information, visit http://www.xenos.com/
(C) 2007 Xenos Group Inc. All rights reserved.
Xenos Group Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
December 31
2006 2005
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Sales $ 3,931,213 $ 3,618,854
Cost of sales 749,643 620,092
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Gross profit 3,181,570 2,998,762
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Expenses
Sales and marketing 1,542,414 2,280,638
Research and development 812,588 873,344
Administration and general 574,469 655,846
Amortization 288,708 262,892
Stock based compensation 26,051 16,757
Interest and bank charges 13,792 12,218
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3,258,022 4,101,695
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Loss before undernoted items (76,452) (1,102,933)
Interest and other 31,952 78,158
Foreign exchange gain 71,025 119,478
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102,977 197,636
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Income (loss) before income taxes 26,525 (905,297)
Provision for income taxes 10,678 21,851
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Net income (loss) $ 15,847 $ (927,148)
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Net income (loss) per common share
- Basic $ - $ (0.09)
- Fully diluted $ - $ (0.09)
Weighted average number of shares
- Basic 9,936,944 9,933,944
- Fully diluted 9,937,053 9,933,944
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Deficit, beginning of year $(36,573,188) $(24,603,941)
Net income (loss) 15,847 (927,148)
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Deficit, end of period $(36,557,341) $(25,531,089)
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Xenos Group Inc.
Consolidated Balance Sheets
(Unaudited)
As at
December 31 September 30
2006 2006
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ASSETS
CURRENT
Cash & S.T. investments $ 6,554,929 $ 7,308,177
Trade receivables 2,254,793 2,103,212
Other receivables 3,572 3,085
Prepaids 693,286 689,491
Income taxes recoverable - 7,204
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9,506,580 10,111,169
LONG TERM
Future income taxes 1,174,661 1,164,566
Capital assets 1,340,203 1,346,041
Intangibles and other assets 2,379,550 2,470,274
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4,894,414 4,980,881
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TOTAL ASSETS $ 14,400,994 $ 15,092,050
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LIABILITIES
CURRENT
Bank indebtedness $ 500,000 $ 500,000
Payables & accruals 1,818,658 2,307,340
Income taxes payable 11,528 8,095
Deferred revenue 2,966,760 3,261,751
Current portion - capital lease 88,633 64,893
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5,385,579 6,142,079
LONG TERM
Capital lease obligations 128,049 95,252
Deferred revenue 10,286 13,371
Deferred lease inducements 167,282 173,448
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305,617 282,071
TOTAL LIABILITIES 5,691,196 6,424,150
SHAREHOLDERS' EQUITY
Capital stock 44,969,035 44,969,035
Contributed surplus 298,104 272,053
Deficit (36,557,341) (36,573,188)
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TOTAL SHAREHOLDERS' EQUITY 8,709,798 8,667,900
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TOTAL LIABILITIES & EQUITY $ 14,400,994 $ 15,092,050
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Xenos Group Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
December 31
2006 2005
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Operating activities
Net income (loss) $ 15,847 $ (927,148)
Amortization 288,708 262,892
Loss on disposal of capital assets 21,658 -
Future income taxes (10,095) 7,613
Stock based compensation 26,051 16,757
Change in non-cash working capital (938,150) 22,896
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(595,981) (616,990)
Financing Activities
Capital lease payments (19,198) (9,552)
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(19,198) (9,552)
Investing activities
Additional consideration paid on
acquisitions - (3,362)
Purchase of capital assets (34,325) (143,343)
Development costs incurred (103,744) (137,225)
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(138,069) (283,930)
Net decrease in cash and short term
investments (753,248) (910,472)
Cash and short term investments
Beginning of period 7,308,177 12,033,741
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End of period $ 6,554,929 $ 11,123,269
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