Burntsand Inc.
TSX : BRT

Burntsand Inc.

March 05, 2010 12:36 ET

Burntsand Releases Fourth Quarter and Fiscal Year 2009 Results

TORONTO, ONTARIO--(Marketwire - March 5, 2010) - Burntsand Inc. (Burntsand) (TSX:BRT) a North American business consulting and technology services company today reported revenue and earnings results for its fourth quarter and year ended December 31, 2009.

Fourth Quarter and 2009 Financial Results Highlights (000's) – unaudited

  Three months ended   Year ended
  December 31,   December 31,
  2009 2008   2009 2008
Service revenue $ 5,120   $ 6,610   $ 20,975   $ 22,347  
Adjusted EBITDA (1)   67     444     47     597  
Net income (loss)   (23 )   18     (417 )   (217 )
   
        As at As at
                31-Dec-09     31-Dec-08  
Cash and cash equivalents             $ 4,095   $ 4,876  
Working capital               5,718     6,359  

Results for the Fourth Quarter ended December 31, 2009

Service revenues for the fourth quarter of 2009 were $5.1 million compared to $6.6 million for the fourth quarter of 2008.

Service revenue US operations contributed $3.0 million (US$2.9 million) of service revenue for the quarter, compared to $5.2 million (US$4.3 million) for the fourth quarter of 2008. The US$1.4 million decline in service revenue included a US$0.4 million decrease in revenue from the US Collaborative practice with the balance of US$0.9 million in the US Enterprise Content Management Practice. This decrease was primarily due to a US$0.3 million decline in service revenue from US strategic partners for services provided by Burntsand to their clients; four projects that generated approximately $0.8 million of service revenue in Q4 2008 that were not followed up with new projects from the same customer or a sufficient dollar volume of new projects from existing or new customers in Q4 2009 and the balance a reduction in average billing rates.

Service revenues in Canada increase $0.7 million to $2.1 million primarily due to growth in consulting services revenue in our Service Management practice and included approximately $0.3 million delivered to the customer in Q3 2009 but with revenue deferred until Q4 2009 until all of the conditions necessary for revenue recognition were met.

Gross profit on services revenue was 30.4% for the fourth quarter of 2009 compared to 34.2% for the fourth quarter of 2008.

Adjusted EBITDA (1) for the fourth quarter of 2009 was $67,462 compared to Adjusted EBITDA of $443,700 for the fourth quarter of 2008. Net loss for the fourth quarter of 2009 was ($22,862) or ($0.00) per share. Net income for the fourth quarter of 2008 was $18,120 or $0.00 per share and included a non- recurring realized foreign currency translation loss of ($314,900).

Backlog as at December 31, 2009 was $5.3 million compared to $4.6 million as at September 30, 2009.

Results for the year ended December 31, 2009

Service revenues for the year ended December 31, 2009 were $21.0 million compared to $22.3 million for 2008. US operations contributed $14.4 million (US$12.5 million) of service revenue in 2009 compared to $16.2 million (US$15.1 million) for 2008. The US$2.6 million decline in service revenue included a US$0.7 million decrease in revenue from the US Collaborative practice with the balance of US$1.9 million in the US Enterprise Content Management Practice. This decrease was primarily due to a US$1.1 million decline in service revenue from US strategic partners for services provided by Burntsand to their clients; a general slowdown in information technology spending in the US and a reduction in average billing rates. Service revenues in Canada increase $0.5 million to $6.6 million primarily due to growth in consulting services revenue in our Collaboration practice.

Gross profit on services revenue was 29.5% in 2009 compared to 32.1% in 2008.

Adjusted EBITDA for 2009 was $46,557 compared to Adjusted EBITDA of $596,774 for 2008. Net loss for 2009 was ($416,703) or ($0.01) per share compared to a net loss of ($216,690) or ($0.00) per share for 2008. The net loss for 2009 included a non-recurring realized currency translation loss of ($53,550) compared to ($314,900) for 2008.

Financial Position at December 31, 2009

As at December 31, 2009 the Company held cash and short-term investments of $4.1 million and working capital of $5.7 million. This compared to $4.9 million of cash and short-term investments and working capital of $6.4 million as at December 31, 2008. The Company has not borrowed under its US $2.5 million line of credit.

"While our cash, working capital and balance sheet remain healthy we are intensely focused on sales and marketing activities to begin to create growth" said Martin Glover, Burntsand's President and Chief Executive Officer. "We continue to focus on delivering solutions that provide our customers business performance improvement in our Collaboration, Enterprise Content Management and Service Management practices." added Mr. Glover.

The Company has filed its financial statements and management's discussion and analysis on SEDAR at www.sedar.com. This information includes various metrics and performance measurements used by the company, including utilization, project data, new customers and new contract information.

As always we invite your comments and encourage you to follow the progress of the company on the Burntsand website at www.burntsand.com.

About Burntsand

Burntsand is a leader in the delivery of technology consulting services for customers with complex information processing and information management requirements in three practice areas - Enterprise Content Management, Collaboration and Service Management - aligned around our strategic partners, EMC, Microsoft and BMC. The Company delivers strategic design, technology architecture and custom application development through our proven Time-to-Value methodology, which mitigates business risk and speeds process improvements and returns. Headquartered in Toronto, Burntsand operates from locations across North America. The Company's shares (TSX:BRT) are traded on the Toronto Stock Exchange. Learn more about Burntsand at www.burntsand.com.

Forward Looking Statements

Certain information in this press release and in other public announcements contains forward-looking information. Such statements include, but are not limited to, statements which indicate the results, events or activities that Burntsand expects or anticipates will or may occur in the future, including statements which give guidance as to future revenues or other financial results of Burntsand and statements regarding the growth of business or operations, competitive strengths and strategic initiatives and plans. Such forward-looking statements can generally be identified by words such as "outlook", "guidance", "estimate", "forecast", "objective", "anticipate", "intend", "likely", "will", "may", "should", "could", "expect", "believe", and similar expressions and statements relating to matters that are not historical facts.

The forward-looking statements in these documents are based upon the reasonable beliefs of Burntsand and its management as of the date the information; however, forward-looking statements involve risks and uncertainties and are based upon factors that may change and assumptions that may prove, with the passage of time, to be incorrect. Accordingly, undue reliance should not be placed upon such statements. If factors materially change or assumptions are materially incorrect, the actual results, performance or achievements of Burntsand may be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements.

Important factors that could cause actual results, events or activities to differ materially from the forward- looking statements contained in this press release include: general economic business conditions; loss of key employees; integration of acquisitions; stock market volatility; supply and demand for services offered by Burntsand; changes in laws and regulations; Burntsand's ability to compete successfully, protect its intellectual property rights, and adapt to technological advances and changing industry standards and other factors. Important assumptions that were used in making the forward-looking statements include: effective daily rates, estimated utilization, estimated new bookings and realization on contracts.

All statements made in these documents that contain forward-looking information are made as of the date of this document. Burntsand disclaims any intention and undertakes no obligation to update or revise any forward-looking statements to reflect new information, future events or otherwise.

Note

(1) Adjusted EBITDA

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, stock-based compensation expense as well as any realized foreign currency translation losses or gains. Burntsand uses Adjusted EBITDA, amongst other measures, to assess the operating performance of its on-going businesses. The term Adjusted EBITDA does not have a standardized meaning prescribed by Canadian generally accepted accounting principles and therefore may not be comparable to similarly titled measures presented by other companies. Adjusted EBITDA should not be construed as the equivalent of net cash flows from operating activities. The following is a reconciliation of net income (loss) to Adjusted EBITDA for the periods indicated:

  Three months ended December 31,   Year ended December 31,
    2009   2008     2009   2008
 
Net income (loss) for the period $ (22,862 ) $ 18,120   $ (416,703 ) $ (216,690 )
Amortization of capital assets and intangibles   57,045     79,272       259,814     328,339  
Interest and investment income   (3,937 )   (17,831 )     (25,665 )   (72,308 )
Interest expense and financing costs   5,982     6,417       50,582     34,633  
Income tax expense   -     289       -     38,963  
Standardized EBITDA   36,228     86,267       (131,972 )   112,937  
Realized currency translation loss   -     314,900       53,550     314,900  
Stock-based compensation   31,234     42,563       124,979     168,937  
Adjusted EBITDA $ 67,462   $ 443,730     $ 46,557   $ 596,774  

BURNTSAND INC. Consolidated Balance Sheets

As at December 31

    2009   2008
 
ASSETS            
CURRENT            
  Cash and cash equivalents $ 4,094,902   $ 4,876,377  
  Accounts receivable   3,562,465     5,216,377  
  Prepaid expenses   146,956     241,252  
    7,804,323     10,334,006  
Capital assets   548,092     663,787  
Intangible assets   106,421     151,654  
Goodwill   153,220     177,566  
  $ 8,612,056   $ 11,327,013  
   
LIABILITIES            
             
CURRENT            
  Accounts payable and accrued liabilities $ 1,889,823   $ 2,828,319  
  Deferred revenue   147,878     1,046,277  
  Current portion of obligations under capital leases   48,723     100,089  
    2,086,424     3,974,685  
Long-term portion of obligations under capital leases   40,573     4,926  
    2,126,997     3,979,611  
   
SHAREHOLDERS' EQUITY            
  Common shares   9,611,454     9,611,454  
  Contributed surplus   1,449,996     1,325,017  
               
  Deficit   (2,655,764 )   (2,239,061 )
  Accumulated other comprehensive loss   (1,920,627 )   (1,350,008 )
    (4,576,391 )   (3,589,069 )
    6,485,059     7,347,402  
  $ 8,612,056   $ 11,327,013  

BURNTSAND INC.
Consolidated Statements of Operations

  Three months ended December 31,   Twelve months ended December 31,
    2009   2008     2009   2008
   
REVENUE                          
  Services $ 5,120,340   $ 6,610,299     $ 20,974,931   $ 22,346,733  
  License and maintenance   264,161     606,324       398,525     2,038,519  
  Other revenue   214,815     379,976       825,971     1,056,568  
    5,599,316     7,596,599       22,199,427     25,441,820  
   
COSTS                          
  Cost of services   3,575,795     4,350,408       14,779,166     15,179,924  
  Cost of license and maintenance   219,446     562,373       326,527     1,928,816  
  Cost of other revenue   185,599     364,350       752,481     992,456  
    3,980,840     5,277,131       15,858,174     18,101,196  
GROSS PROFIT   1,618,476     2,319,468       6,341,253     7,340,624  
EXPENSES                          
  Sales and marketing   426,336     619,574       2,026,220     2,087,805  
  General and administrative   684,045     647,466       2,552,774     2,496,599  
  Other expenses   471,867     651,291       1,840,681     2,328,383  
    1,582,248     1,918,331       6,419,675     6,912,787  
Income (loss) before the undernoted   36,228     401,137       (78,422 )   427,837  
  Realized currency translation loss   -     (314,900 )     (53,550 )   (314,900 )
  Amortization of capital assets   (47,129 )   (64,764 )     (213,814 )   (265,109 )
  Amortization of intangible assets   (9,916 )   (14,478 )     (46,000 )   (63,230 )
  Interest and investment income   3,937     17,831       25,665     72,308  
  Interest expense and financing costs   (5,982 )   (6,417 )     (50,582 )   (34,633 )
Income (loss) before income taxes   (22,862 )   18,409       (416,703 )   (177,727 )
Income tax expense   -     (289 )     -     (38,963 )
NET INCOME (LOSS) FOR THE PERIOD $ (22,862 ) $ 18,120     $ (416,703 ) $ (216,690 )
   
  Net income (loss), basic and diluted, per share $ (0.00 ) $ 0.00     $ (0.01 ) $ (0.00 )
                           
Weighted average number of common shares used to calculate per share amounts, basic and diluted   72,660,220     72,660,220       72,660,220     72,631,805  

BURNTSAND INC.
Consolidated Statements of Cash Flows

        Three months ended December 31,   Twelve months ended December 31,
        2009   2008     2009   2008
   
CASH FLOWS FROM OPERATING ACTIVITIES                          
  Net income (loss) for the period $ (22,862 ) $ 18,120   $ (416,703 ) $ (216,690 )
  Items not affecting cash:                          
      Amortization of capital assets and intangibles   57,045     79,272       259,814     328,339  
      Amortization of assets used in outsourcing contract   40,357     44,260       165,760     177,040  
    Realized currency translation loss   -     314,900       53,550     314,900  
    Stock-based compensation   31,234     42,563       124,979     168,937  
        105,774     499,115       187,400     772,526  
  Changes in operating assets and liabilities:                          
    Accounts receivable   168,892     (692,387 )     1,301,924     (821,416 )
    Prepaid expenses   451,039     125,583       79,509     (2,519 )
    Accounts payable and accrued liabilities   (10,387 )   37,285       (943,094 )   565,427  
    Deferred revenue   (181,408 )   (273,306 )     (892,594 )   211,513  
        533,910     (303,710 )     (266,855 )   725,531  
   
CASH FLOWS FROM INVESTING ACTIVITIES                          
  Purchase of capital assets, net of related accounts payable   (40,258 )   (1,245 )     (49,131 )   (116,645 )
        (40,258 )   (1,245 )     (49,131 )   (116,645 )
   
CASH FLOWS FROM FINANCING ACTIVITIES                          
  Payments on capital lease obligations   (23,147 )   (33,568 )     (121,894 )   (127,892 )
  Issue of common shares   -     -       -     5,000  
        (23,147 )   (33,568 )     (121,894 )   (122,892 )
NET CASH INFLOW (OUTFLOW)   470,505     (338,523 )     (437,880 )   485,994  
EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH   (39,177 )   517,677       (343,595 )   746,451  
CASH (EXCLUDING SHORT TERM INVESTMENTS), BEGINNING OF PERIOD   3,663,574     4,697,223       4,876,377     3,643,932  
CASH (EXCLUDING SHORT TERM INVESTMENTS), END OF PERIOD $ 4,094,902   $ 4,876,377     $ 4,094,902   $ 4,876,377  

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