Xentel DM Incorporated
TSX VENTURE : XDM

Xentel DM Incorporated

August 21, 2009 16:00 ET

Xentel Reports Second Quarter June 30, 2009 Results

CALGARY, ALBERTA--(Marketwire - Aug. 21, 2009) - Xentel DM Incorporated (TSX VENTURE:XDM) -



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Period ended June 30 Three months Six months
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2009 2008 2009 2008
--------------------------------------------------------------------------
($ 000's, except
per share amounts) (restated) (restated)
--------------------------------------------------------------------------
Revenue $ 23,729 $ 24,056 $ 47,614 $ 48,490
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Gross Margin 5,566 5,727 10,937 11,409
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Net earnings 681 498 1,254 783
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EBITDA 1,483 1,458 2,722 2,749
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EPS, fully diluted $ 0.03 $ 0.02 $ 0.05 $ 0.03
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EBITDA, per share,
fully diluted $ 0.06 $ 0.05 $ 0.11 $ 0.10
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(i) EBITDA - Net Earnings before income taxes, interest, depreciation and
amortization. Since Gross Margin, EBITDA and diluted EBITDA per share
have no standardized GAAP meaning, the comparability of these amounts
to other enterprises may not be possible if the basis of calculation
of differs.
Restated - In 2008, effective January 1, 2007 the Company wrote off
the work in process carried on its balance sheet together with the
effect on future income taxes, retained earnings and accumulated other
comprehensive income with the result that certain balances were
restated from what was originally reported in 2008.


Xentel DM Incorporated (TSX VENTURE:XDM) a North American specialty entertainment and relationship marketing company, today reported its financial results for the three and six months ended June 30, 2009.

This quarter now marks five consecutive quarters of positive net earnings and seven consecutive quarters of positive EBITDA.

The Company declared and paid its first dividend in the second quarter 2009. A special dividend of $0.02 per share was paid to shareholders of record as of May 14, 2009 on May 29, 2009. The Company was in a position to declare the dividend based on the strong earnings performance in 2008 which has continued into 2009.

Net earnings for the three months ended June 30, 2009 were $681 thousand compared to net earnings for the same period in 2008, as restated, of $498 thousand. EBITDA for the same periods were $1,483 thousand and 1,458 thousand respectively.

For the six months ended June 30, 2009 and 2008 net earnings were $1,254 thousand and $783 thousand respectively and EBITDA was $2,722 thousand and $2,749 thousand respectively.

Strategically, the Company is focusing on profit optimization which has resulted in some reductions in gross revenues. Gross margin percentages are maintaining while continual monitoring and significant reductions of corporate overhead and branch administration costs has produced positive results. Having effectively eliminated long term debt and fully amortized acquisition intangible assets there are significant permanent reductions in those cost categories as well.

"Being able to consistently maintain profitability during these difficult economic is important. Our objective is to continue on the same path going forward," David Winograd, President stated. "We are very pleased with outcomes of the profit optimization program."

Michael Platz, Chairman, noted, "I am pleased with the efforts put forth in achieving our objectives. The Xentel team is committed to continuing its outstanding performance and achievement of such positive results."

Xentel DM Incorporated is one of North America's leading relationship-marketing concerns and producers of cause related entertainment events. The Company's success is attributable to proprietary sales tools including technologically advanced teleservices and sophisticated customer databases. Xentel DM Incorporated has over 400 clients and 1,900 employees in over 25 offices across North America.

Certain statements in this press release may constitute "forward looking statements" and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any performance or achievement expressed or implied by such "forward looking statements".



Xentel DM Incorporated
Consolidated Balance Sheets June 30, June 30, December 31,
('000s) 2009 2008 2008
(unaudited) (unaudited) (audited)
(restated)

Assets
Current assets

Cash and cash equivalents $ 1,594 $ 267 $ 1,365
Accounts receivable,
net of allowances 7,267 6,250 6,910
Income taxes recoverable 18 - -
Inventory 581 594 617
Prepaid expenses 807 975 1,235
Due from related party 1,500 460 1,589
Future income taxes 817 2,099 1,568
------------ ------------ ------------
12,584 10,645 13,284

Due from related party - 854 -
Equipment 2,608 3,177 3,050
Future income taxes 2,782 3,119 3,089
Intangible assets 60 555 64
Goodwill 1,168 1,023 1,239
------------ ------------ ------------
$ 19,202 $ 19,373 $ 20,726
------------ ------------ ------------
------------ ------------ ------------

Liabilities
Current liabilities

Bank indebtedness $ 681 $ 242 $ 86
Accounts payable and
accrued liabilities 4,992 5,534 5,877
Income taxes payable - 106 275
Current portion of
long term liabilities 90 840 141
Future income taxes 715 662 715
Due to related party 2,193 653 3,244
------------ ------------ ------------
8,671 8,037 10,338

Long term debt 2 10 6
Future income taxes 36 1,048 38
Deferred tenant inducement 180 264 223
Due to related party - 1,961 -
------------ ------------ ------------
8,889 11,320 10,605

Shareholders' equity

Share capital 8,827 9,280 8,925
Warrants - 205 -
Contributed surplus 628 79 558
Accumulated other
comprehensive income (2,923) (3,803) (2,389)
Retained earnings 3,781 2,292 3,027
------------ ------------ ------------
10,313 8,054 10,121
------------ ------------ ------------
$ 19,202 $ 19,373 $ 20,726
------------ ------------ ------------
------------ ------------ ------------


Xentel DM Incorporated
Consolidated Statements of Operations and Retained Earnings
('000s, except per share amounts)

Three Months Ended Six Months Ended
June 30 June 30
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
(restated) (restated)

Revenue $ 23,729 $ 24,056 $ 47,614 $ 48,490
Cost of revenue 18,163 18,329 36,677 37,081
--------- --------- --------- ---------
Gross margin 5,566 5,727 10,937 11,409
--------- --------- --------- ---------
Corporate expenses

Branch overhead and
corporate administration 4,083 4,269 8,215 8,660
Interest expense 49 137 82 241
Amortization of equipment 245 94 495 385
Amortization of intangible
assets 2 372 4 743
--------- --------- --------- ---------
4,379 4,872 8,796 10,029
--------- --------- --------- ---------
Earnings before undernoted
items 1,187 855 2,141 1,380

Other item
Expenses related to 2003
privatization lawsuit - 17 - 26
--------- --------- --------- ---------
Earnings before income taxes 1,187 838 2,141 1,354
--------- --------- --------- ---------
Income tax expense
Current income tax expense 30 33 30 124
Future income tax expense 476 307 857 447
--------- --------- --------- ---------
506 340 887 571
--------- --------- --------- ---------
Net earnings 681 498 1,254 783

Retained earnings, beginning
of period 3,600 1,794 3,027 1,509

Dividends paid 500 - 500 -
--------- --------- --------- ---------
Retained earnings, end of
period $ 3,781 $ 2,292 $ 3,781 $ 2,292
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic and diluted net
earnings per share $ 0.03 $ 0.02 $ 0.05 $ 0.03
--------- --------- --------- ---------
--------- --------- --------- ---------
Basic weighted average
number of shares outstanding 25,163 26,195 25,072 26,195
--------- --------- --------- ---------
--------- --------- --------- ---------
Diluted weighted average
number of shares outstanding 25,545 26,195 25,267 26,195
--------- --------- --------- ---------
--------- --------- --------- ---------


Xentel DM Incorporated
Consolidated Statements of Contributed Surplus
('000s)

Three Months Ended Six Months Ended
June 30 June 30
(unaudited) (unaudited)
2009 2008 2009 2008

Balance, beginning of period $ 628 $ 79 $ 558 $ 79
Discount on share repurchase
from book value - - 70 -
--------- --------- ---------- ---------
Balance, end of period $ 628 $ 79 $ 628 $ 79
--------- --------- ---------- ---------
--------- --------- ---------- ---------


Xentel DM Incorporated
Consolidated Statements of Comprehensive Income
('000s)

Three Months Ended Six Months Ended
June 30 June 30
(unaudited) (unaudited)
2009 2008 2009 2008

Net earnings for the period $ 681 $ 498 $ 1,254 $ 783

Foreign currency translation
adjustment from self
sustaining foreign
operations (611) (56) (534) 108
--------- --------- ---------- ---------
Comprehensive income $ 70 $ 442 $ 720 $ 891
--------- --------- ---------- ---------
--------- --------- ---------- ---------


Xentel DM Incorporated
Consolidated Statements of Accumulated Other Comprehensive Income
('000s)

Three Months Ended Six Months Ended
June 30 June 30
(unaudited) (unaudited)
2009 2008 2009 2008

Balance, beginning of period $ (2,312) $ (3,747) $ (2,389) $ (3,911)

Foreign currency translation
adjustment from self
sustaining foreign
operations (611) (56) (534) 108
--------- --------- ---------- ---------
Balance, end of period $ (2,923) $ (3,803) $ (2,923) $ (3,803)
--------- --------- ---------- ---------
--------- --------- ---------- ---------


Xentel DM Incorporated
Consolidated Statements of Cash Flows
('000s)

Three Months Ended Six Months Ended
June 30 June 30
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
(restated) (restated)
Cash flows from (used in)
operating activities
Net earnings for the period
$ 681 $ 498 $ 1,254 $ 783
Non cash transactions
reflected in net earnings
Amortization 247 466 499 1,128
Future income tax expense 476 307 857 447
Adjustment for non cash
interest - 62 - 123
Adjustment for non cash
tenant inducement rent
credit (21) (21) (42) (42)
--------- -------- --------- --------
1,383 1,312 2,568 2,439
--------- -------- --------- --------

Net change in non cash
working capital items
Accounts receivable (380) 867 (577) 298
Inventory (26) 28 12 43
Prepaid expenses 393 (6) 403 (132)
Other current assets (14) - (26) 4
Income taxes payable /
recoverable (85) 18 (280) 40
Accounts payable and accrued
liabilities (168) 424 (755) (424)
--------- -------- --------- --------
Net change in non cash
working capital items (280) 1,331 (1,223) (171)
--------- -------- --------- --------
1,103 2,643 1,345 2,268
--------- -------- --------- --------
Cash flows from (used in)
financing activities

Bank indebtedness 80 (1,922) 600 (1,071)
Due to related party repaid (305) - (915) -
Long term debt acquired - - - 389
Long term debt repaid (1) (491) (62) (974)
Repurchase of share capital
(note 13) - - (28) -
Dividends paid (note 16) (500) - (500) -
--------- -------- --------- --------
(726) (2,413) (905) (1,656)
--------- -------- --------- --------
Cash flow (used in)
investing activities

Investment in equipment (63) (80) (153) (547)
--------- -------- --------- --------
Effect of exchange rate
fluctuations on cash
balances (66) 3 (58) (3)
--------- -------- --------- --------
Net increase in cash and
cash equivalents 248 153 229 62

Cash and cash equivalents,
beginning of period 1,346 114 1,365 205
--------- -------- --------- --------
Cash and cash equivalents,
end of period $ 1,594 $ 267 $ 1,594 $ 267
--------- -------- --------- --------
--------- -------- --------- --------


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