Xentel DM Incorporated
TSX VENTURE : XDM

Xentel DM Incorporated

December 01, 2009 07:00 ET

Xentel Reports Third Quarter September 30 2009 Results

CALGARY, ALBERTA--(Marketwire - Dec. 1, 2009) - Xentel DM Incorporated (TSX VENTURE:XDM) -



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Period ended September 30 Three months Nine months
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2009 2008 2009 2008
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($ 000's, except per share amounts) (restated) (restated)
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Revenue $22,317 $23,275 $69,931 $ 71,765
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Gross Margin 5,298 6,504 16,234 17,913
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Net earnings 697 922 1,951 1,705
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EBITDA 1,389 2,313 4,110 5,062
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EPS, fully diluted $ 0.03 $ 0.04 $ 0.08 $ 0.07
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EBITDA, per share, fully diluted $ 0.05 $ 0.09 $ 0.16 $ 0.19
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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.
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Xentel DM Incorporated (TSX VENTURE:XDM) a North American specialty entertainment and relationship marketing company, today reported its financial results for the three and nine months ended September 30, 2009. The Company is pleased to report continuing positive results.

Net earnings for the three months ended September 30, 2009 amounted to $697 thousand or $0.03 per diluted share and for the nine months ended September 30, 2009 amounted to $1,951 thousand or $0.08 per diluted share. This compares to the respective periods in 2008 (as restated) of $922 thousand or $0.04 per diluted share and $1,705 thousand or $0.07 per diluted share. The net earnings for both the three and nine months of 2008 have been restated because of the previous write off of work in process, as explained in note 1 of the Notes to the Unaudited Consolidated Financial Statements, having the effect of improving the comparative 2008 net earnings by $481 thousand for the three months ended September 30, 2008 and by $672 thousand for the nine months ended September 30, 2008. Had these restatements not been made for the 2008 amounts, the comparison between 2009 and 2008 would have been shown increases period over period.

Although sustaining profitability, we have seen declines in revenues. Revenues for the three months ended September 30, 2009 amounted to $22,317 thousand compared to $23,275 thousand for the three months ended September 30, 2008, a decline of 4% and, for the nine months ending September 30 2009 versus 2008 revenues were $69,931 thousand compared to $71,765 thousand, a decline of 3%.

EBITDA for the third quarter 2009 was $1,389 and for the year to date was $4,110 or $0.06 per diluted share and $0.16 per diluted share respectively. Comparative amounts for 2008 were $2,313 thousand and $5,062 thousand or $0.09 per diluted share and $0.19 per diluted share for the respective periods. The comparative amounts for 2008 have been restated because of the adjustments made to the reported earnings in 2008 due to the previous write off of work in process as explained above. Similarly, had these restatements not been made for the 2008 results, the comparison between 2009 and 2008 would have shown increases period over period.

Cash reserves are building, working capital is improving and the remaining long term debt due to related parties is being extinguished. The balance sheet is improving quarter over quarter. Subsequent to the close of the third quarter 2009, the Company received approval to repurchase 1,246 thousand of its issued shares for cancellation.

David Winograd, President observed, "We have confidence in out strategy. We are seeing sustainable earnings in difficult times and the basics of our balance sheet continue to improve."

Michael Platz, Chairman, noted, "Our management and staff have worked hard and the results are very rewarding. However, we recognize that we will have to be relentless in our efforts to maintain the positive momentum."

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 September 30,
('000s) September 30, 2008 December 31,
2009 (unaudited) 2008
(unaudited) (restated) (audited)
Assets
Current assets

Cash and cash equivalents $ 2,615 $ 855 $ 1,365
Accounts receivable, net of
allowances 6,671 6,343 6,910
Inventory 510 606 617
Prepaid expenses 610 1,331 1,235
Due from related party 1,417 1,455 1,589
Future income taxes 570 1,899 1,568

-------- -------- --------
12,393 12,489 13,284

Equipment 2,493 2,954 3,050
Future income taxes 2,567 3,205 3,089
Intangible assets 58 187 64
Goodwill 1,105 1,051 1,239


-------- -------- --------
$ 18,616 $ 19,886 $ 20,726
-------- -------- --------
-------- -------- --------

Liabilities
Current liabilities

Bank indebtedness $ 316 $ 88 $ 86
Accounts payable and accrued
liabilities 4,846 4,987 5,877
Income taxes payable 197 459 275
Current portion of long term
liabilities 91 390 141
Future income taxes 715 662 715
Due to related party 1,747 2,725 3,244

-------- -------- --------
7,912 9,311 10,338

Long term debt 1 7 6
Future income taxes 34 1,077 38
Deferred tenant inducement 160 244 223

-------- -------- --------
8,107 10,639 10,605
Shareholders' equity

Share capital 8,827 9,280 8,925
Warrants - 205 -
Contributed surplus 628 85 558
Accumulated other comprehensive
income (3,424) (3,537) (2,389)
Retained earnings 4,478 3,214 3,027

-------- -------- --------
10,509 9,247 10,121

-------- -------- --------
$ 18,616 $ 19,886 $ 20,726
-------- -------- --------
-------- -------- --------


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

Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
(restated) (restated)

Revenue $22,317 $23,275 $69,931 $71,765

Cost of revenue 17,019 16,771 53,697 53,852

------- ------- ------- -------

Gross margin 5,298 6,504 16,234 17,913

------- ------- ------- -------

Corporate expenses

Branch overhead and
corporate administration 3,909 4,191 12,124 12,851
Interest expense 25 115 106 357
Amortization of equipment 221 310 716 696
Amortization of intangible
assets 2 385 6 1,126

------- ------- ------- -------

4,157 5,001 12,952 15,030

------- ------- ------- -------

Earnings before undernoted
items 1,141 1,503 3,282 2,883

Other item
Expenses related to 2003
privatization lawsuit - 48 - 74

------- ------- ------- -------
Earnings before income taxes 1,141 1,455 3,282 2,809

------- ------- ------- -------

Income tax expense
Current income tax expense 134 302 164 426
Future income tax expense 310 231 1,167 678

------- ------- ------- -------

444 533 1,331 1,104
------- ------- ------- -------

Net earnings 697 922 1,951 1,705

Retained earnings,
beginning of period 3,781 2,292 3,027 1,509

Dividends paid - - 500 -

Retained earnings, end of
period $ 4,478 $ 3,214 $ 4,478 $ 3,214
------- ------- ------- -------
------- ------- ------- -------

Basic and diluted net
earnings per share $ 0.03 $ 0.04 $ 0.08 $ 0.07
------- ------- ------- -------
------- ------- ------- -------

Basic weighted average
number of shares outstanding 24,985 26,195 25,042 26,195
------- ------- ------- -------
------- ------- ------- -------

Diluted weighted average
number of shares outstanding 25,845 26,195 25,376 26,195
------- ------- ------- -------
------- ------- ------- -------


Xentel DM Incorporated
Consolidated Statements of Contributed Surplus
('000s)
Three Months Ended Nine Months Ended
September 30 September 30
(unaudited) (unaudited)

2009 2008 2009 2008

Balance, beginning of period $628 $79 $558 $79

Discount on share repurchase from book
value - 6 70 6

---- ---- ---- ----
Balance, end of period $628 $85 $628 $85
---- ---- ---- ----
---- ---- ---- ----

Xentel DM Incorporated
Consolidated Statements of Comprehensive Income
('000s)
Three Months Ended Nine months Ended
September 30 September 30
(unaudited) (unaudited)

2009 2008 2009 2008

Net earnings for the period $ 697 $ 922 $1,951 $1,705

Foreign currency translation adjustment
from self sustaining foreign operations (501) 266 (1,035) 374

------ ------ ------ ------
Comprehensive income $ 196 $1,188 $916 $2,079
------ ------ ------ ------
------ ------ ------ ------


Xentel DM Incorporated
Consolidated Statements of Accumulated Other Comprehensive Income
('000s)
Three Months Ended Nine Months Ended
September 30 September 30
(unaudited) (unaudited)

2009 2008 2009 2008

Balance, beginning of period $(2,923) $(3,803) $(2,389) $(3,911)

Foreign currency translation adjustment
from self sustaining foreign operations (501) 266 (1,034) 374

------ ------ ------ ------
Balance, end of period $(3,424) $(3,537) $(3,423) $(3,537)
------ ------ ------ ------
------ ------ ------ ------


Xentel DM Incorporated
Consolidated Statements of Cash Flows
('000s)
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
(restated) (restated)

Cash flows from (used in)
operating activities

Net earnings for the period $ 697 $ 922 $1,951 $ 1,705


Non cash transactions
reflected in net earnings
Amortization 223 695 722 1,822
Future income tax expense 310 231 1,167 678
Adjustment for non cash
interest - 86 - 210
Adjustment for non cash
tenant inducement rent credit (21) (21) (63) (63)
Stock based compensation - 6 - 6

------ ------ ------ ------
1,209 1,919 3,777 4,358

------ ------ ------ ------

Net change in non cash
working capital items
Accounts receivable 447 (13) (130) 285
Inventory 54 (3) 66 41
Prepaid expenses 183 (349) 586 (481)
Other current assets (9) (8) (35) (4)
Income taxes payable/
recoverable 170 353 (110) 393
Accounts payable and
accrued liabilities (16) (602) (771) (1,026)
------ ------ ------ ------

Net change in non cash
working capital items 829 (622) (394) (792)

------ ------ ------ ------

2,038 1,297 3,383 3,566

------ ------ ------ ------

Cash flows from (used in)
financing activities

Bank indebtedness (360) (157) 240 (1,228)
Due to related party repaid (355) - 1,270) -
Long term debt repaid (2) (504) (64) (1,089)
Repurchase of share capital - - (28) -
Dividends paid - - (500) -

------ ------ ------ ------
(717) (661) (1,622) (2,317)

------ ------ ------ ------

Cash flow (used in)
investing activities

Investment in equipment (200) (43) (353) (590)

------ ------ ------ ------

Effect of exchange rate
fluctuations on cash balances (100) (6) (158) (9)

------ ------ ------ ------

Net increase in cash and
cash equivalents 1,021 587 1,250 650

Cash and cash equivalents,
beginning of period 1,594 1,365 1,365 205

------ ------ ------ ------

Cash and cash equivalents,
end of period $2,615 $1,952 $2,615 $ 855
------ ------ ------ ------
------ ------ ------ ------


The TSX Venture Exchange has neither approved nor disapproved the contents of this announcement.

Contact Information

  • Xentel DM Incorporated
    Corporate Office West
    3710 Westwinds Dr NE, Bay 24
    Calgary, AB T3J 5H3
    403-537-1001
    Fax: 403-270-4398
    or
    Xentel DM Incorporated
    Corporate Office East
    8000 Jane St Tower A, Suite 401
    Concord, ON L4K 5B8
    416-633-4646
    Fax: 416-633-4643
    or
    Xentel Inc.
    101 NE Third Ave, Suite 203
    Ft. Lauderdale, FL 33316
    954-522-5200
    954-524-5183 (FAX)
    or
    Xentel DM Incorporated
    Caren Holtby
    Investor Relations
    866-204-9861
    416-633-4643 (FAX)
    carenh@xentel.com
    www.xentel.com