AZCAR Technologies Incorporated

AZCAR Technologies Incorporated

August 07, 2008 19:34 ET

AZCAR Announces Results for the Second Quarter of 2008

MARKHAM, ONTARIO--(Marketwire - Aug. 7, 2008) - Stephen F. Pumple, Chairman & CEO of AZCAR (TSX:AZZ), announced second quarter revenues of C$19.2 million, compared to C$15.7 million in Q2 2007. The revenue increase occurred in both North America and the UK, but primarily in the UK resulting from work on several outside broadcast vehicles. The Company achieved an improved gross margin of 17.4% versus 13.0% due to more effective project execution. The higher revenue, improved gross margin and a foreign exchange gain all positively impacted the Company's income compared to the second quarter of 2007.

2008 2007 2008 2007
Three Months Ended Six Months Ended
June 30 June 30
(CDN $000) (unaudited) (unaudited) (unaudited) (unaudited)

Revenues 19,159 15,652 35,850 32,646
Cost of goods sold 15,833 13,623 29,674 27,750
Gross Margin 3,326 2,029 6,176 4,896
Gross Margin % 17.4% 13.0% 17.2% 15.0%
Operating expenses 3,132 3,002 5,652 5,591
Interest expense
(income) 92 16 156 24
Foreign exchange
loss (gain) (50) 238 (199) 244
Stock-based compensation 16 14 31 24
Amortization 111 91 207 186
Subtotal 3,301 3,361 5,847 6,069
Income (loss) before income
taxes and Minority Interest 25 (1,332) 329 (1,173)
% of revenues 0.1% (8.5%) 0.9% (3.6%)
Income tax expense (recovery) 15 (389) 15 (419)
Income (loss) before
Minority Interest 10 (943) 314 (754)
Minority Interest - (35) - (23)

Net Income (Loss) 10 (908) 314 (731)

Earnings per share
Basic (cents) - (5.9) 2.0 (4.7)
Fully Diluted (cents) - (6.0) 1.9 (4.9)
Cash dividends per share (cents) 0.0 0.0 0.0 0.0

Higher operating expenses in the period were the result of under utilization of our professional staff reflecting project delays. We had resources matched to three major projects which were scheduled to start early in the second quarter but were delayed by the customers until late in the second quarter with the project time frame being extended. Higher interest rates and higher bank borrowings resulted in the higher interest expense. However, the Company generated a small profit in the second quarter compared to a loss of $908,000 in the same period last year.

For the year to date, revenues have increased by 10% primarily due to the higher volume in the UK, partially offset by the customer delayed start of three projects in North America. Net income for the six months is $314,000, compared to a loss of $731,000 in 2007, as the positive impact of increased revenues, improved project execution and favourable foreign exchange rates were partially offset by higher interest expense and the under utilization of our technical staff.

Management continues to focus on operating efficiencies, improvements in workflow, process and internal controls, all of which will contribute to improved margins and financial performance of the Company during the remainder of 2008 and beyond. In this year the Company will commence implementation of a new enterprise software solution that will improve operating efficiencies, strengthen compliance reporting and provide a seamless integrated business information systems environment.

AZCAR is an independent technology integration company providing high definition digital media technology solutions for the broadcast and telecommunications industries, broadcast ministries, higher education institutions, and multi-purpose sports and entertainment venues. AZCAR provides consulting, engineering, systems design, integration, project management and the supply of related materials, equipment and software. The Company's business operates through the parent company and its subsidiaries. The stock trades on the Toronto Stock Exchange under the symbol: AZZ.

Except for historical information, this news release may contain certain "forward looking statements". Forward looking statements are statements that are not historical facts and are subject to a variety of risks and uncertainties and other factors that may cause the actual results, level of activity and performance to be materially different from the Company's expectations and projections.

This review contains Management's discussion of AZCAR's operational results and financial condition, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2007, and the related "Management's Discussion and Analysis" (MD&A).

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

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