Commercial Solutions Inc.
TSX : CSA

Commercial Solutions Inc.

January 25, 2006 16:05 ET

Commercial Reports Record Revenue and Earnings Growth for Fiscal 2005

EDMONTON, ALBERTA--(CCNMatthews - Jan. 25, 2006) - Commercial Solutions Inc. (TSX:CSA) -

2005 Fiscal and Fourth Quarter Financial Results

2005 Fiscal Year Highlights

- Revenue growth of 25.2% to a record $97.8 million was achieved in fiscal 2005

- EBITDA rose to $7.5 million more than 86.5% up as compared to the prior year

- Net Income increased year-over-year by 163.4% to $3.8 million

- Basic EPS for the year was up 106% compared to last year

- A record earnings per share of $0.33 was attained for fiscal 2005

2005 4th Quarter Highlights

- Q4 Revenue growth of $28.9 million; a 49.4% increase over the prior year

- EBITDA in the quarter rose to $2.5 million more than 225.6 percent up compared to the prior year

- Q4 net earnings up 974.5 percent over prior year to $1.39 million

- Basic EPS in Q4 was up 800.0 percent compared to last year

- Earnings per share of $0.09 was achieved in the Q4

2005 Fiscal and Fourth Quarter Financial Results



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CAD, millions, --------------------------------------------
except EPS data Three Months Ended Sept. 30
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2005 2004 Change
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Revenue 28,891,179 19,342,321 49.4%
EBITDA 2,498,825 767,491 225.6%
Net Earnings 1,386,444 129,030 974.5%
Basic EPS $0.09 $0.01 800.0%
Diluted EPS $0.09 $0.01 800.0%
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CAD, millions, --------------------------------------------
except EPS data Year Ended September 30
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2005 2004 Change
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Revenue 97,829,311 78,112,869 25.2%
EBITDA 7,547,524 4,045,463 86.5%
Net Earnings 3,799,367 1,442,670 163.4%
Basic EPS $0.33 $0.16 106.2%
Diluted EPS $0.30 $0.14 114.3%
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Note: EBITDA is defined as earnings before interest, taxes,
depreciation and amortization


COMMERCIAL SOLUTIONS INC. ("Commercial" or "Company") (TSX:CSA) a leading Canadian distributor of bearings, power transmission, industrial, safety, survey and resource management equipment products and services, today announced its financial results for the fourth quarter and year ended September 30, 2005. A complete copy of the Company's report is available on the Internet at www.sedar.com. Financial highlights from the fourth quarter and annual audited financial statements are as follows:

For the twelve-month period ending September 30, 2005, sales increased by 25.2 percent to $97.8 million versus sales of $78.1 million for the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the fiscal 2005 period significantly increased by 86.5 percent to $7.5 million, compared to EBITDA of $4.0 million in fiscal 2004. Net income more than doubled for the year at $3.8 million or $0.33 per share (basic) versus a fiscal 2004 net income of $1.4 million or $0.16 per share (basic). On a fully diluted basis, earnings per share for fiscal 2005 was $0.30.

The Company reported a 974.5 percent year-over-year increase in earnings for its fourth quarter ended September 30, 2005. Quarterly earnings increased to $1.39 million or $0.09 per share ($0.09 diluted) from earnings of $0.1 million or $0.01 per share ($0.01 diluted) for the prior year. Consolidated revenues increased 49.4 percent to $28.9 million from last year's fourth quarter revenue of $19.3 million and EBITDA for the quarter ended September 30, 2005 increased 974.5 percent to $2.5 million from $0.76 million for same period in 2004.

As at September 30, 2005, the Company had 14,324,413 common shares on a basic basis, and 17,378,412 commons shares on a fully diluted basis.

"I am pleased to report our successes in fiscal 2005. We achieved significant growth at the top and bottom lines by executing on our plan," noted Jim Barker, President and Chief Executive Officer of Commercial. "We remain confident in our ability to grow organically and by making strategic accretive acquisition to complement our strength in the energy and mining sectors, while taking advantage of the now stabilized forestry and agricultural industries."

The Company also announced that its plan for fiscal 2006 is to continue to focus on the following growth strategies:

Internal Growth - Increase revenues organically by offering a diverse suite of industry leading products in the growing oil & gas, and mining, forestry & agriculture markets. Expand addressable markets by using cross-selling and up-selling opportunities following the integration of each acquisition.

EBITDA Growth - Deliver stronger margins by focusing on selling higher margin products while maintaining the Company's cost structure.

Acquisitions - Make selective, strategic acquisitions that are accretive to earnings with sales growth potential and focused on broadening the product offering and geographic reach.

By following these strategies, management believes that the Company will remain well positioned for long-term, profitable growth.



Summary Financial Results

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INCOME STATEMENT, for the years
ended September 30th

F2005 F2004 F2003
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Sales $ 97,829,311 $ 78,112,869 $ 69,394,018

Gross profit $ 27,411,173 21,997,726 19,292,615
Gross profit % 28.0% 28.2% 27.8%

Operating expenses 19,863,648 17,952,263 16,617,553
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EBITDA (i) 7,547,525 4,045,463 2,675,062

Interest 1,261,593 1,207,837 970,034
Depreciation
and amortization 545,849 422,459 453,217
Loss on disposal of
capital assets 20,924 26,522 -
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Earnings before tax 5,719,159 2,388,645 1,251,811
Income taxes 1,919,792 945,975 690,626
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Net income $ 3,799,367 $ 1,442,670 $ 561,185
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Earnings per share
Basic $ 0.33 $ 0.16 $ 0.07
Diluted $ 0.30 $ 0.14 $ 0.06

Weighted avg. shares
outstanding
Basic 11,501,484 8,835,932
Diluted 12,798,554 10,508,640

(i) Represents earnings before interest, taxes, depreciation
and amortization

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BALANCE SHEET, as at September 30th

F2005 F2004 F2003
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Current assets $ 35,412,177 $ 26,019,873 $ 25,457,047
Property, plant
and equipment 2,810,970 2,391,432 2,058,935
Other assets 13,744,920 9,063,097 9,076,963
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TOTAL ASSETS 51,968,067 37,474,402 36,592,945
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Current liabilities 18,455,722 19,158,115 20,146,239
Current portion of
long term debt 2,326,339 1,776,347 1,836,086
Long term liabilities 7,797,595 9,025,740 8,551,088
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TOTAL LIABILITIES 28,579,656 29,960,202 30,533,413
Share capital 16,789,358 4,926,903 4,914,905
Retained earnings &
contributed surplus 6,599,053 2,587,297 1,144,627
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TOTAL SHAREHOLDERS' EQUITY 23,388,411 7,514,200 6,059,532
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TOTAL SHAREHOLDERS' EQUITY
AND LIABILITIES $ 51,968,067 $ 37,474,402 $ 36,592,945
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Outlook

Management believes that the Company's sales and earnings growth outlook is positive due to expected continued strength in the energy sector, which is a source of 47.0 percent of the Company's sales. As anticipated, the forestry and agriculture markets have stabilized after several years of decline. Commercial has adjusted its operating costs in its branches impacted by these markets, therefore, any increased activity in these sectors in fiscal 2006 would directly flow to operating earnings. Management continues to seek out acquisition opportunities to build on Commercial's geographic presence and to diversify its portfolio of products.

About Commercial

Headquartered in Edmonton, Alberta, the Company is one of Canada's leading independent industrial distributors with 24 Services Centres and approximately 266 employees located across Canada. The Company offers more than 160,000 items critical to maintenance repair and operations (MRO) and original equipment manufacturer (OEM) customers. The Company represents 450 leading manufacturers and serves over 10,000 customer accounts within a broad cross-section of industries, including oil and gas, forestry, food processing, chemical processing, mining and aggregate, utilities, agriculture and construction. Commercial trades under the symbol "CSA" on the Toronto Stock Exchange. For further information on the Company, please visit www.commercialsolutions.ca and for detailed financial information visit www.sedar.com.

Forward Looking Statements

From time to time, the Company may publish forward-looking statements relating to such matters as expected financial performance, business prospects, and development activities and like matters. These statements involve risk and uncertainties, including but not limited to the risk factors previously described. Actual results could differ materially from those projected as a result of these risks and should not be relied upon as a prediction of future events. Commercial. undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events.

Contact Information

  • Commercial Solutions Inc.
    Eric Sauze CA CFA
    Chief Financial Officer
    (780) 577-2215
    esauze@csinet.ca
    or
    Genoa Management Limited
    Ali Mahdavi
    (416) 962-3300 or toll-free +1(866) 430-6247
    amahdavi@genoa.ca