Cunningham Lindsey Group Inc.
TSX : LIN

Cunningham Lindsey Group Inc.

October 26, 2006 17:05 ET

Cunningham Lindsey Group Inc.: Third Quarter Results

TORONTO, ONTARIO--(CCNMatthews - Oct. 26, 2006) - Cunningham Lindsey Group Inc. (TSX:LIN) -

Note: All dollar amounts in this press release are expressed in Canadian dollars, unless otherwise noted.

Financial results for the three and nine months ended September 30, 2006 (unaudited)



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Third Quarter Year-to date
(in $000's except share and per
share amounts) 2006 2005 2006 2005
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Revenue:
Canada 13,187 14,056 40,998 39,543
United States 14,901 13,528 47,338 41,956
United Kingdom 49,303 48,572 138,797 148,076
Europe 13,030 14,710 41,796 47,186
International 12,967 10,661 37,544 41,451
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103,388 101,527 306,473 318,212
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Earnings before interest, taxes,
depreciation, and amortization
(EBITDA)(1)
Canada 508 755 568 1,031
United States 1,013 529 3,126 1,750
United Kingdom 4,043 5,635 9,577 15,099
Europe (825) (156) (439) 890
International 1,946 1,144 6,349 12,357
Corporate (1,322) (2,388) (4,443) (5,573)
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5,363 5,519 14,738 25,554
Depreciation expense 1,260 1,282 3,726 3,933
Interest expense 4,336 4,796 12,926 14,726
Gain on disposal - - - (2,944)
Income tax (recovery) provision 901 924 (1,403) 6,191
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Net (loss) earnings from continuing
operations (1,134) (1,483) (511) 3,648
Net loss from discontinued operations - - - (2,352)
Net (loss) earnings (1,134) (1,483) (511) 1,296
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Basic and diluted net (loss) earnings
per share from continuing operations $(0.05) $(0.09) $(0.02) $0.25
Basic and diluted net (loss) earnings
per share $(0.05) $(0.09) $(0.02) $0.09
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Total shares outstanding (000)(2) 22,093 22,093 22,093 22,093
Weighted average shares (000) 21,951 16,591 21,918 14,826
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(1) Earnings before interest, taxes, depreciation, and amortization
(EBITDA) is defined as revenue from continuing operations less cost of
service and selling, general and administration expenses, excluding
depreciation and amortization. EBITDA does not have a standard meaning
prescribed by generally accepted accounting principles and may not be
comparable to similar measures used by other companies.

(2) As at September 30, 2006, there are 19,919,968 subordinate voting
shares and 2,172,829 multiple voting shares issued and outstanding.


Revenue for our consolidated operations for the third quarter of 2006 was $103.4 million, an increase of $1.9 million from revenue for the third quarter of 2005 of $101.5 million.

Cunningham Lindsey Canada reported revenue for the third quarter of 2006 of $13.2 million, which was $0.9 million lower than the third quarter of 2005. The decrease in revenue for the third quarter was due to less summer storm claims activity in 2006 as compared to 2005.

Revenue from operations in the United States was $14.9 million for the third quarter of 2006, an increase of $1.4 million from the third quarter of 2005. The increase in revenue was primarily attributable to an increase in normal claims volumes. In local currency, revenue from the United States operations was U.S.$13.3 million for the third quarter of 2006, an increase of U.S.$2.0 million from the third quarter of 2005.

Revenue for the third quarter of 2006 from operations in the United Kingdom was $49.3 million, an increase of $0.7 million from revenue of $48.6 million in the third quarter of 2005. The increase in revenue was primarily due to increased claims activity across a number of product lines. In local currency, revenue from operations in the United Kingdom was Pound(s) Sterling 23.5 million, an increase of Pound(s) Sterling 0.8 million from the third quarter of 2005.

Revenue for the third quarter of 2006 from the European operations was $13.0 million, a decrease of $1.7 million from the third quarter of 2005. The reduction in reported revenue was due to the continuation of the depressed market conditions in the Netherlands. In local currency, revenue from the European operations was EUR 9.1 million for the third quarter of 2006, a decrease of EUR 0.9 million from the third quarter of 2005.

Revenue from the International operations in the third quarter of 2006 was $13.0 million, an increase of $2.3 million compared to $10.7 million in the third quarter of 2005. The increase in revenue reflects the completion of long term claims from the 2004 Caribbean storms. In local currency, revenue from the International operations was Pound(s) Sterling 6.1 million for the third quarter of 2006, an increase of Pound(s) Sterling 1.1 million compared to the third quarter of 2005.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the third quarter of 2006 was $5.4 million, compared to $5.5 million for the third quarter of 2005.

The Company's net loss for the third quarter of 2006 was $1.1 million ($0.05 loss per share) compared to a net loss of $1.5 million ($0.09 loss per share) in the third quarter of 2005. The decrease in net loss is primarily due to a $0.5 million reduction in interest expense compared to third quarter 2005 as a result of lower debt levels, partially offset by higher interest rates in 2006 compared to 2005.

Mr. Jan Christiansen, President & CEO of Cunningham Lindsey Group Inc. stated, "Revenue growth for the quarter was satisfactory, given the lack of significant weather related events compared to the third quarter of 2005; however, earnings continue to be negatively impacted by non-recurring costs in our United Kingdom operations and our continuing restructuring of our European operations.

Our United States operations, comprising loss adjusting services and Vale National Training Centre, continued the strong growth in revenue and earnings. In local currency for the first nine months, they have recorded a 22% growth in revenue and close to a doubling of EBITDA. Our focus on delivering superior quality service is succeeding.

Our Canadian operations were impacted by the lack of summer storms this year, but improved their performance over previous quarters.

Our UK operations continue to perform well, although they have had some additional non-recurring costs that impacted operating earnings in the third quarter. Several long-term contracts were renewed this quarter and they continue to win new business. For the first nine months in local currency, they have recorded a 2.7% increase in revenue in contrast to the revenue decline reported in Canadian dollars, and currency fluctuations have similarly impacted their operating earnings.

The restructuring efforts in our European operations are progressing according to plan, although more work is needed to produce a satisfactory result. We recently announced the acquisition of Barlow CCS, Spain, which we expect will further enhance our global reach and ability to serve clients both in the domestic market in Spain and abroad.

CL International had a strong third quarter as they finalized their claims activity from the 2004 Caribbean storms and continued to perform satisfactorily."

The Company's unaudited consolidated financial information has been prepared in accordance with Canadian generally accepted accounting principles and, unless otherwise stated, is in Canadian dollars.

Cunningham Lindsey Group Inc. is a holding company that, through its Cunningham Lindsey subsidiaries, provides a wide range of independent insurance claims services, including claims adjusting, appraisal and claims and risk management services. It has a worldwide network of branches in Canada, the United States, the United Kingdom, continental Europe, the Far East, Latin America and the Middle East. Cunningham Lindsey also provides claims adjusting and appraisal training courses in the United States.

Contact Information

  • Cunningham Lindsey Group Inc.
    Jan Christiansen
    President and Chief Executive Officer
    (847) 517-3300
    Website: www.cunninghamlindsey.com