Cyberplex Inc.
TSX : CX

Cyberplex Inc.

November 10, 2011 16:01 ET

Cyberplex Reports Third Quarter 2011 Results

Rebuilding Efforts and Platform Investments Yield Improved Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 10, 2011) - Cyberplex Inc. (TSX:CX) a leader in online publishing and customer acquisition strategies today announced its financial results for the third quarter ended September 30, 2011.

Financial Results for the third quarter ended September 30, 2011

  • The Company generated revenue of $16.6 million, a 15 % increase from the $14.4 million recorded in the previous quarter;
  • Adjusted EBITDA for the quarter was $2 million, a 150% increase from the $0.8 million generated in the previous quarter;
  • Net income for the quarter was $1.0 million compared to a net loss of $2.0 million in the previous quarter; and
  • Cash flow from operations generated $3.6 million in cash for the nine months ended September 30, 2011, as compared to $4.6 million for the same period in 2010.

"Our third quarter results indicate that our efforts to better align our structure and systems with the evolving market opportunities are starting to pay off" said Geoffrey Rotstein, Chief Executive Officer of Cyberplex. "Every division of Cyberplex demonstrated significant progress this past quarter, as we continued to focus as an organization on producing high quality results for our advertising clients and build upon our internal distribution capabilities to accommodate future growth. While the organization is smaller than it was last year, by making the right investments in our people and our systems, we are already producing results that demonstrate the leverage potential of our targeted traffic acquisition platforms."

Third Quarter Operational Highlights

  • Released the second version of the EQ Ads demand side platform with expanded targeting and optimization capabilities;
  • Secured CX Interactive engagements with several key clients across diverse industries, including Brookfield Residential Property Services, Nippising University and Schulich School of Education, Zumbox and Dealuxe;
  • Deployed several major enhancements to the Tsavo Media search platform, resulting in significant increases in traffic quality levels and revenues per click; and
  • Restructured Tsavo Media's credit facility with American Capital, which included a reduction in principal and interest rates, an extension of the maturity date, and a new variable payment structure tied to Tsavo's earnings.

"The third quarter was particularly important for expanding our distribution capabilities and diversifying our traffic sources." said Ted Hastings, President of Cyberplex. "The new foundation for our proprietary search platform within Tsavo, and the roll out of phase two for our EQ Ads display traffic platform have already provided for improved results. As we look forward, we expect to make additional investments to further our mobile and video distribution strategies."

Non-IFRS Financial Measures

This press release includes a discussion of "Adjusted EBITDA," which is a non-IFRS financial measure. The Company defines Adjusted EBITDA as net income (loss) before (a) Finance costs (income), net; (b) income tax expense (recovery); (c) depreciation of property and equipment and amortization of intangible assets; (d) stock-based compensation expense related to the Company's grant of stock options, (e) restructuring costs, and (f) transaction expenses.

Management uses Adjusted EBITDA as a measurement of the Company's operating performance because it provides information related to the Company's ability to provide cash flows for acquisitions, capital expenditures and working capital requirements. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.

The non-IFRS financial measure is used in addition to and in conjunction with results presented in accordance with the Company's consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-IFRS financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the Company's non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

The table below reconciles net income (loss) and Adjusted EBITDA for the periods presented:
Three months ended September 30 Nine months ended September 30
(In thousands of Canadian dollars) 2011 2010 2011 2010
Net income (loss) $ 1,046 $ (81 ) $ (4,579 ) $ (2,471 )
Add:
Depreciation of property and equipment 323 612 1,041 857
Amortization of intangible assets 2,181 4,189 6,564 5,355
Finance cost (income), net (1,474 ) 650 (237 ) 587
Restructuring expenses - - 263 -
Transaction expenses - - - 1,510
Stock based compensation 29 118 276 415
Income tax recovery (130 ) (361 ) (390 ) (468 )
Adjusted EBITDA $ 1,975 $ 5,127 $ 2,938 $ 5,785

Conference Call Details

In conjunction with the release, Cyberplex will host a conference call on Thursday, November 10, 2011 at 4:30 p.m. EST to discuss the financial results. To access the call, please dial 1-888-892-3255. Please call five minutes prior to the call. A replay of the conference call will be available as of 12:00 a.m. the next day. To access the replay dial 1-800-937-6305 followed by the pass code 671239.

About Cyberplex

Cyberplex Inc. (www.cyberplex.com) is a North American leader in online publishing and customer acquisition strategies. The Company, through its subsidiaries, leverages over 300 proprietary web properties and its vast publisher network to efficiently connect advertisers to their most relevant online customers and prospects. By combining high quality publishing initiatives with efficient technology solutions and online marketing expertise, the Company is able to deliver the optimal targeted audience to online advertisers. Cyberplex delivers measurable results that improve advertiser ROI, monetize the value of online properties and build targeted, loyal online audiences.

Forward-Looking Statements

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Cyberplex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

Cyberplex Inc.
Unaudited Interim Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
September 30, 2011 December 31, 2010
Assets
Current assets:
Cash and cash equivalents $ 2,243 $ 5,192
Restricted cash and short-term investments - 2,310
Short-term investments 5 1,551
Available-for-sale financial assets 500 140
Accounts receivable 11,170 13,879
Income taxes recoverable 32 632
Prepaid expenses and other assets 2,177 2,321
Total current assets 16,127 26,025
Non-current assets:
Restricted cash and short-term investments 3,448 1,749
Property and equipment 2,340 2,921
Intangible assets 26,999 32,504
Goodwill 2,462 2,357
Total non-current assets 35,249 39,531
Total assets $ 51,376 $ 65,556
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities $ 8,118 $ 10,177
Current portion of provisions 118 590
Current portion of loans and borrowings 3,587 9,402
Deferred revenue 565 665
Income taxes payable 1,699 1,729
Current portion of deferred lease inducements 115 115
Total current liabilities 14,202 22,678
Non-current liabilities:
Loans and borrowings 21,883 23,583
Provisions 3,228 2,756
Deferred tax liabilities 1,600 1,990
Deferred lease inducements 98 185
Total non-current liabilities 26,809 28,514
Equity:
Share capital 65,452 65,452
Contributed surplus 2,220 1,944
Accumulated other comprehensive loss (2,196 ) (2,500 )
Deficit (55,111 ) (50,532 )
Total equity 10,365 14,364
Total liabilities and equity $ 51,376 $ 65,556
Cyberplex Inc.
Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)
(In thousands of Canadian dollars, except per share amounts)
Three months ended September 30, Nine months ended September 30,
2011 2010 2011 2010
Revenue $ 16,619 $ 44,720 $ 45,645 $ 75,230
Expenses:
Publishing and advertising costs 9,696 31,307 27,032 52,811
Employee compensation and benefits 3,221 4,674 10,681 9,438
Other operating expenses 1,756 3,730 5,270 7,611
14,673 39,711 42,983 69,860
Income before the undernoted 1,946 5,009 2,662 5,370
Depreciation of property and equipment 323 612 1,041 857
Amortization of intangible assets 2,181 4,189 6,564 5,355
Transaction expenses - - - 1,510
Restructuring expenses - - 263 -
Income (loss) from operations (558 ) 208 (5,206 ) (2,352 )
Finance cost (income), net (1,474 ) 650 (237 ) 587
Income (loss) before income taxes 916 (442 ) (4,969 ) (2,939 )
Income tax recovery 130 361 390 468
Income (loss) for the period 1,046 (81 ) (4,579 ) (2,471 )
Other comprehensive income (loss):
Net change in fair value of available-for-sale financial assets (21 ) (42 ) 761 (103 )
Amount reclassified to income (187 ) - (753 ) -
Foreign currency translation adjustments to equity 657 (2,775 ) 296 (1,598 )
Other comprehensive income (loss) for the period, net of tax 449 (2,817 ) 304 (1,701 )
Total comprehensive Income (loss) for the period $ 1,495 $ (2,898 ) $ (4,275 ) $ (4,172 )
Loss per share:
Basic $ 0.01 (0.00 ) $ (0.03 ) $ (0.03 )
Diluted 0.01 (0.00 ) (0.03 ) (0.03 )
Cyberplex Inc.
Unaudited Interim Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)
Nine months ended September 30, 2011 and 2010
2011 2010
Cash flows from operating activities:
Loss for the period $ (4,579 ) $ (2,471 )
Adjustments to reconcile net loss to net cash flows from operating activities:
Depreciation of property and equipment 1,041 857
Amortization of intangible assets 6,564 5,355
Amortization of deferred lease inducements (87 ) (83 )
Stock-based compensation 276 415
Foreign exchange loss 30 102
Finance (income) cost, net (939 ) 587
Income tax recovery (390 ) (468 )
Change in non-cash operating working capital 1,249 1,088
Cash generated from operating activities 3,165 5,382
Income taxes recovery (paid) 389 (789 )
Net cash from operating activities 3,554 4,593
Cash flows from financing activities:
Repayment of term loans (5,749 ) -
Finance lease 200 -
Repayment of finance lease (18 ) -
Proceeds from exercise of stock options - 37
Proceeds from private placement, net of issuance costs - 30,772
Interest paid (3,155 ) (155 )
Net cash from (used in) financing activities (8,722 ) 30,654
Cash flows from investing activities:
Sale of short-term investments 1,546 7,826
Interest income received 30 53
Net proceeds on sale of available-for-sale financial assets 401 -
Acquisition of EQADS, net of cash acquired (100 ) -
Acquisition of TSAVO, net of cash acquired - (46,486 )
Decrease in restricted cash 734 -
Additions to property and equipment (341 ) (969 )
Additions to intangible assets (21 ) (520 )
Net cash from (used in) investing activities 2,249 (40,096 )
Decrease in cash and cash equivalents (2,919 ) (4,849 )
Cash and cash equivalents, beginning of period 5,192 10,222
Foreign exchange (loss) on cash held in foreign currency (30 ) (102 )
Cash and cash equivalents, end of period $ 2,243 $ 5,271

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