Liquidation World Inc.
TSX : LQW

Liquidation World Inc.

February 18, 2009 08:00 ET

Liquidation World Announces First Quarter Results

BRANTFORD, ONTARIO--(Marketwire - Feb. 18, 2009) - Liquidation World Inc. (TSX:LQW) today announces the results of the first quarter of the 2009 fiscal year, representing the 13-week period ended January 4, 2009.

Revenue from continuing operations in Q1 2009 decreased 12.3% to $47.1 million from $52.8 million in Q1 2008. Same store sales during the quarter decreased 4.3%. During Q1 2009, the Company recorded a net loss from continuing operations of $0.8 million ($0.10 per share) versus net income from continuing operations of $1.5 million ($0.19 per share) during Q1 2008.



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Q1 (in millions of Cdn dollars except per share
amounts) 2009 2008 Change
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Revenue $ 47.1 $ 52.8 -$5.8
Net income (loss) from continuing operations $ (0.8) $ 1.5 -$2.3
Net income (loss) from discontinued operations nil ($1.4) +$1.4
Net income (loss) and comprehensive income
(loss) $ (0.8) $ 0.1 -$0.9
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Basic and diluted earnings (loss) per share $ (0.10) $ 0.02 -$0.12
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Additional details are provided in the financial statements below.


Craig Graham, Liquidation World's Chairman, commented:

"The results of the first quarter reflect weaker than expected sales, particularly in the important Christmas season, low margins related to efforts to liquidate aged inventory and non-recurring costs totaling over $700,000. Significant positive news from the quarter includes the establishment of a new 3-year $20 million asset-based credit facility and the previously announced $7.6 million investment in Liquidation World by Talon Merchant Capital. With the conclusion of the Talon transaction we have gained cash, a profitable US wholesale liquidation business and key new executives with long, successful track records in the liquidation industry."

Seth Marks, Liquidation World's newly appointed President and CEO, commented:

"Despite the Company's recent history of losses, I see potential for Liquidation World, especially in the current economic climate. And we are acting with urgency to implement a number of changes to turn the business around. In the short-term, we have plans to reevaluate pricing store-wide in order to improve our value proposition, increase inventory turnover and further cleanse our inventory of slow moving goods; this will aid cash flow and create room for fresh and exciting merchandise. Longer term, we will be acquiring significantly more liquidation merchandise direct from US sources, emphasizing faster turning categories like consumables and apparel and implementing higher store presentation standards. The addition of the US wholesale liquidation arm will provide important benefits with respect to buying economies and product allocation in our stores. As these changes are implemented, I expect we'll first see improvements in the top-line sales trend followed by increases in total gross margin dollars, and that ultimately, we will restore Liquidation World to profitability."

About Liquidation World

Liquidation World liquidates consumer merchandise through 98 stores in Canada and the United States. The Company solves asset recovery problems in a professional manner for the financial services industry, insurance companies, manufacturers, wholesalers and other organizations. Liquidation World is based in Brantford, Ontario and maintains a number of regional buying offices in Canada and the United States. The Company opened its first store in Calgary, Alberta in 1986 and today, with more than 1,200 employees, is Canada's largest liquidator.

Forward-Looking Statements

This release includes forward-looking statements and potential future circumstances and developments. Forward-looking statements regarding future performance are subject to risks and uncertainties, and actual results may differ materially. Due to fluctuations in gross margins and expenses, an increase in revenue does not directly correlate to an increase in net earnings.



LIQUIDATION WORLD INC.
Consolidated Balance Sheets
As At January 4, 2009 and October 5, 2008
Unaudited
(In thousands of Canadian dollars)
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January 4, October 5,
2009 2008
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Assets

Current assets
Cash and equivalents $ 193 $ 186
Accounts receivable 104 119
Inventory 42,195 44,178
Prepaid expenses 1,507 1,403

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43,999 45,886
Property and equipment 9,445 10,226

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$ 53,444 $ 56,112
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Liabilities and Shareholders' Equity

Current liabilities
Bank indebtedness $ 7,550 $ 11,612
Accounts payable and accrued liabilities 16,460 12,690
Current portion of obligations under capital
leases 1,360 1,588
Current liabilities of discontinued operations 434 434
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25,804 26,324
Obligations under capital leases 374 470

Shareholders' equity
Share capital 15,518 15,518
Contributed surplus 1,459 1,407
Retained earnings 10,289 12,393
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27,266 29,318

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$ 53,444 $ 56,112
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LIQUIDATION WORLD INC.
Consolidated Statements of Loss and Comprehensive Loss and Retained Earnings
For the 13 weeks ended January 4, 2009 and January 6, 2008
Unaudited
(In thousands of Canadian dollars, except per share amounts)
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2009 2008

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Revenue $ 47,059 $ 52,812
Cost of sales 31,234 33,155

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Gross Margin 15,825 19,657
Expenses
Selling, general and administrative 15,546 16,845
Depreciation and amortization 841 1,027
Stock-based compensation 52 91
Interest
Short term 183 199
Long term 30 41
Foreign exchange (18) (86)
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16,634 18,117
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(Loss) income before income taxes (809) 1,540
Income taxes
Current - -
Future - -
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- -
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Net (loss) income from continuing operations (809) 1,540
Loss from discontinued operations (1,428)
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Net (loss) income and comprehensive (loss) income (809) 112
Retained earnings, beginning of period 11,098 23,732
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Retained earnings, end of period $ 10,289 $ 23,844
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Basic and diluted (loss) earnings per share
From continuing operations $ (0.10) $ 0.19
From discontinued operations $ 0.00 $ (0.17)
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$ (0.10) $ 0.02
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LIQUIDATION WORLD INC.
Consolidated Statements of Cash Flows
For the 13 weeks ended January 4, 2009 and January 6, 2008
Unaudited
(In thousands of Canadian dollars)
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2009 2008

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Cash provided (used) in:

Operating activities
Net earnings (loss) from continuing operations $ (809) $ 1,540
Add (deduct) non-cash items:
Depreciation and amortization 841 1,027
Loss (gain) on disposal of capital asset 14 (384)
Stock-based compensation 52 91
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98 2,274
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Changes in non-cash operating working capital
Accounts receivable 15 71
Inventory 688 (4,888)
Prepaid expenses (104) 278
Accounts payable and accrued liabilities 3,770 3,230
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4,369 (1,309)
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4,467 965

Investing activities
Purchase of capital assets (74) (625)
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(74) (625)

Financing activities
Increase (decrease) in bank indebtedness (4,062) 516
Repayment of capital lease (324) (402)
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(4,386) 114
Cash applied to discontinued operations (465)
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Increase (decrease) in cash 7 (11)

Cash and equivalents, beginning of period 186 216

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Cash and equivalents, end of period $ 193 $ 205
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Supplemental disclosure of cash paid for:
Income taxes $ 7 $ 27
Interest 213 240

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$ 220 $ 267
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Contact Information

  • Liquidation World Inc.
    Ken Wightman
    Senior VP Finance and CFO
    (519) 758-8878 ext. 2553
    (866) 237-3778 (FAX)
    Email: kenw@liquidationworld.com