Northampton Group Inc.
TSX VENTURE : NHG
TSX VENTURE : NHG.DB

Northampton Group Inc.

August 29, 2012 08:00 ET

Northampton First Quarter Sales Up 2.9%

Expenses Rise with Start-Up Costs Relating to the New aloft™ Vaughan Mills

TORONTO, ONTARIO--(Marketwire - Aug. 29, 2012) - Northampton Group Inc. (TSX VENTURE:NHG)(TSX VENTURE:NHG.DB), an integrated Canadian hotelier, today reported its financial results for the first quarter ended June 30, 2012. Consolidated revenues rose 2.9% to $7.46 million from $7.25 million in the prior year, with a strong contribution from the new aloft™ Vaughan Mills, launched in May of this year. Net income for the period declined 80.1% to $68 thousand or $0.003 per share from $340 thousand or $0.01 per share in the same quarter of the prior year, as cost of sales rose 8.1%. Excluding costs relating to the start-up of the new hotel, the increase in expenses would have been 4.4%.

"On average, our same hotel sales were up marginally by 0.6% in the quarter, so revenues from the new aloft Vaughan Mills have obviously had a positive impact, and it is important to note that we have not yet seen a full quarter's contribution from the hotel," said Vinod Patel, president and CEO of Northampton Group. "Our obvious challenge in the next quarters is to rein in expenses. To that end we continue both to spend carefully, and to market our hotels aggressively. Despite ongoing pressure on room rates, we see significant room for increased profitability from our existing portfolio."

Nationally, industry analysts Pannell Kerr Forster Consulting (PKF) have lowered their forecast for average daily rates (ADRs) from $130 to 129, as a result of industry performance so far this year. Occupancy rates across the country rose 1.2% in the first half of 2012, while average daily rates rose 1.6%, for an increase in average revenue per available room (RevPAR) of 3.7%. The GTA posted a RevPAR increase of 0.5%, while Ottawa's RevPAR increased 7.6% and Montreal improved slightly. Northampton's management anticipates that revenues for the remainder of the year will show an improvement year-over-year as a result of the new aloft Vaughan Mills.

Highlights of the Quarter:

  • Consolidated revenues for the three months ended June 30, 2012 were up 2.9% to $7,457,507 from $7,249,945 a year ago, primarily reflecting contributions from the new aloft Vaughan Mills;
  • For the three months ended June 30, 2012, the cost of sales was $3,904,669, up 8.1% from $3,611,417 in Q1 in the previous year. Generally all expenses were up marginally with the exception of staffing and start-up costs from the new hotel;
  • Operating profit or EBITDA (earnings before interest, income taxes, and amortization), decreased 10.3% to $1,780,958 from $1,984,703 in the same quarter of the previous year;
  • Net income for the quarter was $67,739 or $0.003 per share, off 80.1% from $339,771 or $0.013 per share in the first quarter of last year;
  • Cash flow, or net income plus amortization, in the quarter ended June 30, 2012, was $884,813 or $0.034 per share, a slight decrease from $954,784 or $0.037 per share in the same period last year;
  • Same-hotel sales were slightly improved for all properties except the Holiday Inn Express Hamilton, which had benefitted from local market conditions in 2011;
  • Following the end of the quarter, Northampton repaid a corporate debenture of $2,000,000, bearing interest at 10%, which matured on July 23, 2012.

For a more complete discussion of the Company's results, please see Northampton's quarterly filings on www.sedar.com, or the quarterly MD&A, financials, and notes to the financial statements on the Company's website at www.nhgi.com.

The following is a tabulated summary of Northampton's results from continuing operations:

Three months ended June 30
2012 2011 % change
Revenues 7,457,507 7,249,945 2.9
Gross profit margins 47.6 % 50.2 % -5.1
EBITDA 1,780,958 1,984,703 -10.3
Net income 67,739 339,771 -80.1
Earnings per share 0.003 0.013 -80.1
Cash flow 884,813 954,784 -7.3
Cash flow per share 0.034 0.037 -7.3

About Northampton

Northampton Group Inc. is an integrated Canadian hotelier with ownership and management interests in 2,129 rooms in 17 hotels, including the new aloft™ Vaughan Mills. Focused on creating the best return for all stakeholders, Northampton's proven, market-sensitive strategy is to acquire or build hotels that provide superior overnight accommodation in the mid-price market. Northampton has demonstrated that it excels in this sector, offering services that exceed expectations while still posting industry-leading results.

Disclaimer:

This news release contains forward-looking statements within the meaning of the "safe harbour" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and other factors that may cause Northampton's results to differ materially from expectations. Such risks may relate to hotel performance, market fluctuations, investee performance, and other risks more fully described in the Company's annual report, posted on the Company's website and on SEDAR. These forward- looking statements speak only as of the date hereof. Northampton Group disclaims any intent or obligation to update these forward-looking statements.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.

Contact Information

  • Northampton Group Inc.
    Vinod Patel
    Northampton Group Inc.
    905-629-9992
    www.nhgi.com