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

Northampton Group Inc.

August 22, 2007 15:40 ET

Northampton Q1 Revenues Rise Modestly

TORONTO, ONTARIO--(Marketwire - Aug. 22, 2007) - Northampton Group Inc. (TSX VENTURE:NHG)(TSX VENTURE:NHG.DB), an integrated Canadian hotelier, today reported its results for the first quarter of fiscal 2008, ended June 30, 2007. The period showed quarter-over-quarter sales growth of 1.5%, with most of the Company's properties performing well in tightening regional markets characterized by expanding supply.

With expenses increasingly slightly ahead of revenues, margins dropped from 32.5% in the same period last year to 32.4% in this quarter. Income from operations increased by 1.3%, and net income increased by 5.9% because of increased contributions from investee companies.

Summary of the release:

- In the first quarter, consolidated revenues were up 1.5% to $9.2 million;

- Operating expenses rose 1.6% and total expenses rose 1.5% in the quarter;

- Income from operations increased by 1.3% in the quarter to $1.57 million;

- EBITDA (earnings before income taxes, depreciation, and amortization) rose 1.2% in the quarter;

- Net income rose 5.9% in the quarter;

- Earnings per share in the quarter were flat;

- Cash flow increased 4.5% quarter over quarter;

- Same-hotel sales improved slightly at most properties, with regional challenges in Montreal and the Oakville-Hamilton corridor offset by strong performances in several hotels, especially Toronto downtown and Ottawa West;

- Northampton's 10 percent debentures (trading as NHG.DB) were extended for an additional five years, to mature July 23, 2012.

The Industry

Hospitality industry consultant Pannell Kerr Forster is seeing brisk transaction activity in all hotel sectors, as well as growth in both occupancies and daily room rates. Growth in Western Canada is significantly outpacing Central and Eastern Canada, where supply growth is squeezing margins somewhat. Reduced travel from the United States, the rise in the Canadian dollar, and increased utility costs all continue to affect performance.

System Revenues

System revenues (the sum total of all Northampton revenues plus all revenues reported by investee companies, co-owners, and limited partnerships) for the quarter ended June 30, 2007, increased 4.2% to $15,260,394 from $14,647,056 in the corresponding period in 2006. The majority of this improvement arose from improvements in the Toronto downtown and Ottawa locations.

Consolidated Revenues

Northampton's consolidated revenues for the three months ended June 30, 2007 were $9,179,453, up 1.5% from $9,043,953 a year ago. Ottawa and Downtown Toronto posted comparatively stronger growth, somewhat offset by ongoing challenges in the Oakville-Hamilton corridor.

Expenses

For the three months ended June 30, 2007, total expenses, including amortization and interest, were $7,608,321, up 1.5% from $7,492,312 in the corresponding period in the previous year, essentially in line with improvements in revenues.

Operating expenses increased by 1.6% to $6,202,483 in the first quarter of the current year compared to $6,101,961 in the corresponding period of the prior year. Year over year, expenses were flat; however, utility and labour costs continue to rise disproportionately.

Operating Profit

The Company's goal is to maintain margins at or above 30%. With expenses marginally higher than increases in revenues, the Company's operating margin fell to 32.4% compared to 32.5% for the same period in the prior year, but stayed above margin targets.

Operating profit (earnings before interest, income taxes, and amortization) increased 1.2% to $2,976,970 in the current quarter, up from $2,941,992 in the corresponding period in the previous year.

Income From Operations

Income from operations for the current quarter increased marginally to $1,571,132, up from $1,551,641 in the same quarter last year. Net income for the quarter was $744,115 or $0.03 per share, up from $702,647 or $0.03 per share in the first quarter of last year.

Cash Flow

Cash flows from operating activities increased 4.5% in the quarter ended June 30, 2007 to $1,401,831, up from $1,341,410 last year.



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

-------------------------------------------------------------
Three months ended June 30
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2007 2006 % change
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Revenues 9,179,453 9,043,953 1.5
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Income from operations 1,571,132 1,551,641 1.3
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Net income 744,115 702,647 5.9
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EBITA 2,976,970 2,941,992 1.2
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Earnings per share $0.03 $0.03 0.0
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Cash flow 1,401,831 1,341,410 4.5
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ABOUT NORTHAMPTON

Northampton Group Inc. is one of Canada's top mid-market hoteliers, with ownership interests in 16 properties in Canada and the US. The Company is expert in all facets of the hotel business, from building to marketing to management. Focused on creating the best return for all stakeholders, Northampton's proven, market-sensitive strategy is to acquire or build hotels that provide great value and superior accommodation. Northampton excels in this sector, offering services that exceed expectations while still posting industry-leading margins.

Forward-looking statements

This document contains forward-looking statements relating to the performance, operations, or business environment of Northampton. These statements are based on what management believes are reasonable assumptions given currently available information and current activities. Whenever possible, these forward-looking statements are identified using words such as "anticipates,'' "believes,'' "estimates,'' "expects,'' "plans,'' "intends,'' "potential'', and similar expressions. Forward-looking statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict or control. A number of factors could cause actual outcomes and results to differ materially from those expressed in forward-looking statements. These factors include but are not limited to those set forth in Northampton's corporate filings and other documents, found on SEDAR (www.sedar.com) or the Company's website (www.nhgi.com) . In addition, these forward-looking statements relate to the date on which they are made. Northampton disclaims any intention or obligation to update or revise any forward-looking statements for any reason. Readers should not rely on forward-looking statements.

Shares Outstanding: 25,981,437

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

Contact Information

  • Northampton Group Inc.
    Vinod Patel
    President & CEO
    (905) 629-9992
    (905) 629-9636 (FAX)
    Website: www.nhgi.com