Quorum Information Technologies Inc.

Quorum Information Technologies Inc.

August 21, 2012 14:00 ET

Quorum Releases Q2 Fiscal Year 2012 Results

Quorum produces solid Operational and Financial Results

CALGARY, ALBERTA--(Marketwire - Aug. 21, 2012) - Quorum Information Technologies Inc. (TSX VENTURE:QIS) ("Quorum" or the "Company") today released its Second Quarter (Q2) Fiscal Year (FY) 2012 results. Quorum delivers its dealership management system (DMS), XSellerator™, and related services to automotive dealerships throughout North America. The Company is both an Integrated Dealership Management System (IDMS) strategic partner with General Motors Corporation (GM) and a strategic partner with Microsoft. Quorum's XSellerator product is broadly promoted to its target dealerships throughout North America by these prominent industry partners. Quorum supplies its DMS to Isuzu, Chrysler, Hyundai, Kia, Nissan, Subaru, NAPA and Bumper to Bumper franchised and independent dealership customers.

Maury Marks, Quorum's President and CEO made the following remarks about the Company's Q2 FY2012 results:

Over the last two years, Quorum has become an "all makes" organization, with a continued emphasis on GM dealerships. Quorum supplies our product to GM, Isuzu, Chrysler, Hyundai, Kia, Nissan, Subaru, NAPA and Bumper to Bumper franchised dealership as well as independent dealership customers.

As the Company has grown in the market, we have also enhanced our operational excellence by focusing on measurable improvements. Some of our key Q2 FY2012 milestones are as follows:

  • Quorum attained 263 installed active dealership rooftops at the end of Q2 FY2012. During the quarter we also sold an additional five dealership rooftops that will be installed in future quarters.
  • During the quarter we released version 4.7.4, which contains two key features as follows:
    • "Communicator" which is designed to transform how dealership staff are able to take advantage of modern technology to communicate with their customers and with each other; and
    • "Console" a new customizable workspace with a cadre of productivity tools to help dealerships improve customer service, increase utilization of XSellerator and track key performance indicators.
  • Our monthly Support CSI survey reported an average of 95% "very satisfied" with the service they received from our support center.

Key financial results summary:

  • Sales increased slightly by 0.09% to $1,831K in Q2 FY2012 from $1,830K in Q2 FY2011. The change in sales is due to:
    • A decrease of $28K in net new revenue which was a result of completing six installations in Q2 FY2012 as compared to six larger dealership installations in Q2 FY2011.
    • An increase of $39K in recurring support revenue as a result from having 263 active dealership rooftops at the end of Q2 FY2012 versus 249 at the end of Q2 FY2011.
    • A decrease in integration revenue of $9K due to a reduced number of GM integration projects.
  • Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to $226K in Q2 FY2012 from $239K in Q2 FY2011. Income before taxes increased to $65K in Q2 FY2012 compared to income of $63K in Q2 FY2011.
  • Quorum had a net loss of $80K in Q2 FY2012 compared to a net income of $111K in Q2 FY2011. The loss in Q2 FY2012 is due to a deferred income tax expense of $145K while Q2 FY2011 had a deferred income tax recovery of $48K.
  • Cash flows from operating activities increased to $326K in Q2 FY2012 compared to $288K in Q2 FY2011 due to the effective management of cash collections and accounts payable. Net working capital at June 30, 2012 was $904K, with a current ratio of 2.25, compared to $1,065K at December 31, 2011, with a current ratio of 2.43. The decrease in working capital is primarily due to a decrease in accounts receivable from having less GM integration projects at the end of Q2 FY2012 versus Q4 FY2011 and the expiration of the Newfoundland and Labrador government wage subsidy payment as of March 31, 2012.
  • Quorum posted its twelfth consecutive quarter of cash flow positive results. These results are due to a well-managed cost structure and from attaining a critical mass of dealerships that generate higher margin recurring support revenues.

The Company continues to grow our customer base, improve our service offerings and customer satisfaction, and lead the market in product innovation. We also continue to deliver solid financial results and improve our cash and working capital positions by producing improved positive cash flow every year. Our single biggest challenge in 2012 is to grow our sales and implementation rates to the "next level." We have already embarked on a number of initiatives that are focused on meeting this challenge.

Quorum has filed its Q2 2012 consolidated financial statements and notes thereto as at and for the period ended June 30, 2012 and accompanying management's discussion and analysis in accordance with National Instrument 51-102 - Continuous Disclosure Obligations adopted by the Canadian securities regulatory authorities. Additional information about Quorum will be available on Quorum's SEDAR profile at www.sedar.com and Quorum's website at www.QuorumDMS.com.

Financial Highlights

Six Month Ended
June 30, 2012
Six Months Ended
June 30,
Q2 Ended June 30, 2012 Q2 Ended June 30, 2011 Q1 Ended
March 31, 2012
Q1 Ended
March 31,
Gross revenue $ 3,673,318 $ 3,741,783 $ 1,831,132 $ 1,829,515 $ 1,842,186 $ 1,912,268
Direct costs 1,679,660 1,618,412 850,760 770,837 828,990 847,575
Margin after direct costs 1,993,658 2,123,371 980,462 1,058,678 1,013,196 1,064,693
Earnings before interest, taxes and amortization (EBITDA) 352,542 561,265 226,086 238,508

Income (loss) before deferred income tax 27,591 216,813 65,027 62,603 (37,436 ) 154,210
Net income (loss) (132,565 ) 62,914 (80,311 ) 110,638
Comprehensive income (loss) (134,217 ) (7,306 ) (41,613 ) 92,871 (92,604 ) (100,177 )
Basic net income (loss) per share $ (0.0034 ) $ 0.0016 $ (0.0020 ) $ 0.0028 $ (0.0013 ) $ (0.0012 )
Fully diluted net income (loss) per share $ (0.0034 ) $ 0.0016 $ (0.0020 ) $ 0.0028 $ (0.0013 ) $ (0.0012 )
Weighted average number of common shares
Basic 39,298,438 39,298,438 39,298,438 39,298,438 39,298,438 39,298,438
Diluted 39,298,438 39,684,319 39,298,438 39,684,319 39,298,438 39,684,319
XSellerator installations - in the period 12 12 6 6

XSellerator active dealership rooftops 263 249 263 249


About Quorum

Quorum is a North American company focused on developing, marketing, implementing and supporting its XSellerator product for GM, Isuzu, Chrysler, Hyundai, KIA, Nissan, Subaru, NAPA and Bumper to Bumper dealerships. XSellerator is a dealership and customer management software product that automates, integrates and streamlines every process across departments in a dealership. One of the select North American suppliers under General Motors' IDMS program, Quorum is the second largest DMS provider for GM's Canadian dealerships with 25% of the market. Quorum is a Microsoft Partner in both Canada and the United States. Quorum Information Technologies Inc. is traded on the Toronto Venture Exchange (TSX-V) under the symbol QIS. For additional information please go to www.QuorumDMS.com.

Forward-Looking Information

This press release contains certain forward-looking statements and forward-looking information ("forward-looking information") within the meaning of applicable Canadian securities laws. Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "plan", "intend", "objective", "continuous", "ongoing", "estimate", "expect", "may", "will", "project", "should" or similar words suggesting future outcomes. In particular, this press release includes forward-looking information relating to results of operations, plans and objectives, projected costs and business strategy. Quorum believes the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon.

Forward-looking information is not a guarantee of future performance and involves a number of risks and uncertainties some of which are described herein. Such forward-looking information necessarily involves known and unknown risks and uncertainties, which may cause Quorum's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking information. These risks and uncertainties include but are not limited to the risks identified in Quorum's Management's Discussion and Analysis for the period ended June 30, 2012. Any forward-looking information is made as of the date hereof and, except as required by law, Quorum assumes no obligation to publicly update or revise such information to reflect new information, subsequent or otherwise.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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