Synergex Corporation
TSX : SYX

Synergex Corporation

July 06, 2009 08:59 ET

Synergex Announces First Quarter 2009 Results

MISSISSAUGA, ONTARIO--(Marketwire - July 6, 2009) - Synergex Corporation (TSX:SYX) ("Synergex" or the "Company"), a premier international integrated logistics and distribution service provider, today announced its financial results for the first quarter ended March 31, 2009.

Sales in the first quarter were $29.6 million compared to $27.7 million in the first quarter of 2008. However, in order to provide a meaningful historical comparison the Company calculates "normalized" revenues by deducting the low-margin billings of its SRS subsidiary, which it wound down in October of 2008. Accordingly, during the first quarter of 2008 the Company's normalized sales were $20.5 million. On a normalized basis, Q1 2009 sales increased by $9 million or 44% over the same period in the prior year.

The Company experienced strong and stable sales performance in its Core Canadian operations, with a $1 million increase in normalized sales, despite being a seasonally weak period and the global recessionary conditions. Sales in Brazil, Mexico, Argentina, Colombia and Chile increased in the aggregate by 213% to $11.8 million during the first quarter of 2009 compared to the first quarter of the prior year. Management expects sales from Latin American operations to continue to increase strongly over the next few years.

Synergex operations in Q1 2009 resulted in negative EBITDA of $78 thousand for the first quarter of 2009 compared with a positive EBITDA of $1.3 million for the same period in 2008. Core Canadian operations continue to generate strong results, contributing $1.1 million of EBITDA in the first quarter. However, the combination of seasonality affecting some Latin American operations and a small loss in the Business Services division, along with corporate overhead costs impacted negatively against the Company's EBITDA in the period.

The losses in Latin America reflect a seasonally weak post-holiday period where the Company has now fully established operations and an associated fixed cost base.

"Normalized sales growth in Q1 was very satisfying despite the seasonal challenges we faced. With margins approximately double those of the Canadian distribution operations, we expect to see continued strong sales growth from all Latin American subsidiaries as we get into the second half of 2009. We anticipate a dramatic improvement in profitability, and we will continue to adapt our operating overheads and corporate expenses to current economic conditions," said David Aiello, President and CEO of Synergex Corporation.

The Company expects to benefit from adjustments to overheads and to see lower corporate overhead as a percentage of gross margin dollars earned from worldwide operations in Q3 of 2009 and beyond.

"We have come through a difficult period and are putting it behind us. Synergex is ideally positioned to drive strong growth for you in 2009 and beyond. We have a great pipeline of products and new product partners. We are now in one of the most exciting periods in the history of our company and we are in key emerging markets. As computer entertainment continues to become more powerful, ubiquitous, and affordable, we will transform the way we deliver value to our customers and supplier partners. Synergex has been able to foster growth in foreign operations by virtue of the continuing operating strength of our Core Canadian business, and in 2009 we believe that we will see the Latin American operating group emerge as a profitable strategic business unit in its own right," Mr. Aiello added.

Synergex' primary sources of liquidity are cash flow from operations, a Canadian revolving credit facility that varies between $5 million to 11 million, capital leases used to fund equipment purchases, and a long term debt facility of $10 million to replenish working capital. In addition, as previously announced, the Company has accepted a USD $6 million dollar long-term financing proposal for its Brazilian and Mexican operations in the first half of 2009.

The Company's unaudited financial statements and Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2009 can be found in the Investor Relations section of the Company's website at www.syx.ca. Management will host a conference call with shareholders on Wednesday, July 8th at 11:00am EDT. Participants may access the conference call by dialing 416-644-3420 (or 1-800-590-1508).

About Synergex Corporation

Synergex is a premier international service provider of comprehensive supply chain management services in 6 countries across the Americas, licensing, sales, and marketing of digital entertainment software, specialized international freight forwarding services, & localization and production of packaging for video games and other products. Headquartered in Mississauga, Ontario, Synergex serves a broad base of customers that includes a number of multinational enterprises. Synergex is listed on the Toronto Stock Exchange and trades under the symbol SYX. For further information, please visit www.syx.ca.

Forward-Looking Information

This press release contains "forward-looking statements" and "forward-looking information" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the timing and amount of estimated future expansion and costs of expansion. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "plan", "continue", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". All forward-looking statements are based on our beliefs and assumptions based on information available at the time the assumption was made. While Synergex considers its assumptions to be reasonable and appropriate based on the current information available, there is a risk that they may not be accurate. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Synergex to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to the integration of acquisitions, as well as those factors discussed in the section entitled "Risk Factors" Synergex' 2008 Annual MD&A. Before making any investment decisions and for a detailed discussions of the risks, uncertainties and environment associated with our business, fully review the section entitled "Risk Factors" Synergex' 2008 Annual MD&A. Although Synergex has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Synergex does not undertake to update any forward-looking statements that are incorporated by reference herein, except as required by law.

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