HIGHLIGHTS
Q3 2013
- Third quarter 2013 ("Q3") Revenues of $74.1 million, Q3 Gross Profit of $17.7 million and Q3 Net Loss of $20.2 million (includes a Q3 restructuring charge of $0.6 million and a non-cash impairment of goodwill charge of $19.0 million)
- Q3 Adjusted EBITDA of $4.4 million (See Table 2 and "Non-GAAP Measures" below)
YTD 2013
- Year to Date 2013 ("YTD") Revenues of $234.8 million, YTD Gross Profit of $59.2 million and YTD Net Loss of $23.0 million (includes a YTD restructuring charge of $6.6 million and a non-cash impairment of goodwill charge of $19.0 million)
- YTD Adjusted EBITDA of $17.5 million (See Table 2 and "Non-GAAP Measures" below)
BRAMPTON, ON, Nov. 8, 2013 /CNW/ - DATA Group Inc. (TSX: DGI) ("DATA Group") announced its financial and operating results for the third quarter ended September 30, 2013, which include the operating results of its subsidiaries DATA Group Ltd., DATA Group (US) Corp., The Fulfillment Solutions Advantage Inc. ("FSA") and FSA Datalytics Canada Inc. ("Datalytics").
DATA Group is focused on long-term enterprise value appreciation for investors. To do this, we are profoundly transforming our business, repositioning it for sustained profit growth by adding new revenue streams and new talent, while at the same time significantly reducing our costs and positioning ourselves for accelerated debt reduction.
Why is transformational change required? Our legacy business, built around supplying pre-printed products, is declining due to technology driven shifts in our markets towards digital communications. That is why we are significantly "right-sizing" the legacy portion of our business and reducing our cost base as we do so. At the same time, the digital market shift is creating new revenue opportunities for us. DATA Group has a strong customer base. Our customers are seeking visionary, forward thinking vendors that can provide both print and digital communications, and who can manage the transition between the two. That is our strategy. We will also reduce our debt to drive value for our investors and enhance our long-term ability to invest in our future. We believe the result of our transformation will be a lean, nimble company that thrives in the digital age.
Our transformation will take a number of years and will require a continued and intensely focused effort. Consequently, the Board of Directors has decided to suspend our dividend, effective immediately, until further notice. The funds will be redirected to debt repayment as well as investment in new capabilities, talent and cost reducing initiatives…all of which will fuel our goal of long-term enterprise value appreciation for investors.
Our net loss in the third quarter and year-to-date was primarily due to a non-cash goodwill impairment charge and restructuring expenses associated with our successful cost reduction initiatives. A reduction in revenues and investment in our growth strategy also contributed to the net loss for the quarter and year to date, all of which have been partially offset by cost reductions.
Revenue reductions in the third quarter and year-to-date were primarily due to losses of some legacy print orders to our competition and secondarily due to the technological impact of increased digital communication. This decline was partially offset by gains in revenue from our new products and services and from winning new legacy print orders from our competition. Cost savings of $12.1 million, on an annualized basis, have been implemented year-to-date.
Table 1 The following table sets out selected historical financial information for the periods noted.
| Consolidated Statements of (Loss) Income Information | |||||
| For the periods ended September 30, 2013 and 2012 (in thousands of Canadian dollars, except per share amounts, unaudited) | July 1 to Sept. 30, 2013 $ | July 1 to Sept. 30, 2012 (1) $ | Jan. 1 to Sept. 30, 2013 $ | Jan. 1 to Sept. 30, 2012 (1) $ | |
| Revenues | 74,129 | 80,144 | 234,814 | 249,400 | |
| Cost of revenues | 56,431 | 60,430 | 175,622 | 185,400 | |
| Gross profit | 17,698 | 19,714 | 59,192 | 64,000 | |
| Selling, general and administrative expenses | 14,650 | 15,260 | 45,651 | 48,484 | |
| Restructuring expenses | 624 | - | 6,638 | - | |
| Impairment of goodwill | 19,000 | - | 19,000 | - | |
| Corporate conversion costs | - | - | - | 84 | |
| Amortization of intangible assets | 2,132 | 2,310 | 6,753 | 6,932 | |
| (Loss) income before finance costs and income taxes | (18,708) | 2,144 | (18,850) | 8,500 | |
| Finance costs | |||||
| Interest expense | 1,693 | 1,665 | 4,966 | 5,009 | |
| Interest income | (5) | (1) | (13) | (15) | |
| Amortization of transaction costs | 144 | 154 | 434 | 460 | |
| 1,832 | 1,818 | 5,387 | 5,454 | ||
| (Loss) income before income taxes | (20,540) | 326 | (24,237) | 3,046 | |
| Income tax expense (recovery) | |||||
| Current | 308 | 716 | 1,861 | 2,768 | |
| Deferred | (683) | (564) | (3,120) | (3,930) | |
| (375) | 152 | (1,259) | (1,162) | ||
| Net (loss) income for the period | (20,165) | 174 | (22,978) | 4,208 | |
| Net (loss) income attributable to common shareholders | (20,164) | 196 | (22,963) | 4,258 | |
| Basic and diluted (loss) earnings per share | (0.86) | 0.01 | (0.98) | 0.18 | |
| Number of common shares outstanding | 23,490,592 | 23,490,592 | 23,490,592 | 23,490,592 | |
| Consolidated Statements of Financial Position Information As at September 30, 2013 and December 31, 2012 (in thousands of Canadian dollars, unaudited) | As at Sept. 30, 2013 $ | As at Dec. 31, 2012 $ | |||
| Current assets | 81,912 | 84,069 | |||
| Current liabilities | 48,759 | 40,316 | |||
| Total assets | 196,107 | 224,629 | |||
| Total non-current liabilities | 109,034 | 122,199 | |||
| Shareholders' equity | 38,193 | 61,978 | |||
| Non-controlling interest | 121 | 136 | |||
| Total equity | 38,314 | 62,114 | |||
| (1) | Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
Table 2 The following table provides a reconciliation of net income (loss) to Adjusted EBITDA for the periods noted. See "Non-GAAP Measures".
| Adjusted EBITDA Reconciliation | ||||
| For the periods ended September 30, 2013 and 2012 (in thousands of Canadian dollars, unaudited) | July 1 to Sept. 30, 2013 $ | July 1 to Sept. 30, 2012 (1) $ | Jan. 1 to Sept. 30, 2013 $ | Jan. 1 to Sept. 30, 2012 (1) $ |
| Net (loss) income for the period | (20,165) | 174 | (22,978) | 4,208 |
| Interest expense | 1,693 | 1,665 | 4,966 | 5,009 |
| Interest income | (5) | (1) | (13) | (15) |
| Amortization of transaction costs | 144 | 154 | 434 | 460 |
| Depreciation of property, plant and equipment | 1,323 | 1,450 | 3,974 | 4,320 |
| Amortization of intangible assets | 2,132 | 2,310 | 6,753 | 6,932 |
| Restructuring expenses | 624 | - | 6,638 | - |
| Impairment of goodwill | 19,000 | - | 19,000 | - |
| Corporate conversion costs | - | - | - | 84 |
| Current income tax expense | 308 | 716 | 1,861 | 2,768 |
| Deferred income tax recovery | (683) | (564) | (3,120) | (3,930) |
| Adjusted EBITDA | 4,371 | 5,904 | 17,515 | 19,836 |
| (1) | Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
RESULTS OF OPERATIONS
Revenues
For the quarter ended September 30, 2013, DATA Group recorded revenues
of $74.1 million, a decrease of $6.0 million or 7.5% compared with the
same period in 2012. The decrease, before intersegment revenues, was
the result of a $6.0 million decrease in the DATA East and West segment
and was offset by a $0.1 million increase in the Multiple Pakfold
segment. For the nine months ended September 30, 2013, DATA Group
recorded revenues of $234.8 million, a decrease of $14.6 million or
5.8% compared with the same period in 2012. The decrease, before
intersegment revenues, was the result of a $14.1 million decrease in
the DATA East and West segment and a $0.5 million decrease in the
Multiple Pakfold segment, respectively.
Cost of Revenues and Gross Profit
For the quarter ended September 30, 2013, cost of revenues decreased to
$56.4 million from $60.4 million for the same period in 2012. Gross
profit for the quarter ended September 30, 2013 was $17.7 million,
which represented a decrease of $2.0 million or 10.2% from
$19.7 million for the same period in 2012. The decrease in gross
profit for the quarter ended September 30, 2013 was attributable to a
gross profit decrease of $2.1 million in the DATA East and West segment
and was offset by a gross profit increase of $0.1 million in the
Multiple Pakfold segment. Gross profit as a percentage of revenues
decreased to 23.9% for the quarter ended September 30, 2013 compared to
24.6% for the same period in 2012. For the nine months ended September
30, 2013, cost of revenues decreased to $175.6 million from
$185.4 million for the same period in 2012. Gross profit for the nine
months ended September 30, 2013 was $59.2 million, which represented a
decrease of $4.8 million or 7.5% from $64.0 million for the same period
in 2012. The decrease in gross profit for the nine months ended
September 30, 2013 was attributable to a gross profit decrease of $4.6
million in the DATA East and West segment and a gross profit decrease
of $0.2 million in the Multiple Pakfold segment, respectively. Gross
profit as a percentage of revenues decreased to 25.2% for the nine
months ended September 30, 2013 compared to 25.7% for the same period
in 2012.
Selling, General and Administrative Expenses and Restructuring Expenses
Selling, general and administrative ("SG&A") expenses, excluding
amortization of intangible assets, for the quarter ended September 30,
2013 decreased $0.6 million to $14.7 million compared to $15.3 million
in the same period in 2012. As a percentage of revenues, these costs
were 19.8% of revenues for the quarter ended September 30, 2013
compared to 19.0% of revenues for the same period in 2012. For the
three and nine months ended September 30, 2012, DATA Group incurred
$0.3 million and $0.7 million of severance expenses, respectively.
Severance costs for the three and nine months ended September 30, 2012
were included in SG&A and were related to DATA Group's on-going
productivity improvements and cost reduction initiatives. SG&A
expenses for the nine months ended September 30, 2013 decreased
$2.8 million to $45.7 million compared to $48.5 million for the same
period of 2012. As a percentage of revenues, these costs were 19.4% of
revenues for the nine months ended September 30, 2013 and for the same
period in 2012. The decrease in SG&A expenses for the three and nine
months ended September 30, 2013 was attributable to the benefits
realized from cost saving initiatives implemented in 2012 and early
2013. For the three and nine months ended September 30, 2013, DATA
Group incurred restructuring expenses related to headcount reductions,
the closure of certain manufacturing locations and warehouses, and
lease exit charges of $0.6 million and $6.6 million, respectively, as
part of its 2013 restructuring initiatives. The restructuring
initiatives included closing facilities in Brockville, Ontario and
Anjou, Québec and transferring the operations of FSA from Markham,
Ontario to DATA Group's existing facility in Mississauga, Ontario.
Impairment of goodwill
During the three months ended September 30, 2013, market indicators,
including the trading price of DATA Group's common shares and changes
in revenue trends and forecasted profits indicated that DATA Group's
assets may be impaired. As a result of this new information, DATA
Group performed an impairment analysis by comparing the fair value of
each cash generating unit ("CGU") to the CGU's carrying value. DATA
Group determined the fair value of each CGU by discounting expected
future cash flows in accordance with recognized valuation methods. The
process of determining those fair values required DATA Group to make a
number of estimates and assumptions such as projected future revenues,
costs of revenues, operating margins, market conditions well into the
future, and discount rates. As a result of that review, DATA Group
concluded that the fair value of its DATA East and West CGU was less
than its carrying value. Accordingly, DATA Group recognized an
impairment of goodwill charge of $19.0 million related to the DATA East
and West CGU.
Corporate Conversion Costs
During the nine months ended September 30, 2012, DATA Group incurred
total professional fees of $0.1 million related to the conversion of
the Fund to a corporation on January 1, 2012.
Adjusted EBITDA
For the quarter ended September 30, 2013, Adjusted EBITDA was
$4.4 million, or 5.9% of revenues. Adjusted EBITDA for the quarter
ended September 30, 2013 decreased $1.5 million or 26.0% from the same
period in the prior year due to the continued investment in DATA
Group's growth strategy and a decline in revenues, and was partially
offset by cost savings realized as a result of its restructuring
initiatives. These costs included SG&A expense related to investments
to launch new products and services. The Adjusted EBITDA margin for
the quarter, as a percentage of revenues, decreased from 7.4% of
revenues in 2012 to 5.9% of revenues in 2013. Adjusted EBITDA for the
nine months ended September 30, 2013 was $17.5 million, or 7.5% of
revenues. Adjusted EBITDA for the nine months ended September 30, 2013
decreased $2.3 million or 11.7% from the same period in the prior year
and the Adjusted EBITDA margin for the nine month period, as a
percentage of revenues, decreased from 8.0% of revenues in 2012 to 7.5%
of revenues in 2013.
Interest Expense and Finance Costs
Interest expense on long-term debt outstanding under DATA Group's credit
facilities, DATA Group's outstanding $45.0 million aggregate principal
amount of 6.00% Convertible Unsecured Subordinated Debentures (the
"6.00% Convertible Debentures"), certain unfavourable lease obligations
related to closed facilities and DATA Group's employee benefit plans
was $1.7 million for the three months ended September 30, 2013 compared
to $1.7 million for the same period in 2012, and was $5.0 million for
the nine months ended September 30, 2013 compared to $5.0 million for
the same period in 2012.
Income Taxes
DATA Group reported a loss before income taxes of $20.5 million, a
current income tax expense of $0.3 million and a deferred income tax
recovery of $0.7 million for the three months ended September 30, 2013
compared to income before income taxes of $0.3 million, current income
tax expense of $0.7 million and a deferred income tax recovery of
$0.6 million for the three months ended September 30, 2012. DATA Group
reported a loss before income taxes of $24.2 million, a current income
tax expense of $1.9 million and a deferred income tax recovery of
$3.1 million for the nine months ended September 30, 2013 compared to
income before income taxes of $3.0 million, a current income tax
expense of $2.8 million and a deferred income tax recovery of $3.9
million for the nine months ended September 30, 2012. As a result of
the conversion, DATA Group re-measured its deferred tax assets and
liabilities at the corporate tax rates applicable to corporations,
which are lower than the top marginal tax rate for individuals used by
the Fund. In addition, the Fund's conversion option liabilities were
reclassified as equity on January 1, 2012 and the associated deferred
tax liability was reversed. As a result of these changes, DATA Group
recorded a deferred income tax recovery $2.0 million during the first
quarter of 2012.
Net (Loss) Income
Net loss for the quarter ended September 30, 2013 was $20.2 million
compared to a net income of $0.2 million for the quarter ended
September 30, 2012. The decrease in comparable profitability for the
quarter ended September 30, 2013 was due to lower gross profit as a
result of lower revenues, a goodwill impairment charge of $19.0 million
and restructuring expenses. The decrease in comparable profitability
was partially offset by lower SG&A expense, lower current income tax
expense and a larger deferred income tax recovery.
Net loss for the nine months ended September 30, 2013 was $23.0 million compared to a net income of $4.2 million for the nine months ended September 30, 2012. The decrease in comparable profitability for the nine months ended September 30, 2013 was substantially due to lower gross profit as result of lower revenues, a goodwill impairment charge of $19.0 million, restructuring expenses and a larger deferred income tax recovery in 2012. The decrease in comparable profitability during the first nine months 2013 was partially offset by lower SG&A expenses and current income tax expense as discussed above.
INVESTING ACTIVITIES
Capital expenditures for the three months ended September 30, 2013 of
$1.2 million related primarily to maintenance capital expenditures and
the consolidation of manufacturing facilities. For the nine months
ended September 30, 2013, DATA Group incurred capital expenditures of
$2.0 million related primarily to maintenance capital expenditures and
the consolidation of manufacturing facilities. These capital
expenditures were financed by cash flow from operations.
FINANCING ACTIVITIES
During the nine months ended September 30, 2013, DATA Group repaid $2.5
million of the principal amount outstanding under its Revolving Bank
Facility. For the three and nine months ended September 30, 2013, DATA
Group paid aggregate cash dividends of $1.8 million and $4.8 million,
respectively, on its common shares.
About DATA Group Inc.
DATA Group Inc. is a managed business communications services company
specializing in customized document management and marketing
solutions. DATA Group develops, manufactures, markets and supports
integrated web and print-based communications, information management
and direct marketing products and services that help its customers
reduce costs, increase revenues, maintain brand consistency and
simplify their business processes. DATA Group's expertise and
resources enable it to address any document requirement of its
customers, from a simple mail-out to an enterprise-wide document
management or direct marketing initiative. We have approximately 1,800
employees working from 35 locations across Canada and the United States
to accomplish this.
Additional information relating to DATA Group Inc. is available on www.datagroup.ca, and in the disclosure documents filed by DATA Group Inc. on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.
All financial information in this press release is presented in Canadian dollars and in accordance with generally accepted accounting principles ("GAAP") measured under International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB") for publicly accountable entities, unless otherwise noted. Financial figures presented prior to January 1, 2012 are those of The DATA Group Income Fund, the predecessor to DATA Group Inc.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release constitute "forward-looking"
statements that involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance,
objectives or achievements of DATA Group, or industry results, to be
materially different from any future results, performance, objectives
or achievements expressed or implied by such forward-looking
statements. When used in this press release, words such as "may",
"would", "could", "will", "expect", "anticipate", "estimate",
"believe", "intend", "plan", and other similar expressions are intended
to identify forward-looking statements. These statements reflect DATA
Group's current views regarding future events and operating
performance, are based on information currently available to DATA
Group, and speak only as of the date of this press release. These
forward-looking statements involve a number of risks, uncertainties and
assumptions and should not be read as guarantees of future performance
or results, and will not necessarily be accurate indications of whether
or not such performance or results will be achieved. Many factors
could cause the actual results, performance, objectives or achievements
of DATA Group to be materially different from any future results,
performance, objectives or achievements that may be expressed or
implied by such forward-looking statements. The principal factors,
assumptions and risks that DATA Group made or took into account in the
preparation of these forward-looking statements include the risk that
DATA Group may not be successful in reducing the size of its legacy
print business, reducing costs and long-term debt and growing its
digital communications business; the risk that DATA Group may not be
successful in managing its organic growth; DATA Group's ability to
invest in, develop and successfully market new products and services;
competition from competitors supplying similar products and services;
DATA Group's ability to grow its sales or even maintain historical
levels of its sales of printed business documents; the impact of
economic conditions on DATA Group's businesses; risks associated with
acquisitions by DATA Group; increases in the costs of paper and other
raw materials used by DATA Group; and DATA Group's ability to maintain
relationships with its customers. Additional factors are discussed
elsewhere in this press release and under the heading "Risks and
Uncertainties" in DATA Group's management's discussion and analysis and
in DATA Group's other publicly available disclosure documents, as filed
by DATA Group on SEDAR (www.sedar.com). Should one or more of these risks or uncertainties materialize, or
should assumptions underlying the forward-looking statements prove
incorrect, actual results may vary materially from those described in
this press release as intended, planned, anticipated, believed,
estimated or expected. Unless required by applicable securities law,
DATA Group does not intend and does not assume any obligation to update
these forward-looking statements.
NON-GAAP MEASURES
This press release includes certain non-GAAP measures as supplementary
information. When used in this press release, EBITDA means earnings
before interest and finance costs, taxes, depreciation and
amortization. Adjusted EBITDA for the three and nine months ended
September 30, 2013 means EBITDA adjusted for restructuring expenses and
a goodwill impairment charge. Adjusted EBITDA for the three and nine
months ended September 30, 2012 means EBITDA adjusted for corporate
conversion costs. DATA Group believes that, in addition to net income
(loss), EBITDA and Adjusted EBITDA are useful supplemental measures in
evaluating the performance of DATA Group and its predecessors. EBITDA
and Adjusted EBITDA are not earnings measures recognized by IFRS and do
not have any standardized meanings prescribed by IFRS. Therefore,
EBITDA and Adjusted EBITDA are unlikely to be comparable to similar
measures presented by other issuers.
Investors are cautioned that neither EBITDA nor Adjusted EBITDA should be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of DATA Group's performance. For a reconciliation of net income (loss) to Adjusted EBITDA, see Table 2 above.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
| (in thousands of Canadian dollars, unaudited) | September 30, 2013 $ | December 31, 2012 $ | |||||
| Assets | |||||||
| Current assets | |||||||
| Trade receivables | 37,262 | 41,580 | |||||
| Inventories | 39,635 | 38,085 | |||||
| Prepaid expenses and other current assets | 4,590 | 4,404 | |||||
| Income taxes receivable | 425 | - | |||||
| 81,912 | 84,069 | ||||||
| Non-current assets | |||||||
| Deferred income tax assets | 2,986 | 1,534 | |||||
| Property, plant and equipment | 18,349 | 20,420 | |||||
| Intangible assets | 10,794 | 17,540 | |||||
| Goodwill | 82,066 | 101,066 | |||||
| 196,107 | 224,629 | ||||||
| Liabilities | |||||||
| Current liabilities | |||||||
| Bank overdraft | 3,330 | 1,161 | |||||
| Current portion of Revolving bank facility | 6,000 | - | |||||
| Trade payables | 27,810 | 28,289 | |||||
| Provisions | 2,219 | 308 | |||||
| Income taxes payable | - | 1,699 | |||||
| Deferred revenue | 7,638 | 7,586 | |||||
| Dividends payable | 1,762 | 1,273 | |||||
| 48,759 | 40,316 | ||||||
| Non-current liabilities | |||||||
| Provisions | 3,311 | 867 | |||||
| Revolving bank facility | 49,250 | 57,553 | |||||
| Convertible debentures | 42,759 | 42,311 | |||||
| Deferred income tax liabilities | 683 | 766 | |||||
| Other non-current liabilities | 950 | 1,137 | |||||
| Pension obligations | 9,215 | 16,839 | |||||
| Other post-employment benefit plans | 2,866 | 2,726 | |||||
| 157,793 | 162,515 | ||||||
| Equity | |||||||
| Shareholders' equity | |||||||
| Shares | 215,336 | 215,336 | |||||
| Conversion options | 516 | 516 | |||||
| Accumulated other comprehensive income | 12 | 1 | |||||
| Deficit | (177,671) | (153,875) | |||||
| 38,193 | 61,978 | ||||||
| Non-controlling interest | 121 | 136 | |||||
| 38,314 | 62,114 | ||||||
| 196,107 | 224,629 | ||||||
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
| (in thousands of Canadian dollars, except per share amounts, unaudited) | For the three months ended September 30, 2013 | For the three months ended September 30, 2012 (1) | |||
| $ | $ | ||||
| Revenues | 74,129 | 80,144 | |||
| Cost of revenues | 56,431 | 60,430 | |||
| Gross profit | 17,698 | 19,714 | |||
| Expenses | |||||
| Selling, commissions and expenses | 8,792 | 8,826 | |||
| General and administration expenses excluding amortization of intangible assets | 5,858 | 6,434 | |||
| Restructuring expenses | 624 | - | |||
| Impairment of goodwill | 19,000 | - | |||
| Amortization of intangible assets | 2,132 | 2,310 | |||
| 36,406 | 17,570 | ||||
| (Loss) income before finance costs and income taxes | (18,708) | 2,144 | |||
| Finance costs | |||||
| Interest expense | 1,693 | 1,665 | |||
| Interest income | (5) | (1) | |||
| Amortization of transaction costs | 144 | 154 | |||
| 1,832 | 1,818 | ||||
| (Loss) income before income taxes | (20,540) | 326 | |||
| Income tax expense (recovery) | |||||
| Current | 308 | 716 | |||
| Deferred | (683) | (564) | |||
| (375) | 152 | ||||
| Net (loss) income for the period | (20,165) | 174 | |||
| Net (loss) income attributable to: | |||||
| Common shareholders | (20,164) | 196 | |||
| Non-controlling interest | (1) | (22) | |||
| (20,165) | 174 | ||||
| Basic (loss) earnings per share | (0.86) | 0.01 | |||
| Diluted (loss) earnings per share | (0.86) | 0.01 |
| (1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
| (in thousands of Canadian dollars, except per share amounts, unaudited) | For the nine months ended September 30, 2013 | For the nine months ended September 30, 2012 (1) | |||
| $ | $ | ||||
| Revenues | 234,814 | 249,400 | |||
| Cost of revenues | 175,622 | 185,400 | |||
| Gross profit | 59,192 | 64,000 | |||
| Expenses | |||||
| Selling, commissions and expenses | 27,233 | 27,985 | |||
| General and administration expenses excluding amortization of intangible assets | 18,418 | 20,499 | |||
| Restructuring expenses | 6,638 | - | |||
| Impairment of goodwill | 19,000 | - | |||
| Corporate conversion costs | - | 84 | |||
| Amortization of intangible assets | 6,753 | 6,932 | |||
| 78,042 | 55,500 | ||||
| (Loss) income before finance costs and income taxes | (18,850) | 8,500 | |||
| Finance costs | |||||
| Interest expense | 4,966 | 5,009 | |||
| Interest income | (13) | (15) | |||
| Amortization of transaction costs | 434 | 460 | |||
| 5,387 | 5,454 | ||||
| (Loss) income before income taxes | (24,237) | 3,046 | |||
| Income tax recovery | |||||
| Current | 1,861 | 2,768 | |||
| Deferred | (3,120) | (3,930) | |||
| (1,259) | (1,162) | ||||
| Net (loss) income for the period | (22,978) | 4,208 | |||
| Net (loss) income attributable to: | |||||
| Common shareholders | (22,963) | 4,258 | |||
| Non-controlling interest | (15) | (50) | |||
| (22,978) | 4,208 | ||||
| Basic (loss) earnings per share | (0.98) | 0.18 | |||
| Diluted (loss) earnings per share | (0.98) | 0.18 |
| (1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
| (in thousands of Canadian dollars, unaudited) | For the three months ended September 30, 2013 | For the three months ended September 30, 2012 (1) | |||
| $ | $ | ||||
| Net (loss) income for the period | (20,165) | 174 | |||
| Other comprehensive income (loss): | |||||
| Items that may be reclassified subsequently to net (loss) income | |||||
| Foreign currency translation | 9 | - | |||
| 9 | - | ||||
| Items that will not be reclassified to net (loss) income | |||||
| Actuarial gains (losses) on post-employment benefit obligations | 1,701 | (3,442) | |||
| Taxes related to post-employment adjustment above | (448) | 902 | |||
| 1,253 | (2,540) | ||||
| Other comprehensive income (loss) for the period, net of tax | 1,262 | (2,540) | |||
| Comprehensive loss for the period | (18,903) | (2,366) | |||
| Comprehensive loss attributable to: | |||||
| Common shareholders | (18,902) | (2,344) | |||
| Non-controlling interest | (1) | (22) | |||
| (18,903) | (2,366) |
| (1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
| (in thousands of Canadian dollars, unaudited) | For the nine months ended September 30, 2013 | For the nine months ended September 30, 2012 (1) | ||
| $ | $ | |||
| Net (loss) income for the period | (22,978) | 4,208 | ||
| Other comprehensive income (loss): | ||||
| Items that may be reclassified subsequently to net (loss) income | ||||
| Foreign currency translation | 11 | - | ||
| 11 | - | |||
| Items that will not be reclassified to net (loss) income | ||||
| Deferred income tax recovery on conversion to a corporation | - | 406 | ||
| Actuarial gains (losses) on post-employment benefit obligations | 6,038 | (6,226) | ||
| Taxes related to post-employment adjustment above | (1,585) | 1,632 | ||
| 4,453 | (4,188) | |||
| Other comprehensive income (loss) for the period, net of tax | 4,464 | (4,188) | ||
| Comprehensive (loss) income for the period | (18,514) | 20 | ||
| Comprehensive (loss) income attributable to: | ||||
| Common shareholders | (18,499) | 70 | ||
| Non-controlling interest | (15) | (50) | ||
| (18,514) | 20 |
| (1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| (in thousands of Canadian dollars, unaudited) | Attributable to Shareholders' | |||||||
| Shares | Units | Conversion options | Accumulated other comprehensive income | Deficit | Total Shareholders' Equity | Non- controlling interest | Total Equity | |
| $ | $ | $ | $ | $ | $ | $ | $ | |
| Balance as at December 31, 2011 | - | 215,336 | - | - | (97,973) | 117,363 | 313 | 117,676 |
| Effect of conversion to a corporation | 215,336 | (215,336) | 516 | - | - | 516 | - | 516 |
| 215,336 | - | 516 | - | (97,973) | 117,879 | 313 | 118,192 | |
| Net income (loss) for the period (1) | - | - | - | - | 4,258 | 4,258 | (50) | 4,208 |
| Other comprehensive loss for the period (1) | - | - | - | - | (4,188) | (4,188) | - | (4,188) |
| Total comprehensive income (loss) for the period | - | - | - | - | 70 | 70 | (50) | 20 |
| Acquisition of non-controlling interest | - | - | - | - | 121 | 121 | (121) | - |
| Dividends declared | - | - | - | - | (11,459) | (11,459) | - | (11,459) |
| - | ||||||||
| Balance as at September 30, 2012 | 215,336 | - | 516 | - | (109,241) | 106,611 | 142 | 106,753 |
| Balance as at December 31, 2012 | 215,336 | - | 516 | 1 | (153,875) | 61,978 | 136 | 62,114 |
| Net loss for the period | - | - | - | - | (22,963) | (22,963) | (15) | (22,978) |
| Other comprehensive income for the period | - | - | - | 11 | 4,453 | 4,464 | - | 4,464 |
| Total comprehensive income (loss) for the period | - | - | - | 11 | (18,510) | (18,499) | (15) | (18,514) |
| Dividends declared | - | - | - | - | (5,286) | (5,286) | - | (5,286) |
| Balance as at September 30, 2013 | 215,336 | - | 516 | 12 | (177,671) | 38,193 | 121 | 38,314 |
| (1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
CONSOLIDATED STATEMENTS OF CASH FLOWS
| (in thousands of Canadian dollars, unaudited) | For the three months ended September 30, 2013 | For the three months ended September 30, 2012 (1) | |||
| $ | $ | ||||
| Cash provided by (used in) | |||||
| Operating activities | |||||
| Net (loss) income for the period | (20,165) | 174 | |||
| Adjustments to net (loss) income | |||||
| Depreciation of property, plant and equipment | 1,323 | 1,450 | |||
| Amortization of intangible assets | 2,132 | 2,310 | |||
| Pension expense | 236 | 234 | |||
| Loss on disposal of property, plant and equipment | 3 | 16 | |||
| Impairment of goodwill | 19,000 | - | |||
| Provisions | 624 | 276 | |||
| Amortization of transaction costs | 144 | 154 | |||
| Accretion of convertible debentures | 76 | 75 | |||
| Other non-current liabilities | (80) | (73) | |||
| Other post-employment benefit plans, net | 45 | 67 | |||
| Income tax (recovery) expense | (375) | 152 | |||
| 2,963 | 4,835 | ||||
| Changes in working capital | (862) | (327) | |||
| Contributions made to pension plans | (753) | (746) | |||
| Provisions paid | (1,246) | (266) | |||
| Income taxes paid | (99) | (663) | |||
| 3 | 2,833 | ||||
| Investing activities | |||||
| Purchase of property, plant and equipment | (1,202) | (653) | |||
| Purchase of intangible assets | (7) | - | |||
| Proceeds on disposal of property, plant and equipment | 2 | 5 | |||
| (1,207) | (648) | ||||
| Financing activities | |||||
| Finance lease payments | (8) | - | |||
| Dividends paid | (1,762) | (3,820) | |||
| (1,770) | (3,820) | ||||
| Increase in bank overdraft during the period | (2,974) | (1,635) | |||
| Bank overdraft - beginning of period | (354) | (410) | |||
| Effects of foreign exchange on cash balances | (2) | - | |||
| Bank overdraft - end of period | (3,330) | (2,045) | |||
| (1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
CONSOLIDATED STATEMENTS OF CASH FLOWS
| (in thousands of Canadian dollars, unaudited) | For the nine months ended September 30, 2013 | For the nine months ended September 30, 2012 (1) | |||
| $ | $ | ||||
| Cash provided by (used in) | |||||
| Operating activities | |||||
| Net (loss) income for the period | (22,978) | 4,208 | |||
| Adjustments to net (loss) income | |||||
| Depreciation of property, plant and equipment | 3,974 | 4,320 | |||
| Amortization of intangible assets | 6,753 | 6,932 | |||
| Pension expense | 708 | 702 | |||
| Loss on disposal of property, plant and equipment | 125 | 15 | |||
| Impairment of goodwill | 19,000 | - | |||
| Provisions | 6,638 | 713 | |||
| Amortization of transaction costs | 434 | 460 | |||
| Accretion of convertible debentures | 223 | 224 | |||
| Other non-current liabilities | (255) | (196) | |||
| Other post-employment benefit plans, net | 140 | 199 | |||
| Income tax recovery | (1,259) | (1,162) | |||
| 13,503 | 16,415 | ||||
| Changes in working capital | 2,120 | 589 | |||
| Contributions made to pension plans | (2,294) | (2,291) | |||
| Provisions paid | (2,283) | (765) | |||
| Income taxes paid | (3,985) | (3,917) | |||
| 7,061 | 10,031 | ||||
| Investing activities | |||||
| Purchase of property, plant and equipment | (2,009) | (1,612) | |||
| Purchase of intangible assets | (7) | (415) | |||
| Proceeds on disposal of property, plant and equipment | 103 | 12 | |||
| (1,913) | (2,015) | ||||
| Financing activities | |||||
| Repayment of revolving bank facility | (2,500) | (2,500) | |||
| Finance costs | (11) | (148) | |||
| Finance lease payments | (12) | - | |||
| Dividends or distributions paid | (4,797) | (11,459) | |||
| (7,320) | (14,107) | ||||
| (Increase) in bank overdraft and (decrease) in cash and cash equivalents during the period | (2,172) | (6,091) | |||
| (Bank overdraft) cash and cash equivalents - beginning of period | (1,161) | 4,046 | |||
| Effects of foreign exchange on cash balances | 3 | - | |||
| Bank overdraft - end of period | (3,330) | (2,045) | |||
| (1) Prior-period amounts have been revised to reflect the retrospective application of amendments to IAS 19 Employee Benefits. |
SOURCE DATA Group Inc.
Mr. Michael Suksi
President and Chief Executive Officer
DATA Group Inc.
Tel: (905) 791-3151
Mr. Paul O'Shea
Chief Financial Officer
DATA Group Inc.
Tel: (905) 791-3151