Delta Systems Reports 2006 First Quarter Financial Results30 May 2006
Delta Systems, Inc. (TSX-V: DLT), a leading developer of factory automation solutions for the consumer packaged goods industry, today reported its financial results for the three-month period ended March 31, 2006. (All dollar amounts are reported in U.S. dollars under U.S. GAAP).
"Our 2006 first quarter financial performance was negatively impacted by the lengthened customer sales cycles we experienced throughout 2005, and an unexpected customer-initiated slowdown in the rollout of a major existing project, starting in the third quarter of 2005. Our quote activity remains strong and we anticipate that the rollout of our currently delayed major project will resume in the latter part of 2006 or the first half of 2007," said Jake Bushey, President and CEO of Delta Systems. "Subsequent to the end of the first quarter, we were awarded two contracts from existing customers in Mexico valued in excess of US $4 million and we expect additional significant follow-on orders from other existing customers throughout the remainder of 2006."
Financial Results
Revenue for the three months ended March 31, 2006 decreased to $3.65 million compared to $5.98 million in the first quarter a year ago. This decrease was primarily attributable to the continued slowdown of a major project rollout with an existing customer. The delay in the rollout was initiated by the customer in the second half of 2005. This customer represented approximately 39% of revenue in the first quarter of 2005 and accounted for approximately 12% in the first quarter of 2006. Delta Systems currently anticipates that this multi-year project rollout will resume in late 2006 or early 2007.
Earnings before Interest, Taxes, Depreciation and Amortization(1) ("EBITDA") for the three months ended March 31, 2006, was $(329,078), compared to EBITDA of $179,811 in the first quarter a year ago.
Net loss for the first quarter of 2006 was $(481,061), or ($0.02) per share compared to net loss of $(8,006), or ($0.00) per share in the same period a year ago. The increased net loss for the quarter of 2006 resulted from the impact of decreased revenue on gross margins.
Gross profit for the three months ended March 31, 2006 was $1.18 million or 32.4% of revenue, compared to gross profit of $1.93 million or 32.3% of revenue in the first quarter of 2005. Gross profit declined in the first quarter of 2006 as result of decreased sales in relation to fixed costs.
Operating expenses for the quarter ended March 31, 2006, including depreciation and amortization of $60,166, totaled $1.57 million, compared to operating expenses, including depreciation and amortization of $49,058, of $1.80 million in the first quarter a year ago. Delta Systems' decreased operating expenses in the first quarter of 2006 compared to the first quarter a year ago resulted primarily from decreased general and administrative, and sales and marketing expenses. Delta has consolidated its direct sales force and restructured its sales regions and the decrease reflects the Company's increased use of sales rep organizations, which are paid on a commission basis resulting in more variable expense structure.
The Company held $729,909 in cash and cash equivalents as at March 31, 2006, compared to cash and cash equivalents of $1.49 million as at December 31, 2005. Working capital as at March 31, 2006 was $366,001, compared to $668,659 as at December 31, 2005.
<<
Summary Financial Information
($US)
Three months Three months
ended ended
March 31, March 31,
2006 2005
------------------------------
Net Sales $ 3,647,521 $ 5,979,857
Gross Profit 1,182,236 1,930,311
GP% 32.4% 32.3%
Operating Expenses including Depreciation
and Amortization 1,571,480 1,799,558
EBITDA(1) $ (329,078) $ 179,811
Net (Loss) Profit $ (481,061) $ (8,006)
Basic & Diluted Net Loss Per Share $ (0.02) $ 0.00
Weighted average common shares outstanding
(Basic and Diluted) 19,627,533 20,292,831
(1) EBITDA is a non-GAAP financial measure that is provided because it
is commonly used as a measure of liquidity. EBITDA is defined as
net income (loss) before income taxes, interest expense, interest
income, and depreciation and amortization. Management believes that
cash flows from operating activities, as determined in accordance
with generally accepted accounting principles ("GAAP"), is the most
comparable financial measure. EBITDA should not be construed as an
alternative to cash flow from operations, and because it is not
calculated under generally accepted accounting principles, the
Company's EBITDA may not be comparable to similarly titled measures
used by other companies. The following table reconciles EBITDA to
cash flow from operating activities:
($US)
Three Months Ended March 31,
------------------------------
2006 2005
EBITDA(1) $ (329,078) $ 179,811
Interest Expense (97,447) (90,322)
Accretion of discount on debentures - (34,888)
Other income (expense) 7,337 (959)
Exchange rate loss (1,707) (12,590)
Net changes in operating assets
and liabilities 525,345 166,523
Cash Flows from (used in) Operating
Activities $ 747,932 $ 207,575
Corporate Developments
On March 24, 2006, Delta Systems, Inc. ("New Delta") announced that its subsidiary, Delta Systems, Inc. ("Old Delta") filed articles of amendment to consolidate all of its issued and outstanding shares of common stock with a par value of U.S. $0.001 ("Old Delta Shares") on the basis of a consolidation ratio of one post-consolidation Old Delta Share for every 19,909,988 pre-consolidation Old Delta Shares.
Under the terms of the share consolidation, Old Delta shareholders who did not tender their Old Delta Shares to the offer made by New Delta on June 20, 2005 (as amended) will receive an amount in cash or other immediately available funds equal to Cdn.$0.72 for each Old Delta Share held immediately prior to the completion of the consolidation.
Although structured as a formal take-over bid, the aforementioned transaction was initiated last year in order to re-domicile Delta Systems as a Canadian company and was essentially an internal reorganization. Delta Systems' former corporate structure was unnecessarily complex, imposed significant compliance costs, and impeded trading of the Company's stock and access to capital. Consequently, Delta Systems' Board of Directors determined that the Company would benefit from a corporate reorganization under the laws of Canada. As a result of this initiative, the ".s" was removed from Delta Systems trading symbol, which eliminated associated compliance burdens, and common shares of the "New Delta" commenced trading on the TSX Venture Exchange under the trading symbol "DLT" on October 6, 2005.
The share consolidation was the final step in the implementation of the transactions initiated by Old Delta in 2005 to re-domicile as a Canadian corporation.
About Delta Systems
Delta Systems, Inc. (TSX-V: DLT) develops factory automation solutions for consumer packaged goods companies. The Company's comprehensive line of automation equipment includes high-speed flow wrappers, feeding and distribution, labeling and product tracking systems. Delta System's PC-based motion control software, SoftFlow(TM), enhances the speed, efficiency, precision and flexibility of automation applications on the plant floor, and provides connectivity to other enterprise systems. The Company offers a range of customer support services to optimize deployment, utilization and systems integration. Delta Systems has installations with more than 70 customers in North America and internationally, including 11 Fortune 500 companies. The Company is headquartered in Rogers, Arkansas, and has 70 employees. For more information, please visit: www.delta-systems-inc.com.
The TSX Exchange has neither approved nor disapproved of the information
contained in this news release.
Caution concerning forward-looking statements
Certain statements contained in this news release may constitute "forward looking statements". When used in this news release, the words "may," "would," "could," "will," "intend," "plan," "anticipate," "believe," "estimate," "expect," and similar expressions, as they relate to Delta or its management are intended to identify forward-looking statements. Such statements reflect Delta's current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause Delta's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking statements, including among other things, those which are discussed under the headings "Risk Factors" and elsewhere in documents that Delta files from time to time with securities regulatory authorities. 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 herein as intended, planned, anticipated, believed, estimated or expected. Delta does not intend, and does not assume any obligation, to update these forward looking statements.
%SEDAR: 00022918E
For further information: Jake Bushey, President and Chief Executive Officer, Delta Systems, Inc., (479) 619-2585, jbushey@delta-systems-inc.com; Bruce Wigle, Investor Relations, The Equicom Group Inc., (416) 815-0700 ext. 228, bwigle@equicomgroup.com
Source: newswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
Related Articles
|
