Circa Reports Sales and Operating Results for the Second Quarter Ended June 30, 2021

Calgary, Alberta--(Newsfile Corp. - August 6, 2021) - Circa Enterprises Inc. (TSXV: CTO) (the "Company" or "Circa"), a manufacturer of equipment for the telecommunication, electrical utility, and construction industries, reports results of operations for the second quarter ended June 30, 2021.

Summary of second quarter operating results:

• Q2 2021 sales of $8.7 million, an increase of $1.5 million or 20.5% from Q2 2020 sales of $7.2 million

• Net income and comprehensive income of $504,000 for Q2 2021, being $0.05 per share compared to net income and comprehensive income of $671,000 for Q2 2020, or $0.07 per share

• Q2 2021 EBITDA of $1.2 million, a decrease of $0.3 million compared to Q2 2020 EBITDA of $1.5 million (see below for explanation and calculation of EBITDA)

• Q2 2021 EBITDAaL of $0.9 million, a decrease of $0.3 million compared to EBITDAaL of $1.2 million for Q2 2020 (see below for explanation and calculation of EBITDAaL)

• During the quarter, the Company acquired Westronic Inc. for $3.1 million

Summary of year-to date operating results:

• Sales of $16.9 million for the six months ended June 30, 2021, an increase of 17.5% compared to sales of $14.4 million for the six months ended June 30, 2020

• Net income and comprehensive income for the six months ended June 30, 2021 of $667,000, being $0.07 per share compared to net income and comprehensive income of $817,000, or $0.08 per share for the same period in 2020

• EBITDA of $2.0 million for the six months ended June 30, 2021 compared to EBITDA of $2.1 million for the six months ended June 30, 2020

• EBITDAaL of $1.5 million for the six months ended June 30, 2021 compared to EBITDAaL of $1.6 million for the six months ended June 30, 2020

EBITDA is earnings before interest, taxes, depreciation and amortization. EBITDAaL is earnings before interest, taxes, depreciation and amortization and is adjusted for cash lease payments and therefore comparative EBITDA prior to the adoption of IFRS 16. EBITDA and EBITDAaL are a non-IFRS financial measures and do not have any standardized meaning prescribed by International Financial Reporting Standards and, therefore, may not to be comparable to similar measures presented by other issuers. Management believes that EBITDA and EBITDAaL are useful supplemental measures, which provides an indication of the results generated by Circa's primary business activities prior to consideration of how those activities are financed, amortized or taxed. Readers are cautioned, however, that EBITDA and EBITDAaL should not be construed as an alternative to comprehensive income determined in accordance with IFRS as an indicator of the Company's financial performance. EBITDA and EBITDAaL are calculated by the Company as follows:

$000's	(unaudited) Six months 30 June 2021	(unaudited) Six months 30 June 2020	(unaudited) Three months 30 June 2021	(unaudited) Three months 30 June 2020
Net income and comprehensive income	667	817	504	671
Income taxes	161	394	72	326
Interest	113	65	61	33
Depreciation and amortization	1,042	851	517	427
EBITDA	1,983	2,127	1,154	1,457
Less: Cash lease payments	463	481	225	228
EBITDAaL	1,520	1,646	929	1,229

 

Sales for the second quarter of 2021 were $8.7 million -- a $1.5 million or 20.5% increase compared to the same three-month period in 2020.

Sales in the Metals segment increased $1.4 million to $6.4 million in Q2 2021, compared to $5.0 million in Q2 2020 on strong sales of Hydel metering products and custom metal sales. Telecom segment sales remained consistent at $2.3 million in Q2 2021 compared to the same quarter in 2020. Guardian line sales were lower due to customer delays of some large projects and sales of surge protection products saw a modest decrease in Q2 2021 when compared to Q2 2020. Sales in the cable and connectivity line increased in the quarter from increased activity in the Canadian and local economies and new customer acquisition. The addition of Westronic product sales also helped offset some of the declines in the other Telecom product lines.

The Company posted after tax profit of $504,000 in the second quarter of 2021 compared to $671,000 in the same quarter of 2020. This decline in earnings is a result of lower income from government assistance related to the Canada Emergency Wage Subsidy, which was present in Q2 2020. This decline was slightly offset by the higher sales in the Metals segment, favourable product mix and strong margins.

Circa reported increased selling, general and administrative expenses in Q2 2021 compared to Q2 2020 due to the legal and transaction costs incurred on the Westronic acquisition and higher sales commissions in the Metals segment.

Cory Tamagi, Circa's President and Chief Executive Officer, stated:

"Circa's second quarter of 2021 was a continuation of the past year's trend, with strong sales and earnings in the Metals and lower sales in the Telecom segment due to COVID-19 restrictions and project delays.

The Metals segment sales have continued to outperform expectations with strong demand for metering equipment in several provinces. Telecom sales have underperformed as project delays have continued to hamper the Guardian line; however several of these projects are expected to be manufactured and shipped in the second half of the year, pending customer design and regulatory approvals. Our team is continually managing operations, including a current environment of supply chain disruptions and delays, to ensure timely delivery and fulfilment of customer orders.

We also completed the acquisition of Westronic Inc. in the second quarter by means of an amalgamation and have assumed control of its operations. Circa will be integrating the Westronic business into the Telecom segment in Calgary over the next year, culminating with the expiration of the lease of the facility in late 2022."

CIRCA ENTERPRISES INC.

Condensed Consolidate Interim Statements of Income and Comprehensive Income

Unaudited
$000's	Six months ended 30 Jun 2021	Six months ended 30 Jun 2020		Three months ended 30 Jun 2021			Three months ended 30 Jun 2020
Sales	16,863	14,351		8,717			7,236
Freight	401	359		215			192
Net sales	16,462	13,992		8,502			7,044
Cost of sales	11,120	9,592		5,606			4,824
Gross profit	5,342	4,400		2,896			2,220
Selling, general and administrative expenses	4,446	3,742		2,304			1,808
Operating profit	896	658		592			412
Other income	45	618		45			618
Interest expense	113	65		61			33
Profit before tax	828	1,211		576			997
Income tax expense	161	394		72			326
Net income and comprehensive income	667	817		504			671
Earnings per share (in $'s)
Basic	0.07	0.08		0.05			0.07
Diluted	0.06	0.08		0.05			0.07

 

Circa Enterprises Inc. is a public company with operations in Alberta and Ontario. The outstanding common shares of Circa Enterprises Inc. are listed and trade on the TSX Venture Exchange under the trading symbol CTO. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The Company's quarterly financial statements and related management's discussion and analysis have been filed with certain securities regulatory authorities in Canada and may be accessed electronically through the SEDAR website at www.sedar.com.

Contact: 

Mr. Cory Tamagi 
President and CEO
Circa Enterprises Inc. 
(403) 258-2011

Mrs. Angela Hulshof
VP Finance and CFO
Circa Enterprises Inc.
(403) 258-2011

E-Mail: investor@circaent.com
E-Mail: depp@circaent.com
Website: www.circaent.com

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