- Advantex reports Net Profit for second consecutive quarter.
- 2009 second quarter:
- Net Profit, improves $350,000 vs. 2008 second quarter
- Profit before non-cash items, improves $406,000 vs. 2008 second
quarter.
- Success of Advance Purchase Marketing ("APM") program driving revenue
gain. 2009 second quarter APM revenues up 31.5% vs. 2008 second
quarter.
ADX: TSX
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TORONTO, Jan. 27 /CNW/ - Advantex Marketing International Inc. (TSX:ADX),
a leading specialist in loyalty marketing programs and merchant funding, today
announced its results for the fiscal second quarter ended December 31, 2008.
All references to quarters or years are for the fiscal periods and all
currency amounts are in Canadian dollars unless otherwise noted.
"The second consecutive quarter of net profit and positive cash flow from
operations generated by Advantex in 2009 are significant milestones given the
current market conditions," Mr. Ambrose said.
"These improved financial results are attributable to the initiatives
that we have implemented during the past 30 plus months, including the growth
of our APM program, improved operational efficiencies, and cost reductions,
"Mr. Ambrose said.
"We are in a period of unprecedented decline and negative sentiment in
stock markets. The management is of the opinion that Advantex's share price
does not reflect the improved financial performance," he said.
The highlights of the financial performance are illustrated in the
following table:
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INC/ INC/
Q2 F09 Q2 F08 (DEC) YTD F09 YTD F08 (DEC)
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Revenues $ 3.34 m $ 3.24 m 3.3 % $ 6.45 m $ 6.08 m 6.1 %
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Gross
Profit $ 2.21 m $ 1.80 m 23.0% $ 4.34 m $ 3.49 m 24.3 %
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Contribution
from
Operations $523,351 $ 27,641 $495,710 $1,103,141 $ (17,360) $1,120,501
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Net Profit/
(Loss) $ 20,264 $(329,692) $349,956 $ 75,341 $(695,979) $ 771,320
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The increase in revenue is illustrated by the following table:
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INC/ INC/
Q2 F09 Q2 F08 (DEC) YTD F09 YTD F08 (DEC)
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CIBC Advantex
Programs
- APM(1) $ 1.46 m $ 1.11 m $ 0.35 m $ 3.22 m $ 2.36 m $ 0.86 m
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- Marketing
Only, including
Infinite Hotel
program(2) $ 0.92 m $ 0.80 m $ 0.12 m $ 1.68 m $ 1.66 m $ 0.02 m
-------- -------- -------- -------- -------- --------
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$ 2.38 m $ 1.91 m $ 0.47 m $ 4.90 m $ 4.02 m $ 0.88 m
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Online Shopping
Malls(3) $ 0.96 m $ 1.30 m $(0.34)m $ 1.53 m $ 2.02 m $(0.49)m
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1. The increase in APM revenues reflects higher transaction credits
deployed with merchants. Average transactions credits deployed for the
three and six months ended December 31, 2008 were 41.3% and 42.0% higher
compared with corresponding periods in the previous year, while current
year APM revenues increased 31.5% and 36.4% respectively over
corresponding period in the previous year. APM program accounted for
43.7% of Company's revenues for the three months ended December 31, 2008
compared with 34.3% of revenues for the corresponding period in the
previous year.
2. The Company launched the Infinite Hotel program, a marketing program
introduced in partnership with CIBC, on September 1, 2008. Advantex earns
a fee for marketing services provided to participating hotels. The
revenues from this program offset the impact of decline in consumer spend
at merchants participating in the Marketing Only program during the three
and six months ended December 31, 2008 compared to corresponding period
in the previous year.
3. Decrease reflects decline in consumer spend, and loss of Delta as a
partner from August, 2008. In USD terms (base currency in which the
Company earns its online revenues) the decrease in current year Q2 and
YTD revenues compared with corresponding period in the previous year was
32.9% and 27.6% respectively but due to the favourable movement in
exchange rates the decrease is partially mitigated in the reporting
currency.
While revenue grew 3.3% in the 2009 second quarter, direct expenses
(which include cardholders awards costs, marketing, and advertising on behalf
of merchants, and other costs) declined 21.4% to $1.1 million, compared with
$1.4 million a year earlier. As the result, the company's gross margin
increased to 66.2% from 55.6% a year earlier, and gross profit rose 23.0 %.
Sales, general, and administrative (SG&A) expenses also were down in the
2009 second quarter by 4.6% percent to $1.7 million from $1.8 million in the
2008 period mainly as the result of achieving better operating efficiencies
and the effectiveness of the company's cost-reduction efforts.
These improvements resulted in profit before non cash items of $0.3
million in 2009 second quarter compared with a loss of $0.1 million in 2008
quarter. The company recorded a net profit for the 2009 second quarter of
$20,264 ($0.00 per share), compared with a net loss of $329,692 ($0.00 per
share) in the 2008 quarter.
Company's Outlook is Cautiously Optimistic
"We are hopeful that we can maintain our momentum and the positive trends
in our business despite the considerable uncertainty and turbulence affecting
the Canadian and international economies," Mr. Ambrose said.
"The Company's results will be subjected to seasonality that is
reflective of seasonal consumer spend behaviour in the CIBC Advantex programs,
and Online business. The third quarter is historically the weakest in terms of
consumer spend at merchants participating in Advantex's programs. In addition,
the deteriorating economic conditions will adversely impact consumer spend
behaviour at our merchants. As revenue is recognized at the time that
purchases are made by consumers through the Advantex programs, the weakness in
consumer spend will be reflected in Advantex revenues. However, the current
economic conditions also provide a favourable environment for the Company to
expand its APM program to credit-worthy merchants. APM, which represented
43.7% of the Company's revenues for the three months ended December 31, 2008
was up from 34.3% for the corresponding period in the previous year, is the
growth business for the Company. To meet untapped demand for this product
requires the Company to have access to additional funds, and the difficult
market conditions could hinder that access," he said.
About Advantex Marketing International Inc.
Advantex is a specialist in the marketing services industry, managing
white-labeled rewards accelerator programs for major affinity groups through
which their members earn bonus frequent flyer miles and/or other rewards on
purchases at participating merchants. Under the umbrella of each program,
Advantex provides merchants with marketing, customer incentives, and secured
future sales through its Advance Purchase Marketing model. Advantex partners
include more than 700 restaurants, online retailers, golf courses, small inns
and resorts, and major organizations, including CIBC, United Airlines, Alaska
Airlines, and Lufthansa Airlines. Advantex is traded on the Toronto Stock
Exchange under the symbol "ADX". For additional information on Advantex,
please visit www.advantex.com.
Forward-Looking Information
This Press Release contains certain "forward-looking information". All
information, other than information comprised of historical fact, addresses
activities, events or developments that the Company believes, expects or
anticipates will or may occur in the future. Such forward looking information
includes, without limitation, information regarding the Company's belief that
Transaction Credits are likely indicators of future revenue; the Company's
expectation that its annualized SG&A cost saving measures, implemented mid
March, 2008, will be realized during Fiscal 2009; management's expectations
with respect to reaching agreement with CIBC to expanding the APM program
including into retail fashion establishments in Fiscal 2009, and its ability
to continue to access financing under its existing line of credit facility
with respect to expanding APM program in both the current categories (dining,
golf, small inns and spa) allowed under the current CIBC agreement, and in the
retail fashion category; the Company's anticipated increase in the number of
Merchant Partners with which it will do business; the Company's anticipated
revenues from the 'Infinite Hotel' program, the Company's continued investment
in information technology systems required to keep pace with partner and
marketplace standards; the number of retailers the Company expects to target
for its programs, including the regional markets in which the Company intends
to focus on; the impact on the Company's revenues that increased merchant
participation would have; the Company's intentions with respect to retaining
future earnings in the foreseeable future; and other information regarding
financial and business prospects and financial outlook is forward-looking
information. Forward-looking information reflects the current expectations or
beliefs of the Company based on information currently available to the
Company. Forward-looking information is subject to a number of risks,
uncertainties and assumptions that may cause the actual results of the Company
to differ materially from those discussed in the forward-looking information,
and even if such actual results are realized or substantially realized, there
can be no assurance that they will have the expected consequences to, or
effects on the Company. Factors that could cause actual results or events to
differ materially from current expectations include, among other things,
changes in general economic and market conditions, changes to regulations
affecting the Company's activities, uncertainties relating to the availability
and costs of financing needed in the future, delays in finalizing the retail
contract, continuation of listing on the TSX, and other factors, including
without limitation, those listed under "Risks and Uncertainties" and "Economic
Dependence" in the Company's interim and year end filings. All forward-looking
information speaks only as of the date on which it is made and, except as may
be required by applicable securities laws, the Company disclaims any intent or
obligation to update any forward-looking information, whether as a result of
new information, future events or results or otherwise. Although the Company
believes that the assumptions inherent in the forward-looking information are
reasonable, forward-looking information is not a guarantee of future
performance and accordingly undue reliance should not be put on such
information due to the inherent uncertainty therein.
ADVANTEX MARKETING INTERNATIONAL INC.
CONSOLIDATED FINANCIAL STATEMENTS
For the three month and six month period
Ended December 31, 2008
The accompanying consolidated financial statements have been prepared by
management and approved by the Board of Directors of the Company.
