Calgary, Alberta--(Newsfile Corp. - March 11, 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 fourth quarter and year ended December 31, 2020.

Summary of fourth quarter operating results:

  • Q4 2020 sales of $7.8 million, an increase of $0.9 million or 12.1% from Q4 2019 sales of $6.9 million

  • Profit for the period from continuing operations for Q4 2020 of $302,000, or $0.03 per share compared to profit from continuing operations of $539,000, or $0.05 per share for Q4 2019

  • Q4 2020 EBITDA of $0.9 million, a decrease of $0.3 million compared to Q4 2019 EBITDA of $1.2 million (see below for explanation and calculation of EBITDA)

  • Q4 2020 EBITDAaL of $0.7 million, a decrease of $0.2 million compared to EBITDAaL of $0.9 million for Q4 2019 (see below for explanation and calculation of EBITDAaL)

Summary of fiscal year operating results:

  • Consolidated sales of $30.4 million for fiscal year ended December 31, 2020, compared to sales of $30.4 million for the fiscal year ended December 31, 2019

  • Profit for the period from operations for the fiscal year ended December 31, 2020 of $1.7 million, being $0.17 per share compared to profit for the period from operations of $1.1 million, or $0.12 per share for the same period in 2019

  • EBITDA of $4.1 million in 2020 compared to EBITDA of $3.5 million for 2019 fiscal year

  • EBITDAaL of $3.2 million for 2020 compared to EBITDAaL of $2.6 million for the 2019 fiscal year

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:


Year ended
31 Dec 2020		Year ended
31 Dec 2019		Three months
31 Dec 2020
Three months
31 Dec 2019
Unaudited$000's$000's$000's
$000's
Profit for the period from operations1,6731,201302
539
Income taxes625521158
168
Interest12017531
36
Depreciation and amortization1,7101,647442
423
EBITDA4,1283,544933
1,166
Cash lease payments(962)(967)(238)
(253)
EBITDAaL3,1662,577695
913

 

Sales for the fourth quarter of 2020 were $7.8 million -- a $0.9 million or 12.1% increase compared to the fourth quarter in 2019. The increase was due to higher sales in the Metals segment, which were partially offset by reduced Telecom segment sales in all product lines.

Circa Metals' segment sales increased $0.9 million in Q4 2020 compared to the same quarter in 2019 due to strong sales of Hydel metering products and custom metal sales. Sales in the Telecom segment remained consistent in Q4 2020 as compared to Q4 2019. Guardian product line sales were lower mostly due to a lack of larger overseas project sales. Sales in the cable and connectivity line stayed steady in the quarter despite the continued weakness in the local economy. The surge protection product line saw a modest increase in Q4 2020 when compared to the same quarter in 2019.

The Company posted after tax profit of $310,000 in the fourth quarter of 2020 compared to $539,000 in the fourth quarter of 2019. This decrease in profit is attributed to an $815,000 pre-tax gain that was recorded in Q4 2019 related to the wind-up of the Company's U.S. subsidiary. For the full fiscal year, the Company recorded a 40.0% increase in profit to $1.7 million compared to $1.2 million in 2019. This earnings improvement was driven largely by sales growth and margin improvement in the Metals segment.

The Company incurred higher selling, general and administrative expenses in 2020 as compared to 2019. This increase was due to transaction costs of the Teletics acquisition, higher sales commissions in the Metals segment, higher administration costs and increased spending on engineering resources related to new product development. These increases were partially offset by a reduction in discretionary spending due the economic uncertainty and restrictions surrounding the COVID-19 pandemic.

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

"Circa is pleased to report another solid quarter and full year ended December 31, 2020. Despite the uncertainty and challenges of the global pandemic, the Company posted significantly improved margins on overall sales that were consistent with the previous year."

"This improvement in profitability was led by strong performance in the Metals segment as sales increased in several regions on the high demand and increased market share of metering products. Operating margins improved over fiscal 2019 due to economies of scale, a favourable product mix and improved labour productivity."

"The Telecom segment sales declined in 2020 as the global pandemic and weak economy slowed sales activity. Orders were down across all Telecom product lines and, as a result, the Company generated lower profits compared to the prior year. The market for Guardian products slowed considerably as the pandemic had a significant negative impact on international trade and large project sales."

"The Company will be challenged to repeat the strong performance achieved in 2020. Steel prices have dramatically increased in recent months which will negatively reduce the Metals segment margins. The Company has implemented temporary price increases to help mitigate the impact. In addition, the lease for the Metal's facility in Vaughan will renew in the second quarter at significantly higher rates due to a tight leasing market. Management is optimistic that widespread availability of the COVID-19 vaccination will result in the recovery of economies and international trade, which should have a positive effect on the Telecom segment."

CIRCA ENTERPRISES INC.

Statements of Comprehensive Income

For the years ended December 312020
2019

$000's
$000's





Sales30,395
30,427
Freight730
738
Net sales29,665
29,689
Cost of sales 20,253
21,333
Gross profit9,412
8,356
Selling, general and administrative expenses7,568
7,269
Operating profit 1,844
1,087
Other income (loss)574
(5)
Gain on wind-up of foreign subsidiary-
815
Interest expense(120)
(175)
Profit before tax2,298
1,722
Income tax expense625
521
Profit for the year from operations attributable to shareholders of the Company1,673
1,201
Other comprehensive income (loss)



Exchange differences on translating foreign operations, net of tax-
(111)
Total comprehensive income for the year attributable to shareholders of the Company1,673
1,090





Earnings per share (in $'s)



Basic0.17
0.12
Diluted0.16
0.12

 

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
Website: www.circaent.com

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