MARKHAM, Ont. – Cable and telecom equipment, and network solutions supplier Cygnal Technologies Corporation today announced that revenues and EBITDA dipped in the first quarter of 2005.
Revenues were $29.1 million in the first quarter of 2005, ended March 31st, compared to $35.7 million in the first quarter of 2004, a drop of 18.5%. Gross margin was 20.1%, up from 17.6% in the same quarter last year.
Selling, general and administrative expenses were $9 million, up from $8.3 million last year. EBITDA was a loss of $3.1 million, compared to a loss of $2 million in Q1 of 2004
Net loss in the first quarter was $2.6 million, or $0.10 per share, versus a loss of $1.7 million or $0.08 per share in the same quarter in 2004
“In our first quarter, which is typically our weakest and the most difficult to predict, we were pleased to have grown our Network Operations business by 7% year-over-year," said Gerald Hurlow, chairman and CEO of Cygnal (whose group of companies includes White Radio). "Our Communications Services revenues fell by 40%, however, as the company reduced the sales of equipment at discounted prices that we have traditionally been offered by suppliers just before quarter-end. Based on seasonal factors, project bookings and other indicators we expect revenue in both our operating segments to improve significantly over the remainder of 2005," he added.
Network Operations revenue grew by $1.2 million to $17.6 million, while Communications Services revenue (which includes White Radio) was $11.5 million, down $7.8 million from last year. The decline in Communications Services was primarily a result of decreased volume in sales of low margin discounted products.
Network Operations revenue represented 60.5% of Cygnal’s total revenues in the quarter, compared to 45.9% in the first quarter of 2004. Communications Services revenues represented 39.5% of the total, compared to 54.1% a year earlier.
Cygnal expects its financial performance to improve significantly for the remainder of 2005, says today’s press release. The Company is adjusting its guidance for 2005 revenues to a range of $142 to $148 million from in excess of $150 million, as it is planning for a decline in the sales of discounted products in the Communications Services business. Full year revenue expectations for the Network Operations business are unchanged. This estimate includes an expectation of Network Operations revenues surpassing $20 million in the second quarter of 2005.
The Company expects net income for the final nine months of 2005 to be positive. Whether net income for the full year is positive is expected to be determined by the strength of gross margins in the Network Operations segment and the rate of revenue growth in the non-discounted segment of the Communications Services business.
SG&A expenses are expected to decline throughout the remainder of 2005, though management’s goal of reducing quarterly SG&A costs to below $8 million may not be reached until early 2006.
For more, go to www.cygnal.ca.
