MARKHAM – Cable and telecom equipment and services supplier Cygnal Technologies warned this morning that first quarter revenue will come in lower than last year but thanks to cost-cutting EBITDA is improved.
Cygnal said today it expects consolidated revenues for the three months ended March 31, 2007 to be in the range of $26.5 to $27 million, compared to $30.5 million in the first quarter of fiscal 2006. On a segmented basis the revenue split is expected to be approximately 52% for Network Operations (Cygnal Network Solutions) and 48% for Communications Services (White Radio).
These preliminary results represent the company’s estimates based on currently available information and have not been audited.
Gross margin in the first quarter is expected to be consistent with the 21.9% margin achieved in the first quarter of 2006, despite the smaller revenue base, said the company’s release.
Network Operations margins are expected to improve as a result of improved internal processes, offsetting a decrease in Communications Services.
The company expects to record an EBITDA loss of approximately $900,000 to $1.1 million in the first quarter, which compares to a loss of $2 million in the same period last year. "The primary driver of the expected EBITDA improvement is a 20% decrease in selling, general and administrative expense, achieved through an ongoing program of cost reductions and process improvements," reads the release.
"I am pleased to see us making solid progress on the EBITDA line, demonstrating that our efforts to streamline our operations have been successful," said Jos Wintermans, president and CEO, in the statement. "Our focus going forward is on growing revenues by targeting profitable business that takes full advantage of our competitive strengths."
