MARKHAM – Telecom and cable equipment and services company Cygnal Technologies said last week that the performance of its White Radio division powered its financial results.
"Our results in the third quarter were once again driven by our communications services division, White Radio, which is taking advantage of strong demand for wireless, telecom and VoIP technology," said Jos Wintermans, president and CEO, in a press release. "On the network operations side, I am encouraged by the progress we are making in reducing costs and improving the efficiency of our service delivery. These improvements led to Cygnal’s first EBITDA-positive quarter since fiscal 2003. Our focus in network operations will increasingly shift towards revenue generation, and I believe the changes we made this year in our sales organization position us well to capitalize on significant market opportunities."
Cygnal’s revenues for the three months ended September 30, 2006 were $31.6 million, a decrease of 5.7% compared to Q3 ’05. The communications services division (White Radio) revenue grew by $2.8 million in the quarter to $15.6 million, due to improvements in all categories of the business prompted by new product lines. The revenue split between network operations and communications services was 51%/49%, respectively, compared to 62%/38% a year earlier.
Revenue in the network operations segment decreased by $4.7 million in the quarter to $16 million. "(C)ertain large projects which contributed significantly to 2005 and earlier revenue streams, such as the Niagara Regional Broadband Network, have either been completed or were much smaller in scope during the three months ended September 30, 2006," explains the press release.
"In addition, while the company saw a solid increase in the start of new project work in the quarter, decreases in MAC (move, addition, change) assignments dampened revenue growth further. Finally, the comparable quarter in 2005 benefited from certain special or one-time revenue sources, such as significant cabling revenue during last year’s Bell Canada strike, that did not re-occur in the current period. The company is introducing new technologies, process improvements and marketing initiatives as part of an overhaul of the MAC department."
Gross profit was $7.3 million in the third quarter, a decrease of $900,000 from the comparable period in 2005. Cygnal’s SG&A expenses prior to severance costs decreased by $1.7 million to $7 million, representing 22% of revenues, compared to $8.7 million or 26% of revenues in Q3 2005. The decrease was driven by headcount reductions and overall expense reductions in network operations.
EBITDA was $200,000 in the third quarter of 2006, representing ac$900,000 improvement from an EBITDA loss of $700,000 a year earlier. The improvement was largely attributable to the cost-cutting.
Net loss for the quarter was $1.7 million, compared to a loss of $1.1 million during Q3 ’05. On a pre-tax basis, loss before taxes was $1.8 million in Q3 2006, compared to $1.5 million a year earlier.
