DEQ Reports First Quarter 2012 Financial Results
Apr 26, 2012, 05:17 ET
LEVIS, QC, April 26, 2012 /PRNewswire/ - DEQ Systems Corp. (TSXV: DEQ) ("DEQ" or the "Company") announces the filing of its first quarter financial results for the period ended February 29, 2012. The Consolidated Financial Statements are available on SEDAR (www.sedar.com) and DEQ's website. A conference call will be held on Friday, April 27, 2012 at 11am EST to present and discuss these results. Those interested in participating in the call should dial toll free 1 (800) 736-4594 or (416) 981-9000. A presentation will be available on DEQ's website in the Investors/Financial Reports/Presentation section to support the call content.
2012 FIRST QUARTER RESULTS HIGHLIGHTS:
Financial Metrics
- Revenue
- 90% increase in direct leasing revenue from $480,000 in Q1-2011 to $914,000 in Q1-2012.
- 55% increase in total recurring revenue from $792,000 in Q1-2011 to $1,227,000 in Q1-2012.
- 27% increase in gross profit from $836,000 in Q1-2011 to $1,060,000 in Q1-2012.
- Gross profit margin increased from 81% in Q1-2011 to 85% in Q1-2012.
- Operating Costs
- 10% increase in operating costs excluding amortization and stock option expenses from $1,146,000 in 2011 to $1,259,000 in 2012, explained by the installations in Asia, as well as commercialization efforts in Asia and Australia. We foresee the costs as remaining stable in the second quarter of 2012.
- EBITDA
- EBITDA improved by $111,000 from a loss of $310,000 to a loss of $199,000 in the prior year period explained by our growth in our direct leasing.
- Excluding the Severn revenue recognized in 2011, we have improved our EBITDA by $330,000.
- Based on our current installations which we recently announced and our backlog of orders, we are expecting to be near EBITDA break-even next quarter (Q2-2012).
- Cash Flow
- During the first quarter of 2012, the cash position decreased by $397,000, compared to a decrease of $767,000 for the same period in 2011. This decrease in cash position is mostly explained by the investment of $432,000 in new installations and inventory to meet our projected installation pipeline.
Operational Highlights
- As of February 29, 2012, DEQ had 1,409 units worldwide currently in operation generating an average recurring net lease of $3,400 per unit compared to 1,100 units as of February 28, 2011, an increase of 309 units.
- First installation completed in Australia at Crown Casino for 20 units as well as the increase in all our key markets such as Macau, Nevada and California.
- Real Link installation in Macau linking 4 properties of Las Vegas Sands and in Nevada linking 2 properties of Cannery Group.
- Financial Statements migrated to the International Financial Reporting Standards ("IFRS").
"The trends presented in this quarter's financial statements are clear: our install base and recurring revenue is growing by leaps and bounds while our cost base is remaining strictly controlled" stated Earle G. Hall, President & CEO of DEQ. "We have built an extensive inventory to meet our short term needs to support the growth of the company and we now can clearly calculate the number of units required for profitability. Q1 saw the successful launch and broad range acceptance of Real Link while our R&D team did an amazing job completing our second new product that we plan to launch no later than Q3 of this year. Finally, our financial statements have been migrated to the new IFRS accounting principles and we are working hard to clearly communicate our success in Q1 and the tremendous potential before us."
| Statement of Earnings | ||||
| (unaudited) | First Quarter | |||
| Feb.28, 2011 | Feb.29, 2012 | |||
| (3 months) | (3 months) | |||
| Direct leasing | 480,000 | 914,000 | ||
| Royalties (excluding Severn Enterprises) (1) | 312,000 | 313,000 | ||
| Total recurring revenue | 792,000 | 1,227,000 | ||
| Royalties (Severn Enterprises) (1) | 218,000 | - | ||
| Non recurring revenue | 24,000 | 14,000 | ||
| Total Revenue | 1,034,000 | 1,241,000 | ||
| Gross Profit | 836,000 | 1,060,000 | ||
| % Gross margin | 81 % | 85 % | ||
| Operating Costs | 1,146,000 | 1,259,000 | ||
| EBITDA (2) | (310,000) | (199,000) | ||
| Stock based compensation | 26,000 | 24,000 | ||
| Amortization expenses | 626,000 | 689,000 | ||
| Interest (revenue) expenses | 13,000 | 1,000 | ||
| Foreign exchange (gain) loss | 84,000 | 27,000 | ||
| Future income taxes | (21,000) | - | ||
| Other items | (170,000) | - | ||
| Net Income (Loss) | (868,000) | (940,000) | ||
| Net Income (Loss ) per share | $(0.013) | $(0.014) | ||
| Note 1: | On March 3, 2011, the Company entered into a settlement agreement with DEK International on the Severn Project and the royalty from Severn Enterprises was terminated as of February 28, 2011. |
| Note 2: | We use EBITDA (Earnings before Stock option based compensation, Interest, Taxes, Depreciation, Amortization and Foreign exchange) as performance measurements in our financial disclosure. This measure is not recognized under IFRS. The reconciliations above demonstrate how we calculate such measurements from our financial statements. |
| Balance Sheet | ||||||
| December 1, 2010 | November 30, 2011 | February 29, 2012 | ||||
| (unaudited) | (unaudited) | (unaudited) | ||||
| Cash and cash equivalents | 3,933,000 | 1,843,000 | 1,445,000 | |||
| Current assets (other than cash) | 2,001,000 | 2,001,000 | 2,077,000 | |||
| Long-term assets | 12,679,000 | 10,961,000 | 10,490,000 | |||
| Total Assets | 18,613,000 | 14,805,000 | 14,012,000 | |||
| Current liabilities | 1,852,000 | 1,243,000 | 1,365,000 | |||
| Shareholders' equity | 16,761,000 | 13,562,000 | 12,647,000 | |||
| Total Liabilities and Equity | 18,613,000 | 14,805,000 | 14,012,000 | |||
| Number of shares outstanding | 69,182,000 | 69,182,000 | 69,182,000 | |||
ABOUT DEQ
DEQ Systems Corp. (TSXV: DEQ) is a customer centric company that delivers best of breed table game technology related products to the global gaming industry that add value and increase client revenue. DEQ provides table game bonusing technology, table games, table game results tracking and jackpot connectivity solutions to more than 275 casinos in 30 countries. DEQ is an intellectual property focused company that has an extensive patent portfolio of more than 20 patents recognized in 50 countries.
TSX Venture does not accept any responsibility regarding the accuracy of the information contained in this press release.
Forward-looking statements contained in this Press Release involve known and unknown risks, uncertainties and other factors that may cause actual results, performance and achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the said forward-looking statements.
SOURCE DEQ SYSTEMS CORP.
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