DEQ Reports Revenue of $2.5 Million for the 2016 Third Quarter of 2016
LAS VEGAS, NV and LÉVIS, QC, Oct. 31, 2016 /PRNewswire/ - DEQ Systems Corp. (TSXV: DEQ) ("DEQ" or the "Company") announced today the filing of its third quarter financial results for the period ended August 31, 2016. The consolidated financial statements are available on SEDAR (www.sedar.com) and DEQ's website and should be read in conjunction with this press release.
2016 THIRD QUARTER RESULTS AND HIGHLIGHTS:
Financial Metrics
REVENUE HIGHLIGHTS:
- Overall revenue growth of 9% from $2,307,000 in the third quarter of 2015, as compared to $2,514,000 in the third quarter of 2016.
- Revenues grew 7% on a sequential quarter basis from $2,354,000 in the second quarter of 2016 to $2,514,000 in the third quarter of 2016.
- 30% increase in Proprietary Table Games from $700,000 in the third quarter of 2015 to $908,000 in the third quarter of 2016.
- Equipment sales grew 8% from $90,000 in the third quarter of 2015 to $97,000 in the third quarter of 2016.
- Gross Profits increased 6% in gross profit on a year over year basis from $2,054,000 in the third quarter of 2015 to $2,184,000 in the third quarter of 2016.
OPERATING HIGHLIGHTS:
- Operating and administrative expenses increased to $2,355,000 for the third quarter of 2016, as compared to $2,067,000 in the third quarter of 2015.
- The increase in year‐over‐year comparative third quarter operating expenses are a result of a reduction in amortization totaling $321,000 offset by
- $138,000 in incremental salary for sales staff
- $134,000 in legal fees, professional fees and shareholder communication related to the strategic alternative process
- $82,000 in sales and personal property taxes
- $70,000 in sales related travel costs
- $66,000 in outsourced fees
EBITDA:
- DEQ recorded an EBITDA loss of $317,000 in Q3‐2016 compared to EBITDA of $225,000 in the third quarter of 2015. The change in EBITDA was a result of the following:
- $138,000 in incremental salaries for sales staff;
- $134,000 (composed of legal fees of $96,000, professional fees of $23,000 and
- $15,000 in shareholder communications);
- $82,000 in personal property taxes;
- $70,000 in incremental sales related travel costs;
- $66,000 in outsourced development fees associated with new product;
- $30,000 in additional insurance costs associated general business growth requirements; and
- $22,000 associated with new products licensing.
LIQUIDITY AND CASH FLOW
- During the third quarter of 2016, DEQ's reported cash position decreased by $243,000, from $1,704,000 in the second quarter of 2016 to $1,461,000 in the third quarter of 2016. This decrease is primarily attributed to payroll and travel costs related to the additional sales team and payment of personal property taxes.
KEY PERFORMANCE INDICATOR
- Installed unit base grew to 2,386 with a net installation total of 64 units in the third quarter of 2016, up 3% from 2,322 units in the third quarter of the prior year.
"DEQ continues to execute our strategy of leveraging our service team, premium content and products features to our existing and new customers. As our new and existing content and PRSM progressive system growth continues throughout the increased base of regulated jurisdictions, our investments in sales, licensing and distribution continue to pay off with steady year‐ over‐year and sequential quarter revenue growth. Our dedicated team continues to focus on product placement and marketplace penetration." stated Joe Bertolone, President and Chief Executive Officer of DEQ.
| EBITDA* |
||||
| THIRD QUARTER |
NINE‐MONTH Period |
|||
| August 31, 2016 (unaudited) |
August 31, 2015 (unaudited) |
August 31, 2016 (unaudited) |
August 31, 2015 (unaudited) |
|
| Net Income (Loss) |
(526,000) |
(424,000) |
(1,461,000) |
(1,142,000) |
| Add/(Subtract): |
||||
| Interest Expense |
5,000 |
0 |
12,000 |
4,000 |
| Foreign Exchange Loss (Gain) |
1,000 |
125,000 |
122,000 |
(29,000) |
| Depreciation & Amortization |
204,000 |
497,000 |
535,000 |
1,785,000 |
| Stock‐Based Compensation |
(0) |
27,000 |
14,000 |
79,000 |
| EBITDA* |
(316,000) |
225,000 |
(778,000) |
697,000 |
| *Note: |
DEQ uses an adjusted calculation of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization and stock based compensation and foreign exchange impact), a non‐IFRS measure, to evaluate the Company's operating performance. Securities regulators require that issuers caution readers that measures adjusted to a basis other than IFRS do not have standardized meaning under IFRS and are unlikely to be comparable to similar measures used by other companies. |
| Statement of Earnings |
|||||
| THIRD QUARTER |
NINE-MONTH Period |
||||
| August 31, |
August 31, |
August 31, |
August 31, |
||
| 2016 |
2015 |
2016 |
2015 |
||
| (unaudited) |
(unaudited) |
(unaudited) |
(unaudited) |
||
| Table Systems |
1,510,000 |
1,517,000 |
4,556,000 |
4,362,000 |
|
| Proprietary Table Games |
908,000 |
700,000 |
2,571,000 |
1,948,000 |
|
| Total recurring revenue |
2,418,000 |
2,217,000 |
7,127,000 |
6,310,000 |
|
| Non recurring revenue |
97,000 |
90,000 |
221,000 |
423,000 |
|
| Total Revenue |
2,515,000 |
2,307,000 |
7,348,000 |
6,733,000 |
|
| Gross Profit |
2,184,000 |
2,054,000 |
6,388,000 |
5,680,000 |
|
| % Gross margin |
87% |
89% |
87% |
84% |
|
| Operating & Administrative expenses |
2,355,000 |
2,067,000 |
6,726,000 |
5,964,000 |
|
| Research & Development expenses |
349,000 |
287,000 |
990,000 |
884,000 |
|
| Operating Income (Loss) |
(520,000) |
(300,000) |
(1,328,000) |
(1,168,000) |
|
| FX & other expenses (revenue) |
5,000 |
126,000 |
134,000 |
(25,000) |
|
| Net Income (Loss) |
(525,000) |
(424,000) |
(1,462,000) |
(1,143,000) |
|
| Net Income (Loss) per share |
$(0.007) |
$(0.006) |
$(0.020) |
$(0.018) |
|
| Financial Position |
||||
| August 31, |
August 31, |
November 30, |
||
| 2016 |
2015 |
2015 |
||
| (unaudited) |
(audited) |
(unaudited) |
||
| Cash and cash equivalents |
1,461,000 |
2,733,000 |
2,550,000 |
|
| Current assets (other than cash) |
2,242,000 |
1,839,000 |
1,716,000 |
|
| Long‐term assets |
3,573,000 |
3,703,000 |
3,302,000 |
|
| Total Assets |
$7,276,000 |
$8,275,000 |
$7,568,000 |
|
|
Current liabilities |
2,689,000 |
1,544,000 |
2,001,000 |
|
| Shareholders' equity |
4,587,000 |
6,731,000 |
5,567,000 |
|
| Total Liabilities and Equity |
$7,276,000 |
$8,275,000 |
$7,568,000 |
|
| Number of shares outstanding |
71,682,000 |
71,682,000 |
71,682,000 |
|
ABOUT DEQ
DEQ Systems Corp. (TSXV: DEQ) is one of the market leaders in Table Game Systems, Proprietary Table Games, and Utility solutions. DEQ's systems and games are installed in over 300 casinos, in 30 countries around the world. The combination of our services, industry leading products and revenue generation capabilities make DEQ a leader for innovation in the table game bonusing segment of the global gaming market. For further information, please visit www.deq.com.
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 August 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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