Welcome!

News Feed Item

Coast Wholesale Appliances Inc. Reports 2014 Second Quarter Results

Strong builder sales drives record quarterly revenue, twelfth consecutive quarter of year-over-year sales growth

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/11/14 -- Coast Wholesale Appliances Inc. (TSX:CWA) (Coast or the company), today reported financial results for the three and six months ended June 30, 2014. The three-month period represents the second quarter of Coast's 2014 fiscal year.


Performance Highlights                                                      
                                                                            
(in thousands of dollars except percentages and per-share amounts)          
                                                                            
                               2014    2013    2012    2014    2013    2012 
                                 Q2      Q2      Q2     YTD     YTD     YTD 
----------------------------------------------------------------------------
Sales                        43,872  41,970  37,729  80,666  76,330  67,765 
Gross profit                  9,437   9,566   8,505  17,040  16,984  15,388 
As a percentage of sales       21.5%   22.8%   22.5%   21.1%   22.3%   22.7%
                                                                            
Net Income                    1,162   1,560   1,124     941   1,919   1,120 
Basic and diluted net income                                                
 per share                     0.12    0.16    0.11    0.09    0.19    0.11 
                                                                            
EBITDA                        2,229   2,658   2,062   2,522   3,728   2,678 
EBITDA margin                   5.1%    6.3%    5.5%    3.1%    4.9%    4.0%
                                                                            
EBITDA per share              0.222   0.265   0.205   0.251   0.372   0.267 
Dividends per share           0.075   0.075   0.105   0.150   0.150   0.210 
                                                                            
EBITDA before other costs                                                   
 (1)                          2,592   2,658   2,062   3,688   3,728   2,678 
                                                                            
(1) Other costs includes one-time legal, Special Committee and financial    
 advisor expenses related to the unsolicited offer by CWAL to acquire all   
 of the issued and outstanding common shares of Coast.                      

Second Quarter Results

For the three months ended June 30, 2014, Coast posted sales of $43.9 million, its highest ever quarterly revenues. This was up by $1.9 million, or 4.5%, from $42.0 million in Q2 2013 and represented the company's 12th consecutive quarter of year-over-year revenue growth. Sales to builders increased by 6.1%, while retail sales were level with Q2 2013 and other revenues improved by 12.4%.

Sales growth was particularly strong in the Greater Toronto Area (GTA) and in Manitoba, with double-digit revenue increases in both markets. Revenues in Alberta, Saskatchewan and British Columbia were either equal to or slightly below last year's levels.

Second quarter gross profit of $9.4 million was down slightly from $9.6 million in 2013, while gross margin percentage dipped to 21.5% from 22.8% in 2013. The decreases were primarily due to ongoing pricing compression as a result of much more competitive market conditions in Coast's core builder business segment. Gross margin percentages on retail sales in Q2 were maintained at the 2013 level.

Coast's second quarter selling, general and administrative, facilities and warehousing expenses (SG&A expenses) rose by $0.3 million to $7.2 million. The increase was primarily due to the $0.4 million in professional fees for legal and financial advice, and Special Committee costs incurred during the quarter. These costs related to Coast's response to the unsolicited cash offer made March 4, 2014 by CWAL Investments Ltd. (CWAL) to purchase all of the issued and outstanding shares of Coast not currently held by CWAL. Without these extraordinary costs, SG&A expenses as a percentage of sales would have been reduced from 16.4% to 15.6%, compared to 16.5% in 2013.

Due primarily to the costs associated with the CWAL take-over bid, second quarter EBITDA decreased by $0.4 million to $2.2 million from the $2.7 million reported in 2013, while EBITDA margin decreased to 5.1% from 6.3% last year. Without the one-time costs, EBITDA would have been $2.6 million and EBITDA margin would have been 5.9%.

"We continue to be very pleased with our builder sales growth and are encouraged that we maintained both our retail revenues and margins in the current competitive consumer sales environment," said Maurice Paquette, President and CEO of Coast. "In the builder segment, we've maintained a steady flow of completed contract sales to single and multi-family homebuilders in our western Canadian and GTA markets, and a healthy backlog of contract orders for future delivery. To help offset the erosion of our builder margins, we are continuing to work to increase our share of the higher-margin retail market."

Six-month Results

Revenues for the first half of 2014 increased to $80.7 million from $76.3 million last year, a $4.3 million, or 5.7%, gain. Sales to builders improved by 6.1%, retail sales were up by 3.4% and other revenues increased by 11.3%.

As with the quarterly result, sales growth was particularly strong in the GTA and in Manitoba, with double-digit revenue gains in both markets. Sales in Alberta, Saskatchewan and British Columbia were either equal to or slightly below last year's levels.

First half gross profit of $17.0 million was level with 2013; however, gross margin percentage decreased to 21.1% from 22.3% last year. As with the quarterly result, the drop in gross margin percentage was mainly due to the extremely competitive sales environment that has persisted in Coast's builder business.

Coast's SG&A expenses for the six months ended June 30, 2014 rose by $1.3 million to $14.5 million, due in large part to the $1.2 million in one-time costs associated with the CWAL takeover bid that were incurred during the period. Without these extraordinary costs, SG&A expenses as a percentage of sales would have been reduced from 18.2% to 16.6%, compared to 17.4% in 2013.

EBITDA for the first half of the year decreased by $1.2 million to $2.5 million from $3.7 million last year and EBITDA margin dropped to 3.1% from 4.9%. As with the quarterly result, the reduction was primarily due to costs associated with the CWAL takeover bid. Without the extraordinary costs, first half EBITDA would have been equal to 2013 and EBITDA margin would have been 4.5%.

Operating Highlights

During the second quarter, as part of its ongoing strategy to enhance profitability by increasing sales from its existing stores, Coast began work on showroom updates at its Edmonton North store in Alberta and its Winnipeg, Manitoba location. Both store refreshes are expected to be completed during 2014.

As planned, the company completed major upgrades to its inventory and pricing management systems at the end of June. This IT project came in on time and on budget and has now been implemented across all of Coast's locations. Over time, these new systems will help Coast better manage its gross margins, reduce inventory levels and increase inventory turns.

Dividends

Coast declared monthly dividends of $0.025 per share from April through June of 2014, payable on or about the fifth day of the month following.

Outlook

On June 20, 2014, CWAL announced the successful completion of its bid to acquire Coast, having secured ownership of approximately 80.7% of the company's issued and outstanding common shares. Subsequent to quarter-end, on July 14, 2014, Coast announced that it will hold a special shareholder meeting on August 21, 2014 for the purpose of passing a resolution to approve an arrangement agreement with CWAL for a subsequent acquisition transaction to acquire all of the remaining common shares not owned by CWAL. Upon completion of the transaction, Coast plans to delist the company's common shares from the Toronto Stock Exchange and will apply to cease being a reporting issuer.

A more detailed discussion of Coast's financial results can be found in its 2014 Second Quarter Management's Discussion and Analysis, which will be posted along with the unaudited interim condensed financial statements for the period on Coast's website (www.coastwholesaleappliancesinc.com) and SEDAR (www.sedar.com) on August 11, 2014.

Coast Profile

Coast is a leading independent supplier of major household appliances and accessories to builders and developers of multi-family and single-family housing, and to retail customers. Founded in 1978, Coast operates stores across the four western provinces and in the Greater Toronto Area of Ontario, as well as a network of warehouse distribution centres strategically situated to serve these locations.

Forward-looking Statements

This news release includes forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", "expect", "may", "plan", "will", and similar terms and phrases, including references to assumptions. Such statements may involve, but are not limited to, comments with respect to the sustainability of our dividends to shareholders, the application by Coast to delist its common shares from the Toronto Stock exchange and cease being a reporting issuer, the performance of the Canadian economy and our sales expectations.

These forward-looking statements reflect our current expectations regarding future events and operating performance as of the date of this news release. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to: sensitivity to general economic conditions; changes in consumer confidence in the economy; maintenance of profitability and management of changes to our business; competition; increases to interest rates; reliance on suppliers and their ability to supply product for sale on a timely basis; changes in consumer preferences; changes in our mix of product sales; fluctuations in fuel and commodity pricing; usage of extended warranty programs and the costs to deliver these services; changes to planning and supply chain processes; lack of long-term supplier agreements; reliance on key personnel; and foreign exchange rates as they relate to imported products.

Although the forward-looking statements contained in this news release are based upon what we believe to be reasonable assumptions, Coast cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements reflect management's current beliefs and are based on information currently available to Coast. They speak only as of the date of this news release and reflect current assumptions regarding future events and operating performance. These assumptions include, without limitation: slow economic growth in 2014 in both Western Canada and the Greater Toronto Area (GTA), our current markets; continued fluctuations in exchange rates; continued low interest rates through 2014; continuing relatively stable credit markets for our major builder customers; and little change in the total number of housing starts in 2014 compared to 2013. These forward-looking statements are made as of the date of this news release and Coast assumes no obligation to update or revise them to reflect new events or circumstances, other than as required by law.

Non-IFRS Financial Measures

EBITDA, EBITDA margin and Adjusted EBITDA are non-IFRS financial measures that are defined in Coast's Second Quarter Management's Discussion and Analysis, to be posted on Coast's website and SEDAR on August 11, 2014.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Historically, some banking activities such as trading have been relying heavily on analytics and cutting edge algorithmic tools. The coming of age of powerful data analytics solutions combined with the development of intelligent algorithms have created new opportunities for financial institutions. In his session at 20th Cloud Expo, Sebastien Meunier, Head of Digital for North America at Chappuis Halder & Co., discussed how these tools can be leveraged to develop a lasting competitive advantage ...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
Most companies are adopting or evaluating container technology - Docker in particular - to speed up application deployment, drive down cost, ease management and make application delivery more flexible overall. As with most new architectures, this dream takes a lot of work to become a reality. Even when you do get your application componentized enough and packaged properly, there are still challenges for DevOps teams to making the shift to continuous delivery and achieving that reduction in cost ...
All organizations that did not originate this moment have a pre-existing culture as well as legacy technology and processes that can be more or less amenable to DevOps implementation. That organizational culture is influenced by the personalities and management styles of Executive Management, the wider culture in which the organization is situated, and the personalities of key team members at all levels of the organization. This culture and entrenched interests usually throw a wrench in the work...
DevOps is under attack because developers don’t want to mess with infrastructure. They will happily own their code into production, but want to use platforms instead of raw automation. That’s changing the landscape that we understand as DevOps with both architecture concepts (CloudNative) and process redefinition (SRE). Rob Hirschfeld’s recent work in Kubernetes operations has led to the conclusion that containers and related platforms have changed the way we should be thinking about DevOps and...
The question before companies today is not whether to become intelligent, it’s a question of how and how fast. The key is to adopt and deploy an intelligent application strategy while simultaneously preparing to scale that intelligence. In her session at 21st Cloud Expo, Sangeeta Chakraborty, Chief Customer Officer at Ayasdi, will provide a tactical framework to become a truly intelligent enterprise, including how to identify the right applications for AI, how to build a Center of Excellence to ...
Consumers increasingly expect their electronic "things" to be connected to smart phones, tablets and the Internet. When that thing happens to be a medical device, the risks and benefits of connectivity must be carefully weighed. Once the decision is made that connecting the device is beneficial, medical device manufacturers must design their products to maintain patient safety and prevent compromised personal health information in the face of cybersecurity threats. In his session at @ThingsExpo...
SYS-CON Events announced today that Massive Networks will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Massive Networks mission is simple. To help your business operate seamlessly with fast, reliable, and secure internet and network solutions. Improve your customer's experience with outstanding connections to your cloud.
From 2013, NTT Communications has been providing cPaaS service, SkyWay. Its customer’s expectations for leveraging WebRTC technology are not only typical real-time communication use cases such as Web conference, remote education, but also IoT use cases such as remote camera monitoring, smart-glass, and robotic. Because of this, NTT Communications has numerous IoT business use-cases that its customers are developing on top of PaaS. WebRTC will lead IoT businesses to be more innovative and address...
Everything run by electricity will eventually be connected to the Internet. Get ahead of the Internet of Things revolution and join Akvelon expert and IoT industry leader, Sergey Grebnov, in his session at @ThingsExpo, for an educational dive into the world of managing your home, workplace and all the devices they contain with the power of machine-based AI and intelligent Bot services for a completely streamlined experience.
Because IoT devices are deployed in mission-critical environments more than ever before, it’s increasingly imperative they be truly smart. IoT sensors simply stockpiling data isn’t useful. IoT must be artificially and naturally intelligent in order to provide more value In his session at @ThingsExpo, John Crupi, Vice President and Engineering System Architect at Greenwave Systems, will discuss how IoT artificial intelligence (AI) can be carried out via edge analytics and machine learning techn...
FinTechs use the cloud to operate at the speed and scale of digital financial activity, but are often hindered by the complexity of managing security and compliance in the cloud. In his session at 20th Cloud Expo, Sesh Murthy, co-founder and CTO of Cloud Raxak, showed how proactive and automated cloud security enables FinTechs to leverage the cloud to achieve their business goals. Through business-driven cloud security, FinTechs can speed time-to-market, diminish risk and costs, maintain continu...
SYS-CON Events announced today that GrapeUp, the leading provider of rapid product development at the speed of business, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Grape Up is a software company, specialized in cloud native application development and professional services related to Cloud Foundry PaaS. With five expert teams that operate in various sectors of the market acr...
Existing Big Data solutions are mainly focused on the discovery and analysis of data. The solutions are scalable and highly available but tedious when swapping in and swapping out occurs in disarray and thrashing takes place. The resolution for thrashing through machine learning algorithms and support nomenclature is through simple techniques. Organizations that have been collecting large customer data are increasingly seeing the need to use the data for swapping in and out and thrashing occurs ...