|By Marketwired .||
|August 11, 2014 07:45 PM EDT||
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."
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%.
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.
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.
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 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.
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.
All clouds are not equal. To succeed in a DevOps context, organizations should plan to develop/deploy apps across a choice of on-premise and public clouds simultaneously depending on the business needs. This is where the concept of the Lean Cloud comes in - resting on the idea that you often need to relocate your app modules over their life cycles for both innovation and operational efficiency in the cloud. In his session at @DevOpsSummit at19th Cloud Expo, Valentin (Val) Bercovici, CTO of So...
Sep. 30, 2016 08:00 PM EDT Reads: 1,560
What are the new priorities for the connected business? First: businesses need to think differently about the types of connections they will need to make – these span well beyond the traditional app to app into more modern forms of integration including SaaS integrations, mobile integrations, APIs, device integration and Big Data integration. It’s important these are unified together vs. doing them all piecemeal. Second, these types of connections need to be simple to design, adapt and configure...
Sep. 30, 2016 07:30 PM EDT Reads: 540
Just over a week ago I received a long and loud sustained applause for a presentation I delivered at this year’s Cloud Expo in Santa Clara. I was extremely pleased with the turnout and had some very good conversations with many of the attendees. Over the next few days I had many more meaningful conversations and was not only happy with the results but also learned a few new things. Here is everything I learned in those three days distilled into three short points.
Sep. 30, 2016 07:15 PM EDT Reads: 5,372
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Sep. 30, 2016 07:15 PM EDT Reads: 451
24Notion is full-service global creative digital marketing, technology and lifestyle agency that combines strategic ideas with customized tactical execution. With a broad understand of the art of traditional marketing, new media, communications and social influence, 24Notion uniquely understands how to connect your brand strategy with the right consumer. 24Notion ranked #12 on Corporate Social Responsibility - Book of List.
Sep. 30, 2016 07:15 PM EDT Reads: 422
The Jevons Paradox suggests that when technological advances increase efficiency of a resource, it results in an overall increase in consumption. Writing on the increased use of coal as a result of technological improvements, 19th-century economist William Stanley Jevons found that these improvements led to the development of new ways to utilize coal. In his session at 19th Cloud Expo, Mark Thiele, Chief Strategy Officer for Apcera, will compare the Jevons Paradox to modern-day enterprise IT, e...
Sep. 30, 2016 07:00 PM EDT Reads: 2,450
Major trends and emerging technologies – from virtual reality and IoT, to Big Data and algorithms – are helping organizations innovate in the digital era. However, to create real business value, IT must think beyond the ‘what’ of digital transformation to the ‘how’ to harness emerging trends, innovation and disruption. Architecture is the key that underpins and ties all these efforts together. In the digital age, it’s important to invest in architecture, extend the enterprise footprint to the cl...
Sep. 30, 2016 06:45 PM EDT Reads: 741
SYS-CON Events announced today that Commvault, a global leader in enterprise data protection and information management, has been named “Bronze Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Commvault is a leading provider of data protection and information management solutions, helping companies worldwide activate their data to drive more value and business insight and to transform moder...
Sep. 30, 2016 06:30 PM EDT Reads: 2,903
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
Sep. 30, 2016 06:15 PM EDT Reads: 1,617
What does it look like when you have access to cloud infrastructure and platform under the same roof? Let’s talk about the different layers of Technology as a Service: who cares, what runs where, and how does it all fit together. In his session at 18th Cloud Expo, Phil Jackson, Lead Technology Evangelist at SoftLayer, an IBM company, spoke about the picture being painted by IBM Cloud and how the tools being crafted can help fill the gaps in your IT infrastructure.
Sep. 30, 2016 06:15 PM EDT Reads: 3,140
SYS-CON Events has announced today that Roger Strukhoff has been named conference chair of Cloud Expo and @ThingsExpo 2016 Silicon Valley. The 19th Cloud Expo and 6th @ThingsExpo will take place on November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. "The Internet of Things brings trillions of dollars of opportunity to developers and enterprise IT, no matter how you measure it," stated Roger Strukhoff. "More importantly, it leverages the power of devices and the Interne...
Sep. 30, 2016 06:15 PM EDT Reads: 3,526
Digital innovation is the next big wave of business transformation based on digital technologies of which IoT and Big Data are key components, For example: Business boundary innovation is a challenge to excavate third-party business value using IoT and BigData, like Nest Business structure innovation may propose re-building business structure from scratch, as Uber does in the taxicab industry The social model innovation is also a big challenge to the new social architecture with the design fr...
Sep. 30, 2016 05:45 PM EDT Reads: 1,370
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
Sep. 30, 2016 05:30 PM EDT Reads: 720
Whether they’re located in a public, private, or hybrid cloud environment, cloud technologies are constantly evolving. While the innovation is exciting, the end mission of delivering business value and rapidly producing incremental product features is paramount. In his session at @DevOpsSummit at 19th Cloud Expo, Kiran Chitturi, CTO Architect at Sungard AS, will discuss DevOps culture, its evolution of frameworks and technologies, and how it is achieving maturity. He will also cover various st...
Sep. 30, 2016 04:45 PM EDT Reads: 2,011
Adobe is changing the world though digital experiences. Adobe helps customers develop and deliver high-impact experiences that differentiate brands, build loyalty, and drive revenue across every screen, including smartphones, computers, tablets and TVs. Adobe content solutions are used daily by millions of companies worldwide-from publishers and broadcasters, to enterprises, marketing agencies and household-name brands. Building on its established design leadership, Adobe enables customers not o...
Sep. 30, 2016 04:30 PM EDT Reads: 439