VANCOUVER, British Columbia, Sept. 13, 2010 (GLOBE NEWSWIRE) -- Coastal Contacts Inc. ("Coastal" or "the Company") (TSX:COA) (Stockholm:COA) today announced its financial results in Canadian dollars for the third fiscal quarter ended July 31, 2010.
Coastal noted the following highlights for the 2010 third fiscal quarter:
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Sales set a quarterly record of $39.5 million as compared to $37.5 million in the third quarter of the previous fiscal year. Sales increased 12% excluding the impact of foreign exchange rate fluctuations.
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More than 428,000 orders shipped, an increase of 16% over the same period in 2009.
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$20.8 million in cash and cash equivalents as compared with $10 million at the end of the second quarter of fiscal 2010.
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Coastal acquired 120,000 new customers in the quarter.
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Eyeglasses sales grew to $5.0 million in the quarter, an increase of 84% over the same period in fiscal 2009.
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Shipped more than 71,000 pairs of eyeglasses in the quarter.
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Sales in Canada grew 22% in the third quarter of 2010 as compared to the same period of last fiscal year, and 35% during the nine months ended July 31, 2010.
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Sales in the United States grew 24% in the third quarter of 2010 as compared to the same period of the last fiscal year, and 29% during the nine months ended July 31, 2010.
- Advertising expense declined to 12% of sales as compared to 13% of sales in the same period in fiscal 2009.
Sales for the third fiscal quarter increased 5% and set a quarterly record of $39.5 million compared to $37.5 million in 2009. Exclusive of foreign exchange fluctuations sales grew 12% during the quarter compared to the same period in 2009. Adjusted EBITDA for the third fiscal quarter was $1.4 million compared with $2.0 million during the same period in 2009. Net earnings for the third fiscal quarter was $0.5 million or $0.01 per share compared to $0.6 million or $0.01 per share in the third quarter of fiscal 2009.
Mr. Roger Hardy, Coastal's Founder and CEO, commented, "During the third quarter the Coastal team delivered record sales in what remains a challenging consumer environment. Results in the quarter were lead by strong growth in North America with healthy double digit increases in both Canada and the United States. Our markets in Europe experienced flat to single digit growth in their domestic currencies excluding the effect of foreign exchange fluctuations. We are confident that our competitive position remains strong based upon our differentiated business model and unique consumer value proposition, which allows us to provide the highest quality glasses and contact lenses direct to our customers at much lower prices and delivery time than traditional optical retailers. As we continue to gain market share in the glasses market we feel confident that our business plan is set to deliver substantially higher returns in the coming quarters."
Coastal will host a conference call to review the financial results and Company operations on Monday, September 13, 2010 at 1:00pm PT. Participating in the call will be Roger Hardy, Founder and CEO and Glen Kayll, CFO.
To attend the call, participants may dial:
| North American Toll Free | 1-888-892-3255 |
|
Sweden |
0200791989 |
A replay of the call will be available for 7 days. To access the replay listeners may dial:
| North American Toll Free | 1-800-937-6305 |
| Passcode | 593098 |
Coastal's risks and uncertainties are discussed in detail in the Company's Annual Information Form dated January 29, 2010, which is also available on SEDAR at www.sedar.com.
Adjusted EBITDA and orders shipped as referenced in this news release are Non-GAAP financial measures. Adjust EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, share based compensation expense and foreign exchange gains and losses. See "Supplemental Non-GAAP Measures" herein.
The following selected financial information is qualified in its entirety by, and should be read in conjunction with our unaudited consolidated financial statements for the third fiscal quarter ended July 31st, 2010 and accompanying notes and Management's Discussion and Analysis which will be available on SEDAR at www.sedar.com.
| COASTAL CONTACTS INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (CAD$000's, except share amounts) | ||
|
July 31, 2010 |
October 31, 2009 |
|
| (Unaudited) | ||
| ASSETS | ||
| Current | ||
| Cash and cash equivalents | $20,812 | $11,532 |
| Accounts receivable | 8,190 | 7,965 |
| Inventory | 15,219 | 15,701 |
| Prepaid expenses | 2,229 | 1,532 |
| Future income tax | 93 | 109 |
| Related party promissory notes | 201 | 374 |
| 46,744 | 37,213 | |
| Property, equipment and leasehold improvements | 4,866 | 2,813 |
| Intangible assets | 8,210 | 9,517 |
| Goodwill | 7,292 | 7,757 |
| $67,112 | $57,300 | |
| LIABILITIES | ||
| Current | ||
| Accounts payable and accrued liabilities | $25,904 | $17,908 |
| Income tax payable | -- | 615 |
| Deferred gain on sale of equipment | 63 | -- |
| Capital lease obligation | 330 | -- |
| 26,297 | 18,523 | |
| Deferred gain on sale of equipment | 251 | -- |
| Capital lease obligation | 1,487 | -- |
| Future income tax | 3,209 | 3,614 |
| 31,244 | 22,137 | |
| Shareholders' equity | ||
| Share capital | ||
| Authorized: | ||
| Unlimited common shares without par value | ||
| Unlimited Class A preferred shares without par value | ||
| Issued and outstanding: | ||
| 56,913,546 common shares [2009 – 56,901,719] | 40,386 | 40,248 |
| Shares held in treasury | ||
| 31,773 common shares [2009 – nil] | (40) | -- |
| Contributed surplus | 2,644 | 2,294 |
| Accumulated other comprehensive loss | (4,834) | (3,482) |
| Deficit | (2,288) | (3,897) |
| 35,868 | 35,163 | |
| $67,112 | $57,300 | |
| COASTAL CONTACTS INC. | ||||
| CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE EARNINGS | ||||
| (Unaudited) (CAD$000's, except share and per share amounts) | ||||
|
Three months ended July 31 |
Nine months ended July 31 |
|||
| 2010 | 2009 | 2010 | 2009 | |
| Sales | $39,455 | $37,511 | $112,681 | $102,154 |
| Cost of sales | 28,078 | 26,332 | 80,737 | 71,079 |
| Gross profit | 11,377 | 11,179 | 31,944 | 31,075 |
| Advertising | 4,890 | 5,042 | 12,801 | 13,420 |
| Selling, general and administration | 5,087 | 4,170 | 14,565 | 12,478 |
|
Amortization on property, equipment and leasehold improvements |
364 | 264 | 932 | 719 |
| Amortization on intangible assets | 308 | 352 | 1,098 | 1,115 |
| Share-based compensation | 109 | 189 | 459 | 485 |
| Interest expense (income) | 15 | (12) | 30 | (68) |
| Foreign exchange (gain) loss | (5) | 252 | 270 | 11 |
| Earnings before income taxes | 609 | 922 | 1,789 | 2,915 |
| Income tax | 80 | 319 | 128 | 816 |
| Net earnings | 529 | 603 | 1,661 | 2,099 |
| Basic net earnings per share | $0.01 | $0.01 | $0.03 | $0.04 |
| Diluted net earnings per share | $0.01 | $0.01 | $0.03 | $0.04 |
|
Weighted average number of common shares outstanding |
||||
| Basic | 56,981,557 | 57,057,145 | 56,948,115 | 57,781,343 |
| Diluted | 57,963,709 | 57,374,702 | 58,036,184 | 57,909,739 |
| COASTAL CONTACTS INC. | ||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
| (Unaudited) (CAD$000's) | ||||
|
Three months ended July 31 |
Nine months ended July 31 |
|||
| 2010 | 2009 | 2010 | 2009 | |
| OPERATING ACTIVITIES | ||||
| Net earnings | $529 | $603 | $1,661 | $2,099 |
| Non-cash items affecting earnings: | ||||
| Amortization | 672 | 616 | 2,030 | 1,834 |
| Amortization of deferred lease inducement | (2) | (20) | (31) | (60) |
| Share-based compensation | 109 | 189 | 459 | 485 |
| Future income taxes | (46) | 96 | (181) | 58 |
| Changes in non-cash working capital: | ||||
| Accounts receivable | 303 | 67 | (549) | (437) |
| Inventory | 511 | 2,090 | (201) | (3,433) |
| Prepaid expenses | 4 | 159 | (478) | 462 |
| Accounts payable and accrued liabilities | 8,060 | (3,763) | 8,561 | 352 |
| Income tax payable | 65 | 117 | (697) | 281 |
| Deferred gain on disposition of property and equipment | 313 | -- | 313 | -- |
| Cash provided by operating activities | 10,518 | 154 | 10,887 | 1,641 |
| INVESTING ACTIVITIES | ||||
| Repayments from (advances to) related parties | (3) | (4) | 172 | (12) |
| Acquisition of property, equipment and leasehold improvements | (1,422) | (231) | (2,987) | (637) |
| Acquisition of intangible assets | (106) | (32) | (294) | (53) |
| Disposition of property and equipment | 1,817 | -- | 1,817 | 60 |
| Cash provided by (used in) investing activities | 286 | (267) | (1,292) | (642) |
| FINANCING ACTIVITIES | ||||
| Issuance of common shares on exercise of options | 39 | -- | 131 | -- |
| Purchase of common shares for cancellation | (158) | (199) | (158) | (1,169) |
| Cash used in financing activities | (119) | (199) | (27) | (1,169) |
| Effect of exchange rate changes on cash and cash equivalents | 249 | (315) | (288) | (1,036) |
| Increase (decrease) in cash and cash equivalents | 10,934 | (627) | 9,280 | (1,206) |
| Cash and cash equivalents, beginning of period | 9,878 | 14,627 | 11,532 | 15,206 |
| Cash and cash equivalents, end of period | $20,812 | $14,000 | $20,812 | $14,000 |
| Supplemental disclosure of cash flow information: | ||||
| Non-cash financing and investing activities: | ||||
| Assets acquired under capital lease | $1,817 | -- | $1,817 | -- |
| Income tax paid in cash | $103 | $237 | $602 | $834 |
Supplemental Non-GAAP Measures
Coastal reports its results in accordance with Canadian GAAP, however in this news release, it presents Adjusted EBITDA and the number of orders shipped because Coastal believes its investors use these figures to make investment decisions about the Company.
Adjusted EBITDA is a non-GAAP financial measure that does not have any standardized meaning prescribed by Canadian GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA should be considered in addition to, and not as a substitute for, net earnings, cash flows and other measures of financial performance and liquidity reported in accordance with Canadian GAAP.
Adjusted EBITDA is a measure Coastal believes is useful in assessing performance and highlighting trends on an overall basis. Adjusted EBITDA differs from the most comparable GAAP measure, net earnings, primarily because it does not include interest, income taxes, depreciation, amortization, share-based compensation expense and foreign exchange gains and losses.
|
For the three months ended July 31, |
For the nine months ended July 31, |
|||
| CAD$000's | 2010 | 2009 | 2010 | 2009 |
| Net earnings | 529 | 603 | 1,740 | 2,099 |
| Amortization | 672 | 616 | 2,030 | 1,834 |
| Share-based compensation | 109 | 189 | 459 | 485 |
| Interest expense (income), net | 15 | (12) | 30 | (68) |
| Foreign exchange (gain) loss | (5) | 252 | 270 | 11 |
| Income tax expense | 80 | 319 | 128 | 816 |
| Adjusted EBITDA | 1,400 | 1,967 | 4,657 | 5,177 |
About Coastal Contacts:
Coastal Contacts Inc. is the world's leading direct-to-consumer vision products company which designs, produces and distributes a diversified offering of contact lenses and eyeglasses. Coastal's unique combination of branded and private label products represent quality, value and above all, service. Coastal sells into more than 150 countries through proprietary web properties which reflect the culture and consumer preference of the target market. As new markets for eyeglasses and contact lenses evolve, Coastal is positioned to become the vision product consumer's retailer of choice owing to its compelling value proposition combining value and service. A leader in many of its markets, Coastal is rapidly advancing toward its goal of becoming the "World's Optical Store".
Forward Looking Statements
All statements made in this news release, other than statements of historical fact, are forward-looking statements. The words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "goal", "target", "should," "likely," "potential," "continue," "project," "forecast," "prospects," and similar expressions typically are used to identify forward-looking statements. Examples of such forward looking statements within this news release include statements relating to the Company's perception of the industries and markets it operates in and its competitive position therein.
Forward-looking statements are based on the then-current expectations, beliefs, assumptions, estimates and forecasts about Coastal's business and the industry and markets in which we operate. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Assumptions underlying our expectations regarding forward-looking statements contained in this news release include, among others, that Coastal will maintain its competitive position in the industries and markets it operates in and expand into other markets in a favorable manner.
Persons reading this news release are cautioned that forward-looking statements or information are only predictions, and that Coastal's actual future results or performance may be materially different due to a number of factors. These factors include, but are not limited to, changes in the market, potential downturn in economic conditions and other risks detailed in Coastal's filings with Canadian and Swedish securities regulatory authorities. Reference should also be made to the section entitled "Risk Factors" contained in Coastal's most recently filed Annual Information Form dated January 29, 2010 and in the NASDAQ OMX Stockholm listing prospectus dated October 14, 2009, as filed on Sedar and with the Swedish Financial Supervisory Authority respectively, for a detailed description of the risks and uncertainties relating to Coastal's business. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should not place undue reliance on forward-looking statements and information, which are qualified in their entirety by this cautionary statement. These forward-looking statements are made as of the date of this news release and Coastal expressly disclaims any intent or obligation to update these forward-looking statements, unless it specifically state otherwise and except as required by applicable law.