Circa Reports Sales and Operating Results for the Third Quarter Ended September 30, 2022

Calgary, Alberta--(Newsfile Corp. - October 27, 2022) - Circa Enterprises Inc. (TSXV: CTO) (the "Company" or "Circa"), a manufacturer of equipment for the telecommunication, electrical utility, and construction industries, reports results of operations for the third quarter ended September 30, 2022.

Summary of third quarter operating results:

• Q3 2022 sales of $10.5 million, an increase of $0.8 million or 8.8% from Q3 2021 sales of $9.7 million
• Net income and comprehensive income of $174,000 for Q3 2022, being $0.02 per share compared to net income and comprehensive income of $543,000 for Q3 2021, or $0.05 per share
• Q3 2022 EBITDA of $0.9 million, a decrease of $0.5 million compared to Q3 2021 EBITDA of
  $1.4 million (see below for explanation and calculation of EBITDA)
• Q3 2022 EBITDAaL of $0.5 million, a decrease of $0.6 million compared to EBITDAaL of
  $1.1 million for Q3 2021 (see below for explanation and calculation of EBITDAaL)
• Working capital of $8.4 million

Summary of year-to date operating results:

• Sales of $31.3 million for the nine months ended September 30, 2022, an increase of 18.1% compared to sales of $26.5 million for the nine months ended September 30, 2021
• Net income and comprehensive income for the nine months ended September 30, 2022 of $0.9 million, being $0.09 per share compared to net income and comprehensive income of $1.2 million, or $0.12 per share for the same period in 2021
• EBITDA of $3.2 million for the nine months ended September 30, 2022 compared to EBITDA of $3.4 million for the nine months ended September 30, 2021
• EBITDAaL of $2.2 million for the nine months ended September 30, 2022 compared to EBITDAaL of $2.6 million for the nine months ended September 30, 2021

EBITDA is earnings before interest, taxes, depreciation and amortization. EBITDAaL is earnings before interest, taxes, depreciation and amortization, adjusted for cash lease payments and therefore comparative EBITDA prior to the adoption of IFRS 16. EBITDA and EBITDAaL are a non-IFRS financial measures and do not have any standardized meaning prescribed by International Financial Reporting Standards and, therefore, may not to be comparable to similar measures presented by other issuers. Management believes that EBITDA and EBITDAaL are useful supplemental measures, which provides an indication of the results generated by Circa's primary business activities prior to consideration of how those activities are financed, amortized or taxed. Readers are cautioned, however, that EBITDA and EBITDAaL should not be construed as an alternative to comprehensive income determined in accordance with IFRS as an indicator of the Company's financial performance. EBITDA and EBITDAaL are calculated by the Company as follows:

 

Sales for the third quarter of 2022 were $10.5 million -- a $0.8 million or 8.8% increase compared to the same three month period in 2021 on higher sales in both the Metals and Telecom segments.

Metals segment sales increased $0.6 million to $7.4 million in Q3 2022, compared to $6.8 million in Q3 2021 from higher poleline and custom metal sales. Sales in the Telecom segment were up from $2.9 million in Q3 2021 to $3.1 million in Q3 2022. This increase is mainly due to higher Guardian product line sales in the U.S., combined with the completion of some smaller projects.

Circa reported marginally higher selling, general and administrative expenses in Q3 2022 compared to Q3 2021. The Company saw higher sales and travel expenses from increased customer visits and commissions on higher sales. Depreciation and amortization costs were down in Q3 2022 as the intangible assets related to the 2017 Guardian acquisition have been fully amortized.

The Company posted net income and comprehensive income of $174,000 in the third quarter of 2022 compared to $543,000 in the same quarter of 2021. This decrease in earnings is a result of lower margins in the quarter combined with higher selling, general and administrative expenses and the absence of pandemic-related government subsidies that were present in Q3 2021.

Cory Tamagi, Circa's President and Chief Executive Officer, stated:

"Circa's sales for the third quarter of 2022 increased over Q3 2021 on stronger sales in both segments. However the improved sales did not translate into higher earnings, largely due to supply chain and labour disruptions in the quarter.

The Company posted net income of $174,000, or $0.02 per share, on sales of $10.5 million in the third quarter of 2023. Sales improved in both segments during the quarter and for the nine month period when compared to the same period in 2021. Sales of Hydel metering products continued its strong run on construction activity across Canada. The Telecom line saw a year over year improvement as its run rate business in North America improved and the Company shipped some larger project related orders.

Management expects the Metals segment sales to continue its strong run through the fourth quarter and into 2023 as demand across most regions remains steady and it delivers the backlog orders. The Telecom segment continues to see increased quoting activity, particularly in the U.S. market. Opportunities in the U.S. have increased with the addition new distributor representatives and increased in-person representation.

The tight labour market and ongoing supply chain delays continue to impact operations and resulting productivity, as delivery of key materials is unpredictable and often delayed. The inability to get material components when expected and effectively utilize the Company's labour force is negatively impacting planning and efficiency, which drives up costs. These challenges, combined with high inflation have had a negative impact on earmings in the quarter. The Company is anticipating some of these issues will partially resolve in the fourth quarter and productivity will improve. In the meantime, the Company will continue to actively manage these challenges into 2023."

CIRCA ENTERPRISES INC.

Condensed Consolidated Interim Statements of Income and Comprehensive Income

Unaudited

Circa Enterprises Inc. is a public company with operations in Alberta and Ontario. The outstanding common shares of Circa Enterprises Inc. are listed and trade on the TSX Venture Exchange under the trading symbol CTO. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

The Company's quarterly financial statements and related management's discussion and analysis have been filed with certain securities regulatory authorities in Canada and may be accessed electronically through the SEDAR website at www.sedar.com.

Contact: 

Mr. Cory Tamagi
President and CEO
Circa Enterprises Inc.
(403) 258-2011

Mrs. Angela Hulshof
VP Finance and CFO
Circa Enterprises Inc.
(403) 258-2011

E-Mail: investor@circaent.com
Website: www.circaent.com

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