N@N

GLENTEL Inc. reports strong 2nd quarter earnings of $0.24 per share

^{Published on 2009-07-29 15:10:18, Last Modified on 2009-07-29 15:10:29 - Market Wire}
 

 BURNABY, BC, July 29 /CNW/ - GLENTEL INC. (TSX: GLN) today reported its results for the 2nd quarter and six months ended June 30, 2009. Financial highlights (tabular amounts in thousands of Canadian dollars, except per share data), are: Three months ended Six months ended June 30 June 30 ------------------------------------------ 2009 2008 2009 2008 ------------------------------------------ Sales $67,849 $60,494 $135,293 $111,212 Income, before interest, taxes and amortization 5,408 4,192 10,414 6,186 Operating income, before interest and taxes 3,897 2,640 7,410 3,037 Net income $2,644 $1,819 $5,060 $2,076 Basic net income per share $0.24 $0.17 $0.47 $0.19 Diluted net income per share $0.24 $0.16 $0.46 $0.19 Consolidated sales for the three months ended June 30, 2009 grew 12%, to $67,849,000 compared to $60,494,000 in the same period in 2008. Operating income before interest and taxes for the 2nd quarter increased to $3,897,000 compared to $2,640,000 in 2008. Net income and basic earnings per share for the 2nd quarter increased to $2,644,000, $0.24 per share, compared to $1,819,000, $0.17 per share, in 2008. Consolidated sales for the six months ended June 30, 2009 grew 22%, to $135,293,000 compared to $111,212,000 in the same period of 2008. Operating income before interest and taxes for the six months increased to $7,410,000 compared to $3,037,000 in 2008. Net income and basic earnings per share for the six months increased to $5,060,000, $0.47 per share, compared to $2,076,000, $0.19 per share, for the same period in 2008. Retail Division sales of mobile phone products and services grew 14%, to $57,662,000 for the 2nd quarter compared to $50,506,000 for the same period in 2008. Growth in sales was driven by consumers' adoption of smartphone technology and manufacturers' introduction of new competing products. During the 2nd quarter, Apple introduced the new 3GS iPhone, while HTC introduced its new Android phone powered by Google. Growth in sales was also due to the division operating 254 stores during the 2nd quarter in 2009 (8% growth over the prior year) compared to 236 stores in the same period of 2008. In addition, same-store activations of mobile phones and other wireless devices sold in the Retail Division grew 10% in the 2nd quarter of 2009 over the corresponding period in 2008 for stores that were open throughout both periods. For the six months ended June 30, 2009, sales of mobile phone products and services in the Retail Division grew 26% to $115,485,000 compared to $91,871,000 in 2008. Industry trends have pointed to the fact that higher-end multimedia devices have become drivers for activations. As a result, same-store activations of mobile phones and other wireless devices sold in the Retail Division grew 17% in the six months ended June 30, 2009 over the corresponding period in 2008 for stores that were open throughout both periods. Operating income before interest and taxes in the Retail Division for the 2nd quarter increased to $7,178,000 compared to $5,517,000 in the previous year. For the six months ended June 30, 2009, operating income before interest and taxes increased to $14,204,000 compared to $8,367,000 in 2008. Business Division sales of terrestrial narrowband and broadband radio systems, satellite network services, and implementation services increased 2%, to $10,187,000 for the 2nd quarter compared to $9,988,000 in the same period in 2008. In the 2nd quarter, the division has been successful in winning new communication solution contracts; however, competitive pressure has resulted in a reduction of gross margin on sales by four percentage points, which has negatively impacted the performance of the division. For the six months ended June 30, 2009, sales of terrestrial narrowband and broadband radio systems, satellite network services, and implementation services in the Business Division increased 2% to $19,808,000 compared to $19,341,000 in 2008. However, the economic slowdown has significantly impacted the overall performance of the division as gross margin on sales has been eroded by five percentage points during the first six months. Operating expenses for the six months ended June 30, 2009 were contained at $5,657,000 compared to $5,623,000 in 2008. As a result, operating income before interest and taxes for the 2nd quarter in the Business Division was a loss of $247,000 compared to a loss of $1,000 in 2008. For the six months ended June 30, 2009, operating income before interest and taxes was a loss of $340,000 compared to income of $220,000 in 2008. Corporate operating expenses for the 2nd quarter of 2009 increased to $2,880,000 (4.2% of sales) compared to $2,747,000 (4.5% of sales) last year. This increase was due to the cost of additional administrative resources required to support the Retail Division's growth. Corporate operating expenses for the six months ended June 30, 2009 increased to $6,147,000 (4.5% of sales) compared to $5,278,000 (4.7% of sales) last year. The majority of this increase was for incremental professional services fees (approximately $475,000) incurred in the 1st quarter, related to corporate development activities that the Company incurred in its unsuccessful bid to acquire a national Canadian consumer electronics chain of 750 stores. "Given the current economic climate, we are very pleased with our 2nd quarter financial results," said Thomas Skidmore, GLENTEL's President and Chief Executive Officer. "Smartphone technology has continued to be a major driver of increased sales and profits, and we anticipate that this will continue for the balance of the year. We continue to look for opportunities in the wireless space to expand and grow our business." About GLENTEL: GLENTEL (TSX: GLN) is a leading provider of innovative and reliable telecommunications services and solutions in Canada and the United States. Founded in 1963 and headquartered in Burnaby, BC, GLENTEL comprises two operating divisions - Retail and Business - that service thousands of consumers and commercial telecommunications customers. Together with its divisions, the company operates more than 270 locations across Canada located in retail malls and store fronts, Costco Wholesale stores, and business centers. As the largest multi-carrier mobile phone retailer in Canada, it offers a choice of network carrier and wireless device or phone. To its business and government customers, GLENTEL offers wireless service, rental equipment, satellite and terrestrial network systems, tower sites, and wireless asset monitoring. GLENTEL operates its business under the trading names GLENTEL Wireless, WirelessWave, The Telephone Booth (Tbooth and la cabine T) and WIRELESS etc. Forward-Looking Statements: Statements in this release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third-party manufacturing, managing rapid growth, limited intellectual property protection, and other risks and uncertainties described in GLENTEL's public filings with securities regulatory authorities. NO STOCK EXCHANGE, SECURITIES COMMISSION, OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN. To secure a copy of GLENTEL's annual report, or for additional information, visit [ www.glentel.com ] or [ www.sedar.com ].

For further information: Investor Relations Contact: Dale B. Belsher, Chief Financial Officer, GLENTEL Inc., (604) 415-6500, [ investors@glentel.com ]; Media Contact: Shafiq Jamal, Vice President, James Hoggan & Associates, (604) 739-7500, [ sjamal@hoggan.com ]