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Xenos Earns $0.05 in F2009 Third Quarter

^{Published on 2009-08-12 03:42:16, Last Modified on 2009-08-12 03:42:25 - Market Wire}
 

 TORONTO, Aug. 12 /CNW/ - Xenos Group Inc. (TSX:XNS) today reported year-over-year increases in revenues and earnings for the fiscal 2009 third quarter. For the three months ended June 30, 2009, Xenos revenues increased to $4,434,000 as compared to revenues of $4,152,000 for the same period in 2008. The third quarter of fiscal 2009 represents twelve consecutive quarters of year-over-year revenue growth. Gross margin in the quarter increased to 84% as compared to 79% in the same quarter of fiscal 2008. Gross margins benefited from an increase in Xenos licensed product revenues in the quarter. Xenos Enterprise Server(TM) (ES), released as a new product October 1, 2008, demonstrated its efficacy in a variety of different markets during the third quarter. The breadth of industry applicability for Xenos ES(TM) solutions is illustrated by sales during the quarter into several different verticals. In addition to the previously announced sale to port operator Yusen Terminals (Los Angeles), Xenos also completed an important sale through its new distributor, Truenorth Corp., to the Caribbean operations of one of Spain's largest financial institutions. Xenos recorded the sale of Xenos ES to a regional healthcare cluster in Ontario, as well as several US-based financial institutions. "Solutions built on the Xenos ES platform can deliver dramatic cost savings in a variety of ways to enterprises in a wide range of vertical markets," said Stu Butts, Chairman & CEO of Xenos Group Inc. "There are many benefits to be derived from Xenos ES implementations such as improved efficiency through straight-through processing and enhanced customer service through web-based self-service. But in the current economic environment, our focus on demonstrable operational cost savings speaks loudest to IT departments in every vertical." Total expenses during the quarter increased to $3,274,000 as compared to $3,015,000 for the same period one year ago. Sales and marketing expenses increased 20% as a result of sales force expansion and increased marketing expenses related to Xenos Enterprise Server, while general and administrative expenses decreased by 9% under expense management and efficiency initiatives. Research and development expenses in the quarter increased 8% year-over-year to $952,000 from $879,000. EBITDA for the period increased 38% to $678,000, as compared to $490,000 in the same period in 2008. Xenos reported net income of $547,000 or $0.05 per share, a 126% increase as compared to net income of $242,000 or $0.02 per share in the third quarter of fiscal 2008. For the nine months ended June 30, 2009, Xenos reported revenues of $12,726,000, EBITDA of $1,698,000 and net income of $515,000 or $0.05 per share, as compared to revenues of $12,106,000, EBITDA of $1,469,000 and net income of $1,017,000 or $0.10 per share for the first nine months of fiscal 2008 respectively. Comparative results and revenues continue to be impacted by gyrations in the value of the Canadian dollar against major trading currencies, particularly the US dollar. Xenos incurred a foreign exchange loss of $583,000 for the first nine months compared to a gain of $188,000 in the same period last year. The company currently holds forward contracts to sell US $6,000,000 at $1.15 CAD over the next four quarters. The Canadian dollar closed at 1.163 at June 30, 2009 and all outstanding contracts were marked to market in accordance with GAAP on that date. At June 30, 2009, Xenos held cash of $9,696,000 or $0.97 per common share, and does not hold significant long-term debt. This compares to $8,115,000, or $0.81 per common share, at September 30, 2008. During the fiscal third quarter, Xenos released Xenos ePresentment(TM) for IBM(R) Content Manager OnDemand (CMOD), the latest addition to the suite of Xenos solutions that complement IBM Enterprise Content Management (ECM) software. Xenos ePresentment provides a seamless interface to IBM CMOD that expedites the load and retrieval of business-critical content - such as customer bank, credit card or brokerage statements and insurance declaration documents - generated in high-volume print stream and image formats. "Today, organizations are increasingly being driven to an on-line model for customer interaction. This requires frictionless web access to accurate, timely, and pertinent business information of relevance to the customer. Our clients use Xenos' superior, high speed and scalable solutions to enhance their customers' on-line experience. This leads to increased customer retention, increased market share, and demonstrable competitive advantage," said Mr. Butts. "The fact that we deliver these forward-looking benefits while reducing overheads and operating expenses and delivering green benefits allows us to make good progress in very challenging market conditions." Financial Highlights - (complete statements are attached): ------------------------------------------------------------------------- Three Months Nine Months ------------------------------------------------------------------------- Period Ended June 30, 2009 2008 2009 2008 (in CDN$000s except per share amounts) Sales 4,434 4,152 12,726 12,106 Gross profit 3,739 3,268 10,526 9,448 EBITDA 678 490 1,698 1,469 Net income 547 242 515 1,017 Net income per share 0.05 0.02 0.05 0.10 Cash & cash equivalents 9,696 8,493 Cash per Share $0.97 $0.85 Common Shares Outstanding 10,005 10,005 ------------------------------------------------------------------------- See discussion of non-GAAP financial measures below. Conference Call Notice A conference call for shareholders, analysts and other members of the investment community has been scheduled for August 12 at 10:00am (Eastern Time). Stuart Butts, Chairman, President & CEO, and George Kypreos, CFO, will discuss the financial results and provide updates on operations. To participate, please dial 416-644-3435, or 1-800-594-3615 approximately 10 minutes before the conference call. The conference can also be heard over the Internet at [ www.xenos.com ]. A recording of the conference call will be available through August 19. Please dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 21311854 followed by the number sign to listen to the rebroadcast. The call will also be archived for 30 days on the Xenos web site at [ www.xenos.com ]. About Xenos Group Inc. Xenos (TSX:XNS) is the market-leading provider of high-performance software solutions that deliver a superior Return on Information(TM) by Streamlining Enterprise Information Supply Chains(TM). The company's solutions, based on the scalable Xenos Enterprise Server(TM) and its components, process, extract, transform, repurpose and personalize high volumes of data and documents for storage, real-time access, ePresentment, printing and delivery in numerous formats across multiple channels. By readily repurposing, integrating with and extending the business value of existing technology, infrastructure and business applications, Xenos solutions empower organizations to adapt to changing market demands. They also improve operational efficiency, enhance business processes, reduce risk for compliance management and increase employee productivity with lowered total cost of ownership both for the enterprise and for its customers. Xenos supports Green IT initiatives by empowering organizations to "Reduce Reuse Recycle" information resources. Xenos customers are among the largest organizations worldwide, spanning numerous industries including financial services and insurance. Xenos has offices in Canada, the United States, the United Kingdom and France and a global partner network. For more information, visit [ www.xenos.com ]. Certain statements made in this press release are forward-looking within the meaning of certain securities laws. Such forward-looking statements are based on a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company or developments in the Company's business or its industry to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. The Company urges you not to place undue reliance on these estimates, opinions and projections. The Company assumes no obligation to update forward-looking statements if assumptions or these plans, estimates, opinions or projections should change. The Company uses financial measures including, but not limited to, "EBITDA" to supplement its consolidated financial statements, which are presented in accordance with GAAP. EBITDA is not a recognized measure under GAAP and should not be construed as an alternative to net income (loss). Xenos' method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies. Cash per share is a non-GAAP measure and is calculated by dividing the cash and cash equivalents by the number of common shares outstanding. (C)2009 All rights reserved. Xenos, the Xenos logo, Xenos Enterprise Server, Xenos ES, Xenos Integrated Document Solution, Xenos IDS, Xenos Loader, Xenos DSR, Xenos OnLine, Xenos ePresentment, Xenos d2e Vision, Xenos terminalONE, Streamlining Enterprise Information Supply Chains, and Return on Information are either registered Trademarks or Trademarks of Xenos Group Inc. All other trademarks and trade names are the property of their respective owners. Xenos Group Inc. Consolidated Statements of Operations and Deficit (Unaudited) Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 ----------------------------- ----------------------------- Sales $ 4,433,876 $ 4,151,593 $ 12,725,892 $ 12,105,546 Cost of sales 694,563 883,589 2,199,473 2,657,511 -------------- -------------- -------------- -------------- Gross profit 3,739,313 3,268,004 10,526,419 9,448,035 -------------- -------------- -------------- -------------- Expenses Sales and marketing 1,560,042 1,296,695 4,423,155 3,715,480 Research and development 951,764 878,689 2,790,335 2,479,719 Administration and general 523,943 575,242 1,535,602 1,714,241 Amortization 204,265 227,699 624,594 720,819 Stock based compensation 25,551 27,195 79,040 69,633 Interest and bank charges 8,091 9,444 27,014 32,379 -------------- -------------- -------------- -------------- 3,273,656 3,014,964 9,479,740 8,732,271 -------------- -------------- -------------- -------------- Income before undernoted items 465,657 253,040 1,046,679 715,764 Interest and other 12,260 36,130 84,423 177,743 Foreign exchange gain (loss) 70,426 (23,243) (583,236) 188,455 -------------- -------------- -------------- -------------- 82,686 12,887 (498,813) 366,198 -------------- -------------- -------------- -------------- Income before income taxes 548,343 265,927 547,866 1,081,962 Provision for income taxes 881 23,689 33,312 64,896 -------------- -------------- -------------- -------------- Net income $ 547,462 $ 242,238 $ 514,554 $ 1,017,066 -------------- -------------- -------------- -------------- Net income per common share - Basic $ 0.05 $ 0.02 $ 0.05 $ 0.10 - Diluted $ 0.05 $ 0.02 $ 0.05 $ 0.10 Weighted average number of shares - Basic 10,005,444 9,992,267 - Diluted 10,084,450 10,131,355 ------------------------------------------------------------------------- Deficit, beginning of year $(35,710,117) $(37,206,488) Net income 514,554 1,017,066 -------------- -------------- Deficit, end of period (35,195,563) (36,189,422) -------------- -------------- Xenos Group Inc. Consolidated Balance Sheets (Unaudited) As at June 30 September 30 2009 2008 ----------------------------- ASSETS CURRENT Cash and cash equivalents $ 9,696,037 $ 8,115,259 Trade receivables 2,488,573 2,471,700 Other receivables 15,078 23,767 Non-hedging financial derivatives - 82,524 Prepaids 719,642 597,052 Income taxes recoverable 94,642 26,766 -------------- -------------- 13,013,972 11,317,068 LONG TERM Future income taxes 1,207,039 1,193,086 Capital assets 943,350 998,436 Intangibles and other assets 2,075,159 1,999,370 -------------- -------------- 4,225,548 4,190,892 -------------- -------------- TOTAL ASSETS $ 17,239,520 $ 15,507,960 -------------- -------------- LIABILITIES CURRENT Payables and accruals $ 2,020,284 $ 2,259,583 Income taxes payable 107,750 97,921 Deferred revenue 4,438,687 3,099,644 Non-hedging financial derivatives 55,772 - Current portion - capital lease 18,391 61,170 -------------- -------------- 6,640,884 5,518,318 LONG TERM Capital lease obligations - 2,543 Deferred revenue 47,079 14,812 Deferred lease inducements 111,410 125,734 -------------- -------------- 158,489 143,089 TOTAL LIABILITIES 6,799,373 5,661,407 SHAREHOLDERS' EQUITY Capital stock 45,125,209 45,125,209 Contributed surplus 510,501 431,461 Deficit (35,195,563) (35,710,117) -------------- -------------- TOTAL SHAREHOLDERS' EQUITY 10,440,147 9,846,553 -------------- -------------- TOTAL LIABILITIES & EQUITY $ 17,239,520 $ 15,507,960 -------------- -------------- Xenos Group Inc. Consolidated Statements of Cash Flows (Unaudited) Three Months Ended Nine Months Ended June 30 June 30 2009 2008 2009 2008 ----------------------------- ----------------------------- Operating activities Net income $ 547,462 $ 242,238 $ 514,554 $ 1,017,066 Amortization 204,265 227,699 624,594 720,819 Unrealized foreign exchange loss (gain) 140,929 3,322 (53,461) (61,422) Unrealized (gain) loss on non- hedging financial derivatives (489,639) - 138,296 - Loss on disposal of capital assets 406 14,871 406 14,871 Future income taxes 11,404 1,258 (13,953) (4,471) Stock based compensation 25,551 27,195 79,040 69,633 Change in non- cash working capital (202,447) (33,108) 928,866 (42,647) -------------- -------------- -------------- -------------- 237,931 483,475 2,218,342 1,713,849 -------------- -------------- -------------- -------------- Financing activities Capital lease payments (15,471) (20,192) (45,322) (66,619) Proceeds on issue of shares - - - 93,480 -------------- -------------- -------------- -------------- (15,471) (20,192) (45,322) 26,861 -------------- -------------- -------------- -------------- Investing activities Purchase of capital assets (8,927) (29,470) (184,635) (210,454) Proceeds on disposal of capital assets - 499 - 499 Development costs incurred (110,953) (185,565) (461,068) (455,704) -------------- -------------- -------------- -------------- (119,880) (214,536) (645,703) (665,659) -------------- -------------- -------------- -------------- Effect of foreign exchange rate fluctuations on cash and cash equivalents (140,929) (3,322) 53,461 61,422 -------------- -------------- -------------- -------------- Net (decrease) increase in cash and cash equivalents (38,349) 245,425 1,580,778 1,136,473 Cash and cash equivalents Beginning of period 9,734,386 8,247,856 8,115,259 7,356,808 -------------- -------------- -------------- -------------- End of period $ 9,696,037 $ 8,493,281 $ 9,696,037 $ 8,493,281 -------------- -------------- -------------- -------------- 

For further information: Editorial Contact: George Kypreos, Xenos Group Inc., (905) 709-1020, [ gkypreos@xenos.com ]; Investor Relations Contact: Cory Pala, Xenos Group Inc., (416) 657-2400, [ cpala@xenos.com ]