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Message: Reports First Quarter March 31, 2009 Results

Reports First Quarter March 31, 2009 Results

posted on May 31, 2009 01:24PM
May 31, 2009
Xentel Reports First Quarter March 31, 2009 Results
CALGARY, ALBERTA--(Marketwire - May 31, 2009) - Xentel DM Incorporated (TSX VENTURE:XDM) -

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Three months ended March 31                            2009      2008
---------------------------------------------------------------------
($ 000's, except per share amounts)
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Revenue                                            $ 23,885 $  24,434
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Gross margin                                       $  5,371 $   5,681
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Net earnings                                       $    573 $     285
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EBITDA                                             $  1,239 $   1,290
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EPS, fully diluted                                 $   0.02 $    0.01
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EBITDA, per share, fully diluted                   $   0.05 $    0.05
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EBITDA - Net Earnings before income taxes, interest, depreciation
and amortization. Since Gross Margin, EBITDA and diluted EBITDA
per share have no standardized GAAP meaning, the comparability of
these amounts to other enterprises may not be possible if the basis
of calculation of differs.
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Xentel DM Incorporated (TSX VENTURE:XDM) a North American specialty entertainment and relationship marketing company, today reported its financial results for the three months ended March 31, 2009.

The results for the first quarter 2009 were net earnings of $573 thousand compared to net earnings of $285 thousand for the first quarter 2008. Revenues amounted to $23,885 thousand compared to $24,434 thousand for the same period in 2008. EBITDA for the three months ended March 31, 200 was $1,239 thousand compared to $1,290 for the same period in 2008.

EBITDA was essentially the same for the first quarter 2009 and 2008 in face of declining revenues quarter over quarter as a result of restructuring the labour utilization model, continuing to monitor and control costs and refocusing emphasis on data development. Additionally, the elimination of long term interest with the repayment of the subordinated debt in 2008 and the reduction of amortization relating to the fully amortized intangible assets from the 2003 acquisition contributed to the improved earnings quarter over quarter 2009 to 2008.

David Winograd, President of the US operations stated, "The labour restructuring program is having a very positive impact on earnings. That combined with the improved balance sheet resulting from the elimination of interest on the payment of the subordinated debt and the reduction in amortization on fully amortized intangibles, bodes well for the future."

"Improved earnings are to be expected as a result of the debt reduction and the revenue expense scaling, but the market remains challenging and the entire Xentel team must continue to focus on improving margins", said Michael Platz, Chairman.

Xentel DM Incorporated is one of North America's leading relationship-marketing concerns and producers of cause related entertainment events. The Company's success is attributable to proprietary sales tools including technologically advanced teleservices and sophisticated customer databases. Xentel DM Incorporated has over 400 clients and 1,900 employees in over 25 offices across North America.

Certain statements in this press release may constitute "forward looking statements" and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any performance or achievement expressed or implied by such "forward looking statements".

Xentel DM Incorporated
Consolidated Balance Sheets          March 31,    March 31,    December 31,
('000s)                                  2009         2008            2008
                                   (unaudited)  (unaudited)       (audited)

Assets
Current assets

Cash and cash equivalents             $ 1,346        $ 114         $ 1,365
Accounts receivable, net of
 allowances                             7,146        7,158           6,910
Inventory                                 585          628             617

Prepaid expenses                        1,229          973           1,235
Due from related party                  1,608            -           1,589
Future income taxes                     1,203        2,341           1,568

                                     --------     --------        --------
                                       13,117       11,214          13,284

Due from related party                      -        1,327               -
Equipment                               2,909        3,208           3,050
Future income taxes                     3,120        3,233           3,089
Other intangible assets                    62          938              64
Goodwill                                1,253        1,034           1,239

                                     --------     --------        --------
                                     $ 20,461     $ 20,954        $ 20,726
                                     --------     --------        --------
                                     --------     --------        --------

Liabilities
Current liabilities

Bank indebtedness                       $ 608      $ 2,181            $ 86
Accounts payable and accrued
 liabilities                            5,316        5,132           5,877
Income taxes payable                       89           88             275
Current portion of long term
 liabilities                               90        1,321             141
Future income taxes                       710          662             715
Due to related party                    2,661            -           3,244

                                     --------     --------        --------
                                        9,474        9,384          10,338

Long term debt                              4           11               6
Future income taxes                        38        1,060              38
Deferred tenant inducement                202          285             223
Due to related party                        -        2,603               -

                                     --------     --------        --------
                                        9,718       13,343          10,605

Shareholders' equity

Share capital                           8,827        9,280           8,925
Warrants                                    -          205               -
Contributed surplus                       628           79             558
Accumulated other comprehensive
 income                                (2,312)      (3,747)         (2,389)
Retained earnings                       3,600        1,794           3,027

                                     --------     --------        --------
                                       10,743        7,611          10,121

                                     --------     --------        --------
                                     $ 20,461     $ 20,954        $ 20,726
                                     --------     --------        --------
                                     --------     --------        --------



Xentel DM Incorporated
Consolidated Statements of Operations and Retained
 Earnings
For the three months ended March 31                        2009        2008

('000s, except per share amounts)                    (unaudited) (unaudited-
                                                                   restated)

Revenue                                                $ 23,885    $ 24,434

Cost of revenue                                          18,514      18,753

                                                       --------    --------

Gross margin                                              5,371       5,681

                                                       --------    --------

Corporate expenses

Branch overhead and corporate administration              4,132       4,391
Interest expense                                             33         105
Amortization of equipment                                   250         291
Amortization of intangible assets                             2         370
                                                       --------    --------

                                                          4,417       5,157

                                                       --------    --------

Earnings before undernoted items                            954         524

Other items
Expenses relating to the 2003 privatization
 lawsuit                                                      -           9

                                                       --------    --------
Earnings before income taxes                                954         515

                                                       --------    --------

Income tax expense
Current income tax expense                                    -          91
Future income tax expense                                   381         139

                                                       --------    --------

                                                            381         230

                                                       --------    --------

Net earnings                                                573         285

Retained earnings, beginning of period                    3,027       1,509

                                                       --------    --------

Retained earnings, end of period                       $  3,600    $  1,794
                                                       --------    --------
                                                       --------    --------

Basic and diluted net earnings per share               $   0.02    $   0.01
                                                       --------    --------
                                                       --------    --------

Basic weighted average number of shares                  25,163      26,195
                                                       --------    --------
                                                       --------    --------

Diluted weighted average number of shares                25,163      26,195
                                                       --------    --------
                                                       --------    --------



Xentel DM Incorporated
Consolidated Statements of Contributed Surplus
For the three months ended March 31                      2009         2008
('000s)                                            (unaudited)  (unaudited)

Balance, beginning of period                          $   558      $    79

Discount on share repurchase from stated value             70            -

                                                     ---------    ---------
Balance, end of period                                $   628      $    79
                                                     ---------    ---------
                                                     ---------    ---------


Xentel DM Incorporated
Consolidated Statements of Comprehensive Income
For the three months ended March 31                      2009         2008
('000s)                                            (unaudited)  (unaudited-
                                                                  restated)

Net earnings for period                               $   573      $   285
Foreign currency translation adjustment from self
 sustaining foreign operations                             77          164

                                                     ---------    ---------

Comprehensive income                                  $   650      $   449
                                                     ---------    ---------
                                                     ---------    ---------


Xentel DM Incorporated
Consolidated Statements of Accumulated Other
 Comprehensive Income
For the three months ended March 31                      2009         2008
('000s)                                            (unaudited)  (unaudited-
                                                                  restated)

Balance, beginning of period                         $ (2,389)    $ (3,911)

Foreign currency translation adjustment from self
 sustaining foreign operations                             77          164

                                                     ---------    ---------

Balance, end of period                               $ (2,312)    $ (3,747)
                                                     ---------    ---------
                                                     ---------    ---------



Xentel DM Incorporated
Consolidated Statements of Cash Flows
For the three months ended March 31                      2009         2008
('000s)                                            (unaudited)  (unaudited)

Cash flows from (used in) operating activities

Net earnings for the year                          $      573        $ 285

Non cash transactions reflected in net earnings

Amortization                                              252          661
Future income tax expense                                 381          139
Adjustment for non cash interest                            -           61

                                                   -----------  -----------
                                                        1,206        1,146

                                                   -----------  -----------

Net change in non cash working capital items

Accounts receivable                                      (197)        (569)
Inventory                                                  38           15
Prepaid expenses                                           10         (127)
Other current assets                                      (12)           -
Income taxes payable                                     (195)          22
Accounts payable and accrued liabilities                 (587)        (849)

                                                   -----------  -----------

Net change in non cash working capital items             (943)      (1,508)

                                                   -----------  -----------

                                                          263         (362)

                                                   -----------  -----------

Cash flows from (used in) financing activities
Bank indebtedness                                         520          851
Long term debt repaid                                    (692)        (115)
Redemption of share capital                               (28)           -

                                                   -----------  -----------

                                                         (200)         736

                                                   -----------  -----------

Cash flows (used in) investing activities
Investment in equipment                                   (90)        (467)

                                                   -----------  -----------

                                                          (90)        (467)

                                                   -----------  -----------

Effect of exchange rate fluctuations on cash
 balances                                                   8            2

                                                   -----------  -----------

Net decrease in cash and cash equivalents                 (19)         (91)

Cash and cash equivalents, beginning of period          1,365          205

                                                   -----------  -----------

Cash and cash equivalents, end of period           $    1,346   $      114
                                                   -----------  -----------
                                                   -----------  -----------
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