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Cygnal Technologies updates 2005 financial guidance19 March 2006
Cygnal Technologies Corp. (TSX: CYN) today provided an update to the guidance the Company made in its third quarter 2005 news release and Management's Discussion and Analysis, both dated November 14,
Based on preliminary, unaudited financial results, the Company estimates that its EBITDA (earnings before interest, taxes, depreciation and amortization) for the three months ended December 31, 2005, excluding one-time costs related to the execution of a productivity improvement program in the Network Operations business, will be a loss of approximately $3.8 to $4.1 million, compared to the guidance of approximately zero. Costs associated with the productivity program are expected to negatively impact EBITDA by a further $1.3 million, resulting in a reported EBITDA loss of approximately $5.1 to $5.4 million in the quarter.
The expected EBITDA shortfall is a result of several factors. An impact of approximately $2.5 million is attributable to a combination of lower than expected Network Operations revenue, and lower than expected gross margins due to the revenue mix in the quarter, an increase in inventory allowance and the establishment of a warranty provision. An approximate $1.3 million impact is attributable to an increase in the allowance for doubtful accounts and other miscellaneous selling, general and administrative expenses.
Network Operations revenue for fiscal 2005 is expected to be $75 to $76 million, compared to the most recent guidance of $77 to $79 million. Communications Services revenue is expected to be consistent with the forecasted amount of $50 million.
While the fiscal 2005 audit is not complete, management currently anticipates recording a goodwill impairment charge of approximately $8 million for the year. The Company is also evaluating its future income tax asset. Based on Canadian generally accepted accounting principles, the Company anticipates that there will a reduction of the future income tax asset as at December 31, 2005.
Cygnal plans to release its complete financial results for the quarter and year ended December 31, 2005 on the morning of March 28, 2006. Management will hold a conference call that same morning at 9:00 a.m. (EST) to review the results in greater detail. The call will be hosted by Jos Wintermans, President and CEO. All interested parties are invited to participate.
CONFERENCE CALL DETAILS:
DATE: Tuesday, March 28, 2006
TIME: 9:00 a.m. (EST)
DIAL IN NUMBER: 416-644-3426 or 1-866-250-4910
TAPED REPLAY: 416-640-1917 or 1-877-289-8525
Available until Tuesday, April 4, 2006 at midnight.
Reference number 21181989.
The call will also be audio-cast live at www.cygnal.ca or
www.newswire.ca.
About Cygnal
Cygnal Technologies Corporation is a leading Canadian provider of network communication solutions including the design, installation, maintenance and management of wired and wireless communication networks. The Company offers a full range of technologies and solutions for service providers and enterprise customers. Cygnal has expertise in voice, video and data solutions over traditional and next generation converged technologies.
Cygnal Technologies Corporation is headquartered in Markham, Ontario and supports end-user customers and business partners through 14 offices across Canada, including Vancouver, Edmonton, Calgary, Winnipeg, London, Burlington, Brampton, Toronto, Sudbury, Ottawa, Montreal, Quebec City and Halifax. Cygnal common shares are listed on the Toronto Stock Exchange under the symbol CYN.
No stock exchange or regulatory authority has approved or disapproved of information contained herein. Certain information included in this news release is forward-looking and is subject to important risks and uncertainties. When used in this news release, the words "believe", "intend", "estimate", "expect", "plan", "anticipate" and similar expressions are intended to identify forward-looking statements, although not all forward- looking statements contain such words. These forward-looking statements are based on current expectations. The results, performance or events predicted in these statements may differ materially from actual results, performance or events. Factors which could cause results or events to differ from current expectations include, among other things, the impact of price and product competition, the ability of the Corporation to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner, general industry and market conditions and growth rates, the impact of consolidations in the telecommunications industry and stock market volatility. For additional information with respect to certain of these and other factors, see the reports filed by Cygnal Technologies with applicable Canadian securities administrators. Cygnal Technologies disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
%SEDAR: 00000748E
For further information: please contact: James Shannon, Chief Financial Officer, Cygnal Technologies Corporation, (905) 944-6572, jshannon@cygnal.ca; Jeff Codispodi, Investor Relations, The Equicom Group Inc., (416) 815-0700 ext. 261, jcodispodi@equicomgroup.com; To request a free copy of this organization's annual report, please go to http://www.newswire.ca and click on Tools for Investors.
Source: newswire
All trademarks and copyrighted information contained herein are the property of their respective owners.
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