LAVAL, QUEBEC, January 27, 2010 -- 20-20 Technologies Inc. (TSX: TWT), the world leader in 3D interior design and furniture manufacturing software, today announced its results for the fourth quarter and fiscal year ended October 31, 2009. All amounts are in US dollars unless otherwise indicated.
FISCAL 2009 HIGHLIGHTS
• Revenues stood at $63.1 million compared to $78.6 million in 2008
• Recurring revenues remained stable on a constant dollar basis
• EBITDA increased to $9.3 million from $4.3 million in 2008
• Net earnings of $2.6 million, or $0.14 per share, compared to a loss of $2.3 million, or 0.12 per share in 2008
• Cash position at year-end increased to $23.2 million from $15.1 million last year
YEAR-END RESULTS
Revenues declined by 19.7% to $63.1 million in fiscal 2009, compared with $78.6 million a year ago. The decline was due to persisting difficult economic conditions ($11.2 million) and unfavorable currency exchange rates ($4.3 million).
North America accounted for 55.1% of revenues or $34.8 million for 2009, representing a decline of $8.6 million or 19.8% on a year-over-year basis, largely attributable to sluggish market conditions in the commercial and residential sectors. Europe accounted for 41.7% of revenues or $26.3 million for 2009, a decrease of $6.7 million or 20.3% over last year, primarily due to a combination of weaker European currencies against the U.S. dollar and, to a lesser extent, from weak overall market conditions.
Revenues from license sales decreased by 34.3% or $9.0 million, to $17.3 million in fiscal 2009. Excluding the impact of currency fluctuations, the residential and commercial sectors were the hardest hit sectors with declines of 34.7% and 46.9%, respectively. Maintenance and other recurring revenues continued to perform relatively well when compared to other types of revenues with a decline of 5.8% to $33.3 million and 0.4% to $35.2 million, excluding the impact of foreign exchange. Revenues from professional services were impacted by lower license sales and decreased by 26.0% or $4.4 million, to $12.5 million.
Operating income was $5.6 million, compared with a loss of $2.7 million last year. In 2009, the Company recorded a $0.2 million recovery of restructuring costs compared with $2.3 million in restructuring costs last year. EBITDA increased to $9.3 million (14.8% of revenues) for 2009 from $4.3 million (5.5% of revenues) a year ago.
This improvement reflects the restructuring and cost reduction plans implemented in 2008 and 2009 by management in response to economic conditions. On a year-over-year basis, these measures generated cost reductions and savings of $7.8 million in salaries and $2.7 million in other expenses. For the same period, favorable exchange rates reduced expenses by $7.9 million.
The Company generated net earnings of $2.6 million for the year, or $0.14 per share, compared with a net loss of $2.3 million, or $0.12 per share, a year ago.
The balance sheet improved during the year with cash, cash equivalents and short-term investments totalling $23.2 million at the end of 2009 compared with $15.1 million in 2008. Long-term debt, including instalments due within one year, was $17.7 million compared with $15.6 million in 2008.
“While the interior design business was severely impacted by the recession throughout 2009, 20-20 Technologies remained a leading supplier to the industry in all principal markets. By reducing overhead, selectively downsizing and bringing costs in line with revenues, we considerably improved our profitability,” said Jean-François Grou, Chief Executive Officer. “The lean efficiency we established has positioned us to benefit considerably as the market recovers. Incremental volumes will not require our current cost structure to increase commensurate to rising revenues.”
FOURTH QUARTER RESULTS
Revenues in the fourth quarter decreased by 17.3% to $16.2 million compared to $19.6 million in 2008. On a sequential basis, revenues were flat over the third quarter.
Revenues from North America were $9.0 million versus $11.0 million last year. European revenues were $6.3 million, a decrease of $1.4 million when compared with the same period in 2008. While still a small contributor to the top line, International revenues increased from $0.8 million in 2008 to $0.9 million, representing 5.4% of total revenues during the quarter. It should be noted that revenues from International license sales increased by 15.9% fuelled by growth in China.
In the fourth quarter, license sales decreased by 33.2%, or $2.2 million, over last year, maintenance and other recurring revenues increased by 2.0%, or $0.2 million, while revenues from professional services decreased by 32.6% or $1.4 million. The increase in maintenance and other recurring revenues reflects the increasing volumes of recurring annual license sales of Virtual Planner in the residential sector.
Operating income was $1.1 million, compared with a loss of $0.5 million a year ago. EBITDA was $2.4 million, up from $2.0 million a year ago, exceeding our current quarterly target of $2.0 million.
For the fourth quarter, net income was $0.7 million, or $0.04 per share, compared with a loss of $1.3 million, or $0.07 per share, for the same period in 2008.
SUSTAINED INNOVATION
In our fourth quarter we pursued our investments in research and development rigorously aimed at improvements meeting our current customer requirements. Our portfolio has evolved to make client innovations viable as we adapted existing solutions to support diversification into adjacent markets of many of our customers at both the point-of-sale and in furniture manufacturing.
OUTLOOK
In 2009, 20-20 began work on a new strategic plan featuring a single software platform and a more open business model. It will allow us to accelerate our growth while increasing our profitability by better leveraging all of our assets including our partnerships. We will continue to provide integrated solutions to all the interior design and furniture industry participants including consumers, retailers, designers, manufacturers and their suppliers. "20-20 has the market position and knowledge to deliver this platform, which addresses the widely acknowledged needs of the industry, making it the indisputable ‘industry standard,’” said Jean Mignault, Executive Chairman and Chief of Strategic Direction.
“Work on our new business platform is laying the foundation for our future progress on behalf of our shareholders for years to come, and it signals our determination to maintain and further strengthen 20-20's pre-eminence in the industry," concluded Mr. Mignault.
"Although conditions will likely remain challenging through 2010, pent-up demand is building, and 20-20 is powerfully positioned to benefit from a resumption of growth in the interior design industry,” said Jean-François Grou. “We will continue to deliver, with our existing and new products, greater efficiency and business generation potential to our customers. That in turn, we are confident, will create significant new value for 20-20's shareholders.”
CONFERENCE CALL INFORMATION
20-20 will host a conference call to discuss the fourth quarter results January 27, 2010 at 2 p.m. (EST). The call will be accessible by telephone at 1-888-231-8191 (North America) and 647-427-7450 (Toronto and international). An audio replay of the conference call will be available until midnight, February 3, 2010. To access it, dial 514 807-9274 or 1-800-642-1687 and enter the pass code: 49901794.
Please note that 20-20 Technologies' full financials and MD&A are available on SEDAR as well as on the Company's web site, www.2020technologies.com.
ABOUT 20-20 TECHNOLOGIES INC.
20-20 Technologies is the world's leading provider of computer-aided design, business and software solutions tailored for the interior design and furniture industries. Dealers and retailers use its desktop and Web-based products and solutions for the residential and commercial markets. 20-20 offers a unique proprietary end-to-end solution, integrating the entire breadth of functions in interior design. It provides a bridge for data communication from the point-of-sale to manufacturing and world-leading enterprise resource planning (ERP) systems, including computer-aided engineering and plant floor automation software. Operating in twelve countries with more than 500 employees, 20-20 is a publicly traded company (TWT) on the Toronto Stock Exchange (TSX). For more information, visit www.2020technologies.com.
NON-GAAP MEASURES
References in this press release to the term "EBITDA" are related to cash earnings. EBITDA is defined for these purposes as Operating Income before restructuring charges plus amortization and depreciation expenses. EBITDA is not a recognized measure under GAAP in Canada and may not be comparable to similar measures used by other companies.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this news release constitute forward-looking information within the meaning of securities laws.
Implicit in this information, particularly in respect of future operating results and economic performance of the Company are assumptions regarding projected revenue and expenses. These assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Readers are cautioned that actual future operating results and economic performance of the Company are subject to a number of risks and uncertainties, including general economic, market and business conditions and could differ materially from what is currently expected.
For more exhaustive information on these risks and uncertainties, please refer to our most recently filed annual information form, available at www.sedar.com. Forward-looking information contained in this report is based on management's current estimates, expectations and projections, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to do so, we are under no obligation and do not undertake to update this information at any particular time unless required by applicable securities law.
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