Quorum Information Technologies Inc. (TSX VENTURE:QIS) ("Quorum" or the
"Company") today released its Third Quarter (Q3) Fiscal Year (FY) 2012 results.
Quorum delivers its dealership management system (DMS), XSellerator(TM), and
related services to automotive dealerships throughout North America. The Company
is both an Integrated Dealership Management System (IDMS) strategic partner with
General Motors Corporation (GM) and a strategic partner with Microsoft. Quorum's
XSellerator product is broadly promoted to its target dealerships throughout
North America by these prominent industry partners. Quorum supplies its DMS to
Isuzu, Chrysler, Hyundai, Kia, Nissan, Subaru, NAPA and Bumper to Bumper
franchised and independent dealership customers.
Maury Marks, Quorum's President and CEO made the following remarks about the
Company's Q3 FY2012 results:
Over the last two years, Quorum has become an "all makes" organization, with a
continued emphasis on GM dealerships. Quorum supplies our product to GM, Isuzu,
Chrysler, Hyundai, Kia, Nissan, Subaru, NAPA and Bumper to Bumper franchised
dealership as well as independent dealership customers.
As the Company has grown in the market, we have also enhanced our operational
excellence by focusing on measurable improvements. Some of our key Q3 FY2012
milestones are as follows:
-- Customer Base - we attained 267 installed active dealership rooftops at
the end of Q3 FY2012. Although we continue to grow, one of our key goals
is to increase our sales and implementation rate. We are working on
multiple initiatives; for example, in Q3 FY2012 we hired an additional
salesperson and we also initiated activities focused on increasing the
number of qualified sales leads per salesperson.
-- Product and Product Utilization - during the quarter we piloted V4.7.5
in six dealerships. The version has seven new major features and
multiple small enhancements. In 2012, one of the Company's key goals is
to increase dealerships' utilization of XSellerator. We are working on
multiple initiatives to help increase utilization; for example, we
recently launched eQUIP (which is a web training subscription service
for our customers), we planned our 1st annual customer conference which
will take place Nov 27th and 28th and engaged our support desk to have
them proactively show dealerships new features during support calls.
-- Customer Metrics - our dealership Customer Satisfaction ("CSI") score
results in Q3 FY2012 were as follows:
-- CSI semi annual survey - 85% of end users reported "satisfied" or
"very satisfied" and 70% of dealer principals reported "satisfied"
or "very satisfied". Note that if "somewhat satisfied" is included
in our results, the numbers would be 94% of end users and 85% of
dealer principals.
-- CSI monthly support surveys - over 95% of our end users reported
"very satisfied" with the service they received from our support
center.
-- Financing - during the quarter we signed a $500K interest-free, five
year, unsecured government loan with the Atlantic Canada Opportunities
Agency (ACOA). The financing will be received as Quorum incurs specific
expenditures made from Q3 FY2012 to Q2 FY2013. Additionally, we signed a
$50K grant with ACOA for specific expenditures from Q4 FY2012 to Q3
FY2013.
Key financial results summary:
-- Sales increased by 2% to $1,907K in Q3 FY2012 from $1,874K in Q3 FY2011,
and margin after direct costs decreased to $1,031K in Q3 FY2012, as
compared to $1,105K in Q3 FY2011, a 7% decrease. The increase in sales
is due to:
-- An increase of $41K in net new revenue which was a result of
completing four installations in Q3 FY2012 as compared to three
dealership installations in Q3 FY2011.
-- An increase of $115K in recurring support revenue as a result from
having 267 active dealership rooftops at the end of Q3 FY2012 versus
250 at the end of Q3 FY2011.
-- A decrease in integration revenue of $152K due to a reduced number
of GM integration projects.
-- An increase of $29K in transition revenue.
The decrease in margin after direct costs is largely due to an
increase in low margin net new and transition revenue and a decrease
in higher margin integration revenue.
-- Earnings before interest, taxes, depreciation and amortization
("EBITDA") decreased to $239K in Q3 FY2012 from $372K in Q3 FY2011.
Income before taxes decreased to $81K in Q3 FY2012 from $200K in Q3
FY2011. The decreases in both EBITDA and income before taxes are largely
due to:
-- $74K decrease in margin after direct costs in Q3 FY2012 compared to
Q3 FY2011 as explained above; and
-- an increase in sales and marketing staffing levels which increased
Salaries and Benefits costs by $61K in Q3 FY2012 versus Q3 FY2011.
-- Cash flows from operating activities were $157K in Q3 FY2012 compared to
$163K in Q3 FY2011.
-- Net working capital at September 30, 2012 was $968K, with a current
ratio of 2.26, compared to $1,065K at December 31, 2011, with a current
ratio of 2.43. The decrease in working capital is primarily due to a
decrease in accounts receivable from having less GM integration projects
at the end of Q3 FY2012 versus Q4 FY2011 and the expiration of the
Newfoundland and Labrador Government wage subsidy payment as of March
31, 2012.
The Company continues to grow our customer base, improve our service offerings
and customer satisfaction, and lead the market in product innovation. We also
continue to deliver solid financial results and improve our cash and working
capital positions by producing improved positive cash flow every year. Our
single biggest challenge in 2012 is to grow our sales and implementation rates
to the "next level." We have already embarked on a number of initiatives that
are focused on meeting this challenge.
Quorum has filed its Q3 2012 consolidated financial statements and notes thereto
as at and for the period ended September 30, 2012 and accompanying management's
discussion and analysis in accordance with National Instrument 51-102 -
Continuous Disclosure Obligations adopted by the Canadian securities regulatory
authorities. Additional information about Quorum will be available on Quorum's
SEDAR profile at www.sedar.com and Quorum's website at www.QuorumDMS.com.
Financial Highlights
Nine Nine
Months Months
Ended Ended Q3 Ended Q3 Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2012 2011 2012 2011
----------------------------------------------------------------------------
Gross revenue $5,580,724 $5,616,280 $1,907,406 $1,874,497
Direct Costs 2,556,320 2,387,713 876,660 769,301
Margin after direct
costs 3,024,404 3,228,567 1,030,746 1,105,196
Earnings before
interest, taxes and
amortization (EBITDA) 591,133 933,387 238,591 372,122
Income (loss) before
deferred income tax 108,114 416,877 80,523 200,064
Net income (loss) (98,458) 287,241 34,107 224,327
Comprehensive income
(loss) (175,007) 404,032 (40,790) 411,338
Basic net income (loss)
per share $ (0.0025) $ 0.0073 $ 0.0009 $ 0.0057
Fully diluted net
income (loss) per
share $ (0.0025) $ 0.0073 $ 0.0009 $ 0.0057
Weighted average number
of common shares
Basic 39,298,438 39,298,438 39,298,438 39,298,438
Diluted 39,298,438 39,298,438 39,298,438 39,298,438
XSellerator
installations - in the
period 16 15 4 3
XSellerator active
dealership rooftops 267 250 267 250
----------------------------------------------------------------------------
Q2 Ended Q2 Ended Q1 Ended Q1 Ended
June 30, June 30, March 31, March 31,
2012 2011 2012 2011
----------------------------------------------------------------------------
Gross revenue $1,831,132 $1,829,515 $1,842,186 $1,912,268
Direct Costs 850,670 770,837 828,990 847,575
Margin after direct
costs 980,462 1,058,678 1,013,196 1,064,693
Earnings before
interest, taxes and
amortization (EBITDA) 226,086 238,508 126,456 322,757
Income (loss) before
deferred income tax 65,027 62,603 (37,436) 154,210
Net income (loss) (80,311) 110,638 (52,254) (47,724)
Comprehensive income
(loss) (41,613) 92,871 (92,604) (100,177)
Basic net income (loss)
per share $ (0.0020) $ 0.0028 $ (0.0013) $ (0.0012)
Fully diluted net
income (loss) per
share $ (0.0020) $ 0.0028 $ (0.0013) $ (0.0012)
Weighted average number
of common shares
Basic 39,298,438 39,298,438 39,298,438 39,298,438
Diluted 39,298,438 39,684,319 39,298,438 39,684,319
XSellerator
installations - in the
period 6 6 6 6
XSellerator active
dealership rooftops 263 249 259 245
----------------------------------------------------------------------------
About Quorum
Quorum is a North American company focused on developing, marketing,
implementing and supporting its XSellerator product for GM, Isuzu, Chrysler,
Hyundai, KIA, Nissan, Subaru, NAPA and Bumper to Bumper dealerships. XSellerator
is a dealership and customer management software product that automates,
integrates and streamlines every process across departments in a dealership. One
of the select North American suppliers under General Motors' IDMS program,
Quorum is the second largest DMS provider for GM's Canadian dealerships with 25%
of the market. Quorum is a Microsoft Partner in both Canada and the United
States. Quorum Information Technologies Inc. is traded on the Toronto Venture
Exchange (TSX-V) under the symbol QIS. For additional information please go to
www.QuorumDMS.com.
Forward-Looking Information
This press release contains certain forward-looking statements and
forward-looking information ("forward-looking information") within the meaning
of applicable Canadian securities laws. Forward-looking information is often,
but not always, identified by the use of words such as "anticipate", "believe",
"plan", "intend", "objective", "continuous", "ongoing", "estimate", "expect",
"may", "will", "project", "should" or similar words suggesting future outcomes.
In particular, this press release includes forward-looking information relating
to results of operations, plans and objectives, projected costs and business
strategy. Quorum believes the expectations reflected in such forward-looking
information are reasonable but no assurance can be given that these expectations
will prove to be correct and such forward-looking information should not be
unduly relied upon.
Forward-looking information is not a guarantee of future performance and
involves a number of risks and uncertainties some of which are described herein.
Such forward-looking information necessarily involves known and unknown risks
and uncertainties, which may cause Quorum's actual performance and financial
results in future periods to differ materially from any projections of future
performance or results expressed or implied by such forward-looking information.
These risks and uncertainties include but are not limited to the risks
identified in Quorum's Management's Discussion and Analysis for the period ended
September 30, 2012. Any forward-looking information is made as of the date
hereof and, except as required by law, Quorum assumes no obligation to publicly
update or revise such information to reflect new information, subsequent or
otherwise.
FOR FURTHER INFORMATION PLEASE CONTACT:
Quorum Information Technologies Inc.
Maury Marks
403-777-0036 ext 104
MarksM@QuorumDMS.com
www.QuorumDMS.com
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