News - Q3 Results
Zedi earns $719,000 before tax in Q3
2007-11-13 19:38 MT - News Release
Ms. Debra Deane reports
ZEDI ANNOUNCES THIRD QUARTER 2007 FINANCIAL RESULTS
Zedi Inc. has released results for the third quarter, 2007. "I am pleased with the results our team has produced for the third quarter, not withstanding continued uncertainty in the industry and sector as a whole. While our business model continues to deliver value and a number of our initiatives designed to insulate us from reduced drilling activity have gained traction in the third quarter, we are cognizant of the challenges facing our industry and continue to manage the business conservatively," said Matthew Heffernan, president and chief executive officer of Zedi. He added, "Nonetheless we are committed to an ongoing program to identify growth opportunities in other markets, including U.S., Russia and China." The third quarter 2007 audited financial statements and management's discussion and analysis are filed on SEDAR and can be accessed at SEDAR or on the company's website.
Revenues for the third quarter of 2007 were $7,197,000, compared with $6,793,000 in the third quarter of 2006. Free cash flow in the third quarter was $698,000, compared with $463,000 in the third quarter of 2006. The quarter ended with cash on hand of $11,899,000 and working capital of $20,228,000. None of the company's cash is invested in asset-backed commercial paper.
Net income before tax for the third quarter 2007 was $719,000 or one cent per common share compared with net loss before tax of $829,000 or one cent per common share for the same quarter in 2006. A stock-based compensation expense of $286,000 was recognized in the third quarter of 2007. Although these are non-cash expenses, with no actual impact on the company's operations, generally accepted accounting principles require that they be recognized in the calculation of net income. Earnings before interest, taxes, depreciation, amortization and stock option expense (EBITDAS) for the quarter were $1,621,000 compared with $1,095,000 for the same quarter in 2006, a significant increase of 48 per cent. While EBITDAS is a non-generally accepted accounting principles measure, it is a common measure used by industry to normalize non-operating factors that are included in the net income results.
The company tracks recurring revenue as a percentage of operating expenses. Recurring revenue for the quarter increased to 111 per cent of operating expenses, up from 93 per cent in the third quarter of 2006. Zedi has begun to report on recurring revenue as a percentage of the company's total cash expenditures, which in addition to operating expenses includes deferred development and capital asset purchases, and reports 76 per cent for the third quarter of 2007, up from 68 per cent in the third quarter of 2006. The company believes that these two measures are significant indicators of performance.
The company also announces that it has granted 1,380,917 options to employees, officers and directors of the corporation. The exercise price of the options is 53 cents, which is the closing price at the time the options were granted by the board of directors on Nov. 13, 2007. All of the options vest equally in thirds over a three-year period and expire in equal amounts on the second, third and fourth anniversaries from the date of grant. The company also granted 517,844 restricted stock units to employees, officers and directors of the corporation, vesting two years from the date of grant.