CALGARY, ALBERTA–(Marketwire – Aug. 17, 2011) – Quorum Information Technologies Inc. (“Quorum” or the “Company”) (TSX VENTURE:QIS) today released its Second Quarter (Q2) Fiscal Year (FY) 2011 results. Quorum delivers its dealership management system (DMS), XSellerator™, 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 an industry partner with Microsoft. Quorum's XSellerator product is broadly promoted to its target dealerships throughout North America by these prominent companies.
Maury Marks, Quorum's President and CEO made the following remarks about the Company's Q2 FY2011 results:
Both 2009 and 2010 were difficult years in the automotive industry. In 2009 GM, our most significant partner, went through bankruptcy and has since seen a full recovery. In 2010, as part of GM becoming a leaner organization, they reduced their North American franchised dealerships by 42%. This resulted in the loss of approximately 10% of our customers because they were forced to close their dealerships and the transformation of another 10% of our customers as they moved away from GM to new OEM's or aftermarket organizations.
Quorum had a forced diversification of our business and now 25% of our customers operate non-GM franchised dealerships (up from 10% at the beginning of 2009). The Corporation has changed strategically; we are now an “all makes” organization, but with a continued key emphasis on GM dealerships. Quorum supplies our product to GM, Isuzu, Chrysler, Hyundai, Kia, Nissan, Subaru, Saab, NAPA and Bumper to Bumper franchised dealership customers.
|Positive outcomes in Q2 FY2011 include:|
- Continued growth in our dealership count, reaching 249 active dealership rooftops at the end of Q2 FY2011. We continue to experience small numbers of dealership losses each quarter as former GM dealerships close their dealerships after unsuccessfully operating under a new franchise.
- Quorum posted its eight consecutive quarter of cash flow positive results. These results are due to a well-managed cost structure and attaining a critical mass of dealerships that generate significant recurring support revenues ($1,623K for Q2 FY2011).
- Quorum, under our GM IDMS contract, received an increased number of GM integration projects for development and delivery in Q4 FY2011 and Q1 FY2012.
|Key financial results summary:|
- Sales decreased by 10% to $1,830K in Q2 FY2011 from $2,031 in Q2 FY2010 and margin after direct costs decreased to $1,059K in Q2 FY2011 compared to $1,162 in Q2 FY2010, a 9% decrease. The change in sales is due to:
- A decrease of $194K in net new revenue which was a result of completing six installations in Q2 FY2011 down from nine installations in Q2 FY2010.
- An increase of $66K in recurring support revenue as a result from having 249 active dealership rooftops at the end of Q2 FY2011 versus 228 at the end of Q2 FY2010.
- A decrease in integration revenue of $74K due to a reduced number of GM integration projects.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to $238K in Q2 FY2011 from $412K in Q2 FY2011. The decrease is largely due to lower net new revenue and the resulting lower gross margin from this revenue.
- Net income before taxes decreased to $45K in Q2 FY2011 compared to $322K in Q2 FY2010. The additional decrease is largely due to a non-cash foreign exchange gain in FY2010 of $145K.
- Quorum had net income of $93K in Q2 FY2011 compared to a net income of $369K in Q2 FY2010.
|Our primary focus for 2011 is to grow our quarterly sales and implementation rates. This is a Company- wide initiative and to support the initiative, we are:|
- Increasing our qualified lead pipeline with a target to increase the pipeline by 50% by the end of Q3 FY2011.
- Investing resources in our sales process to move the process from “good” to “great”.
- Hiring more sales staff.
- Developing some innovative product enhancements for release in Q3 and Q4 of 2011. The changes will dramatically change how we demonstrate our product to new prospects.
Quorum has filed its Q2 2011 consolidated financial statements and notes thereto as at and for the period ended June 30, 2011 and accompanying management's discussion and analysis in accordance with National Instrument 51-102 – Continuous Disclosure Obligations adopted by the Canadian securities regulatory authorities. Additional information about Quorum will be available on Quorum's SEDAR profile at www.sedar.com and Quorum's website at www.QuorumDMS.com.
|Six Months Ended
June 30, 2011
|Six Months Ended
June 30, 2010
June 30, 2011
June 30, 2010
March 31, 2011
March 31, 2010
|Margin after direct costs||2,123,371||2,238,448||1,058,678||1,162,018||1,064,693||1,076,430|
|Earnings (loss) before interest, taxes and amortization (EBITDA)||561,265||708,835||238,508||412,058||322,757||296,777|
|Income (loss) before deferred income tax||146,593||287,072||44,836||321,970||101,757||(34,898||)|
|Net income (loss)||(7,306||)||340,698||92,871||368,730||(100,177||)||(28,032||)|
|Basic earnings per share||$||(0.0002||)||$||0.0087||$||0.0024||$||0.0094||$||(0.0025||)||$||(0.0007||)|
|Fully diluted earnings per share||$||(0.0002||)||$||0.0080||$||0.0023||$||0.0087||$||(0.0025||)||$||(0.0007||)|
|Weighted average number of common shares|
|XSellerator installations – in the period||12||19||6||9||6||10|
|XSellerator active dealership rooftops||249||228||249||228||245||221|
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 Silver Certified Partner and Field-Level Managed ISV 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.
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 year ended June 30, 2011. 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.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.