Attention Business/Financial Editors:
Strong nine month results for Envoy Communications Group
Gross Margin and EBITDA up over 40%
TORONTO, Aug. 29 /CNW/ - Geoff Genovese, President and CEO of Envoy
Communications Group Inc. (NASDAQ: ECGI/TSE: ECG) today announced that the
company had another record setting nine month period with gross margin up 41%,
EBITDA increasing by 45% and revenue up 39%.
At the last annual meeting, we noted several goals for Envoy for the 2000
fiscal year. We wanted to build three international companies that are best of
breed in each of their fields: Branding, Marketing and Technology (system
integration, e-commerce and web design). We wanted to double our gross margin
run rate to $100 million annually and we wanted to secure a listing on the
NASDAQ within the year. I am happy to report that we have made tremendous
progress in the third quarter toward meeting if not exceeding these
objectives.
In this last quarter, Envoy announced that it had reached an agreement to
purchase Gilchrist Brothers Ltd., a digital imaging and design company based
in the UK. Gilchrist will operate as part of the Watt Group and complement the
company's existing internationally recognized creative design expertise with
leading-edge digital imaging services. Gilchrist's clients include Asda, Marks
and Spencer, Next, and Mars. Gilchrist adds 120 employees to the Envoy family
in London, Leeds and Paris.
On the Technology front and also in the third quarter, Envoy announced
that it had reached an agreement to purchase Sage Information Consultants
Inc., one of North America's leading technology solution providers, a
Microsoft Solution Provider Partner in Canada and the U.S. and part of
Microsoft's Partner Advisory Council. We are currently in the process of
integrating Sage with Devlin Applied Design en route to creating one of North
America's premier digital professional services (DPS) companies, a company
able to provide total front and back-end e-commerce solutions. We will be
announcing a new brand name and identity for Sage and Devlin with a focused
advertising campaign in the near future.
During the fourth quarter of 2000 we closed both the Gilchrist Bros. and
Sage Information Consultants transactions. These two acquisitions in
conjunction with our existing companies brings Envoy's gross margin run rate
to approximately $85 million.
Our Marketing group has also made progress in the past quarter, as New
York-based Hampel Stefanides secured agency of record status for Juno Online
Services Inc, the world's second largest Internet service provider.
Also in the third quarter of 2000, Envoy has showcased its integrated
marketing model as we launched a high profile, multi-faceted marketing
campaign for Oxford Properties, one of Canada's leading commercial real estate
ownership and management companies. The project, a world first in the
convergence of off and online retailing, involved Communiqué, The Watt Group
and FUSIONcreative.
With accomplishments like those noted above, our gross margin run rate is
fast approaching $83 million and we are well on our way to reaching the $100
million goal by the end of the year.
Finally, Envoy received its NASDAQ listing during this last quarter. The
listing provides Envoy with access to one of the worlds largest pools of
capital and increases the liquidity of its common shares going forward.
Moreover, the international profile of the NASDAQ Stock Market has created a
stronger currency for our shares for potential acquisition targets.
Financial Highlights - 3 months ending June 30, 2000
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Envoy's operating results for the three months ending June, 2000 reflect
growth in top line revenue and gross margin of over 20% compared with the
third quarter of last year. EBITDA also experienced significant growth over
the last year as it increased to $2.8 million for the third quarter of 2000,
up from $1.8 million for the same quarter last year - an increase of 55%.
"EBITDA is an important measure of profitability and we are pleased with
this growth." said Joe Leeder, Envoy's CFO. "When you grow through acquisition
like Envoy has, the goodwill amortization expense can be significant. A number
of U.S. companies use pooling of interest accounting to account for their
acquisitions because it results in no goodwill expense. We focus on EBITDA
because it eliminates the impact of this non-cash expense and allows investors
to compare us with our peer group on a level playing field."
The financial highlights for 3 months ending June 30th, 2000 are as
follows:
<<
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3 months ending
June 30th, 2000 2000 1999 % Change
-----------------------------------------------------------------------
Revenue $44,469,269 $36,911,205 20%
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Gross Margin $13,716,105 $11,363,553 21%
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EBITDA $2,798,742 $1,800,942 55%
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Net Income $970,735 $772,338 26%
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EBITDA/Share - FD $0.15 $0.12 25%
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Net Income/Share - FD $0.05 $0.05 0%
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>>
Financial highlights - 9 months ending June 30, 2000
----------------------------------------------------
For the nine month period ending June 30th, 2000 revenue grew 39% to
$140.5 million, up from $101.4 million for the nine months ending June 30th ,
1999. Gross margin increased to $39.4 million from $27.9 million, an increase
of 41% over the same period last year. Envoy's net income increased 11% to
$2.2 million despite the fact that the company paid 49% income tax as compared
to 30% last year.
We continue to stress the importance of EBITDA (earnings before interest,
taxes, depreciation and amortization) as a measurement of Envoy's performance
and Envoy's EBITDA was up 45% year over year from $4.8 million to $7 million.
EBITDA per share increased to $0.38 from $0.34 despite a 32% year over year
increase in the number of fully diluted shares outstanding. (The reason for
this is we were unable to employ funds raised in two previous financings until
our NASDAQ listing was cleared.) This represents an increase of 45% over June
1999. Expressed as a percentage of gross margin, EBITDA profit margin was
17.8% for the period.
The financial highlights for 9 months ending June 30th, 2000 are as
follows:
<<
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9 months ending
June 30th, 2000 2000 1999 % Change
-----------------------------------------------------------------------
Revenue $140,490,919 $101,384,170 39%
-----------------------------------------------------------------------
Gross Margin $39,358,968 $27,921,400 41%
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EBITDA $7,002,873 $4,840,889 45%
-----------------------------------------------------------------------
Net Income $2,202,197 $1,963,800 12%
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EBITDA/share - FD $0.38 $0.34 12%
-----------------------------------------------------------------------
Net Income/Share - FD $0.12 $0.14 (14%)
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Weighed average FD Shares
Outstanding 18,653,324 14,143,297 32%
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Working Capital $18,634,277 $11,535,868
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Shareholders Equity $57,909,695 $40,612,003
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>>
A new breed company, Envoy (www.envoy.to) is an integrated e-Marketer,
digitally driven and committed to building global brands both off and on-line.
Envoy owns leading advertising and e-Marketing agencies, Communique, Devlin
Applied Design, FUSIONcreative, Gilchrist Brothers (UK), Hampel/Stefanides of
New York, Sage Information Consultants and The Watt Group. Envoy's impressive
roster of clients include adidas-Salomon Canada, Aer Lingus, Alliance
Atlantis, BASF, Benjamin Moore, Bermuda Telephone, Bridgestone/Firestone,
CAMCO, Canadian Football League, Canada Life, CCOHS, CIBC, Castrol, CDNOW,
EMPORI.COM, Fairmont Hotels (USA), FedEx, Fisherman's Friend, Health Canada,
Hewlett Packard, Honda, Hummingbird, IMAX Corporation, Juno Online Services,
LCBO, National Discount Brokers, MAC Cosmetics, Oxford Properties Group Inc.,
Panasonic, PETsMART, PhoneFree, Pizza Hut Canada, Prudential (USA), Safeway,
SPAR Aerospace, Sprint Canada, SportsRocket.com, State Farm (USA), Steelcase,
Taylor Made, TD Waterhouse (USA), Wal-Mart and Woofur.com.
-30-
For further information: Corporate Investor Relations: Jason Mandel,
(416) 599-2256, jasonm@envoy.to; Media Relations: Beverley Hammond,
(416) 593-7555 x366, beverlyh@communique.to |
