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Press release from CNW Group

Glentel Inc. reports earnings per share of $0.23 for the second quarter ended June 30, 2012

Friday, July 27, 2012

Glentel Inc. reports earnings per share of $0.23 for the second quarter ended June 30, 201208:00 EDT Friday, July 27, 2012BURNABY, BC, July 27, 2012 /CNW/ - GLENTEL Inc. (TSX: GLN) today reported its results for the 2nd quarter and six months ended June 30, 2012. Financial highlights (tabular amounts in thousands of Canadian dollars, except per share data) follow. Three months ended June 30Six months endedJune 30 2012201120122011Sales$144,709$137,965$293,056$259,027Income before amortization, change infair value of redeemable financialinstruments, finance income andexpenses, and taxes$10,766$12,445$18,485$23,208Income before change in fair value ofredeemable financial instruments,finance income and expenses, andtaxes$8,149$9,610$13,269$17,805Net income$5,004$6,191$8,272$10,936Basic net income per common share$0.23$0.28$0.37$0.49Diluted net income per common share$0.22$0.28$0.37$0.49"The Company produced solid earnings in the 2nd quarter despite a challenging sales quarter in the Retail Canada Division," stated Thomas Skidmore, GLENTEL's President and Chief Executive Officer. "The Retail Canada Division had lower sales but delivered operating income comparable to the 2nd quarter in 2011. The Retail U.S. Division continues to increase overall sales and to increase store expansion; it acquired 12 stores in the Seattle and Portland areas in the 2nd quarter, as well as 6 stores in Northern California in the 1st quarter. We are looking forward to the 3rd and 4th quarters, which are traditionally the Company's two strongest quarters with the back-to-school and holiday selling seasons."Consolidated summary2nd Quarter 2012 compared to 2011Consolidated sales increased 5%, to $144.7 million compared to $138.0 million.Income was $10.8 million before amortization, change in fair value of redeemable financial instruments, finance income and expenses, and taxes, compared to $12.4 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes decreased to $8.1 million, compared to $9.6 million.Net income and basic earnings per common share were $5.0 million, and $0.23 per share respectively, compared to $6.2 million and $0.28 per share.Six months ended 2012 compared to 2011Consolidated sales increased 13%, to $293.1 million compared to $259.0 million.Income was $18.5 million before amortization, change in fair value of redeemable financial instruments, finance income and expenses, and taxes, compared to $23.2 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes decreased to $13.3 million, compared to $17.8 million.Net income and basic earnings per common share were $8.3 million and $0.37 per share respectively, compared to $10.9 million and $0.49 per share.Retail Canada2nd Quarter 2012 compared to 2011Sales of retail mobile phone products and services in the Retail Canada Division decreased 4% to $86.5 million, compared to $90.1 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes increased to $11.4 million, compared to $11.3 million. The division's operating income was 13% of sales in both 2012 and 2011.Notwithstanding the $3.6 million decrease in sales and same-store activations from the prior year, the division was able to increase operating income for the 2nd quarter of 2012 through increased margins and reduced operating expenses. We have concentrated on our operational procedures to align them with our carriers' recent focus on quality activations and churn management.The 2nd quarter of 2012 was challenging as the wireless business continues to change in the Canadian landscape. The Retail Canada Division saw same-store activations decline for the 2nd quarter versus the prior year. Some consumers are shifting their allegiance from the premium wireless brands to the fighter brands or secondary brands; as a result, we have also seen that more consumers are entering into lower plan contracts than in the past. The Company is very well positioned to embrace these market changes given that we offer the multi-carrier solution to our customers.Six months ended 2012 compared to 2011Sales of retail mobile phone products and services in the Retail Canada Division increased 6% to $177.1 million, compared to $167.1 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes decreased to $19.6 million, compared to $21.2 million.Retail U.S.2nd Quarter 2012 compared to 2011Sales of retail mobile phone products and services in the Retail U.S. Division increased 28% to $50.7 million, compared to $39.5 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes decreased to $1.9 million, compared to $4.1 million.Sales increased in the 2nd quarter with a greater number of stores operating in the 2nd quarter of 2012 compared to the same period in 2011. Sales of smartphones continue to increase and these smartphones have a higher selling price and higher cost of goods sold, which also increased sales from the prior period. Verizon introduced BOGO (buy one, get one free) promotions in the 1st quarter of 2012, and some of these programs were also offered in the 2nd quarter of 2012, which negatively affected margins. The Company matched these promotions to remain competitive in the market; this negatively impacted margins in the 2nd quarter by 5% versus the prior year. However, margins improved by 2% in the 2nd quarter of 2012 versus the 1st quarter of 2012.Diamond continues to increase its store footprint. It acquired 12 stores in the Seattle and Portland areas, to bring the store count to 214 in 17 states.Six months ended 2012 compared to 2011Sales of mobile phone products and services in the Retail U.S. Division increased 33% to $101.0 million, compared to $75.9 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes decreased to $4.1 million, compared to $6.1 million.Sales increased for the six months ended June 30, 2012, with a greater number of stores operating in 2012 compared to the same period in 2011. Sales of smartphones continue to increase and these smartphones have a higher selling price and higher cost of goods sold, which also increased sales from the prior period. Verizon introduced BOGO (buy one, get one free) promotions and various programs in the 1st quarter and 2nd quarters, which affected negatively margins. The Company matched these promotions to remain competitive in the market; this reduced margins by 5% for the six months ended June 30.Verizon introduced new "Share Everything" plan programs at the end of June 2012. These plans give customers unlimited voice minutes and text messaging and allow multiple devices to share data. We expect an increase in customer interest (new customers from other carriers or upgrades) as well as an increase in mobile broadband. We have implemented initiatives that provide increased hardware margins and operating cost reductions in the 3rd quarter and beyond.Business Division 2nd Quarter 2012 compared to 2011Business Division sales of terrestrial narrowband and broadband radio systems, satellite network services, and implementation services decreased 11% to $7.5 million, compared to $8.4 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes increased to $0.1 million, compared to a loss of $0.5 million.Six months ended 2012 compared to 2011Sales of terrestrial narrowband and broadband radio systems, satellite network services, and implementation services in the Business Division decreased 6% to $14.9 million, compared to $16.0 million.Operating income before change in fair value of redeemable financial instruments, finance income and expenses, and taxes increased to $0.1 million, compared to a loss of $0.8 million.Corporate2nd Quarter 2012 compared to 2011Corporate operating and administrative expenses decreased to $5.2 million (4% of sales), compared to $5.3 million (4% of sales). This includes Retail U.S. corporate costs of approximately $1.2 million (2010 - $0.9 million) and corporate development costs of $0.7 million.Six months ended 2012 compared to 2011Corporate operating expenses increased to $10.5 million (4% of sales), compared to $8.8 million (3% of sales). This includes Retail U.S. corporate costs of approximately $2.3 million (2010 - $1.8 million) and corporate development costs of $1.2 million.About GLENTEL GLENTEL (TSX: GLN) is the largest independent multi-carrier mobile phone retailer in Canada and a leading provider of innovative and reliable telecommunications services and solutions in North America. Founded in 1963 and headquartered in Burnaby, BC, Canada, GLENTEL comprises three operating divisions - Retail Canada, Retail U.S. and Business - that service thousands of consumers and commercial communications customers. The company operates over 540 corporate stores with more than 330 locations in Canada located nationally in retail malls, Costco Wholesale stores, and business centres; and more than 210 retail locations in the United States. GLENTEL offers a choice of network carrier and wireless device or mobile phone to Canadian consumers and offers the family of wireless products and services of Verizon Wireless as one of its select six National Premium Retailers in the United States. GLENTEL operates its business under the trading names Glentel Wireless, WIRELESSWAVE, WAVE SANS FIL, Tbooth wireless, la cabine T sans fil, WIRELESS etc., WAVE SANS FIL etc., Mac Station, and Diamond Wireless - a Verizon National Premium Retailer in the U.S.Forward-Looking StatementsStatements in this release relating to matters that are not historical fact are forward-looking statements based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that could cause or contribute to such differences include, but are not limited to, general economic conditions, changes in technology, reliance on third-party manufacturing, managing rapid growth, limited intellectual property protection, and other risks and uncertainties described in GLENTEL's public filings with securities regulatory authorities.NO STOCK EXCHANGE, SECURITIES COMMISSION, OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.SOURCE: Glentel Inc.For further information: Investor Relations Contact: Jas Boparai, Chief Financial Officer GLENTEL Inc. 604.415.6500 investors@glentel.com Media Contact: Melanie Mitchell GLENTEL Inc. 604.415.7002 melanie.mitchell@glentel.com For a copy of GLENTEL's annual report or for additional information visit www.glentel.com or www.sedar.com.