MONTREAL - Second-quarter revenues of Frisco Bay Industries Ltd., a provider of security systems and operator of white-label ATMs, fell nearly 17 percent to $11.4 million ($8.4 million U.S.) Earnings dropped 49 percent to $543,219 ($403,537 U.S.), the company said on Sept. 29.
Net earnings for the quarter ended July 31 amounted to 18 cents (13 cents U.S.) per share, down from 45 cents (33 cents U.S.) a share or $1.07 million ($748,000 U.S.) in the same period last year.
According to a news release, revenues declined due to a decrease in capital spending attributed to a weaker economy amid events such as the SARS outbreak in Toronto and the mad cow scare in Alberta.
The lower profit was due to reduced sales and a higher effective income tax rate. In previous periods, the company was able to carry forward losses from prior years to reduce its taxes.
"In spite of a reduction in product sales, the company was able to remain profitable in large part due to the strength of its recurring revenue model," said Barry Katsof, Frisco Bay's chairman and chief executive officer.
Following the acquisition of Frisco/ATMs in the first quarter, the company now derives more than 40 percent of its revenues from recurring revenue sources, including monitored access control, service contracts and ATM transaction fees. (See related story Canada's Frisco Bay acquires ATMs)
In the quarter, Frisco Bay sold 243,100 shares at $9 U.S. per share to a group of Canadian investment funds, for gross proceeds of just under $2.2 million U.S. (See related story Canadian ISO raises $2.2 million in private placement)
The money was used to retire part of the debt incurred with the acquisition of Frisco/ATMs, according to the release.
