This week’s stock to watch is Circa Enterprises Inc. [TSXV:CTO], an engineering company that designs, manufactures, markets, and sells products to a broad range of industries.
Circa’s operations consist of two distinct business lines – the first being telecommunications surge protection and related products, sold primarily to the United States market, through Circa Telecom, and the second being fabricated metal products Circa Metals. The surge protection business consists of the design, manufacture, marketing and sale of surge protection products, which provide primary protection to telephone systems and data transmission equipment against voltage surges. Circa Metals provides custom metal fabrication services to Circa Enterprises itself and to third parties. Circa Metals also designs, manufactures, markets and sells fabricated enclosures, pole line hardware and other products to the Canadian electrical industry through its Hydel product line.
Circa announced in late July that it has completed the acquisition of substantially all of the assets of Guardian Telecom Inc., a designer, manufacturer and supplier of hazardous and ruggedized high performance telecommunications equipment, for a total cash consideration of $3,577,071 and no shares. The business will operate as Guardian Telecom, a division of Circa Enterprises.
The Company recorded profit from operations attributable to shareholders of $50,000 for the three months ended March 31, 2017, compared to a loss of $354,000 in Q1 2016. The improvement in the Q1 2017 profit is the result of lower Telecom production costs and selling, general and administrative expenses compared to the prior year when the Company was integrating the Alberta Computer Cable business.
Although for the three months ended March 31, 2017, total sales decreased to $5.5 million, from $5.7 million in the first quarter of 2016 due to lower Telecom sales; Circa Metals segment partially offset the loss with stronger sales. While the lower sales negatively impacted earnings, the reduction in operating costs and the absence of restructuring costs helped improve profits compared to the same quarter in 2016.
Circa last traded at $0.76 with a 52 week range of $0.69-$0.97.