Northampton Group Inc. (TSX VENTURE:NHG), an integrated Canadian hotelier, yesterday reported its financial results for the fourth quarter and fiscal year ended March 31, 2013. In the fourth quarter, Northampton posted a quarter-over-quarter sales increase of 1.4% with much improved net income; in the 12 months, sales decreased by 0.2% while net income rose by 27.0%.
"Our fourth quarter is typically soft," said Vinod Patel, President and CEO of the Northampton Group. "However, our revenue this quarter was slightly better than last year's, reflecting a stronger economy, and careful management meant a strong upswing in EBITDA, cash flow, and earnings. But throughout fiscal 2013, we have experienced some specific challenges in different regions and sectors of our business. New hotels and price discounting continue to squeeze our margins in the corridor west of Toronto and in Montreal, where road construction offered an additional barrier to the aloft Montreal. And while there were improvements in the automotive sector and corporate travel generally, leisure and group/tour travel lagged. Overall, despite the sale of one hotel and slight declines in most of our hotels' revenues, we kept our top line steady, and we continue to manage costs carefully, with the result that the year showed improvements in cash flow, net income, and profits."
In Northampton's major markets, calendar 2012 saw occupancy rates increase by one-to-two points, with average daily room rates (ADRs) up by $2.00-to-$3.00, according to Pannell Kerr Forster Consulting (PKF). With PKF's predictions for 2013 showing flat occupancy rates and ADR increases of around 3%, although both economic and industry factors could make that improvement difficult to achieve.
Northampton also sadly reports the passing of long-time Northampton legal counsel and board member, Robert Preston. Born in 1944, Mr. Preston was called to the bar after graduating from law at the University of Western Ontario. A man of much energy and many interests, he so enjoyed his work as Managing Director of the law firm, Ricketts Harris LLP, that retirement was never on the cards.
"Bob was a key player in Northampton's evolution as a public company, and contributed generously of his time, energy, and ideas," said Vinod Patel. "We will all miss him, and his family has our deepest condolences."
Highlights of the Quarter:
- In the 12 months, consolidated revenues fell 0.2% to $29,517,728, from $29,574,351 for the same period in the previous fiscal year; for the fourth quarter, revenues increased 1.4% to $6,204,256 from $6,117,947 in the same quarter in fiscal 2012;
- Cost of sales rose 3.7% in the year and 4.0% in the quarter. Administrative expenses increased 4.2% in the 12 months and 5.7% in the quarter, most of the increase due to increases in payroll and utility costs. Depreciation and interest costs were $2,818,617 and $2,024,887, compared to $2,582,266 and $2,127,610 in fiscal 2013 and 2012 respectively. The rise in amortization pertains to the inclusion of the amortization provision on the new aloft Vaughan Mills while the reduction in interest costs is the net result of increases from the aloft Vaughan Mills and repayment of the company's debenture;
- Gross profit for fiscal 2013 declined slightly to $13,813,596, down 4.3% from $14,435,659 in the prior year. The combination of the decline in revenues and certain disproportionate cost increases resulted in this margin squeeze;
- EBITDA (earnings before income taxes, interest, depreciation, and amortization) in the year ended March 31, 2013 decreased 1.0% to $6,678,184 from $6,744,777 in the prior year, and increased 356.1% to $847,552 from $185,825 in the fourth quarter in the previous year;
- Net income for the fiscal year rose 27.0% to $774,195 from $609,691 in fiscal 2012. Net income for the quarter rose to ($40,213), up from ($719,826) in the previous year;
- Earnings per share in fiscal 2013 rose 27.0% to $0.03 per share compared to $0.023 in the previous year. In the quarter, earnings per share increased to ($0.002) from ($0.028) in the prior period;
- Cash flow, or net income plus amortization, increased 12.6% in fiscal 2013 to $3,592,812 or $0.138 per share. In the quarter, cash flow increased substantially to $538,035 or $0.021 per share from ($135,940) or ($0.005) per share in the prior period;
- Same-hotel sales fell in most of Northampton's markets, but particularly in the corridor to the west of Toronto and Montreal's airport area;
- The Quality Hotel & Suites Oakville won Choice Hotels' Gold Award for the third consecutive year;
- In May of 2012, Northampton successfully launched the aloft Vaughan Mills.
The following is a tabulated summary of Northampton's results from continuing operations:
|Three months ended March 31||Twelve months ended March 31|
|2013||2012||% change||2013||2012||% change|
|Earnings per share||(0.002)||(0.028)||--||0.030||0.023||27.0|
|Cash flow per share||0.021||(0.005)||--||0.138||0.122||12.6|
Northampton Group Inc. is an integrated Canadian hotelier with ownership and management interests in 1,943 rooms in 16 hotels (including the new aloft Vaughan Mills hotel in Vaughan, Ontario) with a selective strategic development program in place. Focused on creating a solid return for all stakeholders, Northampton's proven, market-sensitive strategy is to acquire or build hotels that provide superior overnight accommodation in the mid-price market.
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