Tuesday, 19 February 2008

Some Key Numbers To Note With Release Of Brainhunter's Q1 Results

Brainhunter Inc. (BH - TSX)
Brainhunter released its Q1F08 (Dec. 31) results last Friday and while we'll discuss the numbers, there's one area we want to focus on.

For the corresponding periods of Q1F08 and Q1F07:
  • Revenue was up 8% to $59.1 million.

  • Gross margins were steady at 15.4%

  • Staffing expenses were up by approximately $800 thousand or 9% from 8.3% and

  • SG&A (Selling, General & Administrative) were up 4% from 3.3%.

  • On the above two points, the company said, "The increases in staffing expense is largely due to the additional investment in more senior sales and recruiting personnel required to properly handle the sales growth opportunities resulting from both new clients and existing clients where Brainhunter's status has moved to being a preferred supplier versus secondary supplier."

  • In speaking with management, expectations are that increases in EBITDA will become evident in Q2 from client growth, which is tied to the rise in staffing & sales.

  • EBITDA was $1.3 million from $2 million.

What was very interesting to us was the decline of long-term debt, with a significant portion moved into the current portion. Long-term debt declined to $2.4 million from $14.7 million but the current portion grew to $14.4 from $3.2 million.

BH has debt that comes to term over the next 12 months. The natural question is, how will the company take care of this item. A key point to remember is the Workopolis agreement that Brainhunter recently concluded that will put $10 million into the company's coffers. We spoke with management and the vast majority of these funds will go towards debt obligations. The upside to BH is that when this debt is eliminated, it will add approximately $1.6 million to the bottom line.

To read the news release click here.