Kelly Ambrose - President and Chief Executive Officer
Mukesh Sabharwal - Vice-President, Chief Financial Officer
Advantex Marketing International, Inc. (ADX) Q4F08 Earnings Call September 26, 2008 8:30 AM ET
Welcome to the Advantex Marketing International, Inc. fiscal 2008 year-end results conference call. (Operator Instructions) I will now turn the conference over to Kelly Ambrose, President and Chief Executive Officer.
I am joined on this call by Mukesh Sabharwal, our Chief Financial Officer.
I hope that you have all had a chance to review the news release that we issued late yesterday announcing the fourth quarter and year-end results as well as the MD&A we filed with Cedar and posted on our website. They provided a rather complete overview of our performance. This morning I will briefly review only some of the highlights and leave plenty of time for discussion with you when we open the call in a few minutes for your comment and questions.
As our comments may include statements that may be deemed to be of a forward-looking nature I must begin with the following standard disclosure. Any statements we make today that may be considered to be forward-looking statements are based on our current expectations or beliefs based on the information currently available to us. Such statements are subject to significant risks, uncertainties and assumptions as are described in our news releases and regulatory filings.
These may cause the actual results to differ materially from those that we currently expect. These factors include, but are not limited to, the effects of or changes in general economic conditions on the customers and markets we serve, changes that may take place in our costs and expenditures, uncertainties with respect to the availability and cost of financing, delays in finalizing contracts and other factors discussed in more detail in our news releases, management discussion and analysis and our other regulatory filings. Please refer to these. We assume no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements.
I believe that it is correct to describe our fiscal 2008 as a year when Advantex made very good progress in executing our strategies, improved our financial performance and most importantly positioned our company for growth and improved profitability in fiscal 2009 and future years. I will list some of the key measures we have taken in the past year and recently that we expect will be important factors going forward.
We closed financings in late December 2007 and January 2008. These gave us access to $4.2 million of funds to grow our advanced purchase marketing or what we call our APM program. At year-end we had deployed $6.2 million of funds as initial advances to new merchants. As there was a lag between attaining these funds and enrolling the backlog of merchants anxious to join the APM program, we did not realize the full contribution of the APM program revenues in 2008 and we will see more of this in the current year.
We expect to continue growing this program and our single most significant driver of Advantex’s growth and prosperity will be APM programs. We will be using funds available under our existing credit facility. The demand is strongest in dining, golf, small ends and spa categories.
In partnership with CIBC we have launched an infinite hotel program targeted toward CIBC infinite Visa credit card holders. This program markets the participating hotels to CIBC infinite Visa card holders and entitles card holders to special privileges at participating hotels. We will earn a fee for the marketing services provided to participating hotels. The response from hotels to the rollout of this program was encouraging and the program went live September 1, 2008.
The revenues from this program will be incremental to our fiscal 2008 revenues. There are more than 2,800 hotels, inns and resorts in Canada. An initiative that we continue to work on as a growth area is retail. We are in discussions with CIBC to launch our advanced purchase marketing program in this market. We have access to $3.5 million of funds under an established credit facility that will be available once we have reached agreement with CIBC which allows Advantex to expand the APM program to retail fashion establishments.
The 39% growth in U.S. dollars in our online shopping malls transaction fee revenue of 2008 resulted from an improvement implemented by our team that we put in place with extensive experience, that’s the team, in online marketing for fiscal 2006. Since the 2008 year-end we have secured an extension of our contract with United Airlines, which is our busiest online mall, and have also signed a Memorandum of Understanding with Lufthansa to host their European online malls.
We expect these and other initiatives to partially offset the fact that in June Delta Airlines gave notice to terminate its online partnership with us.
Last year we also identified additional manpower and skills, general and administrative expense savings. We only partially realized the benefits of these measures implemented from mid-March 2008 onwards, during the last quarter of fiscal 2008. These measures carry annualized cost savings of approximately $650,000.
We continue to invest in our information technology, keeping pace with new security and privacy standards, completing development of several platforms connected to our CIBC Advantex program and online shopping malls.
As to the financial results, revenues for all of fiscal 2008 were $11.5 million, up slightly from $11.3 million in the prior year. However, indicative of the improvements we have made in our business, the contribution from operations was $461,000 in fiscal 2008 compared with a loss of $193,000 in fiscal 2007. That is a swing of $644,000 from the negative to the positive. Most of this contribution from operations was realized in the fourth quarter when we reported a contribution from operations of $357,000.
We reduced our net loss of fiscal 2008 to $1.4 million from $2.6 million in the prior year. We believe that the fourth quarter gives an indication of the turnaround we are making in the financial performance towards achieving bottom line profitability.
Now we will open the call to your comments and questions.
(Operator Instructions) Mr. Ambrose there are no questions.
Thank you again for joining us this morning and for your interest in Advantex and your continuing support. I look forward to speaking with you again when we hold our annual meeting and announce our first quarter results. Meanwhile if anyone still has a question please feel free to contact us.