Adeptron Technologie : Adeptron Improves Margins and Delivers Profitable Results from Continuing Operations

Adeptron Improves Margins and Delivers Profitable Results from Continuing Operations

Company: Adeptron Technologies Corporation

Stock Symbol: ATQ

Listing: Toronto Stock Exchange (TSX)

Web Site: www.adeptron.com

TORONTO, May 30, 2011 /CNW/ - Adeptron Technologies Corporation  (ATQ: TSX) ("Adeptron" or the "Company"), a specialist at delivering integrated product solutions and support to the global technology and electronics industry, today reports unaudited first quarter financial results for the three-month period ended March 31, 2011.

Adeptron reports in U.S. dollars and all numbers below are expressed in thousands of U.S. dollars, except per share information and gross margin percentages.

On January 1, 2011, Adeptron adopted International Financial Reporting Standards ("IFRS") for financial reporting purposes, using a transition date of January 1, 2010. The financial statements for the three months ended March 31, 2011, including required comparative information, have been prepared in accordance with International Financial Reporting Standards 1, First-time Adoption of International Financial Reporting Standards, and with International Accounting Standard ("IAS") 34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB"). Previously, the Company prepared its Interim and Annual Consolidated Financial Statements in accordance with Canadian generally accepted accounting principles ("previous GAAP"). Unless otherwise noted, 2010 comparative information has been prepared in accordance with IFRS.

The adoption of IFRS has not had an impact on the Company's operations, strategic decisions and cash flow. The most significant area of impact was the adoption of the IFRS upstream accounting principles. Further information on the IFRS impacts is provided in the Accounting Policies and Estimates Section of the MD&A, including reconciliations between previous GAAP and IFRS net earnings, operating earnings and other financial metrics and in the condensed consolidated interim financial statements for the period ended March 31, 2011 which are available on the Company's website at www.adeptron.com and the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.

Q1 2011 Financial Highlights:

• Sales increased slightly by $415 or 4.2% over the first quarter of 2010 to $10,307,
• Gross margin increased to 12.9% compared to 6.1% for the same period last year,
• Income from continued operations of $192 compared to net loss of $624 for the same period last year,
• Loss from discontinued operations of $263 compared to net loss of $150 for the same period last year,
• Net loss and comprehensive loss for period of $71 compared to net loss of $774 for the same period last year,
• Adjusted EBITDA from continued operations of $618 compared to an Adjusted EBITDA loss of $214 for the same period last year,
• Adjusted EBITDA loss from discontinued operations of $62 compared to an Adjusted EBITDA loss of $132 for the same period last year,
• Earnings of $0.00 per share compared to loss of $0.01 per share last year,
• Cash provided by operating activities of $657 compared to cash used in operating activities of $309 for the same period last year.

Trent Carruthers, CEO of Adeptron stated, "The first quarter of 2011 showed progress resulting from changes and restructuring efforts instituted in 2010. We managed to wind down operations in our San Jose site successfully by the end of January, as planned. We are happy with our efforts to look after our San Jose customers, suppliers and employees in a responsible manner while at the same time minimizing our closure costs. Given our transition to IFRS during the quarter, the San Jose closure costs have been presented in our first quarter financial statements as discontinued operations. Furthermore, we commissioned the equipment moved from San Jose to both Ottawa and Markham during the quarter and expect increased manufacturing efficiencies and lower costs by more effectively using resources and technology and better aligning production with market demand."

"Overall, continuing operations are profitable which in largely the result of improved margins from reducing direct expenses. We continued to fine tune restructuring plans particularly with labour efficiency and other direct costs during the first quarter and benefited from these changes. We have also had success in negotiating with our suppliers to achieve material cost savings which we expect be more evident in coming quarters. We continue to prudently manage our financial position and exercise discipline in all aspects of our capital and operating expenditures," Carruthers remarked.

Carruthers stated, "Our sales improved by approximately $0.4 million over the results from the same quarter last year.  Although sales improved over the same period last year there continues to be additional sales not being realized as the result of raw material component shortages and increased lead times being experienced in the EMS industry. The trends on raw materials continue to improve, however, there has been slight pressure given the recent tsunami in Japan. Adeptron has been proactive dealing with suppliers and customers and has mitigated any significant risks that may occur in sourcing certain components."

Carruthers added, "We have made steady progress in advancing our mid and long-term growth initiatives. Steps taken to secure additional headcount to improve and expedite increased revenue to support our Ottawa and Markham is complete. The Company continued to generate and compete for new revenue opportunities with current and potential customers during the quarter. This renewed focus on growth was supported by a well-balanced sales funnel, spanning across many of the Company's industry sales segments. On the financial front we are anticipating to transition to a new credit facility under a new senior lender during the quarter which we expect to benefit the Company's cash position and are engaged in completing other initiatives which we anticipate will provide more cash resources to handle the working capital needs of increased business in the second quarter and beyond.  Our efforts continue to be focused on meeting demands of our customers in spite of the supply chain issues that I previously mentioned, attracting and absorbing new customers and their orders, and of course, increasing the efficiency of all aspects of our operations to ensure we improve our overall results."

The Company has applied to an extension of the review period instituted by the Toronto Stock Exchange (the "TSX") in connection with its examination of the eligibility for continued listing on the TSX of Adeptron's common shares.  The Company continues to examine options in respect of alternate Canadian stock exchanges.

Q1-2011 - Financial Summary

Selected comparative financial information for the three-month period ended March 31, 2011 and 2010 is shown below:

Income Statement - Continuing Operations					3-Month Period March 31, 2011				3-Month Period March 31, 2011
Sales Gross Profit Gross Profit % Net Income (loss) Adjusted EBITDA2 Basic & diluted income (loss) per share Number of common shares outstanding					$10,307 $1,328 12.9% $192 $618 $0.00 96,708				$9,892 $605 6.1% ($624) ($214) ($0.01) 96,708

Income Statement - Discontinuing Operations			3-Month Period March 31, 2011				3-Month Period March 31, 2011
Sales Gross Profit Gross Profit % Net Income (loss) Adjusted EBITDA2 Basic & diluted income (loss) per share Number of common shares outstanding			$327 $13 4.0% ($263) ($62) $0.00 96,708				$412 ($48) (11.7%) ($150) ($132) $0.00 96,708

EBITDA¹ and Adjusted EBITDA2 reconciliations to GAAP Net Income/(Loss) for the three-month period ended March 31, 2011 and 2010 are shown below:

			3-Month Period March 31, 2011				3-Month Period March 31, 2010
Net income (loss) per IFRS			($71)				($774)
Add (deduct):
Interest expense			213				206
Depreciation and amortization			204				284
EBITDA1,3			$346				($284)
Embedded foreign currency derivatives			-				($92)
Stock-based compensation			9				12
Loss from discontinued operations			263				150
Adjusted EBITDA2,3			$618				($214)

1EBITDA means earnings before interest, taxes, depreciation and amortization.

2Adjusted EBITDA means earnings before interest, taxes, depreciation, amortization, loss on settlement of subordinated debenture, stock-based compensation, embedded foreign currency derivatives, goodwill impairment, severance and termination benefits and discontinued operations.

3EBITDA and Adjusted EBITDA are not recognized measures under IFRS. However, management believes that EBITDA and Adjusted EBITDA as herein defined are useful supplemental measures to net income (loss), as it provides investors with an indication of cash earnings prior to debt service, capital expenditures, income taxes and other non-recurring and non-cash items. Readers should be cautioned, however, that EBITDA and Adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance IFRS as an indicator of the Company's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows. The Company's method of calculating EBITDA and Adjusted EBITDA may differ from the methods by which other companies calculate EBITDA and Adjusted EBITDA and, accordingly, the EBITDA and Adjusted EBITDA used herein may not be comparable to measures used by other companies.

Adeptron's unaudited 2011 first quarter financial statements and MD&A will be available on Adeptron's web site on May 31, 2011 at www.adeptron.com and the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com.

About Adeptron:

Adeptron is a specialist at delivering integrated product solutions and support to the global technology and electronics industry. As a leading global provider of complete Electronics Manufacturing Services (EMS), Adeptron offers world class manufacturing facilities and global partners throughout Canada, the United States, Israel, China an Mexico, allowing the Company to provide its customers the flexibility and scalability to competitively achieve total solutions to their present and future electronics outsourcing needs. Adeptron is a public company whose common shares are listed for trading on the Toronto Stock Exchange (TSX) under the symbol: "ATQ". Visit Adeptron at: www.adeptron.com.

THIS NEWS RELEASE MAY CONTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO SUCH MATTERS AS EXPECTED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, TECHNOLOGICAL DEVELOPMENTS, DEVELOPMENT ACTIVITIES AND LIKE MATTERS.  THESE STATEMENTS INVOLVE RISK AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO RISK FACTORS DESCRIBED IN DOCUMENTS FILED WITH REGULATORY AUTHORITIES, SUCH AS THE COMPANY'S MOST RECENTLY FILED ANNUAL AND QUARTERLY REPORTS AND ANNUAL INFORMATION FORM.  ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED AS A RESULT OF THESE RISKS AND SHOULD NOT BE RELIED UPON AS A PREDICTION OF FUTURE EVENTS.  ADEPTRON TECHNOLOGIES CORPORATION UNDERTAKES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON WHICH SUCH STATEMENT IS MADE, OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.

For further information:

Adeptron Company Contact:		Adeptron Company Contact:
Trent Carruthers Chief Executive Officer Tel: [phone] x3232 [e-mail]		Jon Szczur Chief Financial Officer Tel: [phone] x2299 [e-mail]