“In an economic climate that continues to be very difficult, we delivered results that once again prove the value of our business model and demonstrates our commitment to significant ongoing investments in products, technologies and geographies. This reflects our ongoing commitment to long term growth and profitability of the Company. We are prudently managing costs while staying true to our strategy, protecting the future viability and success of Zedi through continued investment in the development of products and services. The general industry outlook for the remainder of the year continues to be one of caution,” said Matthew Heffernan, Zedi president & chief executive officer.
Even though new drilling activity was very low all through the quarter, Zedi generated net new revenue through services that appeal to producers facing raised cost pressures, and the recurring revenue base remains strong. The company has maintained its strong balance sheet position with end of period working capital of CAD11,503,000.
After the impact of a retroactive change in accounting policy for intangible assets that caused decreases in net income of CAD189,000 for first quarter of 2009 and CAD13,000 in the year-ago quarter. The change in accounting policy was adopted in the first quarter of 2009 as mandated by Canadian GAAP and serves as a step toward Zedi acceptance of international financial reporting standards in fiscal year 2011.
A stock-based compensation expense of CAD310,000 was recognized in the first quarter of 2009, compared to CAD413,000 in the year-ago quarter. Although these are non-cash expenses, with no actual impact on Zedi’s operations, generally accepted accounting principles require that they be recognized in the calculation of net income. Earnings before interest, taxes, depreciation, amortization and stock-based compensation expense (EBITDAS) the first quarter of 2009 was CAD1,661,000 compared to CAD2,309,000 in the year-ago quarter. The change in accounting policy described above decreased EBITDAS by CAD410,000 in the first quarter of 2009 and by CAD200,000 in the year-ago quarter. While EBITDAS is a non GAAP measure it is a common measure used by industry to normalize non-operating factors that are comprised in the net income results.
Zedi continued to carry out against a strategy of delivering value through data throughout he first quarter of 2009. As a result of the three acquisitions concluded in 2008, the comapny at present monitors in surplus of 36,000 wells, of which 25,000 are measured with charts and over 11,000 are measured electronically.
To this end, in 2008 Zedi invested about CAD7,300,000 or CAD 0.07 per share on forward looking activities including research and development, marketing and international sales efforts. The company anticipates investing a similar amount in 2009, not withstanding existing conditions in the energy business. This investment will permit Zedi to increase existing solutions and release new products and services, positioning the company to achieve success in the oil side of the business similar to its achievement in natural gas. The investment also advances the pursuit of international customers.
