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Northampton Nine-Month Sales Decrease by 0.6%

TORONTO, ONTARIO--(Marketwire - Feb 26, 2013) - Northampton Group Inc. (TSX VENTURE:NHG), an integrated Canadian hotelier, today reported its financial results for the third quarter and nine months ended December 31, 2012. In the third quarter, Northampton posted a quarter-over-quarter sales decrease of 3.9%; in the nine-month period sales decreased by 0.6% period-over-period and net income fell by 38.7%. 

"The third quarter is typically a little soft in our business," said Vinod Patel, President and CEO of the Northampton Group. "However, in this quarter we also experienced some specific challenges in the corridor west of Toronto. New hotel builds and price discounting by up-scale hotels combined with a continued slowdown in travel from the US to reduce our top line and squeeze our margins. With the exception of a disproportional increase in payroll costs, our careful financial policies continue to control costs as we support our hotels'' customized marketing programs. Our franchisors have been extremely useful in this respect, and in fact there was a recent Hotelier Magazine article featuring Northampton Group on this very subject (http://www.foodserviceworld.com/MagazinesHotelier/0113-Jan-HotelierMagazine.pdf)."

Highlights of the Quarter:

  • In the nine months, consolidated revenues fell 0.6% to $23,313,472 from $23,456,404 for the same period in the previous fiscal year; for the third quarter, revenues decreased 3.9% to $6,925,505 from $7,204,920 in the same quarter in fiscal 2012;
  • Cost of sales rose 3.7% in the nine-month period and 0.5% in the quarter. Administrative expenses increased 3.8% in the nine months and fell 3.4% in the quarter. Amortization and interest costs of $2,240,369 and $1,551,758 respectively compared to $1,998,380 and $1,593,383 in the nine months and $677,465 and $509,108 respectively compared to $711,546 and $526,526 in the corresponding quarter in the previous year. 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 primarily a result of repayment of the company''s debenture;
  • Gross profit margin for the nine months declined slightly to 48.7% from 50.8% for the same period in the prior year, and in the quarter fell to 45.7% from 48.1% last year, as a result of lower revenues and certain disproportionate cost increases;
  • EBITDA (earnings before income taxes, interest, depreciation, and amortization) in the nine months ended December 31, 2012 decreased 11.1% to $5,830,632 from $6,558,952 in the prior period, and decreased 5.2% to $1,648,546 from $1,738,261 in the same quarter in the previous year;
  • Net income for the nine months declined to $814,408, off 38.7% from $1,329,517 in the same period in fiscal 2012. Net income for the quarter rose to $398,636, up 138.6% from $167,079 in the previous year;
  • Earnings per share in the nine months fell 38.7% to $0.031 per share compared to $0.051 in the same period in the previous year. In the quarter, earnings per share increased 138.7% to $0.015 from $0.006 in the previous fiscal year;
  • Cash flow, or net income plus amortization, decreased 8.2% in the nine months to $3,054,777 or $0.117 per share. In the quarter, cash flow increased 22.5% to $1,076,101 or $0.041 per share; 
  • Same-hotel sales fell in most of Northampton''s markets, but particularly in the corridor to the west of Toronto, including the hotels in the Toronto airport locale.

Industry analysts Pannell Kerr Forster Consulting (PKF Canada) reported a slight average increase of 0.7 percentage point in occupancy nationally for 2012 compared to 2011, while average daily rates (ADRs) increased by 1.9%. PKF''s analysis of 2012 RevPAR Canada-wide showed an improvement of 3.1% over 2011, with Ontario''s RevPAR increasing by 2.7% and Quebec''s decreasing by 0.1% in calendar 2012. For calendar 2013, PKF is forecasting RevPAR increases of 3.75% nationally and 3.49%, 1.02%, and 3.37% for the Toronto, Ottawa, and Montreal areas respectively.

The following is a tabulated summary of Northampton''s results from continuing operations:

    Three months ended December 31   Nine months ended December 31
    2012   2011   % change   2012   2011   % change
Revenues   6,925,505   7,204,920   -3.9   23,313,472   23,456,404   -0.6
Gross profit   3,165,984   3,462,928   -8.6   11,352,795   11,917,392   -4.7
Pre-tax profit   461,973   500,189   -7.6   2,038,505   2,967,189   -31.3
Profit   407,973   358,189   13.7   1,368,005   2,045,289   -33.1
Net income   398,636   167,079   138.6   814,408   1,329,517   -38.7
Earnings per share   0.015   0.006   138.6   0.031   0.051   -38.7
Cash flow   1,076,101   878,625   22.5   3,054,777   3,327,897   -8.2
Cash flow per share   0.041   0.034   22.5   0.117   0.128   -8.2
EBITDA   1,648,546   1,738,261   -5.2   5,830,632   6,558,952   -11.1

For a more complete discussion of the Company''s results, please see Northampton''s quarterly filings on www.sedar.com, or the quarterly MD&A, financials, and notes to the financial statements on the Company''s website at www.nhgi.com.

About Northampton

Northampton Group Inc. is an integrated Canadian hotelier with ownership and management interests in 2,002 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. Northampton has consistently excelled in this sector, offering services that exceed expectations. 


This news release contains forward-looking statements within the meaning of the "safe harbour" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and other factors that may cause Northampton''s results to differ materially from expectations. Such risks may relate to hotel performance, market fluctuations, investee performance, and other risks more fully described in the Company''s annual report, posted on the Company''s website and on SEDAR. These forward-looking statements speak only as of the date hereof. Northampton Group disclaims any intent or obligation to update these forward-looking statements.