Diversification resulted in four new products being launched which contributed to gross profit margin

Air conditioning company, CAC 2000 managed to grow its revenues by $53 million but experienced flat profits during the first quarter ended January 31, 2020.

CAC 2000, which is an engineering company specialising in applied air conditioning systems (chillers, cooling towers, pumps, air handling units, VRF etc.) and listed on the Jamaica Stock Exchange (JSE) made revenues of $306.56 million during the first quarter compared to $253.33 million for the comparable period in 2020. Gross profit was flat at $114.81 million coming from $113.27 million for 2019.

Operating profit was down to $9.03 million, coming from the $16.62 million posted in 2019. Expenses were kept lower than the previous year, as the company took rapid action to respond to COVID-19 by reducing operating costs, but without making any of its staff members redundant. Expenses were cut by seven per cent compared to the prior year.

Turning challenges into opportunities

Newly appointed Chief Executive Officer Gia Abraham remarked that the first quarter results “continue on a positive trend, as CAC seeks to turn challenges into opportunities”.

Said Abraham: “Like everyone else coping with the COVID-19 pandemic, CAC has been adjusting to the regularly changing curfews and rules, but our amazing team continues to quickly and professionally adapt to the ever-changing landscape, as we work together to contain our expenses and expand our offerings.”

She reports that CAC continues to lead in the Indoor Environmental Quality (IEQ) path as the air conditioning and engineering company partner with its customers to identify solutions such as fresh air injection systems, higher efficiency filtration, sterilisation and improved maintenance services, all of which gained the company additional revenues.

According to Abraham, who is credited as the first female CEO of a JSE listed construction company, “this focus on diversification resulted in four new products being launched which contributed to an increase of seven per cent in gross profit margin”.

Operationally, the implementation of CAC’s new Enterprise Resource Planning (ERP) system is still on track for April 1, 2021, led by a team of both external consultants and internal staff all looking to improve the operational efficiency of CAC through the streamlining of our processes.  Abraham expects that the system will provide more insight and help CAC to focus on improving its operational effectiveness in areas such as inventory days (169 PY vs. 180 LY) and days trade payables (105 vs. 122 LY) and improve its combined cash cycle.

Trade receivables increased by 16 per cent for the following reasons:

1. The slowdown of payments by customers in November and December 2020 (job execution and customers maintaining their cash reserves and delaying payments)
2. Increase in 2020 Q4 billing
3. Increased contract assets (work done but not yet billable to customers as per IFRS 15).”We have started the new financial year with a healthy job portfolio and are working on some exciting changes, and initiatives as we strategically set upon the path to profitable growth as the leading experts on energy and IEQ all for the purpose of ‘Improving People’s Lives’, the new CAC CEO reported.

As for corporate social responsibility, the CAC 2000 Foundation has done an amazing job of getting staff involved in volunteerism, working with the Jamaica Diaspora Taskforce Action Network to provide for the community and partnering with the Women’s Leadership Initiative to execute some of their initiatives. Currently, the Foundation is awaits approval for grant funding to resume offering its Service Technician Programme.