PC ServiceSource Reports Good Revenue and Earnings Growth in First
Quarter Results
biz.yahoo.com
DALLAS--(BUSINESS WIRE)--April 8, 1997--PC ServiceSource announced a solid increase in net revenues for the three
month period ending March 31, 1997. The Company reported net revenues of $32,421,000, an increase of 23 percent over
the $26,281,000 reported for the same period in 1996. These results also represent a 13 percent increase over net revenues of
$28,601,000 reported in the previous quarter ended December 31, 1996.
Net earnings for the quarter were $447,000, or $0.08 per share, compared to $654,000, or $0.15 per share for the first
quarter in 1996. However, net earnings increased 60 percent over the previous quarter results of $279,000 or $0.05 per
share.
Mark Hilz, PC ServiceSource's President and CEO stated, "We are pleased with the revenue results, but are aware there are
still areas of volatility on which we must focus. We continue to work on leveraging our operating margins to improve the
profitability of the Company. We are also specifically focusing on operating results from our subsidiary, Cyclix Engineering,
which are sensitive to volume fluctuations from period to period. We are working on and are close to achieving a sustainable
base of repair lines and customers which will reduce the volatility in Cyclix's earnings."
Mr. Hilz continued, "Providing the best service in the industry has made us the leader. In order to maintain this leadership
position, we must also be highly price competitive. Because of this, we took aggressive pricing action on some of our parts
during the quarter. This was a carefully considered action which paid dividends in the form of sales volume, and we feel will
continue to add sales and attract new customers. However, this action resulted in a decrease in our gross margins for the
quarter. We believe these margins will improve as customers attracted by our lowered prices also utilize PC ServiceSource for
a broader range of computer parts."
Mr. Hilz commented further, "We are particularly pleased that our selling, general and administrative expenses as a percent of
sales decreased from the fourth quarter, and we anticipate the SG&A improvement will continue into the current quarter.
Additionally, we expect the combination of our pricing action and marketing initiatives will cause sales to continue to be strong
in the current quarter. Based on these assumptions, our outlook for the second quarter is to achieve sales of $33 million to $35
million with EPS in the $0.12 to $0.14 range."
Mr. Hilz discussed the Company's earlier comments on potential large-scale OEM opportunities. "We continue to develop
these opportunities, although we have found the sales cycle for a major new OEM outsourcing agreement is longer than we
anticipated and may come about in stages, rather than all at once. We see growth from and continue to pursue additional
opportunities by extending our current OEM relationships into greater areas of service. While smaller in scope, these
opportunities not only have the potential for solid revenue growth, they help us strengthen our relationship with our significant
customers."
PC ServiceSource (NASDAQ-PCSS) supports a customer base of over 20,000 service providers, providing services for
more than 30 major computer manufacturers, and is widely recognized as the largest supplier of service logistics to the PC
industry. Cyclix Engineering, the Company's remanufacturing subsidiary, offers a range of services which strategically
complement the distribution-oriented service logistics offerings of PC ServiceSource. PC ServiceSource recently launched pc
service net, the PC industry's first real-time Internet ordering and information retrieval system for spare parts. General and
financial data are located on the Internet at www.pcservice.com .
PC Service Source, Inc.
Comparative Financial Data
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
1997 1996
---------- ----------
Revenues $32,421 $26,281
Gross margin 8,986 7,573
Operating expenses:
Selling, general and
administrative 7,404 5,869
Depreciation and amortization 742 434
--------- ---------
Total operating expenses 8,146 6,303
--------- ---------
Earnings from operations 840 1,270
Interest expense, net 129 229
--------- ---------
Earnings before income taxes 711 1,041
Net earnings $ 447 $ 654
========= =========
Earnings per share $0.08 $0.15
Weighted average common
shares outstanding 5,886 4,373
PC Service Source, Inc.
Supplemental 1997 and 1996 Income Statement Data
(In thousands, except per share amounts)
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 1997 December 31, 1996 Variance
-------------- ----------------- --------
Revenues $32,421 100.0% $28,601 100.0% $3,820
Gross margin 8,986 27.7 8,268 28.9 718
Operating expenses:
Selling 2,372 7.3 2,377 8.3 5
Operating 1,872 5.8 1,754 6.1 (118)
General 3,160 9.7 2,967 10.4 (193)
and administrative
Depreciation and
amortization 742 2.3 649 2.3 (93)
------ ----- ----- ----- -----
Total operating expenses 8,146 25.1 7,747 27.1 (399)
Earnings from operations 840 2.6 521 1.8 319
Interest expense, net 129 0.4 75 0.3 (54)
------ ----- ----- ----- -----
Earnings before
income taxes 711 2.2 446 1.5 265
Net earnings $447 1.4% $279 1.0% $168
====== ===== ===== ===== =====
Earnings per share $0.08 $0.05 $0.03
Weighted average common 5,886 5,884 (2)
shares outstanding
PC Service Source, Inc.
Balance Sheet
(In thousands)
(Unaudited)
March 31, 1997 December 31, 1996
-------------- -----------------
Assets
Current assets $38,716 $37,847
Property and equipment, net 11,187 10,418
Other assets 2,174 1,909
------- -------
Total assets $52,077 $50,174
======= =======
Liabilities and Equity
Current liabilities $15,912 $14,353
Long-term debt 2,956 3,059
Other liabilities 566 566
Shareholders' equity 32,643 32,196
------- -------
Total liabilities and equity $52,077 $50,174
======= =======
Caution Regarding Forward-Looking Statements: The Company occasionally makes forward-looking statements concerning its
plans, goals, product and service offerings, and anticipated financial performance. These forward-looking statements may
generally be identified by introductions such as "outlook" for an upcoming period of time, or words and phrases such as
"should", "expect", "hope", "plans", "projected", "believes", "forward-looking" (or variants of those words and phrases) or
similar language indicating the expression of an opinion or view concerning the future. These forward-looking statements are
subject to risks and uncertainties based on a number of factors and actual results or events may differ materially from those
anticipated by such forward-looking statements. These factors include, but are not limited to, those described under the
heading "Caution Regarding Forward-Looking Statements" in the Company's Report on Form 10K for 1996 as it may be
updated in any subsequent Report on Form 10Q, all as filed with the Securities and Exchange Commission.
CONTACT: PC Service Source, Inc.
Mark T. Hilz, President & CEO
Dan Hair, Sr. Vice President & CFO
972/481-4421 |
