LGS Group Announces Increased Revenue for its 2nd Quarter
Montreal, November 23, 1999
For the second quarter ended September 30, 1999, LGS Group Inc. posted revenue of $55.0 million, an increase of 4% compared to revenue of $52.9 million during the corresponding quarter in the previous fiscal year. Net earnings stood at $704,000 compared to last year's $2.1 million. Net earnings per share went from 18 cents last year to 6 cents this year.
For the six months, revenue amounted to $118.6 million, growing by 18% over last year's $100.6 million. Net profit reached $2.9 million, compared to $3.9 million a year ago. Earnings per share for the six months stood at 23 cents compared to 36 cents last year, while the weighted average number of shares outstanding increased from 10.9 million in 1998 to 12.8 million in 1999.
"Second quarter results were impacted by the slowdown experienced in all information technology sectors due to the approaching Year 2000 transition", commented Senior Executive Vice President Andr‚ Gauthier, adding that this situation developed according to expectations, as announced when LGS' first quarter results were issued. "However, we are beginning to see signs of increased activity, added Gauthier, as many clients are confident they can deal with unexpected occurrences related to the transition and are starting to consider new IT projects". Non-Y2K revenue increased by 38 % over last year's first six months as LGS secured a number of new mandates in document and work management, network support, operations outsourcing and the Internet, to name only a few. This growth replaced Y2K-related revenue which decreased from $17.1 million in the first quarter to $11.4 million in the second quarter. A year ago, the revenue related to the new millennium reached $19.6 million in the second quarter.
For his part, LGS Group President Raymond Lafontaine noted that LGS continues to make strategic investments to develop its specialized practices, notably in the Customer Relationship Management (CRM) sector. "The customer relationship management market offers such great opportunities that LGS has decided to team up with the American firm Siebel and start a CRM practice", he said. "This, together with our Microsoft alliance - which will allow for the training of up to 500 of our specialists - and our internal Enterprise Resources Planning (ERP) project, which will enable LGS to manage a strong growth in revenue and size, impacted negatively our quarterly earnings per share" commented Mr. Lafontaine. "Such investments, he said, will pay off in the near future".
"Moreover, he said, the acquisition of BlueChip Informatica, an Italian information technology firm, will allow us to expand our activities in Europe", he said, "precisely in the Customer Relationship Management (CRM) area, where our Verona office has a strong expertise in the pharmaceutical industry". Furthermore, LGS' European activities continue to be profitable, generating earnings of $359,000 in the quarter, compared to a loss of $89,000 during the same period last year.
LGS Group Inc. (LGSA at NASDAQ, LGS.A at ME) is one of Canada's largest information technology consulting firms specializing in management and systems integration. With annual sales of $230 million, LGS currently employs more than 2,100 professionals in 20 offices in Canada, the United States and Europe. The company is active in most areas of the private and public sectors.
This release may contain forward-looking statements that involve risks and uncertainties which might cause the actual results to differ materially from those projected. Potential risks and uncertainties include the ability to procure, properly price, retain, and successfully complete projects, the availability of technical personnel, and competition. These risks and uncertainties are discussed under the heading "Risk Management " in the Company's Annual Report. |
