(COMTEX) B: FREEMARKETS REPORTS RECORD FOURTH QUARTER 1999 RESULTS RE
B: FREEMARKETS REPORTS RECORD FOURTH QUARTER 1999 RESULTS REVENUES INCREASE 46%
OVER PREVIOUS QUARTER; AUCTION VOLUME GROWS 86% TO NEARLY $1.4 Billion
PITTSBURGH, Jan 31, 2000 /PRNewswire via COMTEX/ -- FreeMarkets, Inc.
(Nasdaq: FMKT), the global leader in business-to-business online
auctions, today announced its results of operations for the fourth
quarter and the year ended December 31, 1999.
Revenues for the fourth quarter were $7.8 million, compared to $3.0
million last year. This represents an increase of 161% over the fourth
quarter last year, and 46% over the quarter ended September 30, 1999.
Operating loss for the fourth quarter, excluding stock-based expense,
was $8.6 million, or $.27 per pro-forma diluted share, compared to
operating income of $126,000, or $.00 per diluted share in the fourth
quarter of 1998. The net loss for the quarter was $8.3 million, or $.26
per pro-forma diluted share.
Revenues for the year ended December 31, 1999 were $20.9 million,
compared to $7.8 million in 1998, an increase of 168%. Operating loss
for the year ended December 31, 1999, excluding stock-based expense,
was $17.5 million, or $.63 per pro-forma diluted share, compared to
$.00 per diluted share in 1998. The net loss for 1999 was $21.8
million, or $.79 per pro-forma diluted share.
"Our quarterly and full-year results reflect our continued commitment
to investing in our business, executing our strategy and creating value
for our clients and shareholders," said Glen T. Meakem, Chairman and
CEO of FreeMarkets. "During the fourth quarter, we added 20 new supply
verticals and over 900 new suppliers participated in our online
auctions, bringing our total number of supplier participants to more
than 3,000 from over 45 countries. We also increased the number of
clients who use our online auction marketplace from 18 to 34 and
continued to attract outstanding new employees, ending the year with a
total headcount of 376. We are particularly pleased with our success in
diversifying our revenue base and we are optimistic about our prospects
for continued growth in 2000."
During the fourth quarter, FreeMarkets conducted online auctions for
nearly $1.4 billion worth of direct materials, commodities and
services. This represents an increase of 275% over the same period a
year earlier and 86% over the previous quarter. For the year, auction
volume was over $2.7 billion, an increase of 178% over 1998. Since
1995, approximately $4.1 billion of commerce has been conducted through
the FreeMarkets online auction marketplace.
Auction volume is cyclical and affected by seasonal fluctuations. A
significant number of clients typically seek to complete projects in
the fourth quarter in order to have pricing in place prior to the new
year. As a result, auction volume can be particularly high in the
fourth quarter.
In the year ended December 31, 1999, revenue from United Technologies
Corporation and General Motors Corporation represented 34% and 15%,
respectively, of total revenues. In the fourth quarter, these
percentages decreased to 22% from United Technologies and 10% from
General Motors.
Of the revenue from General Motors in both the quarter and the year,
over 60% was attributable to services that FreeMarkets performed for
Delphi Automotive Systems Corporation. These services were covered
through 1999 under FreeMarkets' agreements with General Motors.
As previously disclosed, on January 4, 2000, General Motors informed
FreeMarkets that it was canceling its agreements with FreeMarkets. On
January 20, 2000, Delphi signed a new agreement with FreeMarkets, under
which FreeMarkets will continue to serve Delphi through 2000.
FreeMarkets does not expect the cancellation of its agreements with
General Motors to have a material impact on its revenues or results of
operations in 2000, nor does it expect revenue from Delphi to represent
a material percentage of its total revenues in 2000.
The number of clients served through the FreeMarkets online auction
marketplace grew to 34 in the fourth quarter, compared to 6 in the same
period last year, and 18 in the quarter ended September 30, 1999. New
clients added in the fourth quarter include: Raytheon Co., Remington
Arms Inc., Cinergy Services, Inc., Cummins Engine Co. and Dofasco Inc.
In the year ended December 31, 1999, FreeMarkets served 35 clients,
192% more than the 12 it served in all of 1998.
About FreeMarkets FreeMarkets is the global leader in creating
business-to-business online auctions for industrial parts, raw
materials, commodities and services. The Company created online
auctions for over $2.7 billion worth of purchase orders in 1999 and
nearly $1.0 billion worth of purchase orders in 1998. Since 1995,
FreeMarkets has created online auctions for products in more than 70
supply verticals, including injection molded plastic parts, commercial
machinings, metal fabrications, chemicals, printed circuit boards,
corrugated packaging and coal. More than 3,000 suppliers from over 45
countries have participated in FreeMarkets auctions. FreeMarkets
provides access to its online auction marketplace to industrial buyers
and suppliers. The FreeMarkets marketplace includes proprietary online
auction technology, technical operations, industrial market making
services, access to a global database of suppliers and supplier
research, call center support to buyers and suppliers in over 30
languages, and marketplace rules. The Company's current clients include
United Technologies Corporation, The Quaker Oats Company, Eaton
Corporation, Emerson Electric Company, Honeywell International Inc.,
FirstEnergy Corp., SmithKline Beecham plc, Navistar International and
Delphi Automotive Systems Corporation. During the fourth quarter of
1999, FreeMarkets completed an initial public offering of 4.1 million
shares of its common stock, raising $182.2 million. FreeMarkets can be
found on the Web at www.freemarkets.com. FreeMarkets is a registered
trademark of FreeMarkets, Inc.
Forward-looking statements Statements in this press release that are
not historical facts, including those statements that refer to
FreeMarkets' plans, prospects, expectations, strategies, intentions,
hopes and beliefs, are forward-looking statements. These
forward-looking statements are based on information available to
FreeMarkets today, and FreeMarkets assumes no obligation to update
these statements as circumstances change. There are risks and
uncertainties that could cause actual results to differ materially from
the forward-looking statements, including, without limitation, market
acceptance of our online auction marketplace, the competitive nature of
the market for business-to-business online auction services,
FreeMarkets' ability to retain and increase revenue from existing
clients and to execute agreements with new clients, and FreeMarkets'
ability to attract and retain qualified personnel. These and other risk
factors are described in detail in FreeMarkets' prospectus dated
December 9, 1999, which is included as part of its Registration
Statement on Form S-1, filed with the Securities and Exchange
Commission.
FreeMarkets, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands)
Three Months Ended Year Ended
December 31, December 31,
1998 1999 1998 1999
Revenues $2,999 $7,843 $7,801 $20,880
Cost of revenues 1,428 4,799 4,258 12,166
Gross profit 1,571 3,044 3,543 8,714
Operating costs:
Research & development 279 1,953 842 4,913
Sales & marketing 269 6,314 656 11,939
General &
administrative 897 3,426 2,026 9,316
Stock-based expense -- 472 -- 5,200
Total operating costs 1,445 12,165 3,524 31,368
Operating income (loss) 126 (9,121) 19 (22,654)
Interest and other, net 19 779 215 833
Net income (loss) $145 $(8,342) $234 $(21,821)
EPS:
Basic $0.01 $(0.43) $0.02 $(1.46)
Diluted 0.00 (0.43) 0.01 (1.46)
Pro-forma basic -- (0.26) -- (0.79)
Pro-forma diluted -- (0.26) -- (0.79)
Weighted average
shares:
Basic 11,798,661 19,238,530 11,191,670 14,914,189
Diluted 30,383,220 19,238,530 26,776,611 14,914,189
Pro-forma basic -- 31,626,053 -- 27,717,073
Pro-forma diluted -- 31,626,053 -- 27,717,073
Operating income (loss):
Excluding stock-based
expense: $126 $(8,649) $19 $(17,454)
Per diluted share 0.00 (0.45) 0.00 (1.17)
Per pro-forma
diluted share -- (0.27) -- (0.63)
Operational data:
Auction volume
(in millions) $363,500 $1,361,900 $978,900 $2,724,700
Number of clients 6 34 12 35
Headcount 105 376 105 376
Pro-forma EPS was calculated assuming the conversion of convertible
preferred stock as of the beginning of the period or when issued, if
later, even if inclusion is antidilutive.
Contact: Karen Kovatch
Senior Manager, Corporate Communications
FreeMarkets
(412) 297-8767
kkovatch@freemarkets.com
Gary Doyle
Director of Investor Relations
FreeMarkets
(412) 297-8849
gdoyle@freemarkets.com
SOURCE FreeMarkets, Inc.
(C) 2000 PR Newswire. All rights reserved.
prnewswire.com
-0-
CONTACT: Karen Kovatch, Senior Manager, Corporate Communications,
412-297-8767, or kkovatch@freemarkets.com, or Gary Doyle,
Director of Investor
Relations, 412-297-8849, or gdoyle@freemarkets.com, both of
FreeMarkets
WEB PAGE: freemarkets.com
GEOGRAPHY: Pennsylvania
INDUSTRY CODE: CPR
MLM
SUBJECT CODE: ERN
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