RECORD YEAR-END AND FOURTH QUARTER RESULTS
TORONTO, ONTARIO-- February 23, 2000
CASH EARNINGS PER SHARE UP 38%
Mosaic Group Inc. (TSE:MGX), Canada's leading outsourced marketing
services company, today announced record results both for the year
and the quarter ended December 31, 1999. In the fourth quarter
ended December 31, 1999, Mosaic had net earnings before goodwill
charges ("cash earnings")1 of $7.73 million, up 43% over the $5.41
million earned in the fourth quarter of 1998. For the quarter,
fully diluted cash earnings per share ("cash EPS") were up 38%,
from $0.08 to $0.11. Full-year results also showed strong growth,
with cash earnings increasing 67%, from $13.63 million in 1998 to
$22.77 million in 1999. On a per-share basis, full-year fully
diluted cash EPS increased to $0.33, up 38% from $0.24 in 1998.
Consolidated financial information is attached.
"1999 was another great year for Mosaic," said Michael Preston,
Chairman and Chief Executive Officer of Mosaic Group. "We have
achieved strong growth in every financial measure that is used to
evaluate our business - revenue, cash flow, and cash earnings -
both on an absolute and per-share basis. That we have achieved
these results in a year where we integrated a number of recent
North American acquisitions is remarkable, and speaks well for our
prospects going forward.
Large, Long Term Contracts Driving Internal Growth
"The size and scale of Mosaic is opening us up to much larger
contract opportunities than we have ever had in the past. Some of
the contract wins that we announced in 1999 are indicative of
where our business is headed in terms of landing multi-year,
multi-million-dollar contracts. To give a sense of scope, our two
1999 contract wins with Prudential PLC will generate over $50
million in combined revenue for Mosaic in 2000.
"This represents a significant change in the way Mosaic does
business with its clients. We are taking marketing outsourcing to
a new level - a true strategic partnership with our clients, where
we get involved with every aspect of their below-the-line
marketing efforts. This level of partnership gives our clients
better service, with immediate and measurable marketing results,
while generating impressive growth opportunities for Mosaic, as
well as a higher degree of certainty over our revenue and customer
base. This approach will also help us to maintain strong internal
growth rates in future periods as we continue to benefit from
opportunities of scale.
In 1999, Mosaic had internal revenue growth of 23%. In 2000,
management expects to achieve a minimum of 25% internal revenue
growth which, combined with revenues from new acquisitions, is
expected to drive consolidated revenues beyond $550 million in
2000, up over 35% from $400 million in 1999.
New Services, New Geographies
"Mosaic now offers a fully integrated array of below-the-line
marketing and e-commerce services on an outsourced basis," said
Michael Cottman, Vice-Chairman, President and Chief Operating
Officer of Mosaic. "In 2000, we plan to enter the German and
Italian markets, and begin the process of rolling out our suite of
services across our geographic network in Europe. Our expansion
will continue to be driven by client. Filling in our geographic
network gives us the capacity to execute more pan-European
programs - these provide a strategic advantage for our clients and
are profitable for Mosaic.
"As our size and skills continue to enhance our service delivery
capabilities, we will also begin to focus on providing services to
our clients across their various selling channels. Traditionally,
our strength has been in providing marketing services through our
clients' retail selling channels. Increasingly, we will be
developing our service offerings to serve not only the retail
channel, but also the business-to-business and direct-to-consumer
channels. We see substantial opportunity to develop profitable
business in e-commerce services by serving e-tailers as well as
the business-to-business portals of the digital economy.
"Looking forward, I think that 2000 will be another record year in
terms of revenue, cash flow, and cash EPS," Cottman concluded. "We
now have 13 consecutive record quarters behind us. I am confident
this trend will continue during 2000."
This press release contains forward-looking statements. By their
nature, forward-looking statements are subject to risks and
uncertainties that could result in actual performance being
materially different from anticipated results. The Company
cautions readers when making decisions to consider the risks and
uncertainties inherent in such forward-looking statements.
Mosaic Group Inc., with operations in the United States, Europe
and Canada, provides outsourced marketing services on an
integrated basis to leading corporations serving international
markets. Mosaic combines strategic thinking with leading edge
technologies to effectively deliver immediate and measurable
results for its clients. Marketing solutions include electronic
marketing, e-commerce, new media services, contract sales,
merchandising, field marketing, direct marketing, database
development and management, product promotion, corporate
communications and sales force training. Mosaic, which has
approximately 71 million shares outstanding, trades on the TSE
under the symbol MGX.
www.mosaicgroupinc.com
/T/
MOSAIC GROUP INC.
Consolidated Statements of Operations
(In thousands of dollars, except per share amounts)
Three months ended Year ended
December 31, December 31,
-------------------- --------------
1999 1998 1999 1998
Revenues $ 115,998 $ 84,940 $ 400,426 $ 254,523
Direct costs 78,252 55,674 265,144 169,623
------------------------------------------------------------------------
Gross profit 37,746 29,266 135,282 84,900
Selling, general and
administrative 25,463 20,488 93,987 59,118
------------------------------------------------------------------------
Earnings before depreciation and amortization, interest and income
taxes (EBITDA) 12,283 8,778 41,295 25,782
Depreciation and other
amortization 1,342 1,081 5,536 3,385
Interest, net 1,459 962 6,605 4,075
------------------------------------------------------------------------
Earnings before income taxes
and goodwill charges 9,482 6,735 29,154 18,322
------------------------------------------------------------------------
Income taxes:
Current 165 642 1,999 2,289
Deferred 1,586 679 4,387 2,404
------------------------------------------------------------------------
1,751 1,321 6,386 4,693
------------------------------------------------------------------------
Earnings before goodwill
charges 7,731 5,414 22,768 13,629
Goodwill charges, net of
income taxes 1,365 1,450 5,052 3,578
------------------------------------------------------------------------
Net earnings $ 6,366 $ 3,964 $ 17,716 $ 10,051
------------------------------------------------------------------------
------------------------------------------------------------------------
Earnings per share:
Basic $ 0.09 $ 0.07 $ 0.27 $ 0.19
Fully diluted $ 0.09 $ 0.06 $ 0.26 $ 0.18
Earnings per share before goodwill
charges:
Basic $ 0.11 $ 0.09 $ 0.34 $ 0.26
Fully diluted $ 0.11 $ 0.08 $ 0.33 $ 0.24
Weighted average number
of shares outstanding (in thousands):
Basic 70,798 60,428 66,468 52,633
Fully diluted 74,804 66,754 70,294 58,796
------------------------------------------------------------------------
------------------------------------------------------------------------
MOSAIC GROUP INC.
Consolidated Balance Sheets
December 31, 1999
(In thousands of dollars)
------------------------------------------------------------------------
------------------------------------------------------------------------
December 31, December 31,
1999 1998
------------------------------------------------------------------------
Assets
Current assets:
Cash $ 10,036 $ 4,735
Accounts receivable 63,957 54,587
Work in progress and unbilled revenue 20,785 10,408
Prepaid expenses 6,230 3,888
Income taxes receivable 901 -
------------------------------------------------------------------------
101,909 73,618
Property and equipment 24,029 9,640
Goodwill, net of accumulated
amortization 204,989 184,510
Other assets 15,559 4,217
------------------------------------------------------------------------
$ 346,486 $ 271,985
------------------------------------------------------------------------
------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 4,364 $ 1,590
Accounts payable and
accrued liabilities 60,111 40,785
Deferred revenue 17,776 27,247
Accrued acquisition liabilities 8,805 13,121
Income taxes payable - 1,979
Current portion of long-term debt 380 1,471
------------------------------------------------------------------------
91,436 86,193
Long-term debt 78,086 66,075
Deferred income taxes 4,106 1,073
Shareholders' equity:
Share capital 148,770 98,415
Contributed surplus - 317
Foreign currency translation adjustment (6,367) 6,866
Retained earnings 30,455 13,046
------------------------------------------------------------------------
172,858 118,644
------------------------------------------------------------------------
$ 346,486 $ 271,985
------------------------------------------------------------------------
------------------------------------------------------------------------
/T/
1 The Company, consistent with a new accounting disclosure
standard recently approved by the Canadian Institute of Chartered
Accountants, is reporting net earnings before goodwill charges in
addition to net earnings after goodwill charges. The new caption
'net earnings before goodwill charges' better allows financial
statement readers to compare the results of companies which use
purchase accounting for its acquisitions (resulting in a goodwill
charge to earnings) with those who use pooling of interest
accounting (which results in no goodwill charge to earnings).
Pooling of interest accounting is often employed in the United
States but is seldom permitted under existing Canadian accounting
standards.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Mosaic Group Inc.
Ben Kaak
CFO
(416) 813-4272
kaakb@mosaicgroupinc.com
or
Catherine Linley
Public Relations
(416) 813-4277 |
