Mosaic Has Record First Quarter Results
TORONTO, ONTARIO-- May 1, 2000
14th Consecutive Quarter of Record Revenues and Cash EPS
Mosaic Group Inc. (TSE: MGX), Canada's leading outsourced
marketing services agency, today announced financial results for
the first quarter ended March 31, 2000. For the quarter, revenues
increased 20% from the same period last year, to $98 million. Net
earnings before goodwill charges ("cash earnings") were $4.83
million for the quarter, up 65% from $2.92 million in the prior
year. Fully diluted cash earnings per share ("cash EPS") for the
quarter increased by 75%, from $0.04 to $0.07.
"We are very pleased with our results for the first quarter," said
Michael Preston, Chairman and Chief Executive Officer of Mosaic
Group. "For three-and-a-half years, we have consistently delivered
year-over-year record levels of revenue and cash earnings, on an
absolute and per share basis. Mosaic's product offerings and
integrated approach to client service continue to get an
enthusiastic reception in the marketplace for outsourced marketing
services. As we get larger, we get opportunities to win
multi-year, multi-million dollar contracts - and we are winning
them."
E-Business Successes
"Our e-businesses have accelerated their growth rates in the first
months of 2000," Preston continued. "Last week, we announced a
remarkable convergent billing agreement between our 75%-owned
subsidiary, eForce, and Ontario Hydro Energy. We anticipate that
Mosaic will generate over $20 million from the contract in fiscal
2001. The marketing of the convergent billing product, called
Onsource, will be a win for several other Mosaic units, including
20%-owned software company Intelecom Systems and direct marketing
subsidiary Mosaic Direct and Interactive.
"Our interactive training and marketing subsidiary, McGill
Multimedia, has had several new business wins in 2000 with General
Motors and DaimlerChrysler. We are helping these clients to
streamline the way that learning solutions and product information
are disseminated throughout their organizations.
"Finally, in April we announced an agreement in principle to
acquire a 52% interest in Medium One, a website design and
programming agency. Medium One has just won a new contract which
will involve the outsourcing of the design and programming of a
mid-sized software company's corporate website to Medium One.
"All of our e-businesses are profitable. We expect our digital
business revenues from eForce, McGill Multimedia, and Medium One
to be approximately $40 to $45 million in 2000. Intelecom should
add a further $20 to $25 million in revenue. Our e-businesses are
growing rapidly, but at the same time are focused on delivering
bottom line results.
"We have also established an e-commerce and e-marketing incubator
to take strategic interests of 20% or less in promising private
e-commerce and e-marketing companies. The initial budget for the
incubator is approximately $15 million. We have made our first
incubator investment with the purchase of a 2.5% interest in a
business-to-business e-commerce venture set up by Hewlett Packard
to streamline the value-added reseller channel for HP products in
the United Kingdom."
New Business Wins
"We are very excited about the scope of the new business that
Mosaic has won in the past few weeks," said Michael Cottman,
Vice-Chairman, President and Chief Operating Officer of Mosaic
Group. "Yesterday, we announced the largest contract in our
history - a 10-year contract with Information Resources, Inc.
(IRI), under the terms of which IRI will outsource the execution
of their data collection function to Mosaic Group. Mosaic was
selected after an extensive search undertaken by IRI to find a
suitable outsourcing partner. This is project of enormous scope -
Mosaic will be responsible for the management of a 2,400-strong
field force that will make 29,000 retail visits per month
throughout the United States to collect sales and merchandising
information for IRI's clients in the packaged goods industry.
First year revenues under the contract will be approximately $50
million, starting on July 1, 2000. If IRI and Mosaic create a
successful partnership, we would expect to see the total contract
value exceed $0.5 billion over the life of the contract.
"Also in the United States, Mosaic has had two significant wins
with United Distillers and Vintners (UDV). UDV's marketing efforts
are divided into six regions in North America, and Mosaic has now
been appointed as the event marketing agency of record in two of
the regions. Mosaic will provide on-premise, off-premise, and
special events marketing services to support their Bailey's,
Smirnoff Vodka, Cuervo Tequila, and Stolichnaya Vodka brands.
"The new business stories coming out of Europe are also very
encouraging. M:\ DRIVE, a business that we acquired in April to
provide value-added reseller (VAR) channel marketing for the
Mosaic Technology and Communications Group, has just landed the
largest contract in its history. The contract is with an IT and
convergent technology client, for whom Mosaic has been confirmed
as the European agency to roll out their small and medium-sized
enterprises (SME) VAR loyalty program. This is a terrific win, as
we were able to leverage Mosaic's infrastructure on the European
continent as a means to win the broader European program. This
confirms M:\ DRIVE's status as the top marketing agency in Europe
for VAR channel marketing for the IT and convergent technology
industries.
"The scale of these wins is significant, and given the impact of
these contracts and many others on the second half of 2000, we are
confident about our ability to deliver on our commitment of 30%
internal revenue growth in calendar 2000. In addition, we can look
forward to experiencing a full-year impact from these contracts in
2001. This will help to keep our internal growth rates above 25%
for 2001."
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: Statements in this press release regarding the
business of Mosaic Group Inc. which are not historical facts are
"forward looking statements" that involve risks and uncertainties.
Actual results could differ materially from those contained in our
projections or 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 72 million shares outstanding, trades on the TSE
under the symbol MGX.
www.mosaicgroupinc.com
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MOSAIC GROUP INC.
Selected Financial Information
March 31, 2000
Three months ended March 31
(in thousands except per share amounts)
2000 1999 % Change
Revenues $ 97,595 $ 81,618 20%
EBITDA (1) 9,904 6,370 55%
Cash earnings (2) 4,831 2,920 65%
Net earnings 3,221 1,777 81%
Per share amounts:
Earnings:
Basic $ 0.05 $ 0.03 67%
Fully diluted $ 0.05 $ 0.03 67%
Cash earnings (2):
Basic $ 0.07 $ 0.05 40%
Fully diluted $ 0.07 $ 0.04 75%
(1) Earnings before depreciation and amortization, interest and income
taxes.
(2) Earnings before net-of-tax goodwill charges.
MOSAIC GROUP INC.
Consolidated Statements of Operations
(In thousands of dollars, except per share amounts)
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Three months ended
March 31,
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2000 1999
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Revenues $ 97,595 $ 81,618
Direct costs 63,211 55,356
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Gross profit 34,384 26,262
Selling, general and administrative 24,480 19,892
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Earnings before depreciation and
amortization, interest and income
taxes (EBITDA) 9,904 6,370
Depreciation and other amortization 1,709 1,179
Interest, net 1,816 1,428
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6,379 3,763
Minority interest 41 -
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Earnings before income taxes
and goodwill charges 6,338 3,763
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Income taxes:
Current 1,206 315
Deferred 301 528
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1,507 843
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Earnings before goodwill
charges 4,831 2,920
Goodwill charges, net of income taxes 1,610 1,143
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Net earnings $ 3,221 $ 1,777
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Earnings per share:
Basic $ 0.05 $ 0.03
Fully diluted $ 0.05 $ 0.03
Earnings per share before goodwill
charges:
Basic $ 0.07 $ 0.05
Fully diluted $ 0.07 $ 0.04
Weighted average number
of shares outstanding (in thousands):
Basic 71,012 62,638
Fully diluted 76,785 67,305
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MOSAIC GROUP INC.
Consolidated Balance Sheets
March 31, 2000
(In thousands of dollars)
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March 31, December 31,
2000 1999
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Assets
Current assets:
Cash $ 7,746 $ 10,036
Accounts receivable 65,025 63,957
Work in progress and unbilled revenue 21,286 20,785
Prepaid expenses 5,971 6,230
Income taxes receivable 299 901
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100,327 101,909
Property and equipment 27,240 24,029
Goodwill, net of accumulated amortization 213,584 204,989
Other assets 17,556 15,559
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$ 358,707 $ 346,486
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Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness $ 2,155 $ 4,364
Accounts payable and accrued liabilities 51,293 60,111
Deferred revenue 24,312 17,776
Accrued acquisition liabilities 15,868 8,805
Current portion of long-term debt 331 380
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93,959 91,436
Long-term debt 82,886 78,086
Deferred income taxes 3,630 4,106
Shareholders' equity:
Share capital 153,647 148,770
Foreign currency translation adjustment (9,091) (6,367)
Retained earnings 33,676 30,455
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178,232 172,858
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$ 358,707 $ 346,486
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FOR FURTHER INFORMATION PLEASE CONTACT:
Ben W. Kaak
EVP & CFO
Mosaic Group Inc.
(416) 813-4272
kaakb@mosaicgroupinc.com
or
Catherine Linley
Public Relations
Mosaic Group Inc.
(416) 813-4277
www.mosaicgroupinc.com |
