Marketing Services Group Reports First Fiscal Quarter Results and Expectations for Second Fiscal Quarter
Revenue Increases 76% with Positive EPS and Material EBITDA Improvement
NEW YORK, Nov 14, 2000 /PRNewswire via COMTEX/ -- Marketing Services Group, Inc. (Nasdaq: MSGI chart, msgs), a leading provider of integrated marketing solutions, today announced record results for the first fiscal quarter, and disclosed preliminary expectations for the second fiscal quarter.
Revenue for the first fiscal quarter of 2000 increased 76% to $47.6 million compared to $27.1 million for the first quarter last year, representing the 16th consecutive quarter of double-digit growth. The revenue growth came primarily from the inclusion of Grizzard Communications' results as well as new client billings.
Net income from operations was a loss of $5,071,810, consistent with performance associated with what is traditionally the weakest season of the fiscal year. This compares to a loss of $2,078,924 from the prior period. The additional loss was principally related to higher interest and amortization associated with the Grizzard Communications transaction. However, the net loss was offset by a gain from the redemption of WiredEmpire preferred stock representing $8,593,846, yielding income available to common shareholders of $3,522,036.
EBITDA was nearly at a breakeven level, improving by $580,528 to a loss of $56,580 compared to a loss of $637,108 in the first fiscal quarter of 1999.
Jeremy Barbera, Chairman and Chief Executive Officer of Marketing Services Group, commented, "The deliberate actions that we have taken in terms of business integration, acquisition strategy and financial streamlining have positioned us perfectly to execute this quarter and beyond. We are now completely focused on our core direct marketing business, and we are seeing unprecedented demand for our services. Through our pending acquisition of Perks, we will not only significantly increase our capabilities, but also add to our blue chip client roster. Based on what we already know of the second quarter, we are confident that it will be by far the best quarter in the Company's history."
Basic EPS on 30,072,273 shares outstanding was $0.12 per share as compared to ($0.12) per share from the prior period. Diluted EPS on 44,244,284 shares was $0.08 per share as compared to ($0.12) per share from the prior period.
The difference between basic and diluted EPS is primarily due to contingent warrants related to the December 1997 investment by GE Capital. The Company is optimistic that a substantial portion of the warrants will be terminated in accordance with certain earnings per share guidelines, which are defined in the original Warrant agreement.
"Looking forward not only are we positioned to begin to achieve significant positive EBITDA, but we are also on target for all product lines to be EBITDA positive in their own right. From a liquidity standpoint, we have cash resources and credit facilities together with expected revenue growth that are adequate to meet the needs of our continued operations."
2nd Fiscal Quarter Outlook
The December quarter, which is traditionally our strongest as a direct result of holiday campaigns is projected to yield record-breaking results. Revenue is expected to exceed $60 million with EBITDA in excess of $8 million and net income in excess of $4 million.
In addition, we are anticipating a net gain of $4.8 million relating to additional redemptions of WiredEmpire preferred stock, which will be reflected in net income available to common shareholders. The Company fully expects to remain EBITDA positive for the entire fiscal year.
Matters discussed in this release include forward-looking statements that involve risks and uncertainties, and actual results may be materially different. Factors that could cause actual results to differ are stated in the company's reports to the Securities and Exchange Commission including its annual report on Form 10-K for the year ended June 30, 2000 and 10-Q for the period ending September 30, 2000.
About Marketing Services Group, Inc.
Marketing Services Group, Inc. is a leading provider of integrated marketing solutions. The Company provides seamless and cohesive traditional and interactive marketing programs to leading companies around the world, including American Express, Chase Manhattan, Columbia House, General Electric, Lincoln Center for the Performing Arts, Madison Square Garden, Salvation Army, Sierra Club, Verizon and Walt Disney.
Marketing Services Group is a dominant player in the entertainment, publishing, fundraising and financial service sectors as well as other key vertical markets. Marketing Services Group provides marketing solutions to nearly 5,000 clients worldwide with pro-forma revenue for the current fiscal year in excess of $200 million. The Company has over 1,000 employees with material offices in New York, Boston, Philadelphia, Atlanta, Houston, Los Angeles, San Francisco and London.
Marketing Services Group provides a wide range of services including strategic planning, creative, direct marketing, database marketing, database management, telemarketing, telefundraising, print production and mailing, media planning and buying, e-commerce applications, Web development and hosting, and online ad sales and consulting. Corporate headquarters are located at 333 Seventh Avenue, New York, NY 10001.
Telephone: 917-339-7100. Additional information is available on the company's Website: msginet.com.
Marketing Services Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For The Three Months Ended September 30, 2000 and 1999
(unaudited)
2000 1999
Revenues $47,640,098 $27,106,677
Operating costs and expenses:
Direct costs 25,833,672 17,819,178
Salaries and benefits 17,426,498 7,952,566
Selling, general and administrative 4,436,508 1,972,041
Depreciation and amortization 2,907,343 949,469
Total operating costs and expenses 50,604,021 28,693,254
Loss from operations (2,963,923) (1,586,577)
Interest expense and other, net (2,066,472) (479,063)
Loss from continuing operations
before income taxes (5,030,395) (2,065,640)
Provision for income taxes (41,415) (13,284)
Loss from continuing operations (5,071,810) (2,078,924)
Loss from discontinued operations -- (769,246)
Net loss $(5,071,810) $(2,848,170)
Gain on redemption of preferred stock
of discontinued subsidiary 8,593,846 --
Net income available to common stockholders $3,522,036 $(2,848,170)
Basic earnings per share:
Continuing operations $0.12 $(0.09)
Discontinued operations -- $(0.03)
Basic earnings per share $0.12 $(0.12)
Weighted average common
shares outstanding (basic) 30,072,273 22,972,516
Diluted earnings per share:
Continuing operations $0.08 $(0.09)
Discontinued operations -- $(0.03)
Diluted earnings per share $0.08 $(0.12)
Weighted average common shares and
equivalents outstanding (diluted) 44,244,284 22,972,516
Source: Marketing Services Group, Inc.
Contact:
Jamie Karlin of Marketing Services Group, 917-339-7100,
jamie@msginet.com; or Adam Miller of The Abernathy MacGregor Group,
212-371-5999, alm@abmac.com, for Marketing Services Group
(MSGI)
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