Condor Technology Solutions Announces Revenue Growth of 47 Percent and
Net Income Growth of 85 Percent in the First Quarter of 1999
New Emphasis on Leveraging the Internet Through Enterprise Portal Solutions
ANNAPOLIS, Md., April 27 /PRNewswire/ -- Condor Technology Solutions, Inc.
(Nasdaq: CNDR), the leading provider of end-to-end IT solutions in the middle
market, today reported substantial increases in revenues and net income for
the first quarter ended March 31, 1999, compared with the prior year's first
quarter on both an historical and pro forma basis.
Revenues grew 133 percent and net income increased to $3 million from a
net loss of $3 million in the quarter ended March 31, 1999, as compared with
the same quarter of 1998 on a historical basis. Compared with 1998 pro forma
results, as reported, revenues increased 47 percent and net income increased
85 percent.
"Results for the first quarter, where we saw solid growth in all of our
service segments, show that the demand for comprehensive IT services continues
to build among middle market companies," said Kenn Hill, chairman and chief
executive officer. "We expect the demand to continue to increase as we
concentrate our focus on enterprise portal solutions, offering clients the
ability to fortify customer relationships and increase sales over the web or
through e-commerce solutions."
First Quarter Results
Total revenues rose to $59.7 million in the first quarter of 1999,
compared with $40.7 million in pro forma revenues for the first quarter of
1998. The company's net income in the first quarter of 1999 was $3 million,
or 22 cents per diluted share, an increase of 85 percent over the pro forma
net income in the first quarter of 1998 of $1.6 million.
The company's first quarter performance was driven by growth in IT service
revenues which more than doubled to $38.7 million compared with $17.2 million
in pro forma results in the 1998 first quarter. The company's hardware
procurement revenue for the first quarter of 1999 was $20.9 million, compared
with $23.5 million in pro forma hardware procurement revenues for the first
quarter of 1998, a decrease of 11 percent.
The transition from a procurement to a service-dominated business model
benefited both Condor's gross and operating margins. During the quarter,
65 percent of the company's revenue came from the IT service component of the
business, up from 42 percent in the first quarter of last year.
Gross margin grew during the first quarter of 1999 to 32.8 percent
compared with 26 percent for the comparable pro forma period in 1998. The
company's operating margin in the first quarter of 1999 was 9.7 percent,
compared with a pro forma operating margin of 6.6 percent for the comparable
period in 1998.
Dan Roche, Condor's president and chief operating officer, noted that the
company has continued its focus on supporting growth across its four
divisions. "The shift toward a service-dominated business model provides
Condor with continued margin expansion," said Roche.
"We are very excited about our ability to help clients adapt their
business model to compete in a web world with our end to end e-commerce
strategy delivered through Condor's enterprise portal solutions."
Condor Technology Solutions, Inc., the enterprise portal company, is an
end-to-end information technology provider that helps clients meet key
business challenges with targeted, customizable solutions and simplified
information technology management. The integration of consulting solutions,
enterprise performance solutions and systems support solutions, further
enhanced by e-commerce capabilities, provides our clients a single source for
virtually all information technology solutions. Condor's 1,099 employees in
31 cities provide solutions to Fortune 1000 firms, middle-market companies and
government agencies.
Statements in this report that are not strictly historical are "forward
looking" statements that are subject to risk and uncertainty. Factors that
could cause actual results to differ materially include, but are not limited
to, competition, acquisitions, acquisition integration, retention of clients
of acquired companies, attracting and retaining highly skilled employees,
managing risks associated with client projects, revenue and earnings
assumptions based on assumptions about continued growth and margins, as well
as other risks detailed in company reports filed with the Securities and
Exchange Commission, including its prospectus, 10K and 10Q filings.
Note: Condor is a trademark of Condor Technology Solutions, Inc. All
other brands, trademarks, or company names, are the property of their
respective holders.
Investors will have the opportunity to listen to the conference call and
view the slide presentation over the Internet through Vcall at
vcall.com on April 27 at 10 a.m. EDT. To listen to the live call,
please go to the web site at least 15 minutes early to register, download and
install any necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available shortly after the call and a transcript,
along with the slides will be available 24 to 48 hours later.
CONDOR TECHNOLOGY SOLUTIONS, INC.
QUARTERS ENDED MARCH 31, 1999 AND 1998
STATEMENT OF OPERATIONS DATA (UNAUDITED):
Historical Historical (1) Pro Forma (2)
1Q99 1Q99 1Q98 1Q98 1Q98 1Q98
($000) % ($000) % ($000) %
IT service
revenues $ 38,749 64.9%$ 12,950 50.5% $ 17,205 42.3%
Hardware procurement
revenues 20,941 35.1% 12,713 49.5% 23,499 57.7%
Total revenues 59,690 100.0% 25,663 100.0% 40,704 100.0%
Cost of IT services21,319 55.0% 6,681 51.6% 8,532 49.6%
Cost of hardware
procurement 18,780 89.7% 11,756 92.5% 21,584 91.9%
Total cost of
revenues 40,099 67.2% 18,437 71.9% 30,116 74.0%
Gross profit 19,591 32.8% 7,226 28.1% 10,588 26.0%
Selling, general and
administrative 11,645 19.5% 4,956 19.3% 6,923 17.0%
Depreciation and
amortization 2,159 3.6% 520 2.0% 991 2.4%
In process research
and development - - 5,000 19.5% - -
Operating income 5,787 9.7% (3,250) (12.7)% 2,674 6.6%
Interest and other
income (expense) (425) (0.7)% 228 0.9% 357 0.9%
Income before
taxes 5,362 9.0% (3,022) (11.8)% 3,031 7.5%
Provision for
taxes 2,359 4.0% (15) (0.1)% 1,406 3.5%
Net income $ 3,003 5.0%$ (3,007) (11.7)% 1,625 4.0%
Shares Outstanding -
Basic (000's) 12,043 7,117 10,972
Shares Outstanding -
Diluted (000's) 13,563 7,117 10,972
Net income (loss)
per share -- Basic$ 0.25 $ (0.42) $ 0.15
Net income (loss) per
share -- Diluted $ 0.22 $ (0.42) $ 0.15
SELECTED BALANCE SHEET DATA:
Mar. 31, 1999 Dec. 31, 1998
Cash and cash
equivalents $ 2,729 $ 3,053
Accounts receivable 46,530 39,814
Goodwill and
other intangibles 143,705 145,163
Total assets 206,761 200,642
Long term debt,
net of current maturities 23,190 24,296
Stockholder's equity 117,255 114,042
(1) The historical financial statements for Q198 reflect the consolidated
results of Condor as of the IPO and mergers. The consolidated
statement of operations includes the results of operations of the
Founding Companies beginning February 1, 1998. Included in the
historical results of operations are two non-cash, non-recurring
items: (i) a $5.0 million charge for purchased research and
development related to the purchase of one of Condor's Founding
Companies; and (ii) a $1.0 million tax benefit related to the
reduction of a deferred tax valuation allowance that had been recorded
prior to the Company's February 1998 mergers.
(2) The pro forma financial statements reflect results of Condor's
consolidation transaction as though the mergers therein had occurred
as of January 1, 1998, in conformity with SEC Regulation S-X. The
acquisitions of Decision Support Technology, Inc., Louden Associates,
Inc., LINC Systems Corporation, PowerCrew, Inc. and Global Core
Strategies, Inc. are reflected as of their acquisition dates of May 5, |
