Thursday May 13, 8:37 am Eastern Time
Company Press Release
SOURCE: TAVA Technologies, Inc.
TAVA Announces Third Quarter Results
TAVA Reports 129% Revenue Increase and $.14 Per Share
ENGLEWOOD, Colo., May 13 /PRNewswire/ -- TAVA Technologies, Inc. (Nasdaq: TAVA - news), Colorado, a leading provider of automation and information technology solutions to industry, announced results for its fiscal quarter ending March 31, 1999.
Revenue for the quarter increased 129% to $26,749,000 from $11,667,000 recorded in the quarter ending March 31, 1998. Gross profits for the quarter were $13,676,000 or 51% of revenue. Earnings before interest, taxes, depreciation and amortization were $7,536,000 compared to $931,000 in the quarter ending March 31, 1998. The Company recorded income before income taxes of $5,459,000 and net income of $3,319,000 ($.14 per diluted share) compared to net income of $301,000 ($.01 per diluted share) for the quarter ending March 31, 1998. During the current quarter, the Company recorded income tax expense of $2,140,000 compared to zero for the quarter ending March 31, 1998. In the current quarter, the Company was not able to utilize net operating loss carryforwards to offset income tax expense as all available net operating loss carryforwards had been previously used.
For the nine months ending March 31, 1999, the Company's revenues increased 128% to $76,438,000 from $33,470,000 recorded for 9 months ending March 31, 1998. For that same period, earnings per diluted share were $.53 in 1999 compared to a loss of $.05 in 1998.
John Jenkins, CEO commented, ''Revenues in the March quarter were off approximately 12% from that ended December 31, 1998. Pass-through material content in the March quarter revenue base declined by more than $1,100,000 from the December quarter and the December quarter included a $500,000 one-time license fee from Colorado MEDtech. March quarter revenues included $4,400,000 from Plant Y2KOne license agreements and database sales, this was slightly lower than planned due to slow start up of some programs such as the United States Postal Service.''
Jenkins added, ''Even though our Y2k compliance data base presently contains more than 130,000 items, and 'hit rates' on some industries are very good, we are still finding new international clients and industry segments that require significant research. The cost of this research ($591,000 for the March quarter) is now being expensed as incurred due to the expected life of our Y2k product of less than 12 months. Also, in the March quarter we absorbed product development expense as we launched our direct web-access product variation, Y2k OneSource and began the development of our framework for an automation software object library. We recorded no revenue from the Y2kOneSource product in the quarter.''
Jenkins continued, ''March quarter revenue from our consulting practice lagged expense significantly as this division continued to add staff in anticipation of expected project awards on several new engagements. It is clear from the published views of respected industry consultants that there is significant interest in and demand for Integrated Enterprise Solutions, the focus of our consulting practice. We continue to believe that TAVA brings a unique value to this emerging market and will continue to build our resource base accordingly.''
Jenkins summarized, ''With all the above, we are pleased with the March quarter performance. While earnings before income taxes were off $367,000 (6%) from last quarter, earnings before interest, taxes, depreciation and amortization were up approximately $200,000 on lower revenue volume. He added, ''We continue to be pleased with the performance of TAVA/ R W Beck, LLC which contributed $632,000 to our pre tax income in the quarter.''
Doug Kelsall, CFO, commented, ''Sales, General and Administrative expenses excluding amortization of software and goodwill expense were 26% of revenue, essentially flat to the prior quarter. Amortization expense increased $536,000 from last quarter, primarily due to the amortization expense associated with our TAVA Y2k One product suite. We continue to invest heavily in building a unified Company infrastructure as evidenced by our conversion to our new financial and project accounting software in four of our locations during the quarter. We will continue to incur these expenses as we complete conversion of all operations throughout the balance of the calendar year.''
Kelsall also noted, ''When comparing our diluted earnings per share, investors should be aware of the impact of the income tax provision this quarter. In prior periods, the Company was able to offset pre tax income with net operating loss carryforwards resulting in no income tax expense. This quarter, net operating loss carryforwards were not available to the Company and the Company's net effective tax rate was 39% of pre tax income with a 15% net effective tax rate for the nine months ending March 31, 1999. Assuming a 39% effective tax rate for quarter ended December 31, 1998, our earnings per diluted share were approximately flat compared to that quarter.'' He added ''Our balance sheet remains strong with over $11 million in cash and $28 million in working capital at March 31, 1999.''
On April 20, 1999, TAVA Technologies, Inc. signed an Agreement and Plan of Reorganization pursuant to which TAVA will be acquired by a wholly-owned subsidiary of Real Software Group NV, a Belgian corporation, in a cash merger transaction for $8.00 per share. Upon completion of the merger, TAVA will no longer be traded on Nasdaq. Consummation of the merger is subject to certain conditions including without limitation: (i) TAVA shareholder approval, (ii) the receipt of all requisite approvals by applicable public and regulatory authorities and (iii) certain other conditions, including absence of any material adverse change in the TAVA's business, prospects or financial condition, and a requirement by Real Software that four of TAVA's executive officers, including John Jenkins, President and CEO enter into employment agreements with the continuing private company. The merger is not contingent upon financing. A copy of the merger agreement has been filed with the Securities and Exchange Commission in an 8-K filing dated April 20, 1999. Management currently expects preliminary proxy materials will be filed within the next several days and has tentatively set June 29th date for the Special Meeting of Shareholders, subject to regulatory process.
Statements made in this Press Release that are not historical or current facts are ''forward looking statements'' made pursuant to the safe harbor provisions of federal securities laws. Forward-looking statements represent management's best judgment as to what may occur in the future, but are subject to certain risks and uncertainties that could cause actual results and events to differ materially from those presently anticipated or projected. Risks and uncertainties which could affect TAVA and the consummation of the merger described in this press release include the conditions to the merger described in the release and factors discussed in the ''Management's Discussion and Analysis'' section of the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1998, and subsequent reports filed with the SEC to which reference should be made.
Earnings Recap:
Numbers are in ($000's)
Except for share amounts
Three Months Three Months Nine Months Nine Months
Ending Ending Ending Ending
March 31, March 31, March 31, March 31,
1999 1998 1999 1998
Revenue $26,749 $11,667 $76,438 $33,470
Cost of Sales 13,073 6,497 38,518 21,092
Gross Margins 13,676 5,170 37,920 12,378
SG&A 7,062 4,365 20,620 11,975
Amortization of Goodwill &
Cap Software 1,564 383 3,505 916
Total Expenses 8,626 4,748 24,125 12,891
Other Income (Expenses) 409 (121) 1,011 (342)
Income (loss) before tax $5,459 $301 $14,806 $(855)
Income tax expense $2,140 $-- $2,140 $--
Net Income (loss) $3,319 $301 $12,666 $(855)
Net Income (loss)
applicable to comn shldr. $3,319 $301 $12,666 $(915)
Per share - basic $0.15 $0.02 $0.57 $(0.05)
Per share - diluted $0.14 $0.01 $0.53 $(0.05)
Weighted average shares
- basic 22,563,719 19,876,981 22,242,060 17,320,731
Weighted average shares
- diluted 24,042,687 23,298,454 23,882,611 17,320,731
EBITDA $7,536 $931 $19,814 $968
Balance Sheet Info: March 31, 1999
Assets Liabilities and Equity
Cash $11,832 Total Current Liabilities $21,623
Other Current 38,566 Long Term Liabilities 418
Total Current assets 50,398 Total Liabilities 22,041
Other Assets 16,601 Stockholders' Equity 44,958
Total Liabilities and
Total Assets $66,999 Stockholders' Equity $66,999
Working Capital $28,775
SOURCE: TAVA Technologies, Inc.
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