TAVA Technologies, Inc. Announces Results
For The Quarter Ending March 31, 1998
PR Newswire - May 12, 1998 08:22
TAVA %CPR %ERN V%PRN P%PRN
ENGLEWOOD, Colo., May 12 /PRNewswire/ -- TAVA Technologies Inc.
(Nasdaq: TAVA) a leading provider of automation and information
technology solutions for industry, announced results for its third fiscal
quarter ending March 31, 1998.
Revenues for the quarter were $11,667,000 representing an increase of
$484,000 or 4.3 % compared to $11,183,000 recorded in the quarter
ending March 31,1997. Gross profit was $5,170,000 (44.3% of revenue)
an increase of $1,036,000 or 25 % compared to $4,134,000 (37.0% of
revenue) recorded in the quarter ending March 31,1997. The company
recorded earnings before taxes, interest, depreciation and amortization
of $931,000 and net income of $301,000 ($.02 per share, basic and $.01
per share diluted). The company noted that the March 1997 quarter was
an unusually strong quarter with results heavily influenced by one
contract for the IBM facility in Manassas Virginia.
For the nine months ending March 31,1998, revenues were $33,470,000
representing an increase of $6,183,000 or 22.7% from the $27,287,000
recorded for the nine months ending March 31, 1997. The company
recorded earnings before taxes, interest, depreciation and amortization
of $968,000 and a net loss of $855,000 (a net loss of $915,000
applicable to common shareholders) for the nine months ending March 31,
1998 ($0.05 loss per share, basic).
John Jenkins, CEO stated, "Though we recorded over $3,500,000 of Y2K
related revenue in this quarter, most of our client's roll-out of full Y2K
programs did not occur as early in the quarter as we had expected.
Specifically, our staff additions were heavily loaded in late February and
March. Even so, total revenue was up sharply over the quarter ending
December 31, 1997. Our top line showed an increase of almost
$1,200,000 or 10%. Further, the material and subcontract resale content
of our total revenue line decreased by more than $1,100,000 from the
prior quarter. When combined, these two elements put quarter to quarter
growth in service and software revenue at more than $2,300,000 or 20%.
We expect our service and software revenue to continue to grow as we
face sharply accelerating demand."
Jenkins added, "Our improved gross margin was driven by increased Y2K
service and software content, and the lower material and subcontract
content. We expect that gross margins will continue to increase as
software sales grow in revenue contribution and our Y2k billing rates
have greater effect on total mix."
Doug Kelsall, CFO noted "Sales, General and Administrative expenses
(excluding amortization expenses) were $4,365,000 or 37.4% of revenue.
During the quarter, sales expense continued high as the company
continued to make significant investment in marketing its Y2K One
products and services. During the quarter, we also began to amortize
development expenses associated with our Y2K One, product suite. Total
amortization expenses was $383,000 in the quarter with $151,000
associated with the Y2K One product suite."
Kelsall commented, "Our balance sheet continued to improve during the
quarter. Our working capital was $15,767,000 at March 31, 1998, with
over $6,131,000 in cash. We closed a $4,000,000 senior credit facility,
which allowed us to repay short-term debt. In addition we received
$3,592,000 from the exercise of options and warrants, not including the
full effect of the call of the outstanding public warrants which was
completed subsequent to quarter end. Long-term debt now represents
15% of our total capitalization. Additionally, refinancing of multiple
short-term debt facilities will allow us to accelerate our
administrative organization, and consolidate financial and support
functions of our subsidiary operations. Previously, our efforts in this
area had been delayed, due to the requirements of our various credit
facilities."
Doug Kelsall also announced that the company's common stock has been
approved by Nasdaq for trading on the National Market System under the
symbol TAVA, effective Thursday May, 14, 1998.
Jenkins provided the following update on the company's Y2K activity:
"General awareness of Y2K issues in process control and automation
systems, while still lagging the traditional IT sector, is increasing
rapidly. We have seen a sharp acceleration in program commitment and
roll-out in even the past few weeks. Most new clients are moving
directly to adopting comprehensive programs and by-passing the pilot
stage that had been a typical program element to date. The costly
'awareness building' element of our sales and marketing program will be
significantly reduced in this and subsequent quarters with those
resources re-directed to closing additional specific programs and
growing core business relationships with our new clients.
"The company's Y2K client list has grown to exceed 100 with several new
additions expected in the next 30 days. These clients alone hold potential
for application of TAVA tools and services at more than 2300 sites that
vary greatly in size and scope of systems. While this is an indicator of
the strength of our program and its broad acceptance, management
cautions that all sites covered by these agreements cannot be projected
to purchase full complements of tools and services from TAVA.
"The company's joint venture, TAVA/R.W. Beck, chartered to address the
electrical utility industry Y2K compliance market is in final stage
negotiation on closure of several major contracts. The venture is also
developing partners to increase international coverage. We expect
contribution from TAVA/R.W. Beck in our first quarter of fiscal 1999."
Other recent specific developments include:
"General Motors has expanded TAVA's role to include vendor management
and component testing for GM's North American Operations. TAVA will
augment GM's own efforts in this area.
"The company's engagement with Kraft has moved to the remediation
phase at Kraft co-manufacturing sites. TAVA has also begun inventory
and assessment activity at the Kraft distribution centers.
"To meet schedule demands on current engagements, forecast expansion
of those engagements and expected new business, the company is
continuing to recruit aggressively with plans to hire another 150 staff
in the next ninety days. To date, we have had little trouble recruiting
staff and have a good pipeline of applicants.
"In addition to direct staff, our operating model includes use of our
Solution Provider Partners to provide TAVA trained staff in support of
our own program execution, particularly in off-shore engagements. We
have more than a dozen Solution Provider Partners signed on or in final
stage. These range from Korea to Europe and Africa and provide TAVA
with an additional resource pool of more than 1000 personnel.
"In addition to providing staff augmentation for TAVA programs, the
Solution Provider Partners will market PlantY2k One tools and services
in specific markets.
"Development of PlantY2K One(TM) Rev. 2.0 was completed in late April.
With Rev. 2.0 complete, no further major development effort will be
directed to anything other than continued expansion of the vendor
management database. The company's product development resources
have been re-directed to programs put on hold during the Y2K ramp up and
new programs that have grown out of the Y2K engagement experience.
"In conjunction with the release of PlantY2k One(TM) Rev 2.0, we are
rolling out price increases on service rates to new clients.
"As a result of the Y2K driven exposure at new clients, the company is
being directed to new core business opportunities."
Jenkins added that more than 40 of the company senior management had
just completed a five day meeting that concluded our Fiscal 1999
planning process and developed the specific tactics required to support
the company's post year 2000 strategies.
As a major step in that direction the company announced that is has
formed a Consulting Division to be led by Tom Bruhn. Bruhn has joined
TAVA from Raytheon Automated Systems where he last served as
Director of Business Development and was heavily involved in the senior
management of Raytheon's Y2K activity.
This Consulting Division will work with clients at the executive level
and provide the strategic manufacturing information technology plans
required to integrate their ERP and supply chain management systems
with process information systems.
Kevin Fallon TAVA Chief Operating Officer noted, "TAVA views true
enterprise integration as the next wave in IT emphasis and that TAVA is
uniquely positioned with skills and process knowledge to play a lead role
in that transformation." He added, "The goal for our consulting practice
is to be the acknowledged leader in developing client understanding of
the performance improvement to be gained through full enterprise IT
integration."
Earnings Recap:
Numbers are in ($000's) 3 Months 3 Months 9 Months 9 Months
Ending Ending Ending Ending
Mar 31 1998 Mar 31 1997Mar 31 1998Mar 31 1997
Revenue 11,667 11,183 33,470 27,287
Cost of Sales 6,497 7,049 21,092 17,730
5,170 4,134 12,378 9,557
Gross Margins 44.3% 37.0% 37.0% 35.0%
SG&A 4,365 3,133 11,975 8,023
Amort of Goodwill & Cap Sftwr 383 152 916 326
4,748 3,285 12,891 8,349
Other Income ( Expenses) (121) (356) (342) (719)
Net Income (loss) 301 493 (855) 489
Net loss applicable to comn shrhldr. (915)
Per share - basic 0.02 0.05 (0.05) 0.06
Per share - diluted 0.01 0.05 (0.05) 0.05
Average shares outstanding 19,876,981 9,718,155 17,320,731 8,044,253
Balance Sheet Info:
Assets Liabilities and Equity
Cash 6,131 Total Current Liabilities 9,624
Other Current 19,260 Long Term Liabilities 5,948
Total Current assets 25,391 Total Liabilities 15,572
Other Assets 14,382 Shareholder Equity 24,201
Total Liabilities and
Total Assets 39,773 Shareholders Equity 39,773
Working Capital 15,767
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. Such factors include adverse
economic conditions, entry of new and stronger competitors, inadequate
capital, unexpected costs, failure to integrate operations of recently
acquired subsidiaries and failure to capitalize upon access of new
clientele. Specific risks and uncertainties which may affect
forward-looking statements about the Company's Plant Y2K One(TM)
business and prospects include the possibility that a competitor will
develop a more comprehensive or less expensive Y2K solution, and delays
in market awareness of TAVA and its product and service solutions.
These factors and others are 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, 1997, to which reference should be
made.
SOURCE TAVA Technologies, Inc.
/CONTACT: John Jenkins of Topro, Inc., 303-771-9794; or Scott Liolios
of
Pacific Consulting Group, Inc., 714-574-3860/
(TAVA) |
