4Front Technologies, Inc. Announces First Quarter Results
- EBITDA and Operating Margins Expand Versus Previous Quarter -
LONDON--(BUSINESS WIRE)--June 2, 1999-- 4Front Technologies, Inc. (''4Front'') (Nasdaq NM/EASDAQ: FFTI) today announced its results for the first quarter ended April 30, 1999.
HIGHLIGHTS(a)
(in $'000's, except per share data)
First Quarter Ended April 30,
1999 1998 % Increase
(unaudited) (unaudited)
Services revenues $38,429 $16,437 134%
Products revenues $18,897 $10,267 84%
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Total revenues $57,326 $26,704 115%
Operating income $3,380 $1,821 86%
Net income $1,985 $1,092 82%
Net income per share
(basic) $0.19 $0.15 27%
Net income per share
(diluted) $0.17 $0.13 31%
Fully diluted shares
outstanding 11,886,235 8,652,926
(a) A substantial part of the company's growth in the past three years
has been achieved through acquisition. Accordingly, the results of
operations from period to period are not necessarily comparable.
For the first quarter ended April 30, 1999, total revenues increased 115% to $57.3 million, versus $26.7 million reported for the comparable year-ago quarter. Net income for the quarter increased 82% to $2.0 million, or $0.17 per share diluted (based on 11,886,235 shares), versus net income of $1.1 million, or $0.13 per share diluted (based on 8,652,926), for the comparable year-ago quarter.
Anil Doshi, Chairman and Chief Executive of 4Front said:
Overall Performance
''The first quarter was another record quarter with revenues and earnings exceeding our targets once again. 4Front's performance reflects strong internal growth in our business as well as contributions from acquisitions made in the past year. Service revenues continued to grow rapidly, comprising 67% of total revenues in the quarter. Most importantly, margins, which in the previous quarter had been impacted by acquisitions made in Continental Europe, resumed their upward trend. EBITDA in the quarter rose to 8.0% as a percentage of revenues, versus 7.3% in the preceding quarter. The operating margin in the quarter rose to 5.9%, versus 5.5% in the preceding quarter.
Targets
We are ahead of schedule in our progress towards meeting the key calendar 2000 operating targets of $250 million annualized revenues and a 75/25 service/product sales mix, which we set at the time of our offering last July. In addition, targeted margin improvement has resumed in the quarter, as good progress has been made with the integration of recent acquisitions.
Pan-European Strategy
As 4Front consolidates its leading position in the UK, French, Italian and Belgian IT service markets, management has been working to identify opportunities which can strengthen its European network and broaden its geographic coverage. The integration of recent acquisitions is proceeding well. As we move into the second half of the year, when 4Front has historically been most active in terms of acquisition, our focus is on principal European markets where 4Front does not currently have a presence. It is 4Front's aim to have an IT services presence in all major European markets by the end of 1999.''
Balance Sheet and Cash
4Front continues to operate with a strong balance sheet and cash position. Net book value at the close of the quarter was $5.69 per share, and total cash was $23.2 million or $2.16 per share. 4Front continues to be financially well-placed to continue the pursuit of its European growth strategy.
Mark Ellis, Vice Chairman and President of 4Front said:
Operating Performance and Outlook
''In the first quarter earnings growth continued to be strong and both EBITDA and operating margins improved over the preceding quarter. The average size and length of service contracts continued to grow, while 4Front's blue-chip customer base continued to strengthen and its European market position continued to improve. Operational highlights since the beginning of the new financial year included:
Contracts
•In May 4Front won its now largest ever contract worth over $9 million from INAIL in Italy for networking services.•In February 4Front won its then largest ever contract worth an estimated $6 million from BT in the UK for help desk services.•4Front won a new $1.6 million contract from Telecom Italia in Italy.•4Front won a new $1 million contract from France's national police force, the Gendarmerie.•Under major new framework agreements, 4Front became the preferred supplier of network services to Shandwick, Europe's largest public relations company, and to Nexus, a leading corporate facilities management and relocation consortium based in the UK.
Acquisitions
•Progress with the integration of 4Front's three French operations, I-NEA, Decision Systems and Eurosystems, is proceeding well within our targeted timeframe.•The integration of 4Front's Italian operation within the 4Front Group systems is proceeding well within our targeted timeframe.•Penagen Training has been successfully integrated within 4Front's UK operations.
Market Positioning and Industry Partnerships
•4Front's strength in the Italian market was recognised and consolidated through its successful bid for its part of the INAIL project, with other project participants including Compaq, Microsoft, Nokia and Oracle.•4Front's working relationship with Siemens in France developed well with robust new business levels achieved, as exemplified by the successful development of 4Front's business with the Gendarmerie.•4Front further raised its profile in France through a successful media launch of ''Groupe 4Front'', 4Front's French brand name, and generally strengthened the 4Front brand in the European marketplace.
Business Development
•4Front doubled the revenue of its Penagen Training acquisition, which it acquired in October, through organic growth and cross-marketing successes.•4Front strengthened its software management team in advance of broadening the range of e-commerce and other software offerings to be supplied.•4Front management was strengthened in all areas with important recruitments at senior levels from other leading IT companies, enabling the Company to take advantage of increasing business opportunities throughout Europe.
The European IT services industry continues to grow rapidly and the opportunities for 4Front within that market remain significant. The overall outlook for 4Front in all business areas remains bright.''
About 4Front Technologies, Inc.
4Front Technologies, Inc., is a leading provider of information technology and outsourcing solutions, which consist of specialised computer services and complementary products, primarily to blue-chip corporations in the United Kingdom and, to a growing extent, Continental Europe. 4Front's services and solution include hardware maintenance, help desk support, training, network services, specialised software services and products and the supply of high-end storage systems. 4Front's customers include British Petroleum, British Telecom, Telecom Italia, Computer Sciences Corp., Dupont, IBM, Cegedim, Renault, Energis, Pfizer, Cariplo, JP Morgan and the UK Ministry of Defence. Additional information on 4Front can be found on the Company's website at www.4fti.com.
4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended
April 30, April 30,
1999 1998
----------------- -----------
$ '000's $ '000's
(unaudited) (unaudited)
REVENUES
Services $38,429 $16,437
Products 18,897 10,267
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57,326 26,704
------ ------
Cost of Services 18,486 7,629
Cost of Products 16,242 8,534
------ -----
34,728 16,163
------ ------
GROSS PROFIT
Services 19,943 8,808
Products 2,655 1,733
----- -----
22,598 10,541
------ ------
OPERATING EXPENSES
Selling, general and
administrative expenses 18,024 8,004
Depreciation 434 294
Amortization 760 422
--- ---
Total operating expenses 19,218 8,720
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INCOME BEFORE INTEREST, INCOME
TAXES: 3,380 1,821
Interest income 264 68
Interest expense (222) (209)
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INCOME BEFORE INCOME TAXES: 3,422 1,680
INCOME TAXES 1,437 588
----- ---
NET INCOME $1,985 $1,092
----- -----
NET INCOME PER COMMON SHARE (Basic) $0.19 $0.15
NET INCOME PER COMMON SHARE (Diluted) $0.17 $0.13
-0-
4FRONT SELECT BALANCE SHEET INFORMATION
April 30, 1999 January 31, 1999
(unaudited) (audited)
$ '000's $ '000's
Current assets $111,114 $109,596
Current liabilities 86,035 86,815
Total assets 147,883 146,272
Long-term debt 801 780
Shareholders' equity $61,047 $58,677
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Contact:
Investor Relations Contact:
Abernathy MacGregor Frank
Jason Thompson (U.S. Investor Relations)
Tel: 212/371-5999
or
Shandwick Consultants
Matthew Hooper (U.K. Investor Relations)
Tel: 011-44-171-329-0096
or
4Front Technologies, Inc.
Mark Ellis or Ken Newell
Tel: 011-44-171-269-5848 |
