INDIANAPOLIS, Nov. 28 /PRNewswire-FirstCall/ -- Fortune Industries, Inc. (AMEX:FFI) announced today fourth quarter and annual earnings for the fiscal year ended August 31, 2007.
Highlights Revenues for the three and twelve months ended August 31, 2007 were $43.1 million and $158.3 million, respectively, as compared to $47.8 million and $157.1 million for the same periods of 2006, representing a 9.8% decrease for the quarter and 0.8% increase for the year. Net income (loss) available to common shareholders for the three and twelve months ended August 31, 2007 was $602,000 or $0.05 per share and $(7,782,000) or $(0.72) per share, respectively, compared with net income of $536,000 or $0.05 per share and $1,888,000 or $0.18 per share for the same period of 2006. Diluted net income available to common shareholders for the three and twelve months ended August 31, 2007 was $0.05 per share and $(0.63) per share, respectively, compared with $0.04 per share and $0.16 for the same period of 2006.
"I am very happy with our final earning results for the fourth quarter," stated John Fisbeck, CEO. "We had a 9.8% decrease in revenue, but a 12.3% increase in earnings. We have also achieved all-time record annual revenue with the slight increase over last year, despite the downsizing of our Wireless Infrastructure segment by $25 million from our projected revenue. For fiscal year ending August 31, 2008, our forecasted revenue is $190 million, which represents a $31.7 million increase, or 20% over fiscal year ended August 31, 2007. The executive management team is focused on stabilizing our earnings going forward to show more consistency to our shareholders." Segment Analysis
The Company reports five segments. Results by segment are as follows:
Business Solutions revenues increased mainly due to the acquisitions of Precision Employee Management in February 2007 and Employer Solutions Group, Inc. in March 2007. The remaining increase in revenues was due to an overall increase in the customers resulting in the total number of co-employees increasing 45% from 7,806 at August 31, 2006 as compared to 17,290 at August 31, 2007, including additions due to the aforementioned acquisitions.
Transportation Infrastructure revenues decreased mainly due to the completion of certain large guardrail projects in one Midwestern geographic market in the prior fiscal year and the effects of lost guardrail maintenance contract revenues in another Midwestern geographic market to a foreign competitor, despite a substantial increase in performance in our electrical division.
Ultraviolet Technologies had no overall net change in revenues. By segment, sales in the Americas have increased due primarily to increased sales of POP/Decal products; sales in the UK have increased largely due to sales of conductive silver inks, as well as favorable currency exchange rates in fiscal year ended August 31, 2007; and sales decreased in Asia due to a one-time sale of a license agreement in fiscal year ended August 31, 2006, a decline in sales of nameplate inks and a decline in sales of container inks.
Electronics Integration revenues decreased as a result of decreased sales in Kingston Sales Corporation and Audio-Video Revolution (AVR), despite a record all-time revenue in Commercial Solutions, Inc.
Wireless Infrastructure revenues decreased due to the reduction of the size and scope of our Wireless Infrastructure segment during the fiscal year ended August 31, 2007.
Holding Company expenses increased as a result of increased interest rates, borrowings due to partial bank financing of the PEO acquisitions, financing losses in the construction and technical services divisions of our Wireless Infrastructure segment, and third party legal and accounting fees.
Business Outlook Total projected revenues for fiscal year ending August 31, 2008 are $190 million. The breakdown by segment is: 52.6% - Business Solutions ($100 million)
27.4% - Transportation Infrastructure ($52 million)
7.4% - Ultraviolet Technologies ($14 million)
7.4% - Electronics Integration ($14 million)
5.2% - Fortune Development Group ($10 million) "The Company has continued our rapid expansion in our Business Solutions segment," stated Fisbeck. "We achieved a quarter over quarter increase in revenues of almost 100% for the fourth quarter. For fiscal year ended August 31, 2007, revenues were over $69 million versus $44 million for fiscal year ended August 31, 2006, which represents an increase of 55%. We are projecting revenues for fiscal year ending August 31, 2008 of $100 million, assuming no further acquisitions, which represents a 45% increase over fiscal year ended August 31, 2007. The projected EBITDA for the fiscal year ending August 31, 2008 is $6.113 million, factoring in approximately $1.2 to $1.5 million in hardware and software expenses to convert our Business Solutions group to one software platform that is Sarbanes-Oxley compliant by June 30, 2008. We believe this universal platform will result in operational efficiencies and substantial audit and compliance fees reductions. Within this segment, we continue to expand service offerings in addition to our payroll services, including human resource outsourcing, employment training and testing. While the majority of customer operations are concentrated in the Arizona, Colorado, Indiana, Tennessee and Utah markets, we intend to expand service offerings through acquisitions or new offices in the next twelve to twenty-four months. Financial results may be affected by changes in the state regulatory environments, results under our partially self-funded health and partially self-funded workers compensation insurance plans, and economic conditions." "Financial results in the Transportation Infrastructure segment continue to fluctuate as a result of federal and state funding for highway safety projects, changes in steel and fuel prices, market conditions and competition. Most of our jobs are competitively bid. We face the continual challenge of being the lowest and best bidder in order to get the job. We also face the challenge of not underbidding the job with the result that we lose money on the job or do not attain our desired profit margin. The loss of even one big job due to us not being the lowest and best bidder can have a substantial impact on our revenues. We are continuously affected by weather conditions and commodity price fluctuations. Operations within this segment continue to expand beyond strictly highway safety products to commercial steel erection." "We expect continued growth in our Ultraviolet Technologies segment. Future growth is dependent on raw material and product availability and pricing, research and development initiatives, attracting new customers with new products, and our ability to continue to deliver consistent, high-quality product. The increased competition in our domestic and foreign markets requires us to stay price competitive. We are also affected by our ability to attract and retain qualified management and other technical personnel. We recently hired a new chemist to assist with some product quality issues. In his short tenure, he has already made a positive impact. We are also in the process of expanding our manufacturing capacity in Singapore. We see major growth opportunities in China and Singapore." "We expect continued growth in our Electronics Integration segment, although we had mixed results during the fiscal year ended August 31, 2007. Commercial Solutions, which sells televisions primarily to the healthcare and lodging industries, had positive results. Kingston Sales, which sells televisions primarily to integrators, other distributors and large restaurant chains, had a significant decrease in sales. We have installed a new management team and believe that the results will improve. AVR, which installs commercial and residential electronics and home theaters, has ended the year with a significant loss. Again, we have installed new management and believe that results will improve. During the fiscal year ending August 31, 2008, we anticipate expanding our distribution business to include non- electronic products. We have developed many contacts in China as a result of trips to China as part of our Ultraviolet Technologies business. We believe that we can import various products from China and sell these products using our existing distribution network." "Although we have significantly downsized our Wireless Infrastructure segment in fiscal year ended August 31, 2007, some of these reductions will not become apparent until the fiscal year ending August 31, 2008. Most of the segment reductions occurred in our wireless construction and technical services businesses. We deliberately reduced the size and scope of these businesses due to the large losses incurred by these businesses. The losses were incurred primarily due to our inability to efficiently match our number of employees with the construction and technical services workload. We did not receive the anticipated number of jobs and the jobs that we did receive were often delayed or cancelled. After downsizing our wireless construction business, we transferred control of the remaining business to the Transportation Infrastructure segment effective July 1, 2007. Similarly, after downsizing our wireless technical services business, we transferred control of the remaining business to the Transportation Infrastructure segment effective November 1, 2007. We made these transfers because the management of our Transportation Infrastructure segment has substantial expertise in managing construction projects. We believe this expertise will allow them to exercise better control of the wireless construction and technical services businesses. Remaining within this segment is our engineering and site acquisition businesses, which will now operate as Fortune Development Group. These businesses have performed successfully in the past and we believe they will continue to grow in the future." About Fortune Industries, Inc.
Fortune Industries, Inc. operates as a technology-based service company in the United States. It provides technology solutions to businesses in five segments: Business Solutions, Transportation Infrastructure, Ultraviolet Technologies, Electronics Integration and Fortune Development Group. The Business Solutions segment provides professional employment organization (PEO) services to small and medium sized businesses with up to 1,000 employees in all 50 states, including human resource consulting & management, employee assessment, training, and benefits administration. The Transportation Infrastructure segment provides the installation of highway safety products and commercial structural steel, and wireless construction and technical services. The Ultraviolet Ink segment provides worldwide state-of-the-art UV ink technology solutions. The Electronics Integration segment provides sales and installation of commercial electronics. Fortune Development Group provides site development and engineering services to clients nationwide, including wireless carriers in 20 states.
Fortune Industries is based in Indianapolis, Indiana and is publicly traded on the American Stock Exchange under the symbol FFI. Additional information about Fortune Industries, Inc. can be found at http://www.ffi.net/.
This press release and other statements by Fortune Industries, Inc. may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as "believe", "expect", "estimate", "potential", or future/conditional verbs such as "will", "should", and "could" or the negative of those terms or other variations of them or by comparable terminology. The absence of such terms, however, does not mean that the statement is not forward-looking. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences, include, but are not limited to, the risks and uncertainties that are discussed under the heading "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" within the Company's Form 10-K for the year ended August 31, 2006. The Company undertakes no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. Readers should carefully review the risk factors disclosed within the Company's Form 10-K and other documents filed by the Company with the Securities and Exchange Commission.
Consolidated Financial Information Financial highlights are as follows: Year Ended
August 31,
2007 2006
(Dollars in thousands)
Consolidated Total Revenues $158,349 $157,113 Operating Income (Loss) (3,074) 3,650 Income (Loss) Before Provision
for Income Taxes (7,129) 1,796 Segment Data Segment Revenues Wireless Infrastructure $23,162 $27,859
Business Solutions 69,170 44,543
Transportation Infrastructure 40,110 57,931
Ultraviolet Technologies 12,421 12,437
Electronics Integrations 13,450 14,343
Variable Interest Entity 1,493
Variable Interest Entity Elimination (1,457) Total Revenues $158,349 $157,113 Operating Income (Loss) Wireless Infrastructure $(4,212) $(124)
Business Solutions 3,989 3,423
Transportation Infrastructure 1,844 2,970
Ultraviolet Technologies 129 667
Electronics Integrations (574) (91)
Holding Company (5,494) (3,195)
Variable Interest Entity 1,244
Variable Interest Entity Elimination Total Operating Income (Loss) $(3,074) $3,650
Total EBIDTA 1,000 6,200
DATASOURCE: Fortune Industries, Inc.
CONTACT: Carrie Fitzsimons, General Counsel of Fortune Industries, Inc., +1-317-532-1374 Web site: http://www.ffi.net/
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