CHICAGO, April 25 /PRNewswire-FirstCall/ -- Customer Intelligence consultancy Inforte Corp. (NASDAQ:INFT) announced today that revenue for the quarter ending March 31, 2006 was $11 million. Net revenue, which is revenue less reimbursements, was $10 million, at the top of the guidance range and an increase of 15 percent from last year's first quarter results. Diluted earnings per share (EPS) were three cents. Excluding the impact of the expense associated with the transition of its chief executive officer, non-GAAP diluted EPS were six cents, exceeding the high end of guidance of five cents.
Actual earnings results for the quarter ending March 31, 2006, and financial highlights, are as follows: -- Revenue and net revenue increased 15 percent year over year. -- Diluted EPS were three cents, and non-GAAP diluted EPS were six cents
excluding the CEO transition. This compares to negative seven cents
last year and non-GAAP results of zero cents excluding the impact of
the capital restructuring in the first quarter of 2005. It also
compares to diluted EPS of three cents in the fourth quarter of 2005. -- Net income for the quarter was $329,000 compared to a loss of $770,000
in the first quarter of 2005. Excluding the expense of $520,000 for the
CEO transition, non-GAAP net income was $649,000. -- Net income as a percentage of net revenue was 3.3 percent, and compares
to -8.9 percent last year. It was 6.5 percent excluding the CEO
transition. -- Operating income for the quarter increased to $362,000, compared to a
loss of $1.6 million in the first quarter of 2005. Non-GAAP operating
income for the quarter excluding the CEO transition was $882,000. -- Operating income as percentage of net revenue was 3.6 percent, compared
to -17.9 percent in the first quarter of 2005. Excluding the CEO
transition expense, non-GAAP operating income as a percentage of net
revenue was 8.9 percent, which is the best result since the fourth
quarter of 2000. -- Gross income as a percentage of net revenue was 46.3 percent, up from
42.5 percent last quarter and 33.5 percent in the first quarter last
year. -- Cash flow from operations for the quarter was $0.9 million. We
typically experience our most significant cash outlays in the first
quarter of each year. -- As of March 31, 2006, cash and marketable securities were
$30.1 million. -- Utilization was 71 percent compared to 66 percent last quarter and
58 percent in the first quarter of 2005. -- Annualized quarterly net revenue per consultant and net revenue per
employee were $215,000 and $174,000 respectively; this compares to
$211,000 and $172,000 respectively for the prior quarter and $194,000
and $161,000 respectively for the first quarter of 2005. -- As of March 31, 2006, we had 231 employees in total, 190 of which were
billable. This compares to 233 employees last quarter, of which 191
were billable. Steve Mack, Inforte's new chief executive officer and president, commented, "We have a great foundation here at Inforte, and I am very impressed with our people and the great work they are delivering for our clients. I will continue to build on this base and I look forward to our continuing success in the coming years." Nick Heyes, Inforte's chief financial officer, commented on the quarter, "We have continued our progress in 2005 with an excellent first quarter. We have grown revenue and continue to improve our profitability. Our operating earnings before interest, tax, depreciation and amortization (EBITDA) excluding the CEO transition were greater than $1 million and are now at 10.4 percent of net revenue. This is our best performance on an absolute and percentage of net revenue basis since 2000. We are continuing to go through a period of change. While this may have an impact on the next few quarters, it will make us a much stronger company in the future." Net revenue guidance for the next quarter is unchanged at a range of $9.5 million to $10.5 million and EPS guidance is also unchanged at a range of two to six cents.
Non-GAAP supplemental information is provided to enhance the understanding of Inforte's financial performance and is reconciled to Inforte's GAAP information in the accompanying tables at the end of this press release. Inforte presents the non-GAAP financial measures to complement results provided in accordance with GAAP, as management believes these measures help illustrate underlying trends in our business and facilitate comparisons between quarters and years. Management uses these measures to establish budgets and operational goals that are communicated internally and externally, to manage our business and evaluate its performance, and to assess compensation for executives.
The non-GAAP supplemental information excludes the costs of a capital restructuring during the first quarter of 2005, which included an exchange of outstanding options for cash and restricted stock and the granting of additional common stock and excludes the costs of a CEO transition during the first quarter of 2006. See footnote 1 to the Non-GAAP Supplemental Information and Inforte's SEC filings for more detail on the capital restructuring and footnote 2 to the Non-GAAP Supplemental Information for more detail on the CEO transition.
This press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ from forward-looking results for a number of reasons, including but not limited to, Inforte's ability to: (i) effectively forecast demand and profitably match resources with demand during a period of tight client budgets and lower spending levels, and when worldwide economic and geopolitical uncertainty is high; (ii) attract and retain clients and satisfy our clients' expectations; (iii) recruit and retain qualified professionals; (iv) accurately estimate the time and resources necessary for the delivery of our services; (v) build and maintain marketing relationships with leading software vendors while occasionally competing with their professional services organizations; (vi) compete with emerging alternative economic models for delivery, such as offshore development; (vii) integrate acquired businesses; (viii) grow new areas of its business, such as business intelligence and managed analytics; and (ix) identify and successfully offer the solutions that clients demand; as well as other factors discussed from time to time in our SEC filings.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. All forward-looking statements included in this document are made as of the date hereof, based on information available to Inforte on the date thereof, and Inforte assumes no obligation to update any forward-looking statements.
About Inforte Corp.
Inforte Corp. increases the competitive strength of its Global 1000 clients by providing them with insight, intelligence and an infrastructure to close the fact-gap and enable more timely and profitable decision-making. Inforte consultants combine real-world industry, functional and analytical expertise with innovative go-to-market strategies and technology solutions, ensuring that our clients can drive transformational, measurable results in their customer interactions. Inforte is headquartered in Chicago and has offices in Atlanta; Dallas; Delhi, India; Hamburg, Germany; London; Los Angeles; San Francisco; and Washington, D.C. For more information, contact Inforte at 800.340.0200 or visit http://www.inforte.com/ .
CONTACT: , or .
Visit http://www.inforte.com/investor/ to access the April 25, 2006, Investor Conference Call web cast, which begins at 8:30 a.m. Eastern.
CONSOLIDATED STATEMENTS OF OPERATIONS
(000's, except per share data) THREE MONTHS ENDED
MARCH 31,
-------------------------
2005 2006
---------- ----------
(Unaudited) (Unaudited) Revenues: Revenue before reimbursements (net revenue) $8,655 $9,953
Reimbursements 891 997
---------- ----------
Total revenues 9,546 10,950 Cost of services:
Project personnel and related expenses 5,759 5,345
Reimbursements 891 997
---------- ----------
Total cost of services 6,650 6,342
---------- ---------- Gross profit 2,896 4,608 Other operating expenses:
Sales and marketing 613 672
Recruiting, retention and training 199 373
Management and administrative 3,636 3,201
---------- ----------
Total operating expenses 4,448 4,246
---------- ---------- Operating income (loss) (1,552) 362
Loss on investment in affiliate - (75)
Interest income, net and other 261 280
---------- ----------
Income (loss) before income tax (1,291) 567
Income tax expense (benefit) (521) 238
---------- ----------
Net income (loss) $ (770) $ 329
========== ========== Earnings (loss) per share:
-Basic $(0.07) $ 0.03
-Diluted $(0.07) $ 0.03 Weighted average common shares outstanding:
-Basic 11,132 11,283
-Diluted 11,132 11,594 Expenses as a percentage of net revenue
Project personnel and related expenses 66.5% 53.7%
Sales and marketing 7.1% 6.8%
Recruiting, retention, and training 2.3% 3.7%
Management and administrative 42.0% 32.2%
Income tax rate 40.3% 42.0% Margins as a percentage of net revenue
Gross income 33.5% 46.3%
Operating income (17.9)% 3.6%
Pretax income (14.9)% 5.7%
Net income (8.9)% 3.3% Year-over-year change
Net revenue - 15%
Gross income - 59%
NON-GAAP SUPPLEMENTAL INFORMATION (UNAUDITED) (1)(2)
STATEMENTS OF OPERATIONS
(000's, except per share data) THREE MONTHS ENDED
MARCH 31,
-------------------------
2005 2006
---------- ----------
(Unaudited) (Unaudited) Operating income (loss) (1,552) 362
Tender offer related charges 1,316 -
Termination of employment charges - 520
Loss on investment in affiliate - (75)
Interest income, net and other 261 280
-------- --------
Non-GAAP income before income tax 25 1,087
Non-GAAP income tax expense - 438
-------- --------
Non-GAAP net income $ 25 $ 649
Non-GAAP earnings per share:
-Basic $ 0.00 $ 0.06
-Diluted $ 0.00 $ 0.06 Weighted average common shares outstanding:
-Basic 11,132 11,283
-Diluted 11,279 11,594 Non-GAAP margins as a percentage of net revenue:
Pretax income 0.3% 10.9%
Net income 0.3% 6.5% Year-over-year change:
Non-GAAP pretax income - 4,248%
Non-GAAP net income - 2,496%
(1) The Non-GAAP supplemental information shows results excluding the
impact of the capital restructuring in the first quarter of 2005. The
total expense of $1,316 included: (i)$848 for charges related to the
exchange of stock options for cash; (ii) $378 for common stock grants
to employees who had chosen not to exercise options prior to the one-
time cash distribution; and (iii) $90 for professional services. Of
the total expense of $1,316, $292 was charged to Project personnel and
related expenses, $119 was charged to sales and marketing, $8 was
charged to recruiting, retention and training and $897 was charged to
the management and administrative line of the Consolidated Statement
of Operations. The non-GAAP results are provided in order to enhance
the user's overall understanding of the company's current and future
financial performance by excluding certain items that management
believes are not indicative of its core operating results and by
providing results that provide a more consistent basis for comparison
between quarters. The presentation of this additional information
should not be considered in isolation or as a substitute for results
prepared in accordance with accounting principles generally accepted
in the United States of America.
(2) The Non-GAAP supplemental information shows results excluding the
impact of charges related Mr. David Sutton's termination of employment
as the Chief Executive Officer of Inforte in the first quarter of
2006. The total expense of approximately $520 included: (i) the
equivalent of six months' base salary of $152; (ii) $311 for all Mr. Sutton's unvested shares of restricted stock and vested stock options;
(iii) $51 for his services as a strategic advisor; and (iv) $6 for
healthcare benefits. The total charge of $520 was included in the
management and administrative expenses line of the Consolidated
Statement of Operations. The non-GAAP results are provided in order to
enhance the user's overall understanding of the company's current and
future financial performance by excluding certain items that
management believes are not indicative of its core operating results
and by providing results that provide a more consistent basis for
comparison between quarters. The presentation of this additional
information should not be considered in isolation or as a substitute
for results prepared in accordance with accounting principles
generally accepted in the United States of America. INFORTE CORP. CONSOLIDATED BALANCE SHEETS
(000's) MAR 31, JUNE 30, SEPT 30, DEC 31, MAR 31,
2005 2005 2005 2005 2006
-------- -------- -------- -------- --------
(Unaudited)(Unaudited) (Unaudited) (Unaudited) ASSETS
Current assets:
Cash and cash
equivalents $ 22,041 $ 9,471 $ 12,107 $ 10,353 $ 12,217
Short-term
marketable
securities 24,036 20,022 18,996 22,591 17,844
Accounts
receivable 6,760 7,875 8,707 8,460 8,078
Allowance for
doubtful
accounts (450) (450) (450) (400) (400)
-------- -------- -------- -------- --------
Accounts
receivable,
net 6,310 7,425 8,257 8,060 7,678
Note receivable
from affiliate - - 429 684 1,122
Prepaid expenses
and other
current assets 1,163 1,212 1,066 1,023 1,211
Interest receivable
on investment
securities 399 261 204 199 164
Deferred income
taxes 2,424 1,053 1,073 484 371
Income taxes
recoverable 1,042 1,013 218 124 124
-------- -------- -------- -------- --------
Total current
assets 57,415 40,457 42,350 43,518 40,731 Computers,
purchased software
and property 2,642 2,602 2,111 1,862 1,865
Less accumulated
depreciation and
amortization 1,623 1,754 1,091 881 805
-------- -------- -------- -------- --------
Computers,
purchased software
and property,
net 1,019 848 1,020 981 1,060 Long-term
marketable
securities 6,086 3,543 492 - -
Intangible assets - - 64 42 27
Goodwill 11,726 11,726 14,307 15,238 15,238
Deferred income
taxes 366 1,495 1,565 2,758 2,754
Investment in
affiliate - 2,000 1,924 1,857 1,783
-------- -------- -------- -------- --------
Total
assets $ 76,612 $ 60,069 $ 61,722 $ 64,394 $ 61,593
======== ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY
Current
liabilities:
Accounts
payable $ 710 $ 413 $ 666 $ 357 $ 406
Income taxes
payable 148 260 359 920 992
Accrued
expenses 2,274 2,890 3,012 3,595 3,850
Accrued loss
on disposal
of leased
property 1,826 1,492 1,106 845 635
Current portion
of deferred
acquisition
payment 3,150 3,150 3,650 3,650 500
Dividends
declared 17,375 - - - -
Deferred
revenue 1,085 1,166 1,084 1,679 1,456
-------- -------- -------- -------- --------
Total current
liabilities 26,568 9,371 9,877 11,046 7,839 Non current
liabilities:
Non-current
portion of
deferred
acquisition
payment - - 500 1,500 1,500
Stockholders'
equity:
Common stock,
$0.001 par value
authorized -
50,000,000 shares;
issued and
outstanding (net
of treasury
stock) -
12,044,736 as
of Mar. 31,
2006 11 12 12 13 12
Additional
paid-in
capital 74,015 74,170 74,168 74,204 74,204
Cost of common
stock in treasury
(2,720,823 shares
as of Mar. 31,
2006) (24,997) (24,997) (24,997) (24,997) (24,997)
Stock-based
compensation 585 823 1,011 1,265 1,257
Retained
earnings - 454 999 1,307 1,636
Accumulated other
comprehensive
income 430 236 152 56 142
-------- -------- -------- -------- --------
Total
stockholders'
equity 50,044 50,698 51,345 51,848 52,254
-------- -------- -------- -------- --------
Total
liabilities and
stockholders'
equity $ 76,612 $ 60,069 $ 61,722 $ 64,394 $ 61,593
======== ======== ======== ======== ======== Total cash and
marketable
securities $ 52,163 $ 33,036 $ 31,595 $ 32,944 $ 30,061
INFORTE CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's) THREE MONTHS ENDED
MARCH 31,
-------------------------
2005 2006
--------- ---------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net income (loss) $ (770) $ 329 Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 384 228
Loss on investment in affiliate - 75
Non-cash compensation 404 (8)
Deferred income taxes 79 117
Changes in operating assets and liabilities
Accounts receivable 731 382
Prepaid expenses and other current assets (305) (172)
Accounts payable (46) 49
Income taxes (1,178) 72
Accrued expenses and other (542) 45
Deferred revenue (582) (223)
-------- --------
Net cash provided by (used in) operating
activities (1,825) 894 Cash flows from investing activities
Note receivable from affiliate - (421)
Acquisition of Compendit, net of cash (3,150) (3,150)
Decrease in marketable securities 6,359 4,738
Purchases of property and equipment (137) (256)
--------- ---------
Net cash provided by investing activities 3,072 911 Cash flows from financing activities
Proceeds from stock option and purchase plans 46 -
--------- ---------
Net cash provided by financing activities 46 -
--------- ---------
Effect of changes in exchange rates on cash (69) 59
Increase in cash and cash equivalents 1,224 1,864
Cash and cash equivalents, beg. of period 20,817 10,353
--------- ---------
Cash and cash equivalents, end of period $ 22,041 $ 12,217
========= =========
DATASOURCE: Inforte Corp.
CONTACT: Kelly Richards of Inforte Corp., , or Web site: http://www.inforte.com/
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