4Front Technologies, Inc. Announces Second Quarter and Six Months Results; 4Front Posts Another Record Quarter.LONDON--(BUSINESS WIRE)--Sept. 1, 1999-- 4Front Technologies, Inc. ("4Front") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on NM/EASDAQ Symbol: FFTI FFTI Federazione Field Target Italia (Italian) FFTI Feel Free to Ignore ) announced its results for the second quarter and six months ended July July: see month. 31, 1999. -0-
HIGHLIGHTS (a)
(in $000s, except share and per share data)
Second Quarter
Ended July 31, 1999
1999 1998 % Increase
---- ---- ----------
(unaudited) (unaudited)
Service revenues $ 39,166 $ 16,677 135%
Product revenues $ 19,150 $ 10,738 78%
------ ------
Total revenues $ 58,316 $ 27,415 113%
Operating income $ 3,622 $ 2,030 78%
Net income $ 2,050 $ 1,235 66%
Net income per share (basic) $ 0.19 $ 0.15 27%
Net income per share
(diluted) $ 0.17 $ 0.12 42%
Fully diluted shares
outstanding 12,019,330 9,910,335
Six Months
Ended July 31,1999
1999 1998 % Increase
---- ---- ----------
(unaudited) (unaudited)
Service revenues $ 77,595 $ 33,114 134%
Product revenues $ 38,047 $ 21,005 81%
------ ------
Total revenues $ 115,642 $ 54,119 114%
Operating income $ 7,002 $ 3,851 82%
Net income $ 4,035 $ 2,327 73%
Net income per share (basic) $ 0.38 $ 0.30 27%
Net income per share
(diluted) $ 0.34 $ 0.25 36%
Fully diluted shares
outstanding 11,942,645 9,202,154
(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 second quarter ended July 31, 1999 total revenues
increased 113% to $58.3 million versus $27.4 million reported for the
comparable year-ago quarter. Net income for the quarter increased 66%
to $2.05 million, or $0.17 per share diluted (based on 12,019,330
shares), versus net income of $1.2 million, or $0.12 per share diluted
(based on 9,910,335 shares), for the comparable year-ago quarter.
For the six months ended July 31, 1999, total revenues increased
114% to $115.6 million versus $54.1 million reported for the
comparable year-ago period. Net income for the period increased 73% to
$4.0 million, or $0.34 per share diluted (based on 11,942,645 shares),
versus net income of $2.3 million, or $0.25 per share diluted (based
on 9,202,154 shares), for the comparable year-ago period.
Anil Doshi, Chairman and Chief Executive Officer of 4Front, said:
Overall Performance
The second quarter was another record quarter, both in terms of
revenues and earnings. The quarter's performance reflects solid
contributions from the acquisitions made over the past year, as well
as continuing strong internal growth. Results from Continental Europe
were particularly encouraging and we saw further margin improvement in
the quarter. The EBITDA margin for the quarter rose to 8.3% from 8.0%
reported for the preceding quarter. The operating margin for the
quarter rose to 6.2% from 5.9% reported for the preceding quarter.
Targets
We are ahead of schedule for achieving our annualized revenue
run-rate target of $250 million, which we originally aimed to reach
next year. Our second quarter annualized revenue run-rate is now over
$230 million which, following the addition of expected first year
revenues of at least $20 million from the recently completed SIL
acquisition, should put us past the $250 million mark. Furthermore,
the acquisition of services company SIL, together with the continuing
strong growth of 4Front's services activities, pushes the overall
services contribution close to 70%, moving us closer to our targeted
calendar 2000 75/25 service/product split. The continued growth of
services activities, as well as good progress with the integration of
recent acquisitions in Continental Europe, has helped us to achieve
further targeted margin improvements in the current quarter.
Pan-European Strategy
With operational presences in the UK, France, Italy, Belgium,
Germany, Holland, Spain, the Czech Republic, Sweden and Poland, and
with business alliances in Finland, Norway and Portugal, 4Front is now
a truly pan-European IT services provider. 4Front is now present in
all the key IT services markets in Europe, as well as in some emerging
European markets which hold promising growth potential. In total,
4Front is present in markets that account for over 90% of the overall
European computer services market. While 4Front will maintain its
focus on further strengthening its European presence through
acquisition, particular attention is also being paid to rolling out
the full range of 4Front's extensive service offering throughout its
existing European network.
Balance Sheet and Cash
4Front's balance sheet and cash position remains strong. Net book
value at quarter end was $5.90 per share, and total cash was $23.3
million or $2.15 per share. 4Front has ample resources to continue
with the implementation of its European growth strategy.
Mark Ellis, Vice Chairman and President of 4Front said:
Operating Performance and Outlook
Earnings growth continued to be strong while EBITDA and operating
margins again improved over the preceding quarter. Operational
highlights during the quarter and subsequently included:
Contracts
- The average size and term of 4Front's service contracts continued
to increase, helped by contracts such as the $9 million INAIL
contract, 4Front's largest ever contract, which was won in Italy,
and the $5 million 4 year contract won recently from the Kent
Police Force, as well as several other major contracts won in the
UK and Continental Europe.
Acquisitions
- 4Front acquired the SIL Group, a leading European provider of
specialized computer and telecom services.
- The integration of 4Front's three French operations proceeded as
planned.
- The integration of 4Front's Italian operations proceeded as
planned.
Market Positioning and Industry Partnerships
- 4Front expanded its e-commerce consulting and training
capabilities when its education and training arm entered into a
pan-European training partnership with Vignette Corporation
(Nasdaq: VIGN), a leading US Internet-commerce software and
services company.
- 4Front broadened the range of its software offerings when it
became the exclusive pan-European distributor of US enterprise
business systems developer Made2Manage Systems Inc.
(Nasdaq: MTMS).
- The SIL acquisition increased 4Front's exposure to the telecom
services market.
- 4Front made good progress in rolling out new services, such as
help-desk and education services, in Continental Europe.
- 4Front continued to successfully develop its close relationship
with Siemens in France and with other major manufacturers and
service providers throughout Europe.
With European economies generally achieving higher than expected
overall growth levels and the European computer services industry in
particular continuing to grow rapidly, the opportunities for 4Front in
all business areas remain strong.
4Front Technologies, Inc., is a leading provider of information
technology and outsourcing solutions, which consist of specialized
computer services and complementary products, primarily to blue-chip
corporations throughout Europe. 4Front's services and solutions
include help-desk support, education services, product-related
services, network services, systems integration, specialized 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., IBM, Phillips, Nokia, Siemens, Sony,
Cegedim, Renault, Energis, Pfizer, Cariplo, Societe Generale and the
UK Ministry of Defence. Additional information on 4Front can be found
on the Company's website at www.4fti.com.
-0-
4FRONT TECHNOLOGIES, INC. AND SUBSIDIARIES CONDENSED con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. CONSOLIDATED con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: STATEMENTS OF OPERATIONS For the Three Months Ended July 31, 1999 July 31, 1998 $ '000's $ '000's (unaudited) (unaudited) REVENUES Services $ 39,166 $ 16,677 Products 19,150 10,738 ------ ------ 58,316 27,415 ------ ------ Cost of Services 18,659 7,671 Cost of Products 16,584 8,920 ------ ----- 35,243 16,591 ------ ------ GROSS PROFIT Services 20,507 9,006 Products 2,566 1,818 ------- ----- 23,073 10,824 ------ ------ OPERATING EXPENSES Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Selling, general and administrative expenses 18,249 8,074 Depreciation 404 292 Amortization 798 428 -------- ------ Total operating expenses 19,451 8,794 ------ ----- INCOME BEFORE INTEREST, INCOME TAXES: 3,622 2,030 Interest income 220 108 Interest expense (246) (210) ----- ----- INCOME BEFORE INCOME TAXES: 3,596 1,928 INCOME TAXES 1,546 693 ----- --- NET INCOME $ 2,050 $ 1,235 ----- ----- NET INCOME PER COMMON SHARE (Basic) $ 0.19 $ 0.15 NET INCOME PER COMMON SHARE (Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) $ 0.17 $ 0.12 For The Six Months Ended July 31, 1999 July 31, 1998 $ '000's $ '000's (unaudited) (unaudited) REVENUES Services $ 77,595 $ 33,114 Products 38,047 21,005 -------- ------ 115,642 54,119 ------- ------ Cost of Services 37,145 15,300 Cost of Products 32,826 17,454 ------ ------ 69,971 32,754 ------ ------ GROSS PROFIT Services 40,450 17,814 Products 5,221 3,551 ------- ----- 45,671 21,365 ------ ------ OPERATING EXPENSES Selling, general and administrative expenses 36,273 16,078 Depreciation 838 586 Amortization 1,558 850 ------- -------- Total operating expenses 38,669 17,514 ------ ------ INCOME BEFORE INTEREST, INCOME TAXES: 7,002 3,851 Interest income 484 176 Interest expense (468) (419) ----- ----- INCOME BEFORE INCOME TAXES: 7,018 3,608 INCOME TAXES 2,983 1,281 ----- ----- NET INCOME $ 4,035 $ 2,327 ----- ----- NET INCOME PER COMMON SHARE (Basic) $ 0.38 $ 0.30 NET INCOME PER COMMON SHARE (Diluted) $ 0.34 $ 0.25 4FRONT SELECT BALANCE SHEET INFORMATION July 31, 1999 January January: see month. 31, 1999 (unaudited) (audited) Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. $ 126,512 $ 109,596 Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. 102,226 86,815 Total assets 166,974 146,272 Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. 860 780 Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. $ 63,888 $ 58,677 |
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