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Inforte Corp. Announces Third Quarter Results; Highest Quarterly Revenue Performance Since Third Quarter 2004
CHICAGO, Oct. 25 /PRNewswire-FirstCall/ -- Inforte Corp. (NASDAQ: INFT) announced today that revenue for the quarter ending September 30, 2006 was $11.2 million. Net revenue, which is revenue less reimbursements, was $10.3 million. Diluted earnings per share (EPS) were three cents. Stephen Mack, Inforte's chief executive officer and president, commented, "We had a good quarter, exceeding our revenue guidance and meeting our earnings expectations." Actual results for the quarter ending September 30, 2006, and financial highlights, are as follows: -- Net revenue was $10.3 million, representing year over year growth of
six percent and sequential growth of seven percent.
-- SAP net revenue grew seventeen percent sequentially going from
$3.7 million in the second quarter to $4.4 million this quarter.
-- Customer analytics added a significant new client and net revenue more
than tripled year over year.
-- Cash flow from operations was $792,000, continuing a trend of positive
cash flow over the last six quarters. Cash flow from operations was
$3.5 million over the last twelve months.
-- EPS were three cents. EPS for the first nine months in 2006 were
nine cents and compares to two cents last year.
-- Net income for the quarter was $302,000.
-- As of September 30, 2006, cash and marketable securities were
$29.6 million.
-- Days sales outstanding were 54, down from 67 in the third quarter last
year.
-- At the end of the quarter there were 258 employees in total of which
210 were billable. This compares to 237 total employees last quarter of
which 191 were billable.
-- Consultant utilization was 69 percent compared to 63 percent last
quarter.
-- Annualized quarterly net revenue per consultant and net revenue per
employee were $214,000 and $174,000 respectively.
Net revenue guidance for the fourth quarter is set at a range of $8.8 million to $9.8 million and EPS guidance is set at a range of negative four cents to positive two cents. 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; (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 customer 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 helps companies acquire, develop and retain profitable customers with a unique combination of strategic, analytic and technology deployment services. Our approach enables clients to improve their understanding of customer behavior; successfully apply this insight to customer interactions; and continually analyze and fine-tune their strategies and tactics. Founded in 1993, Inforte is headquartered in Chicago with offices in Atlanta; Dallas; Delhi, India; Hamburg, Germany; London; Los Angeles; San Francisco; and Washington, D.C. For more information, call 800.340.0200 or visit http://www.inforte.com/ . CONTACT: kelly.richards@inforte.com, or ir@inforte.com. Visit http://www.inforte.com/investor/ to access the October 25, 2006, Investor Conference Call web cast, which begins at 4:30 p.m. Eastern. CONSOLIDATED STATEMENTS OF OPERATIONS
(000's, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------------------------
2005 2006 2005 2006
---------- ---------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Revenue before
reimbursements
(net revenue) $9,711 $10,252 $28,160 $29,778
Reimbursements 922 961 2,912 2,847
---------- ---------- ---------- ----------
Total revenues 10,633 11,213 31,072 32,625
Cost of services:
Project personnel
and related
expenses 5,187 6,051 16,267 16,838
Reimbursed expenses 922 961 2,912 2,847
---------- ---------- ---------- ----------
Total cost of services 6,109 7,012 19,179 19,685
---------- ---------- ---------- ----------
Gross profit 4,524 4,201 11,893 12,940
Other operating expenses:
Sales and marketing 638 641 1,942 1,867
Recruiting, retention
and training 324 576 785 1,420
Management and
administrative 2,788 2,776 9,382 8,640
---------- ---------- ---------- ----------
Total other operating
expenses 3,750 3,993 12,109 11,927
Operating income (loss) 774 208 (216) 1,013
Loss on investment
in affiliate (76) (90) (76) (226)
Interest income, net
and other 214 414 671 1,038
---------- ---------- ---------- ----------
Income before income tax 912 532 379 1,825
Income tax expense 367 230 150 774
---------- ---------- ---------- ----------
Net income $545 $302 $229 $1,051
========== ========== ========== ==========
Earnings per share:
-Basic $0.05 $0.03 $0.02 $0.09
-Diluted $0.05 $0.03 $0.02 $0.09
Weighted average common
shares outstanding:
-Basic 11,260 11,411 11,209 11,353
-Diluted 11,694 11,811 11,516 11,826
Expenses as a percentage
of net revenue
Project personnel and
related expenses 53.4% 59.0% 57.8% 56.5%
Sales and marketing 6.6% 6.2% 6.8% 6.3%
Recruiting, retention,
and training 3.3% 5.6% 2.8% 4.8%
Management and
administrative 28.7% 27.1% 33.3% 29.0%
Income tax rate 40.2% 43.2% 39.6% 42.4%
Margins
Gross income 46.6% 41.0% 42.2% 43.5%
Operating income 8.0% 2.0% -0.8% 3.4%
Pretax income 9.4% 5.2% 1.3% 6.1%
Net income 5.6% 2.9% 0.8% 3.5%
Year-over-year change
Net revenue 6% 6%
Gross income -7% 9%
Operating income -73% -
Pretax income -42% 381%
Net income -45% 358%
Diluted EPS -40% 350%
NON-GAAP SUPPLEMENTAL INFORMATION (UNAUDITED) (1)
STATEMENTS OF OPERATIONS
(000's, except per share data)
NINE MONTHS ENDED
SEPTEMBER 30, 2005
----------
(Unaudited)
Operating income (loss) (216)
Tender offer related charges 1,316
Loss on investment in affiliate (76)
Interest income, net and other 671
--------
Non-GAAP income before income tax 1,695
Non-GAAP income tax expense 671
--------
Non-GAAP net income $1,024
Non-GAAP earnings per share:
-Basic $0.09
-Diluted $0.09
Weighted average common shares outstanding:
-Basic 11,209
-Diluted 11,516
Non-GAAP margins as a percentage of net revenue:
Pretax income 6.0%
Net income 3.6%
(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.
INFORTE CORP.
CONSOLIDATED BALANCE SHEETS
(000's)
SEPT 30, DEC 31, MAR 31, JUNE 30, SEPT 30,
2005 2005 2006 2006 2006
-------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash
equivalents $12,107 $10,353 $12,217 $10,569 $13,583
Short-term
marketable
securities 18,996 22,591 17,844 19,266 16,037
Accounts
receivable 8,707 8,460 8,078 7,683 7,453
Allowance for
doubtful
accounts (450) (400) (400) (400) (400)
-------- -------- -------- -------- --------
Accounts
receivable,
net 8,257 8,060 7,678 7,283 7,053
Note receivable
from affiliate 429 684 1,122 1,537 1,784
Prepaid expenses
and other
current assets 1,066 1,023 1,211 1,147 895
Interest receivable
on investment
securities 204 199 164 133 125
Deferred income
taxes 1,073 484 371 351 371
Income taxes
recoverable 218 124 124 13 -
-------- -------- -------- -------- --------
Total current
assets 42,350 43,518 40,731 40,299 39,848
Computers, purchased
software and
property 2,111 1,862 1,865 2,303 2,324
Less accumulated
depreciation and
amortization 1,091 881 805 893 955
-------- -------- -------- -------- --------
Computers, purchased
software and
property, net 1,020 981 1,060 1,410 1,369
Long-term marketable
securities 492 - - - -
Intangible assets 64 42 27 14 7
Goodwill 14,307 15,238 15,238 15,126 15,118
Deferred income
taxes 1,565 2,758 2,754 2,748 2,786
Investment in
affiliate 1,924 1,857 1,783 1,721 1,631
-------- -------- -------- -------- --------
Total assets $61,722 $64,394 $61,593 $61,318 $60,759
======== ======== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $666 $357 $406 $1,152 $458
Income taxes
payable 359 920 992 306 320
Accrued expenses 3,012 3,595 3,850 3,195 3,349
Accrued loss on
disposal of leased
property 1,106 845 635 486 408
Current portion of
deferred
acquisition
payment 3,650 3,650 500 500 500
Deferred revenue 1,084 1,679 1,456 1,197 944
-------- -------- -------- -------- --------
Total current
liabilities 9,877 11,046 7,839 6,836 5,979
Non current
liabilities:
Non-current portion
of deferred
acquisition
payment 500 1,500 1,500 1,500 1,000
Stockholders' equity:
Common stock, $0.001
par value authorized-
50,000,000 shares;
issued and
outstanding (net of
treasury stock)-
11,905,374 as
of Sept. 30, 2006 12 13 12 12 12
Additional paid-in
capital 75,179 75,469 75,461 75,487 75,795
Cost of common
stock in treasury
(2,720,823 shares
as of Sept. 30,
2006) (24,997) (24,997) (24,997) (24,997) (24,997)
Retained earnings 999 1,307 1,636 2,056 2,358
Accumulated other
comprehensive
income 152 56 142 424 612
-------- -------- -------- -------- --------
Total
stockholders'
equity 51,345 51,848 52,254 52,982 53,780
-------- -------- -------- -------- --------
Total
liabilities
and
stockholders'
equity $61,722 $64,394 $61,593 $61,318 $60,759
======== ======== ======== ======== ========
Total cash and
marketable
securities $31,595 $32,944 $30,061 $29,835 $ 29,620
INFORTE CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------
2005 2006 2005 2006
-------- --------- -------- --------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cash flows from
operating activities
Net income $545 $302 $229 $1,051
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation and
amortization 293 228 979 698
Loss on investment in
affiliate 76 90 76 226
Stock-based compensation 188 191 830 197
Deferred income taxes (90) (58) 231 54
Changes in operating assets
and liabilities
Accounts receivable (722) 230 (1,106) 1,007
Prepaid expenses and other
current assets 158 210 (8) 101
Unbilled revenue 463 - 463 -
Accounts payable (78) (269) (421) 78
Income taxes 894 44 (143) (306)
Accrued expenses and other
current assets (264) 77 (524) (683)
Deferred revenue (82) (253) (583) (735)
-------- --------- -------- --------
Net cash provided by
operating activities 1,381 792 23 1,688
Cash flows from investing
activities
Acquisitions, net of
cash (2,177) (392) (5,327) (3,542)
Note receivable from
affiliate (375) (198) (425) (1,001)
Investment in affiliate - - (2,000) -
Decrease in marketable
securities 3,981 3,223 16,715 6,469
Purchases of property and
equipment (116) (597) (278) (962)
-------- --------- -------- --------
Net cash provided by
investing activities 1,313 2,036 8,685 964
Cash flows from financing
activities
Proceeds from stock
option and purchase plans - - 202 -
Dividends - - (17,375) -
-------- --------- -------- --------
Net cash used in
financing activities - - (17,173) -
-------- --------- -------- --------
Effect of changes in
exchange rates on cash (58) 186 (245) 578
Increase (decrease) in
cash and cash equivalents 2,636 3,014 (8,710) 3,230
Cash and cash equivalents,
beg. of period 9,471 10,569 20,817 10,353
-------- -------- -------- --------
Cash and cash equivalents,
end of period $12,107 $13,583 $12,107 $13,583
======== ======== ======== ========
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