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Pomeroy IT Solutions, Inc. Reports Second Quarter 2009 Results
PR Newswire
Aug 24, 2009
HEBRON, Ky., Aug. 24 /PRNewswire-FirstCall/ --
Second Quarter Financial Highlights
-- Net earnings of $0.3 million in the second quarter of 2009, down 78%
year-over-year (YOY) but up from a $(0.6) million loss in the first
quarter of 2009
-- Basic and diluted earnings per share of $0.03 per share compared to
$0.12 per share in second quarter of 2008. Excluding unusual charges,
basic and diluted earnings per share was $0.17 per share compared to
$0.19 per share in second quarter of 2008
-- Revenues of $100.8 million in the second quarter of 2009, down 35% YOY
but up 13% compared to the first quarter of 2009. Core Services and
Products revenue down 24% YOY. Core Services and Products excludes the
staffing business that Pomeroy opted not to renew with a major customer
in the second quarter of 2008 due to unprofitable terms
-- Gross profit of $14.7 million, down 25% YOY but up 13% compared to the
first quarter of 2009. Gross profit margin of 14.5% compared to 12.6%
in second quarter of 2008 - up 190 basis points
-- Selling, General and Administrative Expenses (SG&A) of $13.7
million, down 18% YOY. Excluding unusual charges, SG&A was $12.3
million, down 22% YOY
-- Cash and investments of $39.2 million in the second quarter of 2009
versus $31.9 million in the fourth quarter of 2008
-- The Company achieved two significant new services account wins with an
estimated multi-year contract value of $40 million
Pomeroy IT Solutions, Inc. (Nasdaq: PMRY) an information technology ("IT") solutions provider with a comprehensive portfolio of hardware, software, technical staffing services, as well as infrastructure and lifecycle services, today reported revenues of $100.8 million for the second quarter of fiscal 2009, compared to $155.0 million for the second quarter of fiscal 2008. The reported second quarter 2009 net income of $0.3 million, or $0.03 per share compares to second quarter 2008 net income of $1.5 million, or $0.12 per share. The Company reported revenues of $190.3 million for the first six months of fiscal 2009, compared to $300.2 million for the first six months of fiscal 2008. The reported net loss of $(0.3) million, or $(0.03) per share, for the first six months of fiscal 2009 compares to a reported net loss of $(2.7) million, or $(0.23) per share, for the first six months of fiscal 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090213/POMEROYLOGO )
Chris Froman, President and CEO of Pomeroy IT Solutions, said "We continue to execute on our turnaround in spite of softness in the market. In the second quarter our infrastructure services margins improved to 25.2%, up 410 basis points year over year, and our focus on reducing operating expenses led to our fifth consecutive quarter of positive EBITDA. As previously announced we are adding new jobs in support of significant new multi-year services contracts. As technology spending resumes we will be well positioned for additional profit growth."
CONSOLIDATED FINANCIAL RESULTS
Second Quarter 2009 versus Second Quarter 2008
Total Net Revenues: Total net revenues decreased $54.2 million or 35.0% in the second quarter of fiscal 2009, compared to the second quarter of fiscal 2008. For the second quarters of fiscal 2009 and fiscal 2008, the net revenues were $100.8 million and $155.0 million, respectively.
Product revenues were $65.5 million in the second quarter of fiscal 2009, a decrease of $27.2 million or 29.3% from the second quarter of fiscal 2008. The decrease in revenue was primarily generated by a reduction in capital expenditures of large customers within the Financial, Health Care and Retail markets. Many of these expenditures were previously approved in the current year budgets of our customers but were delayed due to ongoing economic uncertainty.
Service revenues were $35.3 million in the second quarter of fiscal 2009, a decrease of $27.0 million or 43.3% from the second quarter of fiscal 2008. The Company groups services sales into Technical Staffing and Infrastructure Services. Technical Staffing Services support clients' project requirements, ensures regulatory and customer compliance requirements and fulfills interim and permanent staffing requirements of the staffing projects. Infrastructure Services help clients optimize the various elements of distributed computing environments. Encompassing the complete IT lifecycle, these services include desktop and mobile computing, server and network environments.
(in millions)
Quarter ended July 5,
Service Revenue 2009 2008
--------------- ---- ----
Technical Staffing $7.3 $31.6
Infrastructure Services 28.0 30.7
---- ----
Total Service Revenue $35.3 $62.3
===== =====
Technical Staffing revenue decreased $24.3 million, or 76.9%, in the second quarter of fiscal 2009. In June 2008, the Company elected not to renew a technical services contract with a major customer because the proposed terms would have been unprofitable for the Company. As a result of the loss of this business, we expect a decline of approximately $80 million in technical staffing revenue for the full year in fiscal 2009. Technical Staffing revenue accounted for approximately 20.7% of total service revenues in the second quarter of fiscal 2009 compared to 50.7% in the second quarter of fiscal 2008.
Infrastructure Service revenues decreased $2.7 million, or 8.9%, in the second quarter of fiscal 2009, primarily due to a decline in short-term project engagements and a loss contract which was exited at the end of the second quarter of fiscal 2008. Infrastructure Service revenues accounted for approximately 79.3% of total service revenues in the second quarter of fiscal 2009 compared to 49.3% in the second quarter of fiscal 2008.
Gross Profit: Gross profit was $14.7 million in the second quarter of fiscal 2009, compared to $19.5 million in the second quarter of fiscal 2008. Gross profit margin, as a percentage of revenue, was 14.5% in the second quarter of fiscal 2009, compared to 12.6% in the second quarter of fiscal 2008.
Product gross profit was $6.3 million in the second quarter of fiscal 2009, compared to $9.4 million in the second quarter of fiscal 2008. Product gross profit margin as a percentage of product revenues decreased to 9.5% in the second quarter of fiscal 2009, compared to 10.2% in the second quarter of fiscal 2008 as a result of transactions at lower gross profit margins in order to retain or gain market share.
Service gross profit was $8.4 million in the second quarter of fiscal 2009, compared to $10.1 million in the second quarter of fiscal 2008. Service gross profit margins were 23.8% in the second quarter of fiscal 2009, compared to 16.2% in the second quarter of fiscal 2008.
(in millions)
Quarter ended July 5,
Service Gross Profit 2009 2008
-------------------- ---- ----
Technical Staffing $1.4 $3.6
Infrastructure Services 7.0 6.5
--- ---
Total Service Gross Profit $8.4 $10.1
==== =====
Gross profit from Technical Staffing Services was $1.4 million for the second quarter of fiscal 2009, compared to $3.6 million for the second quarter of fiscal 2008. Gross profit margin increased to 18.7% in the second quarter of fiscal 2009 from 11.5% in the second quarter of fiscal 2008. The decrease in gross profit dollars and increase in gross margin is primarily the result of the non-renewal of the technical services contract with a major customer in June 2008 which would have been unprofitable for the Company. We expect a decline in technical staffing gross profit of approximately $6.4 million for the full year in fiscal 2009.
Gross profit from Infrastructure Services was $7.0 million for the second quarter of fiscal 2009 compared to $6.5 million for the second quarter of fiscal 2008. Gross profit margin increased to 25.2% in the second quarter of fiscal 2009 from 21.1% in the second quarter of fiscal 2008. The increase in gross profit margin is the result of cost reductions in the second and third quarters of fiscal 2008 resulting in improved utilization and productivity of technical resources.
Operating Expenses: Total operating expenses were $14.4 million in the second quarter of fiscal 2009, compared to $17.8 million in the second quarter of fiscal 2008, a decrease of $3.4 million or 19.4%. The decrease is primarily the result of the following:
-- Payroll and payroll related expenses decreased approximately $1.9
million in the second quarter of fiscal 2009 as compared to the second
quarter of fiscal 2008 due to changes the company made in order to
right-size the business as a result of the overall decline in revenues.
-- Selling expenses were reduced by $1.3 million in the second quarter of
fiscal 2009 as a result of decreased revenues.
-- Depreciation expense decreased $0.5 million in the second quarter of
fiscal 2009 as compared to the second quarter of fiscal 2008 due to a
significant asset being fully depreciated.
-- The provision for bad debts decreased $0.3 million in the second quarter
of fiscal 2009 as compared to the second quarter of fiscal 2008.
The decreases in operating expenses described above were partially offset by a $0.6 million increase in professional fees in the second quarter of fiscal 2009 associated with the proposed merger related activities.
Income from Operations: Income from operations decreased $1.4 million, to $0.3 million in the second quarter of fiscal 2009 from $1.7 million in the second quarter of fiscal 2008. The decrease in income from operations is the result of the decrease in revenues and gross profit, offset by the decrease in operating expenses, as described above.
Other income (expense): Net other income (expense) was income of $42 thousand in the second quarter of fiscal 2009 compared to expense of $0.2 million during the second quarter of fiscal 2008. The decrease in net other expense is primarily the result of a $0.1 million decrease in interest expense for outstanding borrowings under the Company's credit facility during the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008. The decrease in interest expense resulted from the timing of payments of accounts payable and payroll, as well as a lower outstanding floor plan liability during the second quarter of fiscal 2009 as compared to the second quarter of fiscal 2008.
Income Taxes: For the second quarters of fiscal 2009 and fiscal 2008, the Company had no income tax expense or benefit. During the second quarters of fiscal 2009 and 2008, the Company decreased its tax valuation allowance by $0.1 million and $0.6 million, respectively, as a result of generating net income for these periods.
Net Income: Net income was $0.3 million in the second quarter of fiscal 2009, compared to $1.5 million in the second quarter of fiscal 2008. The decrease in net income is a result of the factors described above.
July 5, 2009 YTD versus July 5, 2008 YTD
Total Net Revenues: Total net revenues decreased $109.9 million or 36.6% in the first six months of fiscal 2009, compared to the first six months of fiscal 2008. For the first six months of fiscal 2009 and fiscal 2008, the net revenues were $190.3 million and $300.2 million, respectively.
Product revenues were $118.6 million in the first six months of fiscal 2009, a decrease of $55.5 million or 31.9% from the first six months of fiscal 2008. The decrease in revenue was primarily generated by a reduction in capital expenditures of large customers within the Financial, Manufacturing, Health Care and Retail markets. Many of these expenditures were previously approved in the current year budgets of our customers but were delayed due to ongoing economic uncertainty.
Service revenues were $71.6 million in the first six months of fiscal 2009, a decrease of $54.4 million or 43.2% from the first six months of fiscal 2008. The Company groups services sales into Technical Staffing and Infrastructure Services. Technical Staffing Services support clients' project requirements, ensures regulatory and customer compliance requirements and fulfills interim and permanent staffing requirements of the staffing projects. Infrastructure Services help clients optimize the various elements of distributed computing environments. Encompassing the complete IT lifecycle, these services include desktop and mobile computing, server and network environments.
(in millions)
Six months ended July 5,
Service Revenue 2009 2008
--------------- ---- ----
Technical Staffing $14.9 $64.1
Infrastructure Services 56.7 61.9
---- ----
Total Service Revenue $71.6 $126.0
===== ======
Technical Staffing revenue decreased $49.2 million, or 76.8%, in the first six months of fiscal 2009. In June 2008, the Company elected not to renew a technical services contract with a major customer because the proposed terms would have been unprofitable for the Company. As a result of the loss of this business, we expect a decline of approximately $80 million in technical staffing revenue for the full year in fiscal 2009. Technical Staffing revenue accounted for approximately 20.8% of total service revenues in the first six months of fiscal 2009 compared to 50.8% in the first six months of fiscal 2008.
Infrastructure Service revenues decreased $5.2 million, or 8.5%, in the first six months of fiscal 2009, primarily due to a decline in short-term project engagements and a loss contract which was exited at the end of the second quarter of fiscal 2008. Infrastructure Service revenues accounted for approximately 79.2% of total service revenues in the first six months of fiscal 2009 compared to 49.2% in the first six months of fiscal 2008.
Gross Profit: Gross profit was $27.6 million in the first six months of fiscal 2009, compared to $35.2 million in the first six months of fiscal 2008. Gross profit margin, as a percentage of revenue, was 14.5% in the first six months of fiscal 2009, compared to 11.7% in the first six months of fiscal 2008.
Product gross profit was $11.8 million in the first six months of fiscal 2009, compared to $17.8 million in the first six months of fiscal 2008. Product gross profit margin as a percentage of product revenues decreased slightly to 9.9% in the first six months of fiscal 2009, compared to 10.2% in the first six months of fiscal 2008 as a result of transactions with lower gross profit margins in order to retain or gain market share primarily in the second quarter of fiscal 2009.
Service gross profit was $15.9 million in the first six months of fiscal 2009, compared to $17.4 million in the first six months of fiscal 2008. Service gross profit margins were 22.1% in the first six months of fiscal 2009, compared to 13.8% in the first six months of fiscal 2008.
(in millions)
Six months ended July 5,
Service Gross Profit 2009 2008
-------------------- ---- ----
Technical Staffing $2.6 $6.2
Infrastructure Services 13.3 11.2
---- ----
Total Service Gross Profit $15.9 $17.4
===== =====
Gross profit from Technical Staffing Services was $2.6 million for the first six months of fiscal 2009, compared to $6.2 million for the first six months of fiscal 2008. Gross profit margin increased to 17.4% in the first six months of fiscal 2009 from 9.7% in the first six months of fiscal 2008. The decrease in gross profit dollars and increase in gross margin is primarily the result of the non-renewal of the technical services contract with a major customer in June 2008 which would have been unprofitable for the Company. We expect a decline in technical staffing gross profit of approximately $6.4 million for the full year in fiscal 2009.
Gross profit from Infrastructure Services was $13.3 million for the first six months of fiscal 2009 compared to $11.2 million for the first six months of fiscal 2008. Gross profit margin increased to 23.4% in the first six months of fiscal 2009 from 18.0% in the first six months of fiscal 2008. The increase in gross profit margin is the result of engagements during the first quarter of fiscal 2008 that generated revenue of approximately $1.4 million at zero gross profit and cost reductions in the second and third quarters of fiscal 2008 resulting in improved utilization and productivity of the technical resources.
Operating Expenses: Total operating expenses were $27.9 million in the first six months of fiscal 2009, compared to $37.5 million in the first six months of fiscal 2008, a decrease of $9.6 million or 25.6%. The decrease is primarily the result of the following:
-- In the first quarter of fiscal 2008, the Company recorded a $1.0 million
charge to reserve against the collection of Technical Staffing Services
revenues that were overbilled by subcontractors in 2005 and 2006. During
the first quarter of fiscal 2009, the Company reversed $0.2 million of
this charge after reevaluating the amounts overbilled.
-- Severance charges decreased $0.5 million in the first six months of
fiscal 2009 compared to the first six months of fiscal 2008.
-- Depreciation expense decreased $1.1 million in the first six months of
fiscal 2009 as compared to the first six months of fiscal 2008 due to a
significant asset being fully depreciated.
-- The provision for bad debts decreased $0.5 million in the first six
months of fiscal 2009 compared to the first six months of fiscal 2008.
-- Selling expenses were reduced by $2.2 million in the first six months of
fiscal 2009 as a result of decreased revenues.
-- During the first quarter of fiscal 2008, the Company recorded accruals
for loss contracts of $0.3 million, as well as a $0.3 million start-up
penalty for a new contract.
-- Payroll and payroll related expenses decreased approximately $4.8
million in the first six months of fiscal 2009 as compared to the first
six months of fiscal 2008 due to changes the Company made in order to
right-size the business as a result of the overall decline in revenues.
The decreases in operating expenses described above were partially offset by a $0.4 million charge in the first quarter of fiscal 2009 associated with the Company's leased aircraft and $0.6 million increase in professional fees in the second quarter of fiscal 2009 associated with the proposed merger related activities.
Loss from Operations: Loss from operations decreased $2.0 million in the first six months of fiscal 2009 as compared to the first six months of fiscal 2008, from a loss of $2.2 million in the first six months of fiscal 2008 to $0.2 in the first six months of fiscal 2009. The decrease in loss from operations is the result of the decrease in operating expenses, offset by the decrease in revenues and gross profit, as described above.
Other income (expense): Net other expense was $36 thousand in the first six months of fiscal 2009 compared to $0.5 million during the first six months of fiscal 2008. Although the Company has significant cash balances, the Company's interest expense exceeds its interest income due primarily to outstanding balances under its floor plan and credit facilities at rates that exceed those rates earned on the Company's cash and cash equivalents. The decrease in net other expense is primarily the result of a $0.3 million decrease in interest expense for outstanding borrowings under the Company's credit facility during the first six months of fiscal 2009 compared to the first six months of fiscal 2008 resulting from the timing of payments of accounts payable and payroll, as well as a lower outstanding floor plan liability during the first six months of fiscal 2009 as compared to the first six months of fiscal 2008.
Income Taxes: For the first six months of fiscal 2009 and fiscal 2008, the Company had no income tax expense or benefit. During the first six months of fiscal 2009 and 2008, the Company increased its tax valuation allowance by $0.1 million and $0.9 million, respectively, due to uncertainty of the Company's ability to utilize its deferred tax assets.
Net Loss: Net loss was $0.3 million in the first six months of fiscal 2009, compared to $2.7 million in the first six months of fiscal 2008. The decrease in net loss is a result of the factors described above.
Other Second Quarter Financial Information
-- Working Capital $59.9 million
-- Cash Flow Used in Operating Activities $10.8 million
-- Cash, Cash Equivalents and CD's $39.2 million
-- Capital Expenditures $0.7 million
-- Outstanding Floor Plan Financing $17.9 million
-- Book Value per Share (1) $7.17
(1) Calculation excludes unvested restricted share awards
Non-GAAP Measures
This press release includes reference to selling, general and administrative expenses excluding unusual charges and non-GAAP earnings per share, as well as a quote that Pomeroy had positive EBITDA in the second quarter of fiscal 2009. We believe that these measures provide meaningful indicators of our performance to both management and investors.
The reconciliation of the Company's reported selling, general and administrative expenses to selling, general and administrative expenses excluding unusual charges, for the second quarters of fiscal 2009 and 2008 follows:
(in millions)
Quarter Quarter
ended ended
July 5, July 5,
2009 2008
Selling, general and administrative
expenses $13.7 $16.6
Less: unusual professional fees
(primarily litigation or
merger-related) (1.2) (0.6)
Less: severance charges (0.2) (0.3)
---- ----
Selling, general and administrative
expenses excluding unusual charges $12.3 $15.7
===== =====
The reconciliation of the Company's reported net income and earnings per share for the second quarters of 2009 and 2008, to non-GAAP net income and earnings per share, resulting from the non-GAAP adjustments described above, follows:
(in millions, except per
share data)
Quarter Quarter
ended ended
July 5, July 5,
2009 2008
Net income - GAAP $0.3 $1.5
Non-GAAP adjustments to selling, general
and administrative expenses described
above 1.4 0.9
--- ---
Net income - non-GAAP $1.7 $2.4
==== ====
Basic and diluted earnings per share -
GAAP $0.03 $0.12
===== =====
Basic and diluted earnings per share -
non-GAAP $0.17 $0.19
===== =====
Weighted average shares used in basic
EPS calculation (in thousands) 9,760 12,343
===== ======
Weighted average shares used in diluted
EPS calculation (in thousands) 9,760 12,343
===== ======
The reconciliation of the Company's reported net income to EBITDA for the second quarter of fiscal 2009 is as follows:
(in millions)
Quarter ended
July 5, 2009
Net income $0.3
Add back: net interest expense -
Add back: income tax expense -
Add back: depreciation and
amortization expense 0.7
---
EBITDA $1.0
====
CONFERENCE CALL
To participate in a conference call and questions and answer session with senior management regarding the second quarter 2009 results, call 1-888-260-6133, using conference identification number 22489898 at 4:30 p.m. (ET) on Monday, August 24, 2009. For your convenience, a replay will be available shortly after the call by dialing 1-800-642-1687 and referencing the conference identification number above.
ABOUT POMEROY IT SOLUTIONS, INC.
Pomeroy IT Solutions, Inc. is a leading provider of IT infrastructure solutions focused on enterprise, network and end-user technologies. Leveraging its core competencies in IT Outsourcing and Professional Services, Pomeroy delivers consulting, deployment, operational, staffing and product sourcing solutions through the disciplines of Six-Sigma, program and project management, and industry best practices. Pomeroy's consultative approach and adaptive methodology enables Fortune 2000 corporations, government entities, and mid-market clients to realize their business goals and objectives by leveraging information technology to simplify complexities, increase productivity, reduce costs, and improve profitability. For more information, go to www.pomeroy.com.
FORWARD-LOOKING STATEMENTS
Certain of the statements in the preceding paragraphs regarding financial results constitute forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our markets' actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements, expressed or implied by such forward-looking statements. These risks, and other factors you should specifically consider, include but are not limited to: changes in customer demands or industry standards; existing market and competitive conditions, including the overall demand for IT products and services and the need to respond to pricing pressures; the nature and volume of products and services anticipated to be delivered; whether customers elect to exercise renewal options on multi-year service contracts; the mix of the products and services businesses; the type of services delivered; the Company's ability to accurately project staffing needs; the ability to fully utilize personnel and increase the use of higher-margin service employees; the ability to manage costs and expenses; the ability to manage risks associated with customer projects; the ability to successfully attract and retain customers, sell additional products and services to existing customers; the ability to timely bill and collect receivables; the ability to avoid non-profitable service contracts; the ability to maintain a broad customer base to avoid dependence on any single customer; the need to successfully attract and retain outside consulting services; new acquisitions by the Company; the ability to attract and maintain key vendor relationships; terms of vendor agreements and certification programs and the assumptions regarding the ability to perform there under; the ability to implement the Company's best practices strategies; adverse or uncertain economic conditions; loss of key personnel; litigation; and the ability to attract and retain technical and other highly skilled personnel. In some cases, you can identify forward-looking statements by such terminology as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential", "continue", "projects", "intends", "prospects", "priorities", or negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
July 5, January 5,
2009 2009
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $38,065 $30,787
Certificates of deposit 1,159 1,142
Accounts receivable:
Trade, less allowance of $3,096 and $3,233,
respectively 68,054 89,654
Vendor, less allowance of $318 and $293,
respectively 1,875 1,299
Net investment in leases 34 74
Other 327 622
--- ---
Total receivables 70,290 91,649
------ ------
Inventories 8,809 7,890
Other 4,231 3,861
----- -----
Total current assets 122,554 135,329
------- -------
Equipment and leasehold improvements:
Furniture, fixtures and equipment 14,564 14,040
Leasehold Improvements 5,370 5,055
----- -----
Total 19,934 19,095
Less accumulated depreciation 14,012 12,748
------ ------
Net equipment and leasehold improvements 5,922 6,347
----- -----
Intangible assets, net 620 752
Other assets 454 559
--- ---
Total assets $129,550 $142,987
======== ========
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands)
July 5, January 5,
2009 2009
---- ----
LIABILITIES AND EQUITY
Current Liabilities:
Floor plan financing $17,899 $11,709
Accounts payable - trade 20,694 30,774
Deferred revenue 1,648 1,557
Employee compensation and benefits 7,072 7,081
Accrued facility closing cost and severance 339 1,149
Other current liabilities 15,045 23,772
------ ------
Total current liabilities 62,697 76,042
------ ------
Equity:
Preferred stock, $.01 par value;
authorized 2,000 shares,
(no shares issued or outstanding) - -
Common stock, $.01 par value; authorized
20,000 shares, (13,724 and 13,693
shares issued, respectively) 143 142
Paid in capital 94,252 93,858
Accumulated other comprehensive income 4 13
Accumulated deficit (4,156) (3,889)
------ ------
90,243 90,124
Less treasury stock, at cost (4,402 and
4,340 shares, respectively) 23,390 23,179
------ ------
Total equity 66,853 66,945
------ ------
Total liabilities and equity $129,550 $142,987
======== ========
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share
data)
Three Months Ended
------------------
July 5, July 5,
2009 2008
---- ----
Net revenues:
Product $65,483 $92,678
Service 35,317 62,315
------ ------
Total net revenues 100,800 154,993
------- -------
Cost of revenues:
Product 59,232 83,243
Service 26,907 52,207
------ ------
Total cost of revenues 86,139 135,450
------ -------
Gross profit 14,661 19,543
------ ------
Operating expenses:
Selling, general and
administrative 13,708 16,630
Depreciation and amortization 671 1,218
--- -----
Total operating expenses 14,379 17,848
------ ------
Income from operations 282 1,695
--- -----
Other income (expense):
Interest income 122 42
Interest expense (111) (247)
Other 31 -
-- -
Other income (expense), net 42 (205)
-- ----
Income before income tax 324 1,490
Income tax expense - -
- -
Net income $324 $1,490
==== ======
Weighted average shares
outstanding:
Basic 9,760 12,343
===== ======
Diluted 9,760 12,343
===== ======
Earnings per common share:
Basic $0.03 $0.12
===== =====
Diluted $0.03 $0.12
===== =====
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share
data) Six Months Ended
----------------
July 5, July 5,
2009 2008
---- ----
Net revenues:
Product $118,644 $174,155
Service 71,616 126,007
------ -------
Total net revenues 190,260 300,162
------- -------
Cost of revenues:
Product 106,876 156,314
Service 55,763 108,629
------ -------
Total cost of revenues 162,639 264,943
------- -------
Gross profit 27,621 35,219
------ ------
Operating expenses:
Selling, general and
administrative 26,479 35,026
Depreciation and amortization 1,374 2,434
----- -----
Total operating expenses 27,853 37,460
------ ------
Loss from operations (232) (2,241)
---- ------
Other income (expense):
Interest income 208 127
Interest expense (271) (598)
Other 27 -
-- -
Other expense, net (36) (471)
--- ----
Loss before income tax (268) (2,712)
Income tax expense - -
- -
Net loss $(268) $(2,712)
===== =======
Weighted average shares
outstanding:
Basic 9,339 12,027
===== ======
Diluted (1) 9,339 12,027
===== ======
Earnings per common share:
Basic $(0.03) $(0.23)
====== ======
Diluted (1) $(0.03) $(0.23)
====== ======
(1) Diluted loss per common share for the six month periods ending July 5, 2009 and 2008 would have been anti-dilutive if the number of weighted average shares outstanding were adjusted to reflect the dilutive effect of outstanding stock options and unvested restricted shares.
POMEROY IT SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)
Six Months Ended
----------------
Cash Flows from (used in) Operating July 5, July 5,
Activities: 2009 2008
------- -------
Net loss (268) (2,712)
Adjustments to reconcile net loss to
net cash flows from (used in) operating
activities:
Depreciation and amortization 1,397 2,499
Stock option, restricted stock compensation
and employee
purchase plan expense 311 1,237
Provision for doubtful accounts 67 600
Amortization of unearned income - (4)
Changes in working capital accounts:
Accounts receivable 21,252 4,678
Inventories (919) 146
Other current assets (370) 3,462
Net investment in leases 40 424
Accounts payable trade (10,080) (668)
Deferred revenue 91 (291)
Other, net (9,430) (2,398)
------ ------
Net operating activities 2,091 6,973
----- -----
Cash Flows used in Investing Activities:
Capital expenditures (867) (2,386)
---- ------
Net investing activities (867) (2,386)
---- ------
Cash Flows from (used in) Financing
Activities:
Net increase (reduction) in floor plan
financing 6,190 (6,631)
Purchase of treasury stock (211) (2,270)
Proceeds from issuance of common shares for
employee
stock purchase plan 84 172
-- ---
Net financing activities 6,063 (8,729)
----- ------
Effect of exchange rate changes on cash and
cash equivalents (9) 18
-- --
Increase (decrease) in cash and cash
equivalents 7,278 (4,124)
Cash and cash equivalents:
Beginning of period 30,787 13,282
------ ------
End of period $38,065 $9,158
======= ======
SOURCE Pomeroy IT Solutions
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