Emtec, Inc. Announces First Quarter 2011 Results
Springfield, NJ – Emtec, Inc. (OTCBB: ETEC) (“Emtec” or the “Company”) announced today that for the quarter ended November 30, 2010, revenue increased to $76.9 million for quarter ended November 30, 2010 from $73.6 million in quarter ended November 30, 2009, an increase of $3.3 million. Services and consulting revenue grew by 17.6% from the same period in the prior year, primarily from the addition of revenues generated by the Company’s recent SDI acquisition. Gross profit showed no material increase from the same period in the prior year. Earnings before interest, taxes, depreciation and amortization expenses (“EBITDA”) were $2.2 million for the quarter ended November 30, 2010, compared with $3.1 million for the quarter ended November 30, 2009. Adjusted EBITDA, which is defined by management as net income before interest, taxes, depreciation, amortization, retention bonuses, non-essential overhead, stock-based compensation, executive recruiting fees, severance, the recovery of prior year expenses and stock warrant expense (“Adjusted EBITDA”), was $2.5 million for the quarter ended November 30, 2010 versus $3.4 million for the quarter ended November 30, 2009. A reconciliation of net income to EBITDA and Adjusted EBITDA is attached to this press release.
EBITDA and Adjusted EBITDA are key financial metrics used by the Company’s Board of Directors and management to evaluate and measure the Company’s operating performance. These metrics are not in conformity with generally accepted accounting principles (“GAAP”) in the United States of America. Management’s calculation of EBITDA eliminates the effect of charges primarily associated with financing decisions, tax regulations and capital investments. Adjusted EBITDA also eliminates certain unusual costs and reflects certain changes in the business made by management and includes adjustments which in the opinion of management are necessary to reflect the underlying ongoing operations of the business. Net income (loss) is the most comparable GAAP measure of the Company’s operating results presented in the Company’s consolidated financial statements. We have made a reconciliation of net income (loss), which is the most closely comparable GAAP measure to these non-GAAP measures for the quarters ended November 30, 2010 and 2009 and discussed these adjustments in this release. EBITDA and Adjusted EBITDA should not be considered as an alternative to net income (loss) or any other GAAP measure of performance or liquidity, and may not be comparable to other similarly titled measures of other companies. Management believes that the presentation of EBITDA and Adjusted EBITDA is important to investors because Adjusted EBITDA is used by management to evaluate financial performance and continuing operations and to determine resource allocation for each of our business segments.
“I am pleased to report that the transformation of our business to one based on recurring revenue from services continued to show positive results in the first quarter,” said Dinesh Desai, Chairman, CEO, and President of Emtec. “While the overall gross profit was flat compared to the same quarter last year, we are excited by the 17.6 percent growth in our services and consulting revenue. The main driver of this revenue growth was our acquisition of SDI along with some other changes we made during the quarter to improve our service offerings. I was disappointed that a few large low margin procurement sales offset the positive margin impact of this services and consulting growth. On the positive side, this clearly shows the long-term benefit of this business transformation we have undertaken. As we continue to make these investments in infrastructure and personnel we may see some short-term negative earnings impacts, but we are implementing cost-control discipline and processes across all our business units that are intended to allow the positive effects to flow to the bottom-line.”
Phone : 973.232.7897
Email : Deanna.Evers@emtecinc.com
Emtec is a global IT consultancy dedicated to helping world class organizations in the enterprise, education, and government markets drive transformation and growth by employing the latest enterprise technologies and innovative business processes. We empower our clients to accelerate innovation and deliver amazing client experiences to better compete and ultimately lead in their industry. Our “Client for Life” approach is built upon over 20 years of delivering rapid, meaningful and lasting business value. Our offerings span the IT spectrum from Advisory, Applications (Enterprise, Custom, Mobile and Cloud) as well as Intelligent Automation, Analytic, Cyber Security and Infrastructure Services. www.emtecinc.com
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