Emtec, Inc. Announces Third Quarter 2012 Results
Springfield, NJ. – Emtec, Inc. (OTCQB: ETEC) (“Emtec” or the “Company”) announced today that, for the quarter ended May 31, 2012, consulting and outsourcing revenue increased to $26.8 million from $20.2 million in the quarter ended May 31, 2011, an increase of $6.6 million or 32.5%. Overall revenue increased from $44.9 million for the three months ended May 31, 2011 to $50.7 million for the three months ended May 31, 2012. Gross profit increased by approximately $1.3 million to $9.1 million for the quarter ended May 31, 2012 from $7.8 million for the quarter ended May 31, 2011. Adjusted EBITDA, which is defined by management as net income before interest, taxes, depreciation, amortization, retention bonuses, stock-based compensation, executive recruiting fees, severance, earnout liability adjustments and stock warrant expense (“Adjusted EBITDA”), was approximately $1.5 million for the quarter ended May 31, 2012 versus an Adjusted EBITDA loss of approximately $36,000 for the quarter ended May 31, 2011. A reconciliation of net income to EBITDA and Adjusted EBITDA is attached to this press release.
For the nine months ended May 31, 2012, consulting and outsourcing revenue increased to $77.6 million from $54.5 million in nine months ended May 31, 2011, an increase of $23.1 million or 42.4%. Overall revenue increased from $167.9 million for the nine months ended May 31, 2011 to $170.5 million for the nine months ended May 31, 2012. Procurement services revenues declined by $20.5 million from $113.4 million for the nine months ended May 31, 2011 to $92.9 million for the nine months ended May 31, 2012. The decline in procurement revenue was due to purchasing decision delays by education clients through April 2012 and a delay in software sales to certain of our Canadian clients due to a new release of software in 2012. Gross profit increased by approximately $2.4 million to $28.5 million for the nine months ended May 31, 2012 from $26.1 million for the nine months ended May 31, 2011. Adjusted EBITDA increased by approximately $1.8 million or 80.2% to $4.1 million for the nine months ended May 31, 2012 versus $2.3 million the nine months ended May 31, 2011.
Dinesh Desai, Chairman and CEO of Emtec commented, “We are pleased with our overall performance this quarter and feel we have started to see the results of our strategy take hold. Recurring services revenue is now north of the $100 million annual run rate and we expect to see this trend continue. The delays in education projects are now over and in May we started those projects in earnest. During the third quarter, we closed more than fifty (50) new consulting and outsourcing engagements with our clients, including several with new clients.”
Gregory Chandler, Chief Financial Officer of Emtec added, “We have returned to profitability excluding non-cash based expenses this quarter through a combination of increases in education sales and a focus on lowering SG&A expenses. We improved gross margin versus the same quarter in 2011 by another 0.5%. Our SG&A expenses decreased slightly, but when taking into account the additional SG&A from acquired companies of $1.7 million our SG&A has decreased significantly from the prior year. Year-to-date capital expenditures continue to track at lower levels than in the prior year, with the Company only spending about $700,000 over the first nine months of fiscal 2012 versus approximately $2.3 million 2011.”
Certain statements in this document constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company’s future operating results are dependent upon many factors, including but not limited to: (i) the Company’s ability to obtain sufficient capital or a strategic business arrangement to fund its plan of operations when needed; (ii) the Company’s ability to build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company’s control; and (iv) other risk factors discussed in the Company’s periodic filings with the Securities and Exchange Commission which are available for review at www.sec.gov under “Search for Company Filings.” We undertake no obligation to publicly update or revise any forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events, or changes to future results over time.
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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 25 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.
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