TechTeam Global, Inc. News
TechTeam Global Reports First Quarter 2008 Financial Results
First quarter highlights include the following: — Total revenue of $66.0 million increased 42.8% over last year through a combination of growth via acquisitions and 20.6% organic growth (growth net of acquisitions). — Revenue from the Company's commercial business of $43.9 million grew 26.1% over last year featuring 21.8% organic growth with the remainder from acquisitions. — Revenue from the Company's government business of $22.0 million increased 94.0% over last year primarily due to acquisitions combined with 17.2% organic growth. — Three new service delivery locations became operational in Dresden, Germany; Sibiu, Romania; and Stockholm, Sweden.
"TechTeam achieved another quarter of solid growth, record revenue and improved year-over-year profitability in the first quarter of 2008, our strongest first quarter performance since 2005," said
Cotshott added, "TechTeam remains well positioned to deliver double digit organic revenue growth for 2008, while continuing to benefit from acquisitions made in 2007. In addition, we are making progress on our near-term strategic initiatives previously identified — expanding our service capability globally to better serve global accounts; expanding our alliance partnerships; raising our profile in the industry; and striving to achieve continued margin and SG&A improvements through a thorough organizational review, which we expect to complete in the second quarter. In addition to three new service delivery locations in
Total Company revenue increased 42.8% to
Gross profit increased 41.6% to
While increasing 26.1% on a dollar basis, selling, general, and administrative ("SG&A") expense decreased to 20.3% of total revenue for the first quarter of 2008, from 22.9% of total revenue for the same period in 2007. Excluding the three acquisitions completed in 2007, SG&A expense was
Operating income increased to
Other components of TechTeam's first quarter 2008 performance include the following:
— In the Company's commercial business, revenue in the Americas increased 11.1% to $18.2 million for the first quarter of 2008, and revenue from Europe increased 39.4% to $25.7 million. Excluding acquisitions, organic revenue in Europe increased 32.3% to $22.0 million. Although revenue from Europe in 2008 was favorably impacted by the weakening of the U.S. dollar by approximately $2.1 million relative to the first quarter of 2007, Europe continues to deliver very strong growth. — The Company's year-to-date effective tax rate reported each quarter generally reflects the Company's estimate of its effective tax rate for the current fiscal year. The consolidated effective tax rate increased to 39.8% for the first quarter of 2008, from 27.7% for the same period last year, primarily due to an increase in estimated year-over-year foreign operating losses for which a tax benefit is not recorded and a new income tax in the State of Michigan that took effect January 1, 2008. Furthermore, the Company's effective tax rate for the year ended December 31, 2007 was 34.7%. Excluding the new State of Michigan income tax expense of $144,000, the Company's effective tax rate was 36.5% for the first quarter of 2008. Prior to 2008, the State of Michigan had a value-added tax called the Single Business Tax that was not considered an income tax and was, therefore, included in SG&A expense in the consolidated income statement. Single Business Tax included in SG&A expense totaled $120,000 in the first quarter of 2007. — For the first quarter of 2008, earnings before interest, taxes, depreciation and amortization expense (\"EBITDA\") increased 116% to $5.0 million, or 7.7% of revenue, compared with EBITDA of $2.3 million, or 5.1% of revenue, for the same period in 2007. The Company believes EBITDA is an important \"non-GAAP\" measure of the Company's financial performance. EBITDA presents information on earnings that may be more comparable to companies with different finance structures, capital investments or capitalization and depreciation policies. The most closely related GAAP measure is operating income. Some financial analysts also use EBITDA to assist in the determination of a company's possible market valuation. (See the table following the financial statements contained in this press release for a reconciliation of operating income to EBITDA.) — As of March 31, 2008, the Company had 10,770,671 common shares issued and outstanding.
Conference Call Information
TechTeam Global, Inc. will also host an investor teleconference to discuss its first quarter 2008 financial results at
A taped replay of the call will be available beginning at approximately
About TechTeam Global, Inc.
TechTeam Global, Inc. is a worldwide provider of information technology, enterprise support and business process outsourcing services to Fortune 1000 corporations, multinational companies, product providers, small and medium-sized companies, and government entities. TechTeam's ability to integrate computer services into a flexible, ITIL-based solution is a key element of its strategy. Partnerships with some of the world's "best-in-class" corporations provide TechTeam with unique expertise and experience in providing information technology support solutions. For information about TechTeam Global, Inc. and its services, call 800-522-4451 from
Safe Harbor Statement
The statements contained in this press release that are not purely historical, including statements regarding the Company's expectations, hopes, beliefs, intentions or strategies regarding the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding, among other things, the growth of the Company's core business, revenue and earnings performance going forward, management of overhead expenses, productivity and operating expenses. Forward-looking statements may be identified by words including, but not limited to, "anticipates," "believes," "intends," "estimates," "promises," "expects," "should," "conditioned upon" and similar expressions. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors include, but are not limited to, the award or loss of significant client assignments, timing of contracts, recruiting and new business solicitation efforts, the Company's ability to recruit and retain highly-qualified executives, the market's acceptance of and demand for the Company's offerings, competition, unforeseen expenses, the Company's ability to implement changes to its organizational structure to improve its operational effectiveness, the costs and risks associated with executing an offshore strategy, demands upon and consumption of the Company's cash and cash equivalent resources or changes in the Company's access to working capital, currency fluctuations, changes in the quantity of the Company's common stock outstanding, regulatory changes and other factors affecting the financial constraints on the Company's clients, economic factors specific to the U.S. Federal Government and automotive industry, general economic conditions, unforeseen disruptions in transportation, communications or other infrastructure components, unforeseen or unplanned delays in the Company's ability to consummate acquisitions, and the Company's ability to successfully integrate acquisitions on a timely basis. All forward-looking statements included in this press release are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statement. Prospective investors should also review all aspects of the Company's Reports on Forms 8-K, 10-Q, and 10-K filed with the United States Securities and Exchange Commission, including Management's Discussion and Analysis of Financial Condition and Results of Operations, and the risks described therein from time to time.
Financial Data TechTeam Global, Inc. Condensed Consolidated Income Statements (unaudited) (In thousands, except per share data) Three Months Ended March 31, ——————————————— % 2008 2007 Change ——————- ——————- ————— Revenue Commercial - IT Outsourcing Services $30,267 $24,056 25.8% IT Consulting and Systems Integration 6,874 6,848 0.4% Other Services 6,787 3,932 72.6% ——————- ——————- Total Commercial 43,928 34,836 26.1% Government Technology Services 22,036 11,358 94.0% ——————- ——————- Total Revenue 65,964 46,194 42.8% ——————- ——————- Cost of Revenue Commercial - IT Outsourcing Services 22,364 17,992 24.3% IT Consulting and Systems Integration 5,488 5,337 2.8% Other Services 5,234 2,898 80.6% ——————- ——————- Total Commercial 33,086 26,227 26.2% Government Technology Services 16,481 8,391 96.4% ——————- ——————- Total Cost of Revenue 49,567 34,618 43.2% ——————- ——————- Gross Profit 16,397 11,576 41.6% Selling, general and administrative expense 13,358 10,590 26.1% ——————- ——————- Operating Income 3,039 986 208% Net interest income (expense) (444) 237 Foreign currency transaction gain 212 27 ——————- ——————- Income before Income Taxes 2,807 1,250 Income tax provision 1,116 346 ——————- ——————- Net Income $1,691 $904 ============= ============= Diluted Earnings per Common Share $0.16 $0.09 ============= ============= Diluted weighted average common shares and common share equivalents 10,495 10,424 ============= ============= Condensed Consolidated Balance Sheet (unaudited) (In thousands) March 31, December 31, 2008 2007 ————— ————— Current Assets Cash and cash equivalents $14,562 $19,431 Accounts receivable, net 72,051 69,627 Prepaid expenses and other current assets 4,604 5,290 ————— ————— Total current assets 91,217 94,348 ————— ————— Property, Equipment and Software, Net 10,773 10,562 Goodwill and Other Intangible Assets, Net 75,845 76,686 Other Assets 638 573 ————— ————— Total Assets $178,473 $182,169 ========== ========== Current Liabilities Current portion of long-term debt $5,936 $5,850 Accounts payable 15,685 20,952 Accrued payroll and related taxes 13,340 14,237 Accrued expenses and other current liabilities 10,007 10,136 ————— ————— Total current liabilities 44,968 51,175 ————— ————— Long-Term Liabilities Long-term debt, less current portion 30,541 31,167 Deferred income taxes 1,582 1,738 Other long-term liabilities 1,258 1,058 ————— ————— Total long-term liabilities 33,381 33,963 ————— ————— Shareholders' Equity Preferred stock - - Common stock 108 107 Additional paid-in capital 76,025 75,364 Retained earnings 20,082 18,391 Accumulated other comprehensive income 3,909 3,169 ————— ————— Total shareholders' equity 100,124 97,031 ————— ————— Total Liabilities and Shareholders' Equity $178,473 $182,169 ========== ========== Condensed Consolidated Statements of Cash Flows (unaudited) (In thousands) Three Months Ended March 31, —————————————— 2008 2007 —————— —————— Operating Activities Net income $1,691 $904 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,798 1,329 Other adjustments, primarily changes in working capital (6,415) 254 —————— —————— Net cash provided by (used in) operating activities (2,926) 2,487 —————— —————— Investing Activities Purchase of property, equipment and software (755) (917) Cash paid for acquisitions, net of cash acquired (670) (4,543) —————— —————— Net cash used in investing activities (1,425) (5,460) —————— —————— Financing Activities Proceeds from issuance of common stock 3 239 Tax benefit from stock options (16) 60 Payments on long-term debt (558) (1,954) —————— —————— Net cash used in financing activities (571) (1,655) —————— —————— Effect of exchange rate changes on cash and cash equivalents 53 18 —————— —————— Decrease in cash and cash equivalents (4,869) (4,610) Cash and cash equivalents at beginning of period 19,431 30,082 —————— —————— Cash and cash equivalents at end of period $14,562 $25,472 ============ ============ Reconciliation of Operating Income to Earnings before Interest, Taxes, Depreciation and Amortization (In thousands) Three Months Ended March 31, —————————————— 2008 2007 —————— —————— Operating income $3,039 $986 Depreciation and amortization 1,798 1,329 Foreign currency transaction gain 212 27 —————— —————— Earnings Before Interest, Taxes, Depreciation and Amortization $5,049 $2,342 ============ ============
SOURCE TechTeam Global, Inc.
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