Press Releases
MTM Technologies Achieves Fourth Consecutive Quarter of Positive EBITDA Results
- 151% Increase in Quarterly Revenue Over Comparable Quarter from Prior Year
- Service Revenue of $14.9 Million, a 188% Increase Over Comparable Quarter from Prior Year
- Quarterly EBITDA Performance of $1.5 Million Versus an EBITDA Loss of ($372,000) in the Comparable Quarter from Prior Year
- Signed Preliminary Agreement to Acquire NEXL, Inc.
STAMFORD, CT – November 9, 2005 – MTM Technologies, Inc. (NASDAQ: MTMC), a leading provider of innovative, end-to-end IT solutions and services, today announced financial results for its second fiscal quarter ended September 30, 2005.
Quarterly Results:
Net revenue for the second quarter increased 151% from the comparable period in the prior year to $47.0 million, including a 188% increase in service revenue to $14.9 million. The increase in net revenue from the second quarter of last year resulted primarily from the acquisition of Network Catalyst, Inc., which occurred late in the second quarter of last year, and the acquisitions of Vector ESP, Inc. and Info Systems, Inc., which occurred after the second quarter of last year.
Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the second quarter was $1.5 million, as compared to an EBITDA loss of ($372,000) for the comparable period in the prior year.
Net loss for the second quarter was ($78,000), or ($0.01) per share, as compared to a net loss of ($835,000), or ($0.16) per share, for the comparable period in the prior year. The significant decrease in net loss since last year resulted primarily from an increase in revenues, and an improvement in gross profit margins driven both by product and services gross margin improvements and an overall increase in service revenue as a percentage of total revenue.
Year-to-Date Results:
Net revenue for the first half of the fiscal year increased 184% from the comparable period in the prior year to $96.6 million, including a 261% increase in service revenue to $29.4 million. The increase in net revenue from the first half of the last fiscal year resulted primarily from the Company’s acquisitions.
Adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) for the first half of the fiscal year was $2.8 million, as compared to an EBITDA loss of ($2.4) million for the comparable period in the prior fiscal year. Reported EBITDA for the first quarter of this fiscal year was adjusted to remove the effect of one-time charges of $1.2 million related primarily to the settlement of compensation arrangements with certain former executives of predecessor companies.
Net loss for the first half of the fiscal year was ($4.6) million, or ($0.61) per share, as compared to a net loss of ($3.3) million, or ($0.66) per share, for the comparable period in the prior year. The increase in net loss from the first half of the last fiscal year resulted primarily from a non-cash interest expense charge of $3.2 million related to convertible notes issued by MTM Technologies in December 2004 and March 2005. This was offset in part by an increase in net revenues and an improvement in gross profit margins.
“The execution of our plan to build the preeminent national middle market IT solutions business remains strong and on track. Our successful execution is once again reflected in our positive and improving quarterly results,” said Francis J. Alfano, MTM Technologies’ CEO. “Our operational improvements, the continuing integration of our acquired businesses, and our focus on increasing gross and operating margins as well as service mix increases is yielding measurable results. I am excited about the accomplishments we have achieved. Our management team is demonstrating excellence in executing the growth and integration strategy that we put into place early last year.”
“During the second quarter, we signed an agreement to acquire NEXL, Inc., a leading IT solutions provider based in the Boston area,” continued Mr. Alfano. “This acquisition will expand our technical capabilities and market opportunities, as well as enhance our competencies in several key areas such as storage solutions and managed services. To facilitate this and other future acquisitions, as well as to support our organic growth initiatives, we recently signed a non-binding term sheet with a major pension fund for a $25 million subordinated term loan. We also expect to close additional preferred equity financing of $10 million concurrent with the debt financing. These significant financing commitments by our current investors and the new lender clearly reflect the continuing success of our growth strategy.”
Investors can find more information on the NEXL transaction and related financings in MTM Technologies’ Proxy Statement, dated October 24, 2005, and Current Reports on Form 8-K, dated August 19, 2005 and November 4, 2005, filed with the Securities and Exchange Commission.
MTM Technologies believes that EBITDA, which is not a recognized measure for financial presentation under United States generally accepted accounting principles (“GAAP”), provides investors and management with a useful supplemental measure of its operating performance by excluding the impact of interest, taxes, depreciation, and amortization. EBITDA results should be evaluated in light of MTM Technologies' financial results prepared in accordance with GAAP. A table reconciling net loss calculated in accordance with GAAP to EBITDA is included in the financial statements in this release. EBITDA does not have any standardized definition and is therefore unlikely to be comparable to similar measures presented by other reporting companies.
About MTM Technologies, Inc.
MTM Technologies, Inc. is a leading provider of innovative, end-to-end IT solutions and services. Partnered with industry-leading technology providers such as Cisco, Citrix, Microsoft, HP, EMC and Avaya, MTM Technologies’ practice areas include access infrastructure, IP telephony, enterprise storage, security and network and systems infrastructure. Service areas include managed services, consulting, professional IT staffing and implementation. For more information, visit http://mtm.com
“Safe Harbor” Statement Under The Private Securities Litigation Reform Act Of 1995
The statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks and uncertainties include the Company's entry into new commercial businesses, the risk of obtaining financing, recruiting and retaining qualified personnel, and other risks described in the Company's Securities and Exchange Commission filings. The forward looking statements in this press release speak only as of the date hereof and the Company disclaims any obligation to provide updates, revisions or amendments to any forward looking statement to reflect changes in the Company’s expectations or future events.
For more information, contact:
Allen Bloomfeld
MTM Technologies, Inc.
Phone: (203) 975-3750
Fax: (203) 975-3701
Email: investorrelations@mtm.com
