Press Releases
MTM TECHNOLOGIES, INC. REPORTS RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2004
- Achieves Positive Quarterly EBITDA Performance of $0.8 Million.
- Quarterly Total Revenue of $29.7 Million, a 101% Increase Over Comparable Quarter and a 59% Increase Over Prior Quarter.
- Quarterly Service Revenue of $8.6 Million, a 108% Increase Over Comparable Quarter and a 66% Increase Over Prior Quarter.
- Strategy of Building a National Middle Market Focused IT Computer and Communications Solutions Provider Well Underway.
Stamford, CT - February 14, 2005 - MTM Technologies, Inc. (MTM Technologies) (NASDAQ: MTMC), a leading national computer and communications technology management company providing IT networking and data center services, including secure access, voice over internet protocol (VOIP), storage, security, collaboration, and messaging solutions, today announced financial results for its third fiscal quarter and the nine months ended December 31, 2004.
Net revenue for the third quarter increased 101% from the comparable period in the prior year to $29.7 million and increased 59% from the second quarter of this fiscal year. Service revenue increased 108% from the comparable period in the prior year to $8.6 million and increased 66% from the second quarter of this fiscal year. The quarterly results reflect a full quarter of the operations of Network Catalyst and one month of the operations of Vector ESP. The quarterly results also reflect significant organic growth in product and service offerings.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the third quarter was $0.8 million, as compared to an EBITDA loss of ($0.9) for the comparable period in the prior year and ($0.4) million for the second quarter of this fiscal year.
Net loss for the third quarter was ($0.8) million, or ($.13) per share, as compared to a net loss of ($1.4) million, or ($.31) per share, for the comparable period in the prior year, and a net loss of ($0.8) million, or ($.16) per share, for the second quarter of this year. The reduction in net loss resulted from an increase in net revenues and an improvement in gross profit margins. These increases were offset, in part, by a non-cash interest expense of $1.0 million related to convertible notes issued by MTM Technologies in December 2004.
"Early last year we announced our plan to build a national middle market IT solutions business and we have made significant progress toward that goal. Positive EBITDA performance for the quarter was driven by strong revenue growth, significant gross margin improvement and a focus on cost containment, all of which confirm our focus on important financial metrics. Contributing to our positive results was the successful integration of our three acquisitions, DataVox Technologies, Network Catalyst and Vector ESP. These acquisitions extend our geographic footprint from a regional New York and Southern New England presence to a national presence by adding Southern California plus 12 additional major metropolitan markets in the Central and Western United States. We now have nationally recognized technical capabilities in secure access solutions as an elite partner with Citrix and Microsoft and as a premier VOIP provider. Our increased technical capabilities and national reach make us a leading provider of secure access, VOIP and storage solutions to the middle market. We have an active pipeline of acquisition targets and we are focused on building the preeminent national computer and communications solution provider." said Francis J. Alfano, MTM Technologies CEO.
"Additionally, during the quarter the company completed a $22.5 million financing with Constellation Ventures investing $10 million and the balance financed by Pequot Ventures. To date the combined investment in the company by Constellations Ventures and Pequot Ventures is $35 million."
MTM Technologies believes that its non-GAAP measure of EBITDA provides investors with a useful supplemental measure of its operating performance by excluding the impact of interest, taxes, depreciation, and amortization. Management uses EBITDA to assist in evaluating operating performance. These non-GAAP results should be evaluated in light of MTM Technologies' financial results prepared in accordance with United States generally accepted accounting principles ("GAAP"). A table reconciling net loss calculated in accordance with GAAP to EBITDA is included in the financial statements in this release. EBITDA is not a recognized measure for financial statement presentation under GAAP. Non-GAAP earnings measures do not have any standardized definition and are therefore unlikely to be comparable to similar measures presented by other reporting companies. This non-GAAP measure is provided to assist readers in evaluating MTM Technologies’ operating performance. Readers are encouraged to consider this non-GAAP measure in conjunction with MTM Technologies’ GAAP results.
About MTM Technologies, Inc.
MTM Technologies, Inc. is a leading national computer and communications technology management company providing IT networking and data center services, including secure access, VOIP, storage, security, and messaging solutions. MTM Technologies is an authorized reseller/partner and integrator for Microsoft, HP, Cisco Systems, Citrix, Intel Corp, IBM, Dell Computer, Nortel and Novell. For more information visit our web site at 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 MTM Technologies' entry into new commercial businesses, the risk of obtaining financing, recruiting and retaining qualified personnel, and other risks described in MTM Technologies' Securities and Exchange Commission filings. The forward looking statements in this press release speak only as of the date hereof and MTM Technologies disclaims any obligation to provide updates, revisions or amendments to any forward looking statement to reflect changes in MTM Technologies’ expectations or future events.
For More Information Contact:
John F. Kohler
MTM Technologies, Inc.
Phone: (203) 975-3750
Fax: (203) 975-3701
Email: Investorrelations@mtm.com
MTM Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, 2004 March 31, 2004
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents.............................................. $ 8,124,818 $ 370,361
Restricted cash.............................................................. 1,000,000
Accounts receivable ? trade, net of allowance of $390,000 and $233,000,
respectively................................................................ 28,881,164 11,278,932
Inventories.................................................................... 1,957,914 858,544
Prepaid expenses and other current assets...................... 1,457,743 525,970
Total current assets............................................... 41,421,639 13,033,807
Property and equipment..................................................... 12,406,364 9,746,254
Less accumulated deprecation and amortization............... 8,153,316 7,038,281
4,253,048 2,707,973
Goodwill 30,863,965 3,228,729
Other assets.................................................................... 364,010 504,945
Total assets......................................................... $ 76,902,662 $ 19,475,454
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Secured notes payable................................................... $ 11,291,018 $ 5,918,784
Inventory financing agreements...................................... 2,605,035 3,455,635
Current portion of promissory notes............................... 166,587
Accounts payable and accrued expenses........................ 17,053,308 3,252,736
Convertible subordinated promissory notes...................... 5,549,874
Warrants and future rights liability…………....................... 5,531,000
Deferred revenue........................................................... 4,310,886 1,583,938
Current portion of capital lease obligations....................... 137,257 100,070
Total current liabilities............................................ 46,644,965 14,311,163
Non-current portion of promissory notes............................. 708,253
Non-current portion of lease obligation................................ 206,410
Total liabilities............................................................ 47,559,628 14,311,163
Shareholders’ equity:
Series A preferred stock, par value $.001 per share;
14,000,000 shares authorized; 9,101,968 shares issued and
outstanding at December 31, 2004.................................. 16,997,230
Common stock ? $.001 par value; authorized 80,000,000 and
10,000,000 shares respectively, issued and outstanding
6,465,985 and 4,723,052 shares, respectively................. 6,467 4,724
Additional paid?in capital.................................................. 26,658,853 15,364,227
Accumulated deficit......................................................... (14,319,516 ) (10,204,660 )
Total shareholders’ equity....................................... 29,343,034 5,164,291
Total liabilities and shareholders’ equity.............. $ 76,902,662 $ 19,475,454
MTM Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Nine Months Ended December 31,
2004 2003
(Unaudited)
Net revenues:
Products....................................................................... $ 46,943,080 $ 30,572,749
Services....................................................................... 16,703,202 13,335,272
63,646,282 43,908,021
Costs and expenses:
Cost of products sold.................................................... 42,518,098 29,065,168
Cost of services provided.............................................. 10,961,942 8,961,483
Selling, general and administrative expenses................... 12,822,494 7,633,823
66,302,534 45,660,474
Operating (loss) income..................................................... (2,656,252) (1,752,453)
Other income..................................................................... 5,606
Interest expense................................................................. 1,458,604 330,431
Net (loss).......................................................................... $ (4,114,856 ) $ ($2,077,278)
Net (loss) per common shares:
Basic and diluted............................................................. $ (0.76) $ (0.44)
Weighted average number of common shares outstanding:
Basic and diluted.......................................................... 5,399,890 4,723,052
MTM Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Three Months Ended December 31,
2004 2003
(Unaudited)
Net revenues:
Products......................................................................... $ 21,137,917 $ 10,621,503
Services.......................................................................... 8,553,707 4,122,188
29,691,624 14,743,691
Costs and expenses:
Cost of products sold...................................................... 18,696,309 10,004,682
Cost of services provided................................................ 4,972,435 3,460,203
Selling, general and administrative expenses..................... 5,555,767 2,598,877
29,224,511 16,063,762
Operating income (loss) ..................................................... 467,113 (1,320,071)
Other income...................................................................... 2,454
Interest expense.................................................................. 1,241,718 128,826
Net (loss)........................................................................... $ (774,605) $ ($1,446,443 )
Net (loss) per common shares:
Basic and diluted ............................................................. $ (0.13) $ (0.31)
Weighted average number of common shares outstanding:
Basic and diluted .......................................................... 6,091,346 4,723,052
MTM Technologies, Inc. and Subsidiaries
EBITDA Reconciliation
Three Months Ended,
December 31, 2004
September 30, 2004
December 31, 2003
Net (loss) income
($774,605)
($835,599)
($1,446,443)
Depreciation
$349,153
$371,310
$432,887
Interest expense (a)
$1,241,718
$92,359
$128,826
EBITDA
$816,266
($371,930)
($884,730)
(a) Period ended December 31, 2004 includes $1,046,405 non-cash amortization of debt discount.
