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Momentum Announces Q4 and Year End Results Q4 Revenue up 23% and EBITDA hits $625,463 TORONTO, ONTARIO--(MARKET WIRE)--Jul 22, 2008 -- Momentum Advanced Solutions Inc. (Toronto:WWW.TO - News), ("Momentum"
or the "Company"), a leader in IT hosting and managed website
services, today announced results for the fourth quarter
and year ended April 30, 2008.
Q4 FY'08 vs. Q4 FY'07 Highlights - Total revenue increased 23% to $4,996,602 vs. $4,069,000 - Web Solutions and Services ("WSS") revenue increased 21% to $3,317,372 vs. $2,746,000 - Managed Services ("MS") revenue increased 27% to $1,679,230 vs. $1,323,000 - EBITDA(1) improved to $625,463 up $360,463 from $265,000 - Net income from continuing operations was $242,630 vs. a loss of $61,000 - Net income after discontinued operations was $242,630 vs. a loss of $304,000 FY'08 vs. FY'07 Highlights - Total revenue increased 15% to $17,590,646 vs. $15,256,000 - Total gross profit up 12% to $6,887,798 vs. $6,171,000 - Web Solutions and Services revenue increased 10% to $11,561,071 vs. $10,499,000 - WSS gross profit up 9% to $4,217,277 vs. $3,877,000 - Managed Services revenue increased 27% to $6,029,575 vs. $4,757,000 - MS gross profit up 16% to $2,670,521 vs. $2,294,000 - EBITDA(1) improved to $1,373,046 up $1,730,046 vs. a loss of $357,000 - Net income from continuing operations of $140,834 vs. a loss of $1,559,000 - Added 500 cabinet equivalents of data centre space with the addition of the Banigan location - Re-purchased for cancellation 1,180,500 shares through a normal course issuers bid - Launched www.UltraHosting.com, our web hosting offering designed for the SMB market Capital Resources - April 30, 2008 unrestricted cash and cash equivalents and short-term investments of $4,128,277 - Unused bank facility agreement remains in place for $2,000,000 "The results for fiscal 2008 clearly demonstrate a successful transformation to a services led, high value, growth oriented business model", stated Sheldon Pollack, CEO of Momentum. "Furthermore, management strongly believes that with our planned increased investments in sales and marketing, as well as the addition of accretive and strategic acquisitions, we can be in a stronger position to take advantage of the earnings leverage this business affords that comes as a result of top line revenue growth". Q4 FY'08 vs. Q4 FY'07 Total revenue for Q4 FY08 increased 23% or $927,602 to $4,996,602 compared with $4,069,000 recorded in Q4 FY07. Total gross profit was $1,794,047 an increase of $46,047 compared with the $1,748,000 recorded in Q4 FY07. The increase in revenue and gross profit occurred due to increases in revenue in Q4 of 2008 for WSS of 21% and in MS of 27% over the same quarter of the prior year. Operating expenses were $1,559,762 in the fourth quarter compared with $1,811,000 in the fourth quarter of 2007, representing a decrease of $251,238 due to a decrease in general and administrative staff, professional fees and facility costs. The above resulted in operating income of $234,285 for the fourth quarter of FY08 up from an operating loss of $63,000 in the fourth quarter of FY07. EBITDA(1) for the fourth quarter of 2008 was $625,463 compared with $265,000 in the same quarter of the prior year. Interest income, net of expenses for the fourth quarter was $8,345 vs. $2,000 in the same quarter of the prior fiscal year due to the amount of investments being higher in Q4 2008. As a result, net income from continuing operations for the fourth quarter of 2008 was $242,630 representing an improvement from the net loss from continuing operations of $61,000 in the fourth quarter of FY07. Net income after discontinued operations was $242,630 compared with a net loss after discontinued operations of $304,000. FY'08 vs. FY'07 Total revenue increased 15% to $17,590,646 in FY08 compared with $15,256,000 in the prior year. Total gross profit increased 12% to $6,887,798 in the current year from $6,171,000 in the prior year. The increases in revenues and gross profit are due to an increase in both WSS and MS revenues. Web Solutions and Services revenue increased 10% in FY08 to $11,561,071 from $10,499,000 in FY07. WSS gross profit of $4,217,277 for FY08 was up $340,277 from the $3,877,000 recorded in FY07 due to increases in revenue. Managed Services revenue increased by 27% to $6,029,575 in FY08 compared with $4,757,000 recorded in FY07. This increase was due to an increase in new customers in the automotive and financial services markets as well as enhancing the service offering provided to existing customers. MS gross profit improved $376,521 or 16% to $2,670,521 vs. $2,294,000 due to increases in revenues. As a percentage of sales, gross profit was 44.3% in FY08 compared with 48.2% in FY07 due to an increase in amortization of MS assets and operating costs incurred by the Company for its new Toronto data centre announced on August 7, 2007. Total operating expenses decreased to $6,839,428 in FY08 compared with $7,708,000 in FY07. Selling expenses increased $235,793 to $2,634,793 from $2,399,000 due to otherwise billable resources working on pre-sales activities to generate new business, and increased marketing expenses as the company invested in web-based marketing activities. Administrative expenses decreased $983,349 to $3,622,651 from $4,606,000 due to reduced facility and staff costs as well as the cost recovery of certain expenses from the purchaser of the VAR Business. Other amortization was $581,984 in 2008 compared with $703,000 in 2007, representing a reduction of $121,016 due primarily to declining asset book values. Operating income for FY08 was $48,370 compared with a loss of $1,537,000 for FY07. EBITDA for FY08 was a $1,373,046 an improvement of $1,730,046 compared with a loss of $357,000 in FY07. Interest income net of expenses for 2008 was $74,312 compared with a net expense of 22,000 in the prior year due primarily to $2,300,000 received from the sale the VAR business in Q1 2008. Net income from continuing operations for FY08 was $140,834 or $0.00 per share, an improvement from the net loss from continuing operations of $1,559,000 or $0.02 per share recorded in the same period of the prior year. Net income for FY08 was $102,596 or EPS of $0.00 vs. $3,556,000 or EPS of $0.05 in FY07 (including $3,868,000 gain from sale of VAR Business). Liquidity and Capital Resources At April 30, 2008, the Company had cash, cash equivalents and investments of $4,128,277 compared with $2,758,000 at April 30, 2007, and no restricted cash or bank debt. Working capital at April 30, 2008 was $6,172,840 compared with $6,212,723 at April 30, 2007. During the year, the Company entered into a new bank facility agreement providing for a $2,000,000 demand operating facility from a major Canadian financial institution. Normal Course Issuer Bid On September 14, 2007, Momentum announced the commencement of a normal course issuer bid. As of April 30, 2008, the Company had repurchased 1,180,500 common shares at an average purchase price before commissions of $0.17. Common shares repurchased have been or will be cancelled. Forward Looking Statement Readers should take note that certain statements in this press release are forward-looking and may not give full weight to all of the potential risks and uncertainties. These forward-looking statements include statements that are subject to risks and uncertainties. Forward-looking statements are subject by their nature to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the forward-looking statements. Any forward-looking statements speak only as of the date made. The company is not undertaking to update any information in the foregoing reports until the effective date of its future reports required by the securities laws.
Momentum Advanced Solutions Inc.
Consolidated Balance Sheets (unaudited)
As at April 30, 2008 and 2007
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2008 2007
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Assets
Current assets:
Cash and cash equivalents $ 1,075,754 $ 2,758,000
Short-term investments 3,052,523 -
Accounts receivable 3,879,258 3,012,000
Proceeds receivable from sale of business - 2,300,000
Prepaid expenses and other assets 375,287 413,723
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8,382,822 8,483,723
Restricted cash - 250,000
Deferred costs and other assets 460,009 314,000
Capital assets 5,245,086 4,380,000
Goodwill 550,277 550,277
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$ 14,638,194 $ 13,978,000
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 1,480,581 $ 1,850,000
Deferred revenue 186,990 214,000
Current portion of obligations under
capital leases 542,411 207,000
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2,209,982 2,271,000
Obligations under capital leases 819,164 257,000
Long-term facility lease inducement and other 314,191 144,000
Shareholders' equity 11,294,857 11,306,000
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$ 14,638,194 $ 13,978,000
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Momentum Advanced Solutions Inc.
Consolidated Statements of Operations and Retained Earnings (unaudited)
For the three and twelve months ended April 30, 2008 and 2007
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Three months ended Twelve months ended
April 30 April 30
2008 2007 2008 2007
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Revenue
Web solutions and services $ 3,317,372 $ 2,746,000 $11,561,071 $10,499,000
Managed services 1,679,230 1,323,000 6,029,575 4,757,000
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4,996,602 4,069,000 17,590,646 15,256,000
Cost of Revenue
Web solutions and services 2,210,699 1,625,000 7,343,794 6,622,000
Managed services 756,614 543,000 2,616,362 1,986,000
Amortization of managed
services assets 235,242 153,000 742,692 477,000
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3,202,555 2,321,000 10,702,848 9,085,000
Gross Profit
Web solutions and services 1,106,673 1,121,000 4,217,277 3,877,000
Managed services 687,374 627,000 2,670,521 2,294,000
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1,794,047 1,748,000 6,887,798 6,171,000
Expenses:
Selling 668,768 674,000 2,634,793 2,399,000
Administrative 735,058 962,000 3,622,651 4,606,000
Other amortization 155,936 175,000 581,984 703,000
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1,559,762 1,811,000 6,839,428 7,708,000
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Operating income (loss) 234,285 (63,000) 48,370 (1,537,000)
Interest income 39,536 27,000 154,420 114,000
Interest expense (31,191) (25,000) (80,108) (136,000)
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Income (loss) before
income taxes 242,630 (61,000) 122,682 (1,559,000)
Income tax recovery - - 18,152 -
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Income (loss) from
continuing operations 242,630 (61,000) 140,834 (1,559,000)
Income (loss) from
discontinued operations - (243,000) (38,238) 5,115,000
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Net income (loss) and
comprehensive income (loss) $ 242,630 $ (304,000) $ 102,596 $ 3,556,000
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Retained earnings,
beginning of period $ 3,943,091 $ 4,461,000 $ 4,157,000 $ 601,000
Repurchase of common
shares (20,614) - (94,489) -
Net income (loss) for
the period 242,630 (304,000) 102,596 3,556,000
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Retained earnings, end
of period $ 4,165,107 $ 4,157,000 $ 4,165,107 $ 4,157,000
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Basic and diluted earnings
(loss) per share
Continuing operations $ - $ - $ - $ (0.02)
Discontinued operations - - - 0.08
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Basic and diluted earnings
per share $ - $ - $ - $ 0.05
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Basic weighted average
common shares outstanding 64,467,728 65,625,077 65,140,347 65,625,077
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Diluted weighted average
common shares outstanding 64,649,881 65,792,601 65,410,352 65,758,999
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Momentum Advanced Solutions Inc.
Consolidated Statements of Cash Flows (unaudited)
For the three and twelve months ended April 30, 2008, and 2007
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Three months ended Twelve months ended
April 30 April 30
2008 2007 2008 2007
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Cash provided by (used in):
Operations:
Net income (loss) $ 242,630 $ (304,000) $ 102,596 $ 3,556,000
Items not involving cash:
Amortization of capital
assets 391,178 361,000 1,324,676 1,213,000
Amortization of deferred
costs 18,144 30,000 90,193 124,000
Loss (gain) on sale of
business - 19,000 - (3,868,000)
Amortization of
long-term facility lease
inducement and other (25,040) - (52,784) -
Increase in long-term
facility lease inducement
and other 55 - 168,756 -
Unrealized gain on
short-term investments (31,278) - (102,523) -
Stock-based compensation 15,871 5,000 91,179 120,000
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611,560 111,000 1,622,093 1,145,000
Changes in non-cash
operating working capital (2,636,198) 1,597,000 (1,225,251) (3,684,000)
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(2,024,638) 1,708,000 396,842 (2,539,000)
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Financing:
Additions to obligation
under capital lease 632,523 - 1,240,841 332,000
Payments on obligations
under capital leases (136,333) (50,000) (343,266) (205,000)
Decrease (increase) in
restricted cash - - 250,000 (250,000)
Proceeds received
(receivable) from sale
of business 2,300,000 - 2,300,000 (2,300,000)
Repurchase of shares (5,510) - (204,918) -
Amortization of
long-term facility lease
inducement and other (11,894) (15,000) (54,931) (64,000)
Increase (decrease) in
long-term facility lease
inducement and other - (16,000) 20,000 (84,000)
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2,778,786 (81,000) 3,207,726 (2,571,000)
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Investments:
Purchase of capital assets (978,190) (853,000) (2,576,610) (1,963,000)
Purchase of short-term
investments - - (3,300,000) -
Sale of short-term
investments - - 350,000 -
Proceeds from disposition
of capital assets 214,887 - 475,998 -
Proceeds from sale of
discontinued operations - - - 6,800,000
Additions to deferred
costs and other assets (20,486) (17,000) (236,202) (201,000)
Purchase of Indigo27 Inc. - - - (125,000)
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(783,789) (870,000) (5,286,814) 4,511,000
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Increase (decrease) in
cash and cash equivalents (29,641) 757,000 (1,682,246) (599,000)
Cash and cash equivalents,
beginning of period 1,105,395 2,001,000 2,758,000 3,357,000
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Cash and cash equivalents,
end of period $ 1,075,754 $ 2,758,000 $ 1,075,754 $ 2,758,000
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----------------------------------------------------------------------------1) EBITDA is defined as income (loss) before amortization, interest and other, adding back amortization recorded in Managed Services cost of sales. The Company uses EBITDA amongst other measures to assess the operating performance of its ongoing business. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's continuing business activities prior to taking into consideration financing costs and capital asset amortization costs. Similarly, readers may find this non-GAAP financial measure useful although the term EBITDA does not have a recognized meaning under Canadian generally accepted accounting principles and therefore may not be comparable to similarly titled measures presented by other companies. EBITDA should not be construed as the equivalent to cash flow from operations. The most comparable GAAP measurement for EBITDA is net income (loss) from continuing operations. A reconciliation between net income (loss) from continuing operations and EBITDA is provided below.
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Three months ended Twelve months ended
April 30 April 30
2008 2007 2008 2007
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Net income (loss) from
continuing operations 242,630 (61,000) 140,834 (1,559,000)
Amortization of MS assets 235,242 153,000 742,692 477,000
Other amortization 155,936 175,000 581,984 703,000
Interest (income) expense, net (8,345) (2,000) (74,312) 22,000
Income tax recovery - - (18,152) -
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EBITDA 625,463 265,000 1,373,046 (357,000)
----------------------------------------------------------------------------2) "VAR Business" represents the Company's hardware and software resale and infrastructure solutions and services business. About Momentum Advanced Solutions Inc. Momentum is a leader in Web outsourcing services. Its solutions provide customers with the innovation, integration, and operational expertise needed to reduce costs and/or improve productivity by outsourcing their mission critical, web-based applications and infrastructure to Momentum. Headquartered in Markham, Ontario, Momentum has offices in Ottawa, Windsor, and Toronto. Momentum Advanced Solutions is publicly traded on the Toronto Stock Exchange and trades under the symbol WWW. Contact: Contacts:
Momentum Advanced Solutions Inc.
Sheldon Pollack
Chief Executive Officer
(905) 709-6825
Email: Sheldon.Pollack@Momentum.com
Momentum Advanced Solutions Inc.
Daren Selfe, CA
Chief Financial Officer
(905) 709-6800
Email: Daren.Selfe@Momentum.com
Website: http://www.momentum.com
Source: Momentum Advanced Solutions Inc.
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