Midas Medici Group Holdings Reports Record Q1 2012 Financial Results
Revenues grow from $12.8 million to $35.5 million, a 177.3% Increase Quarter-Over-Quarter as it Expands Operations Into Brazil
NEW YORK, May 21, 2012 /PRNewswire/ -- Midas Medici Group Holdings, Inc. (OTCQX: MMED) ("Midas Medici" or "Company"), a global provider of managed IT services, data centers, IT infrastructure and consulting services, today announced record financial results for the period ended March 31, 2012.
Midas Medici Business Overview
Midas Medici is an innovative provider of comprehensive IT infrastructure services and solutions, including managed services, virtualization and cloud computing to medium sized and large commercial enterprises and government institutions in the United States and Brazil. Midas' innovative IT and data center services and solutions focus on "cloud" and managed services, data center services, virtualization, storage, business process outsourcing and smart grid which are fulfilled. Midas provides its services at the customer's in-house data centers, through its partners' data centers or through a virtual/shared data center or the "cloud". Customers use Midas to solve problems related to i) the growth of data in their business ii) their need for different locations for their datacenter assets iii) their need to improve datacenter asset productivity and reduce costs and iv) to handle the complex problems with their large datasets. Midas operates through its StraTech (formerly Consonus) and UtiliPoint brands in the US and its Cimcorp brand in Brazil. Midas Medici services approximately 900 customers which include The International Monetary Fund, The State of North Carolina, Avaya, Companhia Energética de Minas Gerais S.A., Staate of Minas, Banco Do Brasil SA and Banco Central Do Brasil. The Company generates sales through solutions that include both one-time payments as well as long-term maintenance support and services contracts. Midas' team of highly-skilled and certified engineers enables the Company to provide unique insights to quickly solving clients' IT infrastructure challenges.
Period ended March 31, 2012 Highlights
- Net revenues increased a record 177.3% to $35.5 million
- 11.3% of net revenue growth organic and 88.7% of net revenue growth from acquisitions
- International operations contributed $20.5 million or 57.7% to consolidated net revenues
- Gross margin contribution increased 215.6% from $3.3 million to $10.2 million
- Gross margin percentage increased from 25.8% of revenues to 29.4% quarter-over-quarter
- SG&A as a percent of net revenues dropped from 33.6% to 31.2% as the business scaled
- Non-GAAP adjusted net loss attributable to common shareholders increased by 73% to $3.0 million from 2011 as net revenues increased by 177.3% Non-GAAP adjusted loss EPS increased from $0.20 to $0.30
Three Months Ended March 31, 2012 Results
Summarized Three Months Ended March 31st, 2012 Results ('000) except EPS |
|||
March 31st, 2012 |
March 31st, 2011 |
Change |
|
Sales |
$35,547 |
$12,837 |
177.1% |
Gross Profit |
$10,442 |
$3,309 |
215.6% |
Selling, General and Administrative Expenses |
$11,088 |
$4,313 |
157.1% |
Net Income (loss) attributable to Common Shareholders |
($5,223) |
($1,112) |
N/A |
Non-GAAP Adjusted Net Loss* |
($2,983) |
($1,112) |
(68.2%) |
EPS |
($0.53) |
($0.20) |
(165.0%) |
Non-GAAP Adjusted EPS* |
($0.30) |
($0.20) |
(50.0%) |
*Non-GAAP adjusted net income and EPS exclude $281,000 of SG&A non-recurring and non-cash expenses for the three months ended March 31, 2012, $1,932,563 impact from a non-cash fair-value accounting of a deferred purchase price and $26,604 of a foreign currency transaction gain.
"We are pleased to announce an impressive 177% growth quarter over quarter, of which 11% of that growth was organic and 89% through acquisitions. We are pleased to see our US business growing nicely while our Brazilian business is accelerating our growth trajectory. Despite a softer than anticipated quarter that saw some larger projects slip into the second quarter," began Nana Baffour, CEO and Chairman of Midas Medici. "We are pleased with the performance in Q1 which historically is a seasonally lower quarter. Consistent with our strategy to diversify into high-growth emerging markets, we believe our entry into the Brazilian market, the largest and fastest-growing IT market and economy in Latin America, will provide Midas with sustained growth prospects in the near future. Moving forward, we are looking forward to taking advantage of our scale to drive profitability "
Data Center Services Revenues
Midas Medici's data center services are comprised primarily of hosting, bandwidth, managed infrastructure, managed services, software and maintenance support services. Each of Midas' brands, which include Cimcorp, Brazil, StraTech, U.S. and UtiliPoint, U.S., contribute revenues to Data Center Services sales. For the three months ended March 31, 2012, sales of data center services and solutions increased approximately 112% to $14.9 million, representing 42% of total sales in the three months ended March 2012. The Company generated higher sales primarily driven by the acquisition of its Brazil operations. Gross margins for Data Center Services for the three months ended maintained at 28%, down slightly from 31% in 2011.
IT Infrastructure Services and Solutions
IT infrastructure services and solutions include primarily the sale of hardware and software, along with consulting, integration and training services. This infrastructure when deployed at either the customer location, at a Midas partner location or in the virtual/shared location is subsequently supported and serviced by Midas during its useful life. Revenue from this after-sales service offering is captured as part of the Company's Data Center Services revenues. IT infrastructure services and solutions increased 294% from $4.9 million to $19.4 million for the quarter and maintained approximately 31% gross margins for the three months ended March 31, 2012, up from 18% in the comparable period in 2011, driven by higher margins in the Company's Brazil operations.
Consolidated Results of Operations
Midas Medici's consolidated revenues for the three months ended March 31, 2012 totaled $35.5 million compared to $12.8 million for the three months ended March 31, 2011. The sales increase was primarily due to the Company's acquisition of Brazil-based Cimcorp, which occurred in the third quarter of 2011. Acquisitions added $20.1 million in incremental revenue for the three months ended March 31, 2012, contributing approximately 56.6% to consolidated revenues and 88.7% to consolidated revenue growth in 2011. The Company reported its US operations exceeded expectations for the quarter, while its Brazilian operations' revenues were lower than anticipated for the quarter as a result of slippage of some larger projects into the second quarter of the year.
Cost of sales for the three months ended March 31, 2012 was $21.1 million compared to $9.5 million for the three months ended March 31, 2011. Cost of sales dropped to 70.6% of revenues from 74.2% primarily due to higher margins from the Company's international operations. Acquisitions contributed $13.5 million of incremental costs of sales. Gross margins were 29.5% and 25.8% for the three months ended 2012 and 2011, respectively.
Selling, general and administrative ("SG&A") expenses for the three months ended March 31, 2012 were $11.1 million compared to $4.3 million for the three months ended March 31, 2010. SG&A expenses increased primarily due to the acquisition of Midas' Brazilian operations, Cimcorp, which contributed $5.8 million and 85.9% to the Company's incremental SG&A.
The operating loss for the three months ended March 31, 2012 totaled $1.9 million compared to an operating loss of $1.7 million for the three months ended March 31, 2011. The increase by $0.2 million in operating loss was due to an increase in operating costs of $22.9 million offset by an increase in revenues of $22.7 million, primarily driven by Brazilian operations which had a positive operating profit for the three months ended March 31, 2012. Midas's Brazilian operations were acquired in August 2011.
Reported net loss attributable to Midas Medici shareholders was $5.2 million compared to net loss of $1.1 million for the three months ended March 31, 2011. Reported net loss per share attributable to Midas Medici shareholders was $0.53 per share for the three months ended March 31, 2012 compared to a loss per share of $0.20 for the three months ended 2011. Excluding non-cash charges and non-recurring items of $2.1 million in the three months ended March 2012, non-GAAP adjusted net losses were $3.0 million and $1.1 million for the three months ended March 31, 2012 and 2011, respectively. Non-GAAP, adjusted loss per share increased 50.0% to $0.30 per share versus a loss of $0.20 per share in the three months ended March 31, 2011.
About MIDAS MEDICI Group Holdings, Inc.
Midas Medici Group Holdings, Inc. (OTCQX: MMED) is an innovative managed IT services and infrastructure company that supplies mid-sized and select enterprises and institutions with leading-edge IT solutions in the fields of virtualization, cloud computing and data management, as well as working with utilities and other institutions to transform the electric grid through digital technologies in the United States and Brazil. Across its Cimcorp, StraTech and UtiliPoint operations, Midas works with its customers by optimizing IT and data center investments, streamlining communications between departments, reducing costs and preventing data loss, all while maximizing productivity. Through a management team with decades of experience, Midas is positioning itself to take advantage of the high-growth IT industry through its unique specialized services.
For more information on Midas Medici, please visit: www.midasmedici.com.
Forward Looking Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties, including statements related to Midas Medici Holding's public offering of common stock and the completion of the offering. These forward-looking statements are based upon Midas Medici's current expectations. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of risks and uncertainties, which include, without limitation, risks and uncertainties associated with market conditions and the satisfaction of customary closing conditions related to the proposed offering and other risks detailed in Midas Medici's filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. There can be no assurance that Midas Medici will complete the offering of shares of common stock. All forward-looking statements are qualified in their entirety by this cautionary statement, and Midas Medici undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.
Contacts:
COMPANY
Midas Medici Group Holdings, Inc.
Nana Baffour, CFA
Chief Executive Officer
Tel: +1-212 792 0920
Email: [email protected]
www.midasmedici.com
INVESTOR RELATIONS
MZ
John Mattio, SVP
Tel: US +1-212-301-7130
Email: [email protected]
www.mz-ir.com
MIDAS MEDICI GROUP HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(In thousands except share and per share amounts) |
||||||||
March 31, |
December 31, |
|||||||
2012 |
2011 |
|||||||
(Unaudited) |
(Note 1) |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
1,381 |
$ |
1,461 |
||||
Accounts receivable, net of allowance for doubtful accounts of $1,806 and $1,711, respectively |
25,044 |
28,374 |
||||||
Lease payments receivable, current |
2,071 |
2,091 |
||||||
Lease payments receivable – Westcon |
4,849 |
4,000 |
||||||
Inventories |
3,827 |
3,413 |
||||||
Recoverable taxes, current |
1,544 |
1,500 |
||||||
Deferred costs, current |
9,470 |
13,044 |
||||||
Prepaid expenses and other current assets |
2,436 |
2,017 |
||||||
Total current assets |
50,622 |
55,900 |
||||||
Property and equipment, net |
6,523 |
6,317 |
||||||
Accounts receivable, long-term |
48 |
70 |
||||||
Lease payments receivable, long-term |
1,732 |
1,663 |
||||||
Lease payments receivable - Westcon, long-term |
10,648 |
10,575 |
||||||
Recoverable taxes, long-term |
5,709 |
5,131 |
||||||
Goodwill |
26,194 |
25,839 |
||||||
Other intangible assets, net |
13,868 |
14,619 |
||||||
Other assets |
468 |
443 |
||||||
Deferred costs, net of current portion |
1,156 |
1,446 |
||||||
Total assets |
$ |
116,968 |
$ |
122,003 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
37,541 |
$ |
36,815 |
||||
Accrued liabilities |
11,881 |
12,571 |
||||||
Westcon capital lease, current |
3,116 |
2,890 |
||||||
Capital leases, current |
1,597 |
1,614 |
||||||
Current maturities of long-term debt |
15,927 |
15,745 |
||||||
Current portion of deferred revenue |
13,245 |
13,155 |
||||||
Deferred purchase price |
3,791 |
4,791 |
||||||
Purchase price contingency |
4,397 |
2,464 |
||||||
Total current liabilities |
91,495 |
90,045 |
||||||
Long-term debt, net of current maturities |
6,079 |
6,479 |
||||||
Westcon capital lease, net of current maturities |
6,446 |
7,071 |
||||||
Capital leases, net of current maturities |
1,402 |
1,560 |
||||||
Deferred revenue, net of current portion |
2,668 |
2,761 |
||||||
Other long-term liabilities |
7,962 |
7,955 |
||||||
Total liabilities |
116,052 |
115,871 |
||||||
Commitments and contingencies |
||||||||
Redeemable noncontrolling interest |
1,640 |
2,267 |
||||||
Stockholders' (Deficit) Equity: |
||||||||
Preferred stock $0.001 par value, 10,000,000 shares authorized; no shares issued as of March 31, 2012 and December 31, 2011 |
- |
- |
||||||
Common stock $0.001 par value, 40,000,000 shares authorized; 10,282,532 and 9,894,374 shares issued and outstanding as of March 31, 2012 and December 31, 2011, respectively |
10 |
10 |
||||||
Additional paid-in capital |
31,749 |
30,888 |
||||||
Accumulated deficit |
(29,007)
|
(23,784)
|
||||||
Accumulated other comprehensive loss |
(3,476) |
(3,249) |
||||||
Total stockholders' equity (deficit) |
(724) |
3,865 |
||||||
Total liabilities and stockholders' equity (deficit) |
$ |
116,968 |
$ |
122,003 |
MIDAS MEDICI GROUP HOLDINGS, INC. AND SUBSIDIARIES |
||||||||
Condensed Consolidated Statements of Operations and Comprehensive Loss |
||||||||
(In thousands except share and per share amounts) |
||||||||
Three Months Ended March 31, |
||||||||
2012 |
2011 |
|||||||
(Unaudited) |
(Unaudited) |
|||||||
Revenues: |
||||||||
Data center services and solutions |
$ |
14,952 |
$ |
7,066 |
||||
IT infrastructure services |
1,216 |
852 |
||||||
IT infrastructure solutions |
19,379 |
4,919 |
||||||
Totals |
35,547 |
12,837 |
||||||
Operating expenses: |
||||||||
Data center services and solutions |
10,759 |
4,858 |
||||||
IT infrastructure services |
975 |
614 |
||||||
IT infrastructure solutions |
13,371 |
4,056 |
||||||
Selling, general and administrative expenses |
11,088 |
4,313 |
||||||
Depreciation and amortization expense |
1,258 |
725 |
||||||
Totals |
37,451 |
14,566 |
||||||
Operating loss |
(1,904) |
(1,729) |
||||||
Loss on change in fair value of purchase price contingency |
(1,933) |
- |
||||||
Other income |
127 |
- |
||||||
Interest expense, net |
(2,090) |
(141) |
||||||
Foreign currency transaction gain |
27 |
- |
||||||
Loss before income tax expense |
(5,773) |
(1,870) |
||||||
Income tax benefit (expense) |
(39) |
758 |
||||||
Consolidated net loss |
(5,812) |
(1,112) |
||||||
Less: loss attributable to noncontrolling interest |
589 |
- |
||||||
Net loss attributable to Midas Medici Group Holdings, Inc. and Subsidiaries |
$ |
(5,223) |
$ |
(1,112) |
||||
Comprehensive loss: |
||||||||
Consolidated net loss |
$ |
(5,812) |
$ |
(1,112) |
||||
Foreign currency translation adjustment |
(227) |
- |
||||||
Total comprehensive loss |
(6,039) |
(1,112) |
||||||
Comprehensive loss attributable to the noncontrolling interest |
589 |
- |
||||||
Comprehensive loss attributable to Midas Medici Group Holdings, Inc. and Subsidiaries |
$ |
(5,450) |
$ |
(1,112) |
||||
Loss per share: |
||||||||
Loss per common share - basic and diluted |
$ |
(0.53) |
$ |
(0.20) |
||||
Weighted average number of common shares outstanding - basic and diluted |
9,941,816 |
5,699,078 |
SOURCE Midas Medici Group Holdings
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