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

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Midas Medici Group Holdings

May 21, 2012, 01:15 ET

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