Exhibit 99.1
Innotrac Corporation Announces 2005 Third Quarter Results
ATLANTA, GA (November 7, 2005) – Innotrac Corporation (NASDAQ: INOC) announced financial results today for the third quarter and nine months ended September 30, 2005. The Company reported revenues of $17.5 million for the quarter versus $17.6 million reported in the comparable period in 2004, a decrease of 0.5%. For the nine months ended September 30, 2005, the Company reported revenues of $55.7 million compared to $57.4 million for the same period in 2004, a decrease of 3.0%. The decreases for both the three and nine month periods were primarily attributed to reduced volumes from our telecommunications business, which were partially offset by increased volumes from our DSL business. In addition, we added several new clients, resulting in increased revenues from our direct marketing and retail/catalog businesses in excess of the decreased revenues caused by the termination of services for Tactica International, Inc. and Martha Stewart Living Omnimedia, as anticipated.
The Company reported a net loss of $796,000, or $0.06 per share, for the three months ended September 30, 2005, versus a net loss of $402,000, or $0.03 per share, in the comparable period of 2004. For the nine months ended September 30, 2005, the Company reported a loss of $1.7 million, or $0.14 per share compared to net income of $50,000, or breakeven on a per share basis, for the same period in 2004. The Company generated $5.1 million in cash flows from operations for the nine months ended September 30, 2005.
The Company is pleased to announce that it has reached agreements with three new clients to provide services beginning in the second quarter of 2006. The most significant of these agreements is a multiyear agreement with Target Corporation to provide North America’s second largest general merchandise retailer with product fulfillment services to support the expansion of their Target.com eCommerce initiative. To handle the expected volumes, Innotrac will open another fulfillment center just outside of Cincinnati, Ohio, in Hebron, Kentucky. Construction for the facility has begun and the new center is expected to be ready to ship Target.com’s orders in the summer of 2006.
The new fulfillment center will be Innotrac’s second facility in the Hebron, Kentucky, area and its ninth facility across six states bringing the total square footage of the Company’s facilities to over 2.4 million.
“Over the last year our focus has been on finding companies that would benefit from our integrated national footprint. Although it took longer than anticipated to bring these to fruition, I feel that the new business we have signed for 2006 will be significant and will allow Innotrac to show stronger revenue and profit growth for several years to come,” stated Scott D. Dorfman, President and Chief Executive Officer.
Conference Call
Innotrac Corporation will hold a conference call to discuss this release this evening, November 7, 2005 at 5:00 PM Eastern Standard Time. Investors can listen to the conference call live by dialing 1-877-569-0972 (Conference ID: 1788968) or by logging on to www.innotrac.com and clicking on “Webcasts and Presentations” in the “Company” section. The Webcast will be archived and available at the same Web address. Additionally, audio playback will be available at 1-800-642-1687 (Conference ID: 1788968).
About Innotrac
Innotrac Corporation, founded in 1984 and based in Atlanta, Georgia, is a full-service fulfillment and logistics provider serving enterprise clients and world-class brands. The Company employs sophisticated order processing and warehouse management technology and operates eight fulfillment centers and two call centers in six cities spanning all time zones across the continental United States. For more information about Innotrac, visit the Innotrac Web site, www.innotrac.com.
Information contained in this press release, other than historical information, may be considered forward-looking in nature. Forward-looking statements in this press release include our expectations for future progress in our business and future generation of cash flows. Forward-looking statements are subject to various risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or expected. Among the key factors that may have a direct bearing on Innotrac’s operating results, performance or financial condition are competition, the demand for Innotrac’s services, Innotrac’s ability to retain its current clients and attract new clients, realization of expected revenues from new clients, the state of the telecommunications and direct response industries in general, changing technologies, Innotrac’s ability to maintain profit margins in the face of pricing pressures and numerous other factors discussed in Innotrac’s 2004 Annual Report on Form 10-K and other filings on file with the Securities and Exchange Commission.
Contact
Christine Herren
Senior Director and Controller
678-584-4115
cherren@innotrac.com
###
INNOTRAC CORPORATION
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
|
|
| ||||||||||
|
| 2005 |
| 2004 |
| 2005 |
| 2004 |
| ||||
|
|
|
|
|
| ||||||||
|
| (Unaudited) |
| (Unaudited) |
| ||||||||
Revenues |
| $ | 17,543 |
| $ | 17,631 |
| $ | 55,724 |
| $ | 57,433 |
|
Cost of revenues |
|
| 8,695 |
|
| 8,756 |
|
| 28,328 |
|
| 26,670 |
|
|
|
|
|
|
| ||||||||
Gross profit |
|
| 8,848 |
|
| 8,875 |
|
| 27,396 |
|
| 30,763 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 8,535 |
|
| 7,931 |
|
| 25,421 |
|
| 26,574 |
|
Depreciation and amortization |
|
| 1,091 |
|
| 1,283 |
|
| 3,551 |
|
| 3,905 |
|
|
|
|
|
|
| ||||||||
Total operating expenses |
|
| 9,626 |
|
| 9,214 |
|
| 28,972 |
|
| 30,479 |
|
|
|
|
|
|
| ||||||||
Operating (loss) income |
|
| (778 | ) |
| (339 | ) |
| (1,576 | ) |
| 284 |
|
Interest expense |
|
| 18 |
|
| 63 |
|
| 127 |
|
| 234 |
|
Other |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
|
|
|
| ||||||||
Total other expense |
|
| 18 |
|
| 63 |
|
| 127 |
|
| 234 |
|
|
|
|
|
|
| ||||||||
(Loss) income before income taxes |
|
| (796 | ) |
| (402 | ) |
| (1,703 | ) |
| 50 |
|
|
|
|
|
|
| ||||||||
Income tax (benefit) |
|
| — |
|
| — |
|
| — |
|
| — |
|
|
|
|
|
|
| ||||||||
Net (loss) income |
| $ | (796 | ) | $ | (402 | ) | $ | (1,703 | ) | $ | 50 |
|
|
|
|
|
|
| ||||||||
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | (0.06 | ) | $ | (0.03 | ) | $ | (0.14 | ) | $ | 0.00 |
|
|
|
|
|
|
| ||||||||
Diluted |
| $ | (0.06 | ) | $ | (0.03 | ) | $ | (0.14 | ) | $ | 0.00 |
|
|
|
|
|
|
| ||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 12,277 |
|
| 11,905 |
|
| 12,167 |
|
| 11,843 |
|
Diluted |
|
| 12,277 |
|
| 11,905 |
|
| 12,167 |
|
| 12,540 |
|
Note: | These statements should be read in conjunction with the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2005. |
INNOTRAC CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
|
| September 30, |
| December 31, 2004 |
| ||
|
|
|
| ||||
|
| (Unaudited) |
|
| (Audited) |
| |
ASSETS |
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
Cash |
| $ | 3,803 |
| $ | 1,377 |
|
Accounts receivable (net of allowance for doubtful accounts of $1,049 at September 30, 2005 and $1,624 at December 31, 2004) |
|
| 12,846 |
|
| 18,405 |
|
Inventory |
|
| 4,131 |
|
| 2,662 |
|
Prepaid expenses and other |
|
| 1,627 |
|
| 1,986 |
|
|
|
|
| ||||
Total current assets |
|
| 22,407 |
|
| 24,430 |
|
Property and equipment, net |
|
| 9,906 |
|
| 12,499 |
|
Goodwill |
|
| 25,169 |
|
| 25,169 |
|
Other assets, net |
|
| 1,116 |
|
| 1,275 |
|
|
|
|
| ||||
Total assets |
| $ | 58,598 |
| $ | 63,373 |
|
|
|
|
| ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
Accounts payable |
| $ | 4,292 |
| $ | 6,023 |
|
Accrued expenses and other |
|
| 3,127 |
|
| 2,630 |
|
Line of credit |
|
| — |
|
| 3,063 |
|
|
|
|
| ||||
Total current liabilities |
|
| 7,419 |
|
| 11,716 |
|
Noncurrent Liabilities: |
|
|
|
|
|
|
|
Other non-current liabilities |
|
| 1,039 |
|
| 1,098 |
|
|
|
|
| ||||
Total noncurrent liabilities |
|
| 1,039 |
|
| 1,098 |
|
Total shareholders’ equity |
|
| 50,140 |
|
| 50,559 |
|
|
|
|
| ||||
Total liabilities and shareholders’ equity |
| $ | 58,598 |
| $ | 63,373 |
|
|
|
|
|
Note: | These statements should be read in conjunction with the Company’s Form 10-K filed with the Securities and Exchange Commission on March 31, 2005. |
INNOTRAC CORPORATION
Condensed Consolidated Statements of Cash Flows
(in thousands)
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
|
|
| ||||||||||
|
| 2005 |
| 2004 |
| 2005 |
| 2004 |
| ||||
|
|
|
|
|
| ||||||||
|
| (Unaudited) |
| (Unaudited) |
| ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
| $ | (796 | ) | $ | (402 | ) | $ | (1,703 | ) | $ | 50 |
|
Adjustments to net loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 1,091 |
|
| 1,283 |
|
| 3,551 |
|
| 3,905 |
|
Loss on disposal of fixed assets |
|
| 12 |
|
| 6 |
|
| 12 |
|
| 106 |
|
Amortization of deferred compensation |
|
| — |
|
| 18 |
|
| — |
|
| 68 |
|
Changes in working capital: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
| 5,031 |
|
| (175 | ) |
| 5,558 |
|
| (1,373 | ) |
Inventory |
|
| (1,377 | ) |
| 385 |
|
| (1,469 | ) |
| 6,285 |
|
Prepaid assets and other |
|
| 317 |
|
| (763 | ) |
| 348 |
|
| (1,690 | ) |
Accounts payable, accrued expenses and other |
|
| (1,584 | ) |
| 195 |
|
| (1,239 | ) |
| 1,062 |
|
|
|
|
|
|
| ||||||||
Cash provided by operating activities |
|
| 2,694 |
|
| 547 |
|
| 5,058 |
|
| 8,413 |
|
|
|
|
|
|
| ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
| (217 | ) |
| (795 | ) |
| (800 | ) |
| (2,112 | ) |
|
|
|
|
|
| ||||||||
Cash used in investing activities |
|
| (217 | ) |
| (795 | ) |
| (800 | ) |
| (2,112 | ) |
|
|
|
|
|
| ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings (repayments) under line of credit |
|
| — |
|
| 262 |
|
| (3,063 | ) |
| (7,455 | ) |
Payment of capital lease obligation |
|
| (18 | ) |
| (25 | ) |
| (54 | ) |
| (65 | ) |
Loan fees paid |
|
| — |
|
| — |
|
| — |
|
| (15 | ) |
Exercise of employee stock options |
|
| 21 |
|
| 105 |
|
| 1,285 |
|
| 748 |
|
Stock reacquired to settle employee stock bonus withholding tax obligation |
|
| — |
|
| — |
|
| — |
|
| (286 | ) |
|
|
|
|
|
| ||||||||
Cash (used in) provided by financing activities |
|
| 3 |
|
| 342 |
|
| (1,832 | ) |
| (7,073 | ) |
|
|
|
|
|
| ||||||||
Net increase (decrease) in cash |
|
| 2,480 |
|
| 94 |
|
| 2,426 |
|
| (772 | ) |
Cash, beginning of period |
|
| 1,323 |
|
| 1,362 |
|
| 1,377 |
|
| 2,228 |
|
|
|
|
|
|
| ||||||||
Cash, end of period |
| $ | 3,803 |
| $ | 1,456 |
| $ | 3,803 |
| $ | 1,456 |
|
|
|
|
|
|
|
Note: | These statements should be read in conjunction with the Company’s Form 10-K filed with the Securities and Exchange on March 31, 2005. |