Workstream Inc. Announces Third Quarter Fiscal 2009 Results
Maitland, Florida — April 14, 2009 – Workstream (NASDAQ: WSTM), a leading provider of on demand talent management solutions, today announced financial results for the third quarter ended February 28, 2009:
Net Revenues were $5.6 million compared to $6.2 million during the same period last year.
EBITDA, or earnings before interest, taxes, depreciation and amortization, was $1.3 million or $0.02 per diluted share, compared to a loss of ($4.5) million or ($0.09) per diluted share during the same period last year.
Net income for the period in accordance with accounting principles generally accepted in the United States, or GAAP, was $573,852 compared to a loss of ($19.7) million during the same period last year.
GAAP diluted earnings per share for the quarter was $0.01 with 58 million weighted average shares outstanding compared to a loss per diluted share of ($0.38) during the same period last year.
Cash flow from operations for the period was $351,000 compared to ($3.5) million cash used in operation during the same period last year.
In the third quarter and nine months of fiscal 2009, management continued to focus and execute on increasing productivity, reducing cost and generating free cash flow.
EBITDA and EBITDA per share are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. EBITDA is commonly defined as earnings before interest, taxes, depreciation and amortization. We believe that EBITDA provides useful information to investors as it excludes transactions not related to the core cash operating business activities. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations. All companies do not calculate EBITDA in the same manner, and EBITDA as presented by Workstream may not be comparable to EBITDA presented by other companies. Workstream defines EBITDA as earnings or loss from continuing operations before interest, taxes, depreciation and amortization, non-cash equity compensation and non-recurring goodwill impairment, if applicable. Following the financial statements attached is a reconciliation of net loss to EBITDA loss and EBITDA per share that should be read in conjunction with the financial statements.
In the third quarter and nine months of fiscal 2009, management reduced employee costs, including commissions, as there was a significant decrease in headcount as part of management’s overall plan to reduce costs to better align them with the Company’s current revenues. Additionally, we renegotiated several major accounts with service providers and changed some of our offices to remote centers in order to lower our expenses.
About Workstream Inc.
Workstream provides on-demand compensation, performance and talent management solutions and services that help companies manage the entire employee lifecycle - from recruitment to retirement. Workstream's TalentCenter provides a unified view of all Workstream products and
services including Recruitment, Performance, Compensation, Development and Transition. Access to TalentCenter is offered on a monthly subscription basis under an on-demand software delivery model to help companies build high performing workforces, while controlling costs. With offices across North America, Workstream services customers including Chevron, The Gap, and Nordstrom. For more information visit www.workstreaminc.com or call (407)475-5500.
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations or beliefs of Workstream's management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: inability to grow our client base and revenue because of the number of competitors and the variety of sources of competition we face; client attrition; inability to offer services that are superior and cost effective when compared to the services being offered by our competitors; inability to further identify, develop and achieve success for new products, services and technologies; increased competition and its effect on pricing, spending, third-party relationships and revenues; as well as the inability to enter into successful strategic relationships and other risks detailed from time to time in filings with the Securities and Exchange Commission.
WORKSTREAM INC. | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
February 28, 2009 | May 31, 2008 | |||||
ASSETS: | (Unaudited) | |||||
Current assets: | ||||||
Cash and cash equivalents | $ | 1,484,622 | $ | 3,435,337 | ||
Restricted cash | - | 391,415 | ||||
Short-term investments | 35,000 | 67,983 | ||||
Accounts receivable, net | 3,027,801 | 3,771,598 | ||||
Prepaid expenses and other assets | 172,774 | 502,303 | ||||
Total current assets | 4,720,197 | 8,168,636 | ||||
Equipment, net | 1,114,344 | 1,960,836 | ||||
Other assets | 27,056 | 78,287 | ||||
Acquired intangible assets, net | 64,750 | 449,975 | ||||
Goodwill | 17,729,448 | 17,729,448 | ||||
TOTAL ASSETS | $ | 23,655,795 | $ | 28,387,182 | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIT: | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 1,295,102 | $ | 3,175,850 | ||
Accrued liabilities | 2,669,570 | 3,079,718 | ||||
Accrued compensation | 459,987 | 1,176,774 | ||||
Current portion of long-term obligations | 229,271 | 543,170 | ||||
Deferred revenue | 3,103,839 | 2,991,909 | ||||
Total current liabilities | 7,757,769 | 10,967,421 | ||||
Long-term obligations less current portion | 820,519 | 275,987 | ||||
Deferred revenue – long term | 17,069 | 113,000 | ||||
Common stock warrant liability | - | 19,000,000 | ||||
Notes payable | 19,000,000 | - | ||||
Total liabilities | 27,595,357 | 30,356,408 | ||||
Contingencies | ||||||
STOCKHOLDERS’ DEFICIT: | ||||||
Common stock | 113,188,378 | 112,588,378 | ||||
Additional paid-in capital | 18,429,815 | 18,261,543 | ||||
Accumulated other comprehensive loss | (710,448 | ) | (799,190 | ) | ||
Accumulated deficit | (134,847,307 | ) | (132,019,957 | ) | ||
Total stockholders’ deficit | (3,939,562 | ) | (1,969,226 | ) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 23,655,795 | $ | 28,387,182 |
CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE INCOME (LOSS) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
February 28, 2009 | February 29, 2008 | February 28, 2009 | February 29, 2008 | |||||||||
Revenues: | ||||||||||||
Software | $ | 2,099,072 | $ | 2,045,775 | $ | 5,731,051 | $ | 6,804,533 | ||||
Professional services | 638,791 | 741,307 | 1,869,931 | 2,562,044 | ||||||||
Rewards | 1,610,241 | 1,326,317 | 4,564,245 | 4,283,658 | ||||||||
Career networks | 1,289,594 | 2,071,127 | 4,169,682 | 6,954,646 | ||||||||
Revenues, net | 5,637,698 | 6,184,526 | 16,334,909 | 20,604,881 | ||||||||
Cost of revenues: | ||||||||||||
Rewards | 1,184,542 | 1,012,377 | 3,527,782 | 3,188,460 | ||||||||
Other | 295,306 | 668,040 | 1,132,788 | 2,109,323 | ||||||||
Cost of revenues (exclusive of amortization and depreciation expense noted below) | 1,479,848 | 1,680,417 | 4,660,570 | 5,297,783 | ||||||||
Gross profit | 4,157,850 | 4,504,109 | 11,674,339 | 15,307,098 | ||||||||
Operating expenses: | ||||||||||||
Selling and marketing | 598,143 | 2,664,602 | 2,950,516 | 8,302,606 | ||||||||
General and administrative | 1,758,505 | 5,186,038 | 6,775,338 | 14,657,559 | ||||||||
Research and development | 565,944 | 1,901,563 | 2,853,205 | 4,823,741 | ||||||||
Amortization and depreciation | 309,399 | 693,026 | 1,236,265 | 3,101,263 | ||||||||
Total operating expenses | 3,231,991 | 10,445,229 | 13,815,324 | 30,885,169 | ||||||||
Operating income (loss) | 925,859 | (5,941,120 | ) | (2,140,985 | ) | (15,578,071 | ) | |||||
Interest and other income | 19,893 | 88,317 | 161,655 | 397,932 | ||||||||
Warrant liability interest expense | - | (13,051,901 | ) | - | (6,318,102 | ) | ||||||
Interest and other expense | (352,167 | ) | (16,700 | ) | (810,533 | ) | (2,155,371 | ) | ||||
Other income (expense) | (332,274 | ) | (12,980,284 | ) | (648,878 | ) | (8,075,541 | ) | ||||
Income (loss) before income tax expense | 593,585 | (18,921,404 | ) | (2,789,863 | ) | (23,653,612 | ) | |||||
Income tax expense | (19,733 | ) | (804,310 | ) | (37,487 | ) | (790,726 | ) | ||||
NET INCOME (LOSS) | $ | 573,852 | $ | (19,725,714 | ) | $ | (2,827,350 | ) | $ | (24,444,338 | ) | |
Basic earnings (loss) per share | $ | 0.01 | $ | (0.38 | ) | $ | (0.05 | ) | $ | (0.47 | ) | |
Diluted earnings (loss) per share | $ | 0.01 | $ | (0.38 | ) | $ | (0.05 | ) | $ | (0.47 | ) | |
Net income (loss) | $ | 573,852 | $ | (19,725,714 | ) | $ | (2,827,350 | ) | $ | (24,444,338 | ) | |
Comprehensive income (loss): | ||||||||||||
Foreign currency translation adjustments | (95,809 | ) | (81,604 | ) | 88,742 | (17,231 | ) | |||||
COMPREHENSIVE INCOME (LOSS) | $ | 478,043 | $ | (19,807,318 | ) | $ | (2,738,608 | ) | $ | (24,461,569 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(Unaudited) | ||||||
Nine Months Ended | ||||||
February 28, 2009 | February 29, 2008 | |||||
Cash flows provided by (used in) operating activities: | ||||||
Net loss | $ | (2,827,350 | ) | $ | (24,444,338 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Amortization and depreciation | 1,236,265 | 3,101,263 | ||||
Leasehold inducement amortization | (38,064 | ) | (41,144 | ) | ||
Provision for bad debt | 457,795 | 527,075 | ||||
Loss on sale or disposal of fixed asset | - | 12,623 | ||||
Stock related compensation | 168,272 | 1,262,841 | ||||
Non-cash interest expense | - | 6,318,102 | ||||
Deferred income taxes | (2,275 | ) | 762,835 | |||
Change in long-term portion of deferred revenue | (95,931 | ) | 23,975 | |||
Net change in components of working capital: | ||||||
Accounts receivable | 286,003 | (1,464,343 | ) | |||
Prepaid expenses and other assets | 380,760 | 354,837 | ||||
Accounts payable and accrued expenses | (1,004,788 | ) | 738,149 | |||
Accrued compensation | (716,788 | ) | 186,491 | |||
Deferred revenue | 111,930 | 1,373,884 | ||||
Net cash used in operating activities | (2,044,171 | ) | (11,287,750 | ) | ||
Cash flows provided by (used in) investing activities: | ||||||
Purchase of property and equipment | (2,989 | ) | (542,033 | ) | ||
(Increase)/ decrease in restricted cash | 424,398 | 63,411 | ||||
(Increase)/decrease in short-term investments | - | (1,813 | ) | |||
Net cash provided by (used in) investing activities | 421,409 | (480,435 | ) | |||
Cash flows provided by (used in) financing activities: | ||||||
Proceeds from exercise of options and warrants | - | 43,200 | ||||
Repayment of long-term obligations | (416,695 | ) | (502,534 | ) | ||
Payment of guaranteed financing costs | - | (550,000 | ) | |||
Proceeds from warrant financing | - | 18,658,172 | ||||
Net repayments on line of credit | - | (4,498,619 | ) | |||
Net cash provided by (used in) financing activities | (416,695 | ) | 13,150,219 | |||
Effect of exchange rate changes on cash and cash equivalents | 88,742 | (17,231 | ) | |||
Net increase / (decrease) in cash and cash equivalents | (1,950,715 | ) | 1,364,803 | |||
Cash and cash equivalents, beginning of period | 3,435,337 | 2,752,601 | ||||
Cash and cash equivalents, end of period | $ | 1,484,622 | $ | 4,117,404 | ||
Supplemental disclosure of cash flow information: | ||||||
Cash paid during the period for interest | $ | 81,757 | $ | 399,998 | ||
Cash paid during the period for income taxes | $ | 16,231 | $ | 126,606 | ||
Supplemental schedule of non-cash investing and financing activities: | ||||||
Equipment acquired under capital leases | $ | - | $ | 133,478 | ||
Conversion of warrant liability to notes payable | $ | 19,000,000 | $ | - | ||
Non-cash issuance of common stock in connection with the settlement of class action lawsuits | $ | 600,000 | $ | - |
WORKSTREAM INC. | ||||||||||||
UNAUDITED RECONCILIATION OF EARNINGS OR LOSS BEFORE | ||||||||||||
INTEREST, DEPRECIATION, AMORTIZATION AND NON-CASH COMPENSATION (EBITDA) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
February 28, 2009 | February 29, 2008 | February 28, 2009 | February 29, 2008 | |||||||||
Net loss, per GAAP | $ | 573,852 | $ | (19,725,714 | ) | (2,827,350 | ) | $ | (24,444,338 | ) | ||
Income tax expense | 19,733 | 804,310 | 37,487 | 790,726 | ||||||||
Interest and other expense | 352,167 | 16,700 | 810,533 | 2,155,371 | ||||||||
Warrant liability interest expense | - | 13,051,901 | - | 6,318,102 | ||||||||
Interest and other income | (19,893 | ) | (88,317 | ) | (161,655 | ) | (397,932 | ) | ||||
Amortization and depreciation | 309,399 | 693,026 | 1,236,265 | 3,101,263 | ||||||||
Non-cash compensation | 35,570 | 385,985 | 168,272 | 1,262,841 | ||||||||
Merger and acquisition costs | - | 349,251 | (34,784 | ) | 349,251 | |||||||
EBITDA income (loss) | $ | 1,270,828 | $ | (4,512,858 | ) | $ | (771,232 | ) | $ | (10,864,716 | ) | |
Weighted average number of common shares outstanding-basic | 56,079,181 | 51,923,532 | 54,534,060 | 51,706,273 | ||||||||
Weighted average number of common shares outstanding-diluted | 58,467,312 | 51,923,532 | 54,534,060 | 51,706,273 | ||||||||
Basic & diluted earnings (loss) per share, per GAAP | $ | 0.01 | $ | (0.38 | ) | $ | (0.05 | ) | $ | (0.47 | ) | |
Basic & diluted EBITDA earnings (loss) per share | $ | 0.02 | $ | (0.09 | ) | $ | (0.01 | ) | $ | (0.21 | ) |
Investor Relations:
Workstream Inc.
LeAnn Hitchcock, 407-475-5500
LeAnn.Hitchcock@workstreaminc.com
Media/Press:
Workstream Inc.
LeAnn Hitchcock,
LeAnn.Hitchcock@workstreaminc.com