INFOCROSSING LOGO
Contacts:
Chairman/CEO Chief Financial Officer
Zach Lonstein William McHale
Infocrossing, Inc. Infocrossing, Inc.
(201) 840-4726 (201) 840-4732
zlonstein@infocrossing.com wmchale@infocrossing.com
Investor Relations
Matthew Hayden
Hayden Communications, Inc.
(858) 704-5065
INFOCROSSING REPORTS EARNINGS OF $0.11 PER SHARE ON REVENUE
OF $37.5 MILLION FOR FIRST QUARTER ENDED MARCH 31, 2005
FISCAL 2005 GUIDANCE REAFFIRMED; SECOND QUARTER 2005 GUIDANCE PROVIDED
LEONIA, NJ, May 10, 2005 -- Infocrossing, Inc. (Nasdaq: IFOX) a provider of
selective IT outsourcing and business processing solutions announced today
financial results for the first quarter ended March 31, 2005.
KEY FINANCIAL RESULTS
(All numbers in thousands, except percentages and per share amounts)
Q1 2005 Q1 2004 Increase % Change
Revenue $37,527 $15,176 $22,351 147.3%
EBITDA $8,143 $2,851 $5,292 185.6%
Income from operations $5,523 $1,247 $4,276 342.9%
Net income $2,437 $775 $1,662 214.5%
EPS - diluted $0.11 $0.05 $0.06 120.0%
Diluted shares 27,338 17,146 10,192 59.4%
Zach Lonstein, Chairman and Chief Executive Officer of Infocrossing, stated "We
are extremely pleased with the results for the first quarter of 2005. We met our
guidance for earnings per share on slightly better than projected revenue, and
our pipeline of new business opportunities continues to build. With enhanced
service offerings, a national data center infrastructure, and a highly skilled
professional staff, we are being invited to participate in larger, more complex
outsourcing engagements more frequently than at any other time in our history.
While these opportunities have a longer sales cycle, they provide greater
revenue potential, and we are optimistic about the balance of 2005 and beyond."
For the first quarter of 2005, Infocrossing reported revenue of $37,527,000, an
increase of $22,351,000, or 147.3% compared with revenue of $15,176,000 reported
for the first quarter of 2004. Excluding acquisitions, revenue growth was
$1,266,000, or 8.3%.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
increased 185.6% to $8,143,000 during the first quarter of 2005, an increase of
$5,292,000 over EBITDA of $2,851,000 reported for the first quarter of 2004.
EBITDA growth benefited from higher revenue and the Company's success in
leveraging its operational infrastructure to support new clients and
acquisitions. Infocrossing uses EBITDA because it considers such information an
important supplemental measure of its operating performance and believes EBITDA
is frequently used by securities analysts, investors and other interested
parties in the evaluation of companies with comparable market capitalization,
many of which present EBITDA when reporting their results. A reconciliation of
EBITDA to net income follows in Appendix A.
Income before taxes was $4,058,000, an increase of 597.3% from $582,000 for the
first quarter of 2004. As a result of the Company's profitability and forecasts
for future periods, Infocrossing released approximately $12.5 million of a
deferred tax valuation allowance in the fourth quarter of 2004. Accordingly,
first quarter 2005 income taxes were accrued at a 39.9% rate, but were payable
at a rate of 7.2% because of the utilization of deferred tax assets available to
offset a portion of the Company's taxable income. The Company will enjoy the
cash benefit of these deferred assets through lower taxes payable in the future.
Net income for the current period was $2,437,000 or $0.11 per diluted share
compared with net income of $775,000 or $0.05 per diluted share for the same
period last year. For the first quarter of 2005, net income reflects a full
burden of income taxes whereas for the first quarter of 2004, net income
reflected a net tax benefit. Tax expense for the first quarter of last year was
a net tax benefit of $193,000. For the first quarter of 2005, the tax expense of
$1,621,000 represents a decrease of $0.06 per diluted share for the first
quarter of 2005. In contrast, net income for the first quarter of last year
increased by $0.01 per diluted share as a result of the net tax benefit of
$193,000. The weighted average number of shares and share equivalents used to
calculate EPS was 27,338,000 shares for the current period compared with
17,146,000 shares for the first quarter of 2004. The share count increase was a
result of the issuance of 2.9 million shares in a private placement in 2004, the
potential issuance of 4.7 million shares from the conversion of $72.0 million of
contingently convertible notes also issued in 2004, and the improved market
value of the Company's shares.
2005 First Quarter Business Highlights
o Added $10.8 million in incremental revenue commitments over contract terms
of up to 5 years in length of which approximately 90% will be realized
within three years of the commencement of services.
o Completed the integration of Infocrossing West, Inc., formerly ITO
Acquisition Corporation d/b/a Systems Management Specialists.
o Completed the planning phase and commenced the implementation phase of the
integration of IHS.
o Generated the largest pipeline of organic growth opportunities in the
Company's history based on the contract value of potential transactions in
which the Company has been selected as a potential finalist.
o Filed a shelf registration to permit the Company to issue up to $125
million in common stock, preferred stock, warrants, senior debt,
subordinated debt, and units.
Business Outlook
The Company's previously issued fiscal 2005 projections of revenue of $167.0 to
$170.0 million; net income of $18.2 to $18.8 million; and EPS of $0.72 to $0.74
remains unchanged.
For the second quarter of fiscal 2005, the Company expects revenue of
approximately $37.5 million; net income of approximately $2.4 million; EPS of
approximately $0.11; and fully diluted shares of approximately 27.3 million
shares.
"The reaffirmation of our guidance is based on our expectation that we will be
able to execute our growth strategy of building our business through the
addition of new customers, the expansion of our services to existing customers,
and the acquisition of companies which fit our strategic requirements," Mr.
Lonstein concluded.
Infocrossing will hold a conference call for investors and analysts on Tuesday,
May 10, 2005 at 4:30 p.m. EDT to discuss results for the Company's first quarter
of 2005. The call-in number for the live audio call beginning at 4:30 p.m. EDT
is 1-973-409-9259. A live web cast of the conference call will also be available
on Infocrossing's website at http://www.infocrossing.com. An audio replay of the
conference call will be available from 6:30 p.m. EDT on Tuesday, May 10, 2005,
for seven days at 973-341-3080. The pass code for the replay is 5984285. A
webcast of the conference call will be available for 30 days following the call
at http://www.infocrossing.com.
This call is being webcast by ViaVid Broadcasting and can be accessed at
Infocrossing's website at www.infocrossing.com. The webcast may also be accessed
at ViaVid's website at www.viavid.net. The webcast can be accessed through June
9, 2005 on either site. To access the webcast, you will need to have the Windows
Media Player on your desktop. For the free download of the Media Player please
visit:
www.microsoft.com/windows/windowsmedia/en/download/default.asp
EBITDA represents net income before interest, taxes, depreciation and
amortization. The Company presents EBITDA because it considers such information
an important supplemental measure of its performance and believes it is
frequently used by securities analysts, investors and other interested parties
in the evaluation of companies with comparable market capitalization, many of
which present EBITDA when reporting their results. The Company also uses EBITDA
for the following purposes: (1) EBITDA is one of the factors used to determine
the total amount of bonuses available to be awarded to executive officers and
other employees; (2) the Company's credit agreement uses EBITDA (with additional
adjustments) to measure compliance with covenants such as interest coverage and
debt incurrence; (3) EBITDA is also used by prospective and current lessors as
well as potential lenders to evaluate potential transactions with the Company;
and (4) EBITDA is also used by us to evaluate and price potential acquisition
candidates.
EBITDA has limitations as an analytical tool, and you should not consider it in
isolation or as a substitute for analysis of the Company's results as reported
under GAAP. Some of these limitations are: (a) EBITDA does not reflect changes
in, or cash requirements for, the Company's working capital needs; (b) EBITDA
does not reflect the significant interest expense, or the cash requirements
necessary to service interest or principal payments, on the Company's debts; and
(c) although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized may have to be replaced in the future, and
EBITDA does not reflect any cash requirements for such capital expenditures.
Because of these limitations, EBITDA should not be considered as a principal
indicator of the Company's performance. The Company compensates for these
limitations by relying primarily on the Company's GAAP results and using EBITDA
only supplementally.
ABOUT INFOCROSSING, INC. (http://www.infocrossing.com)
---------------------------
Infocrossing, Inc. (IFOX) is a provider of selective IT outsourcing services,
delivering the computing platforms and proprietary systems that enable
companies, regardless of industry, to process data and share information within
their business, and between their customers, suppliers and distribution
channels. Leading companies leverage Infocrossing's robust computing
infrastructure, skilled technical team, and process-driven operations to reduce
costs and improve service delivery by outsourcing the operation of mainframes,
mid-range, open system servers, networks, and business processes to
Infocrossing.
Safe Harbor Statement
This release contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. As such, final results
could differ from estimates or expectations due to risks and uncertainties,
including, but not limited to: incomplete or preliminary information; changes in
government regulations and policies; continued acceptance of the Company's
products and services in the marketplace; competitive factors; closing contracts
with new customers on favorable terms; expanding services to existing customers;
new products; technological changes; the Company's dependence upon third-party
suppliers; intellectual property rights; difficulties with the identification,
completion, and integration of acquisitions, including the integration of
Infocrossing Healthcare Services, Inc., f/k/a Verizon Information Technologies
Inc., and other risks. For any of these factors, the Company claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, as amended.
(financial tables follow)
INFOCROSSING, INC. & SUBSIDIARIES
SUMMARY OF CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31,
2005 2004
-------------- --------------
Revenues $37,527 $15,176
-------------- --------------
Costs and expenses
Cost of revenues 25,847 10,223
Selling and promotion 958 736
General and administrative 2,579 1,366
Depreciation and amortization 2,620 1,604
-------------- --------------
Total costs and expenses 32,004 13,929
-------------- --------------
Income from operations 5,523 1,247
-------------- --------------
Interest expense 1,591 703
Interest income (126) (38)
-------------- --------------
Net Interest expense 1,465 665
-------------- --------------
Income before income taxes 4,058 582
Income tax (benefit) expense 1,621 (193)
-------------- --------------
Net income $2,437 $ 775
============== ==============
Basic earnings per share $0.12 $0.05
============== ==============
Weighted average number of common shares
outstanding 20,087 15,193
============== ==============
Diluted earnings per share $0.11 $0.05
============== ==============
Fully diluted weighted average number of
common shares outstanding 27,338 17,146
============== ==============
Certain reclassifications were made to prior period amounts to conform to the
current presentation.
INFOCROSSING, INC. & SUBSIDIARIES
SUMMARY OF CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, 2005 DECEMBER 31, 2004
-------------- -----------------
(UNAUDITED)
ASSETS
Cash and equivalents $35,257 $26,311
Accounts receivable 26,009 26,707
Other current assets 8,825 7,733
---------- ----------
Total current assets 70,091 60,751
Property and equipment, net 27,002 25,113
Goodwill 103,976 103,177
Other non current assets 26,337 27,609
---------- ----------
Total Assets $227,406 $216,650
========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $ 22,962 $ 22,569
Notes payable, long-term debt
and capitalized leases 101,857 100,432
Other liabilities 2,534 2,412
---------- ----------
Total liabilities 127,353 125,413
Common stockholders' equity 100,053 91,237
---------- ----------
Total liabilities and common
stockholders' equity $227,406 $216,650
========== ==========
Certain reclassifications were made to prior period amounts to conform to the
current presentation.
SUPPLEMENTARY INFORMATION
APPENDIX A
EBITDA RECONCILIATION
The reconciliation of EBITDA with net income for the quarters ended March 31,
2005 and 2004, respectively, is as follows (in thousands):
THREE MONTHS ENDED MARCH 31,
2005 2004
-------- ---------
Net Income $2,437 $ 775
Add (deduct)
Income tax provision (benefit) 1,621 (193)
Net interest expense 1,465 665
Depreciation and amortization 2,620 1,604
-------- --------
EBITDA $8,143 $2,851
======== ========
Certain reclassifications were made to prior period amounts to conform to the
current presentation.
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