EX-99.1
NEWS RELEASE for March, 30 2005 at 7:30 AM EST
Contacts for Incentra Solutions:
Allen & Caron Inc. Incentra Solutions
Jill Bertotti (investors) Paul McKnight
jill@allencaron.com Chief Financial Officer
------------------- pmcknight@incentrasolutions.com
Len Hall (financial media) -------------------------------
len@allencaron.com (303) 449-8279
------------------
(949) 474-4300
INCENTRA SOLUTIONS ANNOUNCES RECORD FOURTH QUARTER, YEAR-END RESULTS
YEAR-OVER-YEAR PRO FORMA REVENUES UP 52% TO $4.6 MILLION FOR QUARTER,
39% TO $17.7 MILLION FOR YEAR; 2004 PRO FORMA GROSS MARGINS
INCREASE 93% FROM PRIOR YEAR
BOULDER, CO, MARCH 30, 2005 - Incentra Solutions, Inc. (OTCBB: ICEN) today
reported significant year-over-year improvements in top- and bottom-line
performance for its fourth quarter and year ended December 31, 2004. Chairman
and CEO Thomas P. Sweeney said that results for the 2004 fourth quarter and year
were driven by year-over-year improvements in gross margins and continued strong
sales globally by the Front Porch Digital Media and Broadcast division and
increased volume of storage under management by its ManagedStorage International
(MSI) subsidiary.
During 2004, Incentra sold and delivered a fully integrated digital archive
and storage infrastructure to a major cable provider in the United States, which
was the Company's first sale of a complete DIVArchive solution to include
hardware, software and professional services. During the first quarter of 2005,
the Company successfully sold two additional complete archive solutions.
"2004 was a remarkable year for our Company and it is continuing into
2005," Sweeney said. "We have made several important acquisitions, starting in
August with ManagedStorage International, that is based on our overall strategy
to substantially increase revenues, improve our bottom-line performance and
enhance shareholder value. These steps are essential to both accelerate our
penetration of existing markets and expand further into related markets."
In the first quarter 2005, Incentra completed the acquisitions of STAR
Solutions and PWI Technologies, two leading system integrators in the western
United States. These businesses and their established customer bases will serve
as a platform for the sale of Incentra's managed storage and monitoring
solutions. "These two acquisitions are key steps in building Incentra into a
rapidly growing and profitable company," Sweeney added. "The acquisitions of PWI
and STAR provide us with established direct sales and services organizations
serving the enterprise market." For the year ended December 31, 2004, STAR and
PWI had aggregate revenues of over $38 million.
PRO FORMA RESULTS OF OPERATIONS
Pro forma revenue for the 2004 fourth quarter increased approximately 52
percent to $4.6 million from $3.0 million for the comparable prior year quarter,
and for all of 2004, pro forma revenue increased approximately 39 percent to
$17.7 million, up from $12.7 million in 2003. Pro forma gross margin for the
fourth quarter of 2004 increased 51 percent to $2.4 million from $1.6 million
for the fourth quarter of the prior year. Gross margin for all of 2004 increased
93 percent on a pro forma basis to $9.2 million from the prior year of $4.8
million.
Pro forma EBITDA loss for the quarter and the year ended December 31, 2004
improved substantially from the prior year as the pro forma EBITDA loss declined
to $0.8 million and $3.7 million compared to an EBITDA loss of $3.4 million and
$10.2 million for the quarter and full year ended December 31, 2003,
respectively. Included in the EBITDA loss for 2004 was $1.4 million of merger
related expense.1
"We believe our EBITDA performance demonstrates that we are moving in the
right direction," Sweeney said. "Our pro forma operating expenses for the year
increased slightly, only 2 percent, and our losses decreased dramatically
despite charges for one-time items and an increase in non-cash charges. We are
increasing our sales of DIVArchive and increasing the volumes of storage under
management, creating the momentum we need going forward."
Pro forma net losses before amounts attributable to common shareholders2
for the fourth quarter and year ended December 31, 2004 were $3.1 million and
$13.0 million, respectively, which compares to pro forma net losses of $5.7
million and $19.1 million, respectively, for the 2003 comparable periods.
Included in the net loss for 2004 was $1.4 million of costs included in SG&A
expenses that were related to the acquisition of ManagedStorage International
(MSI) in the 2004 third quarter, of which approximately $800,000 were non-cash
charges.
Pro forma results of operations discussed below, include 100 percent of the
operating results of Front Porch and MSI for all periods presented. Results of
operations determined in accordance with generally accepted accounting
principles (GAAP) exclude the results of operations of Front Porch prior to the
completion of the MSI acquisition on August 18, 2004. The pro forma results of
operations discussed below exclude consideration of the Company's first quarter
acquisitions of STAR and PWI.
"A key factor in our revenue profile is the growing recurring revenue base
we are building, which is driven in large part by sales of our proprietary
Gridworks Operations System Support solution and our first call support,"
Sweeney said. "As our recurring revenue base continues to grow, it will provide
added stability and predictability to our revenues, and create a significant
growth opportunity for expanded sales of solutions and services to existing
customers."
The Company continues to invest in hardware and the development of its
software and digital archiving in the data storage and infrastructure areas.
During the year ended December
31, 2004, the Company invested approximately $1.4 million in software
development and approximately $1.8 million in data storage infrastructure.
"These investments have already yielded results and have positioned us to
execute a key part of our strategic plan to grow revenues across both the
enterprise and broadcast markets," Sweeney said.
RESULTS OF OPERATIONS IN ACCORDANCE WITH GAAP
For the fourth quarter and year ended December 31, 2004, total revenues
were approximately $4.6 million and $13.3 million, respectively, compared to
approximately $2.1 million and $9.8 million, respectively, for the comparable
prior year periods. Gross margins as a percentage of revenue for the 2004 fourth
quarter and year were 52 percent and 45 percent, respectively, compared to 46
percent and 29 percent for the respective periods in 2003. Net losses
attributable to common shareholders2 for the 2004 fourth quarter and year were
$3.1 million and $10.4 million, respectively, which compares to net losses of
$2.4 million and $11.0 million, respectively, for the prior year comparable
periods. Included in the net loss for 2004 was approximately $1.3 million in
expenses that was related to the acquisition of MSI.
The EBITDA loss for the quarter and the year ended December 31, 2004
improved substantially from the prior year as the EBITDA loss declined to $0.8
million and $2.4 million compared to an EBITDA loss of $1.0 million and $5.5
million for the quarter and full year ended 2003, respectively.
CONFERENCE CALL INFORMATION
As previously announced, management will host a conference call to be
broadcast live on the Internet on Wednesday, March 30, 2005 at 11:30 a.m.
(Eastern time) on the Investors section of the Company's website,
www.incentrasolutions.com. After you register your name and company, you will be
given access to the live webcast. Additionally, an archive of the conference
call will be available at this site.
ABOUT INCENTRA SOLUTIONS, INC.
Incentra Solutions, Inc. (www.incentrasolutions.com, OTCBB:ICEN) is a
provider of complete IT & storage management solutions to broadcasters,
enterprises and managed service providers worldwide. The Company operates a
Broadcast & Media Division, Front Porch Digital (www.fpdigital.com) that
provides total digital archive management and transcoding solutions.
Wholly-owned subsidiaries, ManagedStorage International (MSI,
www.msiservice.com), STAR Solutions (www.star-solutions.com), and PWI
Technologies (WWW.PWI.COM) provide professional services, hardware & software
products, IT outsourcing solutions and financing options to the enterprise and
service provider markets.
(1) EBITDA is defined as earnings before interest, taxes, depreciation and
amortization and cumulative effect of changes in accounting principles. Although
EBITDA is not a measure of performance or liquidity calculated in accordance
with generally accepted accounting principles (GAAP), the Company believes the
use of the non-GAAP financial measure EBITDA enhances an overall understanding
of the Company's past financial performance and is a widely-used
measure of operating performance in practice. In addition, the Company believes
the use of EBITDA provides useful information to the investor because EBITDA
excludes significant non-cash interest and amortization charges related to past
financings by the Company that, when excluded, the Company believes produces
more meaningful operating information. EBITDA also excludes depreciation expense
incurred primarily in the MSI subsidiary and amortization expense for intangible
assets which arose out from the acquisition of MSI, which are significant when
compared to such levels prior to the acquisition of MSI. However, investors
should not consider this measure in isolation or as a substitute for net income
(loss), operating income (loss), cash flows from operating activities or any
other measure for determining the Company's operating performance or liquidity
that are calculated in accordance with GAAP, and this measure may not
necessarily be comparable to similarly titled measures employed by other
companies. A reconciliation of EBITDA to the most comparable GAAP financial
measure, loss before income taxes, is included in the adjoining tables.
(2) Net loss before amounts attributable to common shareholders excludes deemed
dividends and accretion related to the Company's preferred stock.
INCENTRA SOLUTIONS FORWARD LOOKING STATEMENTS
CERTAIN INFORMATION DISCUSSED IN THIS PRESS RELEASE MAY CONSTITUTE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 AND THE FEDERAL SECURITIES LAWS. ALTHOUGH THE
INCENTRA SOLUTIONS ANNOUNCES RECORD FOURTH QUARTER, YEAR-END RESULTS
Page 4-4-4
COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE BASED UPON REASONABLE ASSUMPTIONS AT THE TIME MADE, IT CAN GIVE
NO ASSURANCE THAT ITS EXPECTATIONS WILL BE ACHIEVED. READERS ARE CAUTIONED NOT
TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING
STATEMENTS ARE INHERENTLY SUBJECT TO UNPREDICTABLE AND UNANTICIPATED RISKS,
TRENDS AND UNCERTAINTIES SUCH AS THE COMPANY'S INABILITY TO ACCURATELY FORECAST
ITS OPERATING RESULTS; THE COMPANY'S POTENTIAL INABILITY TO ACHIEVE
PROFITABILITY OR GENERATE POSITIVE CASH FLOW; THE AVAILABILITY OF FINANCING; AND
OTHER RISKS ASSOCIATED WITH THE COMPANY'S BUSINESS. FOR FURTHER INFORMATION ON
FACTORS WHICH COULD IMPACT THE COMPANY AND THE STATEMENTS CONTAINED HEREIN,
REFERENCE SHOULD BE MADE TO THE COMPANY'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING ANNUAL REPORTS ON FORM 10-KSB, QUARTERLY REPORTS
ON FORM 10-QSB AND CURRENT REPORTS ON FORM 8-K. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE OR SUPPLEMENT FORWARD-LOOKING STATEMENTS THAT BECOME UNTRUE
BECAUSE OF SUBSEQUENT EVENTS.
TABLES FOLLOW
INCENTRA SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
===================================================================================
*DECEMBER 31, 2004 DECEMBER 31, 2003 DECEMBER 31, 2004 DECEMBER 31, 2003
------------------ ----------------- ----------------- -----------------
all amounts in (000's)
Revenues 4,599 2,088 13,285 9,811
------------- ------------- ------------- -------------
Cost of revenue 2,196 1,118 7,300 6,952
------------- ------------- ------------- -------------
Gross margin 2,403 969 5,984 2,859
------------- ------------- ------------- -------------
Total Operating Expenses 4,482 2,562 13,696 11,345
------------- ------------- ------------- -------------
Loss from operations (2,079) (1,593) (7,711) (8,486)
------------- ------------- ------------- -------------
Net loss before income tax (2,663) (2,398) (10,038) (10,991)
------------- ------------- ------------- -------------
Net loss (3,063) (2,398) (10,438) (10,991)
------------- ------------- ------------- -------------
Net loss applicable to common
stockholders (3,717) (2,558) (11,778) (12,735)
============= ============= ============= =============
* certain adjustments and reclassifications were made in the fourth quarter 2004, due to the MSI acquisition
EBITDA RECONCILIATION
Net Loss (3,063) (2,398) (10,438) (10,991)
Income tax expense 400 -- 400 --
Non-cash interest 397 643 2,226 2,141
Cash interest 72 7 180 45
Depreciation 563 516 2,192 2,338
Amortization 785 237 1,782 929
------------------------------------------------------------------------------
EBITDA (846) (994) (3,658) (5,539)
==============================================================================
Merger costs -- -- 1,275 --
EBITDA, AS ADJUSTED (846) (994) (2,383) (5,539)
INCENTRA SOLUTIONS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
----------------------------------------------------------------------------------
THREE MONTHS ENDED YEAR ENDED
==================================================================================
DECEMBER 31, 2004 DECEMBER 31,2003 DECEMBER 31, 2004 DECEMBER 31, 2003
----------------- ---------------- ----------------- -----------------
all amounts in (000's)
Revenues 4,599 3,018 17,740 12,728
----------------- ---------------- ----------------- -----------------
Cost of revenue 2,196 1,424 8,531 7,955
----------------- ---------------- ----------------- -----------------
Gross margin 2,403 1,594 9,208 4,772
----------------- ---------------- ----------------- -----------------
Total Operating Expenses 4,482 4,292 18,542 18,114
----------------- ---------------- ----------------- -----------------
Income (Loss) from operations (2,079) (2,698) (9,334) (13,341)
----------------- ---------------- ----------------- -----------------
Net loss before income taxes (2,663) (5,661) (12,631) (19,131)
----------------- ---------------- ----------------- -----------------
Net loss (3,063) (5,661) (13,031) (19,131)
----------------- ---------------- ----------------- -----------------
Net loss applicable to common
stockholders $ (3,717) $ (5,820) $ (16,987) $ (20,875)
================= ================ ================= =================
EBITDA RECONCILIATION
Net loss (3,063) (5,661) (13,031) (19,131)
Income tax expense 400 -- 400 --
Non-cash interest 397 827 3,177 2,823
Cash interest 72 26 273 135
Depreciation 563 600 2,233 2,631
Amortization 785 831 3,244 3,301
----------------------------------------------------------------------------------
EBITDA (846) (3,377) (3,704) (10,240)
==================================================================================
Merger costs -- -- 1,425 --
EBITDA, AS ADJUSTED (846) (3,377) (2,279) (10,240)
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