Exhibit 99.1
Contacts:
Stanley Wunderlich John Howlett
Consulting For Strategic Growth 1, Ltd. Chief Executive Officer
Public Relations Emtec, Inc.
Corporate Development Consultants Tel: 856-235-8787
Tel: 800-625-2236 Fax: 856-235-2932
Fax: 212-697-0910 Email:john_howlett@emtecinc.com
Email: cfsg@consultant.com Website: www.emtecinc.com
EARNINGS RELEASE
EMTEC, INC. REPORTS RESULTS FOR THIRD QUARTER
ENDED DECEMBER 31, 2003
Net Income Increased by 141.76% for the Quarter and by 201.71%
for the Nine Months, Compared to the Same Periods in 2002
MT. LAUREL, N.J., February 17, 2004 - Emtec, Inc. (OTCBB:ETEC), a
systems integrator providing technology solutions to enable customers to
effectively use and manage data to grow their business, announced today its
results for the third quarter ended December 31, 2003.
Net income for the three months ended December 31, 2003 rose by 141.76
percent to $320,326, compared to a net loss of $(767,026) for the comparable
period in 2002.
Net income for the nine months ended December 31, 2003, rose to
$539,269 compared to a net loss of $(530,200) for the same period in 2002 - an
increase of 201.71 percent. Management attributed both of these increases in net
income to the overall increase in installation services associated with computer
roll-out projects for the various state agencies in the State of New Jersey and
a school district in Georgia, as well as an increase in our manufacturers'
support services contract revenues to one customer.
John Howlett, CEO, Emtec, Inc., said, "Our rapidly growing net income
in 2003 was a result of our acquisitions in August 2002 of certain assets of
Acentra Technologies, Inc. and Turnkey Computer Systems, Inc., which brought us
substantial new groups of customers for our IT solutions, including a contract
with the State of New Jersey. Today, Emtec is building on that foundation. In
November 2003, we received Sun Microsystems' highest level of accreditation -
iForce Strategic Technology Integrator. In February 2004, Emtec was awarded a
backdrop contract (#CMS553A) from the New York State Office of General Services
to provide IT consulting and systems integration services to a variety of state
government entities. As a longtime provider of IT services to Fortune 1000
companies, we are becoming a solution of choice in the government and education
markets, and this is adding strongly to our bottom line."
Revenue Increases
For the three months ended December 31, 2003, total revenues for the IT
business, which includes services and consulting revenue and procurement
revenues, increased by 9.44 percent or $2.12 million, to $24.62 million,
compared to revenues of $22.49 million for the same period in 2002. Services and
consulting revenue increased by 25.11 percent, or $1.0 million, to $4.97
million. This increase was attributed to the overall increase in installation
services associated with computer roll-out projects for the various state
agencies in the State of New Jersey and a school district in Georgia, as well as
an increase in our manufacturers' support services contract revenues. The
increase in manufacturers support services contracts revenue is mainly
attributable to a third-year renewal of an annual maintenance contract to one
customer. Net revenue associated with this sale increased by approximately
$410,000 for the quarter ended December 31, 2003.
For the nine months ended December 31, 2003, total revenues for the IT
business increased by 18.61 percent or $12.36 million, to $78.82 million
compared to $66.46 million for the same nine months in 2002. The company
attributed this increase primarily to the acquisitions of Acentra Technologies,
Inc. and Turnkey Computer systems, Inc. in August 2002. Also attributed to these
acquisitions is the increase in services and consulting revenue, which rose by
20.64 percent, or $2.31 million, to $13.53 million for the nine-month period. An
18.19 percent rise in procurement revenues, to $65.29 million for the nine
months, is also attributed to these acquisitions.
Gross Profits
For the three months ended December 31, 2003, aggregate gross profit
for the IT business increased by 68.21 percent (or $1.56 million) to $3.84
million. This increase was attributed to a 25.11 percent increase in services
and consulting revenues. As a percentage of total IT revenues, overall gross
profit margin also increased to 15.59 percent of total IT revenues for the
quarter, compared to 10.14 percent for the same quarter a year ago. Gross profit
for product sales during the three months increased by 6.63 percent. Gross
profit for service and consulting increased by 325.17 percent, or $1.43 million,
to $1.87 million, compared with $440,986 for the same quarter in 2002.
For the nine months ended December 31, 2003, aggregate gross profit for
IT business increased by 26.28 percent, or $2.24 million, to $10.77 million. As
a percentage of total IT revenues, overall gross profit margin for the
nine-month period increased to 13.67 percent, up from 12.84 percent for the same
period in 2002. Gross profit for product sales decreased slightly by 0.12
percent from results for the same period a year ago. Gross profit for service
and consulting increased by 95.05 percent, or $2.25 million, to $4.62 million
for the nine months ended December 31, 2003. This increase was attributed to the
20.64 percent increase in services and consulting revenues.
SG&A Expenses
For the three-month period, sales, general, and administrative expenses
increased by 11.08 percent, or $334,068, to $3.35 million for the three months
ended December 31, 2003. For the nine-month period, SG&A
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expenses increased by 10.13 percent, or $914,085, to $9.93 million. These
increases are primarily a result of the new businesses of the company, mentioned
above. Without the acquisitions of Acentra Technologies, Inc. and Turnkey
Computer Systems, Inc., the SG&A expenses would have decreased by approximately
11.41 percent of $1.03 million, to $7.99 million for the nine months ended
December 31, 2003 compared with $9.02 million for the nine months ended December
31, 2002. This decrease is attributable to the elimination of non-productive
sales staff, reduction in sales commission compensation plans, and eliminated
duplication of non-essential administrative support services.
About Emtec
Emtec, Inc. established in 1981, provides high-end computer systems
and services to Fortune 1000 clients ranging in size from $50 million to $500
million in revenues. The Company specializes in evaluating and providing
solutions for data management including Enterprise Management, Managed Services
(monitoring/maintenance/helpdesk), and Data Management (storage and protection
of data). With the recent acquisitions of Intellispan (Help Desk), Acentra
(systems and services) and Turnkey Computer Systems (managed building services),
Emtec has broadened its engineering and services capabilities.
For additional information please contact Consulting For Strategic
Growth 1, Ltd, at 800-625-2236.
# # #
Certain statements in this document constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the actual results, performance or achievements
of Emtec, Inc. ("the Company"), or industry results, to be materially different
from any future results, performance, or achievements expressed or implied by
such forward-looking statements. The Company's future operating results are
dependent upon many factors, including but not limited to the Company's ability
to: (i) obtain sufficient capital or a strategic business arrangement to fund
its plan of operations when needed; (ii) build the management and human
resources and infrastructure necessary to support the growth of its business;
(iii) competitive factors and developments beyond the Company's control; and
(iv) other risk factors discussed in the Company's periodic filings with the
Securities and Exchange Commission which are available for review at www.sec.gov
under "Search for Company Filings." Consulting For Strategic Growth I, Ltd.
("CFSG") has a month-to-month relationship with Emtec, Inc. to provide
consulting, business advisory, investor relations, public relations and
corporate development services to the Company for fees to be determined. In
connection with these services, CFSG prepares press releases, corporate
profiles, and other publications on behalf of and regarding the Company.
Independent of CFSG's receipt of cash compensation from Emtec, CFSG may choose
to purchase the common stock of Emtec and thereafter liquidate those securities
at any time it deems appropriate to do so.
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EMTEC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
---------------------- -------------------
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Procurement services $19,648,683 $18,522,103 $65,286,512 $55,237,353
Service and consulting 4,969,881 3,972,432 13,533,973 11,218,523
Geothermal 47,900 45,353 140,873 127,705
----------- ----------- ----------- -----------
Total Revenues 24,666,464 22,539,888 78,961,358 66,583,581
----------- ----------- ----------- -----------
Cost of Revenues:
Procurement services 17,686,595 16,681,947 59,127,426 49,070,806
Service and consulting 3,094,958 3,531,446 8,917,374 8,851,590
Geothermal 61,167 18,154 91,249 53,783
----------- ----------- ----------- -----------
Total Cost of Revenues 20,842,720 20,231,547 68,136,049 57,976,179
----------- ----------- ----------- -----------
Gross Profit:
Procurement services 1,962,088 1,840,156 6,159,086 6,166,547
Service and consulting 1,874,923 440,986 4,616,599 2,366,933
Geothermal (13,267) 27,199 49,624 73,922
----------- ----------- ----------- -----------
Total Gross Profit 3,823,744 2,308,341 10,825,309 8,607,402
----------- ----------- ----------- -----------
Operating Expenses:
Selling, general and
administrative 3,350,077 3,016,008 9,934,891 9,020,806
Interest 75,333 59,359 247,885 106,926
----------- ----------- ----------- -----------
Total Operating Expenses 3,425,410 3,075,367 10,182,776 9,127,732
----------- ----------- ----------- -----------
Income (Loss) Before Income Tax
Expense 398,334 (767,026) 642,533 (520,330)
Income tax expense 78,008 -- 103,264 9,870
----------- ----------- ----------- -----------
Net Income (Loss) $ 320,326 $ (767,026) $ 539,269 $ (530,200)
=========== =========== =========== ===========
Net Income (Loss) Per Share Basic $ .04 $ (.11) $ .08 $ (.07)
Net Income (Loss) Per Share Diluted $ .04 $ (.11) $ .07 $ (.07)
Weighted Average Number Of
Shares Outstanding {Basic} 7,197,628 7,080,498 7,118,680 7,080,498
Weighted Average Number Of
Shares Outstanding {Diluted} 7,504,498 7,080,498 7,470,137 7,080,498
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