FFI REPORTS 39% ANNUAL REVENUE INCREASE AND
181% ANNUAL EARNINGS INCREASE
INDIANAPOLIS, INDIANA -- November 21, 2006 - Fortune Industries, Inc. (AMEX:FFI)
announced today record revenue for the fourth quarter and annual fiscal year
ended August 31, 2006.
HIGHLIGHTS
Revenues for the three and twelve months ended August 31, 2006 were $47.8
million and $157.1 million, respectively as compared to $36.0 million and $113.1
million for the same periods of 2005, representing a 33% and 39% increase.
Diluted net income available to common shareholders for the three and twelve
months ended August 31, 2006 was $583,000 or $0.05 per share and $1,888,000 or
$0.16 per share, respectively, compared with net losses of ($2,774,000) or
($0.26) per share and ($2,317,000) or ($0.22) per share for the same period of
2005, representing a 121% and 181% increase. Excluding the release of an income
tax valuation allowance of $521,000, diluted net income available to common
shareholders was $62,000 or $0.01 per share and $1,367,000 or $0.12 per share,
representing a 102% and 159% increase.
"I am extremely pleased with our performance," stated John Fisbeck, CEO. "Four
out of five of our segments reported all-time record fiscal year revenues, and
all five segments outperformed prior year revenue and earnings results despite
an increase of interest expense of approximately $1.1 million. Organic revenue
growth increased approximately $35 million or 29%."
SEGMENT ANALYSIS
The Company now reports five reportable segments as a result of its growth.
Results by segment are as follows:
Wireless Infrastructure revenue increases were due mainly to increased demand
for products and services offered by our companies due to the cellular
communication industry's investment in expansion of their networks and increased
marketing of our services. Operating income improved as a result of revenue
growth and operating performance offset by geographic and branch expansion and
hiring and training of new employees.
Business Solutions revenue increases were due to the acquisition of Century II,
a PEO in Nashville, TN in April, 2005, as well as an increase in customer base
and favorable claims experience in health and workers compensation insurance
programs. Operating income increased as a result of revenue growth offset by an
increase in administrative and sales personnel.
Transportation Infrastructure revenue increases were due to improved market
conditions due to favorable legislation within the highway construction industry
and increased productivity due to favorable weather conditions. Operating income
increased as a result of revenue growth offset somewhat by unfavorable job
closings due to increased costs in one operating division.
Ultraviolet Technologies revenue increases were due to new product offerings and
expanded revenue streams in the Asian marketplace. Operating income increased as
a result of revenue growth and a decrease in sales personnel offset by office
expansion.
Electronics Integration revenue increases were due to the acquisition of AVR, an
installer of residential and commercial electronics in November 2005. Operating
income increased as a
result of revenue increases and the implementation of a more stringent credit
policy and improved inventory management system.
Holding Company expenses increased as a result of increased borrowings due
mainly to partial bank financing of the CSM acquisition and the Company's
issuance of a $7.5 million long-term convertible note, increased accounting
personnel and third party legal and accounting fees.
BUSINESS OUTLOOK
"I believe we are in the best positioning that we have been since the Company
was created in 2000," stated Fisbeck. "We have created substantial value through
various acquisitions and start-up operations in each operating division. We have
financed much of this growth through borrowings under our credit facility, which
we renewed at the end of the fiscal year at approximately 1% reduction in basis
points. I expect that our performance in fiscal 2007 will be focused on earnings
growth, improvements to our leverage ratio, and integration of operations under
each reportable segment through software conversion and operating environments.
Additionally, capital resources will be focused on those areas that we believe
provide us with the greatest prospects for profitable growth. We continue to
believe that our diversification in various businesses will improve our
long-term earnings performance."
"Management's strategy has been and continues to be to start-up or acquire
businesses that present consistent long-term growth opportunities. To that
extend, the five acquisitions completed between 2002 and 2006 in our Wireless
Infrastructure segment have allowed us to shift our sales efforts from
sub-contractor niche markets to nationwide turn-key wireless infrastructure
services. Consistent with our revenue growth, we believe our investments related
to our hiring, training, geographic expansion and equipment expenditures over
the past few years will enable us to increase market share with existing
customers and procure new customers and contracts. We believe there are great
opportunities for continued growth in the wireless industry due to the build-out
and upgrades of the wireless networks in the United States."
"Within our Business Solutions segment we continue to expand service offerings
in addition to our payroll services, including human resource outsourcing,
employment training and testing. We expect to allocate additional capital
resources to this segment over the next twelve to twenty four months to fund
growth efforts."
"Our Transportation Infrastructure segment has benefited from funding of federal
and state highway safety projects, market conditions and commercial steel
erection. We believe financing for these projects will remain strong for the
next 36 months; however fluctuations in these factors, which are largely outside
of our control, may affect our fiscal 2007 results."
"We expect continued growth in our Ultraviolet Technologies segment operations
as a result of the significant investment in research and development of new
products. We will continue to push sales efforts in the Asian markets, largely
due to our investment and expansion of our Singapore and new China offices."
"Our Electronics Integration segment has benefited from expanded vendor
relationships, improved economic conditions, and investments in management. We
expect to realize the value of our start-up operations in this segment over the
next twelve months. Our future financial success will largely be dependent on
product availability from principal suppliers, industry consolidation, economic
conditions, and the ability to attract and retain qualified management and other
personnel."
ABOUT FORTUNE INDUSTRIES, INC.
Fortune Industries, Inc. operates as a technology-based service company in the
United States. It provides technology solutions to businesses in five segments:
Wireless Infrastructure, Business Solutions, Transportation Infrastructure,
Ultraviolet Technologies and Electronics Integration. The Wireless
Infrastructure segment provides turnkey solutions directly to wireless carriers
in 20 states and provides other specialty infrastructure services. The Human
Resource Solutions segment provides professional employment organization (PEO)
services to small and medium sized businesses with up to 1,000 employees in over
44 states including human resource consulting & management, employee assessment,
training, and benefits administration. The Transportation Infrastructure segment
provides the installation of highway safety products and commercial structural
steel. The Ultraviolet Ink segment provides worldwide state--of-the-art UV ink
technology solutions. The Electronics Integration segment provides sales and
installation of commercial electronics.
Fortune Industries is based in Indianapolis, Indiana and is publicly traded on
the American Stock Exchange under the symbol FFI. Additional information about
Fortune Industries, Inc. can be found at www.ffi.net.
This press release and other statements by Fortune Industries, Inc. may contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are typically
identified by words or phrases such as "believe", "expect", "estimate",
"potential", or future/conditional verbs such as "will", "should", and "could"
or the negative of those terms or other variations of them or by comparable
terminology. The absence of such terms, however, does not mean that the
statement is not forward-looking. Any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties that could
cause actual results to differ materially. Factors that might cause or
contribute to such differences, include, but are not limited to, the risks and
uncertainties that are discussed under the heading "Management's Discussion and
Analysis of Results of Operations and Financial Condition." The Company
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Readers should carefully review the risk factors disclosed within Form 10-KSB
for the year ended August 31, 2005 and other documents filed by the Company with
the Securities and Exchange Commission.
CONSOLIDATED FINANCIAL INFORMATION
Financial highlights are as follows:
Year Ended
August 31,
---------------------------------
2006 2005
-------------- --------------
(Dollars in thousands, except
per share data)
Consolidated
Total Revenues $ 157,113 $ 113,096
Operating Income (Loss) 3,650 (1,005)
Net Income (Loss) 2,198 (2,317)
--------- ---------
Net Income (Loss) Available to Common $ 1,888 $ (2,317)
Shareholders ========= =========
Net Income (Loss) per Share:
Basic $ 0.18 $ (0.22)
========= =========
Diluted $ 0.16 $ (0.22)
========= =========
Segment Data
Segment Revenues
Wireless Infrastructure $ 27,859 $ 14,911
Business Solutions 44,543 28,458
Transportation Infrastructure 57,931 46,549
Ultraviolet Technologies 12,437 10,771
Electronics Integrations 14,343 12,407
--------- ---------
Total Revenues $ $ 157,113 $ 113,096
========= =========
Operating Income (Loss)
Wireless Infrastructure $ (124) $ (603)
Business Solutions 3,423 2,369
Transportation Infrastructure 2,970 1,008
Ultraviolet Technologies 667 (219)
Electronics Integrations (91) (1,095)
Holding Company (3,195) (2,465)
--------- ---------
Total Operating Income (Loss) $ 3,650 $ (1,005)
========= =========
--------- ---------
Net Income (Loss) Available to Common $ 1,888 $ (2,317)
Shareholders ========= =========
CONTACT
Fortune Industries, Inc.
Amy Gallo, Chief Financial Officer
(317) 532-1374