Workstream Inc. Announces Fourth Quarter and Fiscal 2005 Year-End Results
Ottawa, ON, July 20, 2005 - Workstream Inc. (NASDAQ - WSTM), a provider of
On-Demand Enterprise Workforce Management software, today announced its fourth
quarter and fiscal 2005 year-end results for the period ended May 31, 2005. All
figures are in U.S. dollars.
Total revenue for the fourth quarter was $7,076,899 compared to $4,557,522 in
the prior year's period, an increase of $2,519,377 or 55%. EBITDA for the fourth
quarter of fiscal 2005 was $(3,757,200), or $(0.08) per share, compared to an
EBITDA of $158,683, or $0.01 per share in the previous year. The Company's net
loss for the quarter ended May 31, 2005 was $6,246,924 or $(0.13) per share
compared to a net loss of $908,148 or $(0.03) in last year's comparable quarter.
The results of operations for the fourth quarter were significantly impacted by
unusually large professional fees, Sarbanes Oxley implementation and offshore
development resources, inefficiencies related to some large fixed-fee contracts
acquired during the year and an increase in marketing expenditures and
compensation.
Total revenue for the fiscal year 2005 was $26,818,587 compared to fiscal year
2004 revenue of $17,166,880, an increase of 56%. The Company had EBITDA of
$(7,391,417) or $(0.17) per share compared to EBITDA of $965,912 or $0.04 per
share for fiscal year 2004. The net loss for fiscal year 2005 was $15,158,975 or
$(0.35) per share compared to a net loss of $5,536,899 or $(0.22) per share for
fiscal year 2004. The increase in the net loss is primarily attributable to
several acquisitions made since the beginning of last year. These resulted in
significant increases in intangible asset amortization, the operational
absorption of entities which all had pre-acquisition losses and the organization
of the Company's development resources around the TalentCenter vision.
Commenting on the results, Michael Mullarkey, Chairman and Chief Executive
Officer said, "Our team successfully achieved three major milestones in 2005. We
completed the build out of our TalentCenter Product Suite, providing an
end-to-end Enterprise Workforce Management software solution. We also increased
our customer base and added covered employee lives.
Lastly, we rounded out our senior management team for our next phase of growth."
Mullarkey went on to add that, "Our investments earlier this year are starting
to show results. We have addressed many of the challenges that we faced in the
last few quarters that forced us to spend considerable time and money.
Workstream now enters fiscal year 2006 with a broad product offering, strong
customer base and the financial and management resources to achieve our
long-term goals. Workstream will continue to invest in innovative products for
our customers, increase our focus on our Workstream TalentCenter product suite
and efficiently manage our cash resources."
2005 Fiscal Year Highlights:
The following highlights were announced or occurred since Workstream Inc.'s last
annual earnings statement:
Financial Milestones
o 56% year over year revenue growth over fiscal 2004.
o 55% quarter over quarter revenue growth over prior year.
o Raised $25 million with institutional and other accredited
investors.
Company Acquisitions
o During the first quarter, Workstream acquired Bravanta, Inc. a
provider of Enterprise Incentive Management software solutions.
o During the second quarter the Company acquired the assets of HRSoft,
LLC, a provider of Workforce Planning software.
o During the third quarter Workstream acquired the assets of ProAct
Technologies, a provider of Enterprise Benefits software.
Customer Activity
o New customers announced include Reader's Digest, Mervyns, Children's
Healthcare, Halton Healthcare, MyFamily.com and Mercedes-Benz.
o Companies who renewed or upgraded their service that were previously
announced include Cendant, Dupont, Tektronix and Nordstrom.
Management will host a conference call today at 9:00 a.m. EST. The dial in
number to participate in the call is 800-387-6216 for North American
participants and 800-7664-7664 for those outside of North America. The instant
replay number for the call will be available until July 27, 2005 by calling
800-408-3053 access code 3158691.
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 before interest, taxes,
depreciation amortization and non-recurring goodwill impairment. Included,
following the financial statements, is a reconciliation of net loss to EBITDA
loss and EBITDA per share that should be read in conjunction with the financial
statements.
About Workstream Inc.
Workstream provides On-Demand Enterprise Workforce 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, Benefits,
Performance, Compensation, Rewards 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 nine offices across North America, Workstream services over 400
customers including Chevron, Eli Lilly Canada, The Gap, Home Depot, Kaiser
Permanente, Motorola, Nordstrom, Samsung, Sony Music Canada, VISA, and Wells
Fargo. For more information visit www.workstreaminc.com or call toll free
1-866-470-WORK
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.
For more information contact:
Investor Relations:
Tammie Brown
Workstream Inc.
Tel: 877-327-8483 ext. 263
Email: tammie.brown@workstreaminc.com
WORKSTREAM INC.
Statement of Operations and Net Loss per Share
QUARTER ENDING YEAR ENDING
---------------------------- ----------------------------
MAY 31, 2005 MAY 31, 2004 MAY 31, 2005 MAY 31, 2004
REVENUE $ 7,076,899 $ 4,557,522 $ 26,818,587 $ 17,166,880
Cost of Revenues 1,778,127 397,743 7,013,980 1,586,989
------------ ------------ ------------ ------------
GROSS PROFIT 5,298,772 4,159,779 19,804,607 15,579,891
------------ ------------ ------------ ------------
Selling and Marketing 2,033,455 1,211,603 7,210,996 4,362,292
General and Administrative 6,100,587 2,724,023 17,837,777 9,798,440
Research and Development 921,930 65,470 2,147,251 453,247
Amortization and Depreciation 2,477,754 1,427,277 8,534,715 5,601,910
------------ ------------ ------------ ------------
11,533,726 5,428,373 35,730,739 20,215,889
------------ ------------ ------------ ------------
OPERATING LOSS (6,234,954) (1,268,594) (15,926,132) (4,635,998)
------------ ------------ ------------ ------------
Interest and Other Income 63,680 5,165 189,851 11,959
Interest and Other Expenses (57,880) (46,910) (234,451) (2,647,265)
------------ ------------ ------------ ------------
LOSS BEFORE INCOME TAXES (6,229,154) (1,310,339) (15,970,732) (7,271,304)
------------ ------------ ------------ ------------
Recovery of deferred income taxes -- 470,697 847,920 1,789,235
Current income tax expense (17,770) (68,506) (36,163) (54,830)
------------ ------------ ------------ ------------
NET LOSS $ (6,246,924) $ (908,148) $(15,158,975) $ (5,536,899)
============ ============ ============ ============
Weighted Average Shares Outstanding 48,824,747 29,038,713 43,461,514 25,036,056
NET LOSS PER SHARE $ (0.13) $ (0.03) $ (0.35) $ (0.22)
============ ============ ============ ============
WORKSTREAM INC.
Balance Sheet
May 2005 May 2004
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 11,811,611 $ 4,338,466
Restricted cash 3,063,368 2,760,259
Short-term investments 312,322 301,194
Accounts receivable, net of allowance
for doubtful accounts 3,388,501 1,379,610
Prepaid expenses and other assets 669,692 753,379
-------------- --------------
Total Current Assets 19,245,494 9,532,908
-------------- --------------
CAPITAL ASSETS 1,224,332 1,429,143
OTHER ASSETS 89,570 79,073
ACQUIRED INTANGIBLE ASSETS 12,814,525 9,242,617
GOODWILL 42,283,442 28,598,706
-------------- --------------
Total Assets $ 75,657,363 $ 48,882,447
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 5,094,294 $ 5,542,725
Line of credit 2,326,612 1,972,218
Current portion of long-term obligations 1,738,966 303,240
Deferred revenue 3,366,120 2,065,604
-------------- --------------
Total Current Liabilities 12,525,992 9,883,787
-------------- --------------
DEFERRED INCOME TAX LIABILITY 0 839,265
LONG-TERM OBLIGATIONS 192,258 420,213
-------------- --------------
Total Liabilities 12,718,250 11,143,265
-------------- --------------
SHAREHOLDERS' EQUITY
CAPITAL STOCK
Issued and outstanding, no par value
common shares 109,019,358 72,705,603
Additional paid-in capital 7,506,376 3,605,224
Accumulated other comprehensive loss (928,303) (1,072,302)
Accumulated deficit (52,658,318) (37,499,343)
-------------- --------------
Total Shareholders' Equity 62,939,113 37,739,182
-------------- --------------
Total Liabilities and Shareholders' Equity $ 75,657,363 $ 48,882,447
============== ==============
WORKSTREAM INC.
Statement of Cash Flows
YEAR ENDING
-----------------------------
MAY 31, 2005 MAY 31, 2004
Net Loss $(15,158,975) $ (5,536,899)
Amortization and depreciation 8,494,615 5,572,366
Non-cash interest on debt 53,746 2,318,444
Recovery of deferred income taxes (847,920) (1,758,049)
Other -- 642,130
Changes in working capital (1,481,524) (1,164,772)
------------ ------------
Operating Activities (8,940,058) 73,220
------------ ------------
Cash paid in business acquisitions (8,838,592) (416,385)
Capital expenditures (339,499) (228,408)
Other (92,452) (1,722,135)
------------ ------------
Investing Activities (9,270,543) (2,366,928)
------------ ------------
Proceeds from issuance of stock, net 24,089,938 7,577,770
Proceeds from exercise of options and warrants 2,383,703 39,997
Line of credit, net activity 186,289 1,488,180
Debt / capital lease repayments (1,050,292) (2,572,023)
------------ ------------
Financing Activities 25,609,638 6,533,924
------------ ------------
Effect of exchange rate changes 74,108 (156,923)
Increase (Decrease) in cash 7,473,145 4,083,293
Cash at beginning of year 4,338,466 255,173
------------ ------------
Cash at End of Year $ 11,811,611 $ 4,338,466
============ ============
WORKSTREAM INC.
Reconciliation of Earnings or Loss before Interest, Taxes, Depreciation and
Amortization (EBITDA)
QUARTER ENDING YEAR ENDING
---------------------------- ----------------------------
MAY 31, 2005 MAY 31, 2004 MAY 31, 2005 MAY 31, 2004
Net Loss $ (6,246,924) $ (908,148) $(15,158,975) $ (5,536,899)
Recovery of Deferred Income Taxes -- (470,697) (847,920) (1,789,235)
Other Income Tax Expense 17,770 68,506 36,163 54,830
Interest and Other Expense 57,880 46,910 234,451 2,647,265
Interest and Other Income (63,680) (5,165) (189,851) (11,959)
Amortization and Depreciation 2,477,754 1,427,277 8,534,715 5,601,910
------------ ------------ ------------ ------------
EBITDA (Loss) $ (3,757,200) $ 158,683 $ (7,391,417) $ 965,912
============ ============ ============ ============
Weighted Average Number of Common Shares 48,824,747 29,038,713 43,461,514 25,036,056
============ ============ ============ ============
EBITDA (Loss) per Share $ (0.08) $ 0.01 $ (0.17) $ 0.04
============ ============ ============ ============