Exhibit 99.1
TECHTEAM GLOBAL REPORTS RECORD EARNINGS OF $.49 PER SHARE FOR 2004;
$.16 PER SHARE FOR FOURTH QUARTER 2004
* Revenue growth of 49.1% to $128.0 million for 2004; 51.8% for Q4
* Gross profit increase of 71.0% to $30.6 million for 2004; 78.8% for Q4
* Operating income of $6.55 million for 2004; $1.44 million for Q4
* Cash balance of $40.4 million, or $4.61 per common share outstanding,
at December 31, 2004
SOUTHFIELD, Mich., Feb. 10 /PRNewswire-FirstCall/ -- TechTeam Global, Inc.,
(Nasdaq: TEAM), a global provider of information technology and business process
outsourcing support services, today reported net income of $4.73 million, or
$.49 per diluted common share -- annual income and earnings per share records
for the Company -- for the twelve months ended December 31, 2004. The Company
also reported net income of $1.51 million, or $.16 per diluted common share, for
the three months ended December 31, 2004. For the twelve months ended December
31, 2003, TechTeam reported a net loss of $1.05 million, or $(.10) per diluted
common share, while the Company reported net income of $750,000, or $.07 per
diluted common share, for the three months ended December 31, 2003. (In the
quarter ended June 30, 2003, the Company took non-cash, after-tax charges to
earnings totaling $871,000, principally related to the write-down of the value
of its leasing inventories.)
Excluding the net income contributed from Digital Support Corporation (DSC)
and TechTeam A.N.E. (A.N.E.), wholly-owned subsidiaries of the Company acquired
on December 31, 2003 and May 13, 2004, respectively, net income was $3.04
million, or $.31 per diluted common share, for the twelve months ended December
31, 2004. Excluding DSC and A.N.E., net income was $1.03 million, or $.11 per
diluted common share, for the three months ended December 31, 2004.
Total revenue from continuing operations grew 49.1% to $128.0 million for
the twelve months ended December 31, 2004, an increase from $85.8 million in
2003. Total revenue from continuing operations grew 51.8% to $33.3 million for
the three months ended December 31, 2004, an increase from $21.9 million for the
comparable period in 2003. Excluding the revenue contributed by DSC and A.N.E.,
revenue from continuing operations grew 11.5% from 2003 to $95.7 million for the
twelve months ended December 31, 2004 and grew 13.1% to $24.8 million for the
three months ended December 31, 2004 from the comparable period in 2003.
Effective with the fourth quarter of 2004 reporting period, TechTeam began
accounting for the Company's leasing operations business unit (TechTeam Capital
Group, LLC, or "TTCG") as a "discontinued operation," consistent with the
provisions of SFAS 144, Accounting for the Impairment or Disposal of Long- Lived
Assets, as a direct consequence of the diminishing impact leasing operations has
had on the Company's financial results for the past several quarters.
Accordingly, the Company has reclassified the financial statements of the
Company to present TTCG as a discontinued operation for the current and all
historical periods reported.
Gross profit improved 71.0% to $30.6 million for the twelve months ended
December 31, 2004, from $17.9 million in 2003. Gross profit grew 78.8% to $7.55
million for the three months ended December 31, 2004, an increase from $4.22
million for the comparable period in 2003. Excluding the gross profit
contributed by DSC and A.N.E., gross profit grew 32.7% from 2003 to $23.7
million for the twelve months ended December 31, 2004 and grew 35.3% to $5.72
million for the three months ended December 31, 2004 from the comparable period
in 2003.
The Company's gross margin (gross profit expressed as a percentage of
revenue) performance improved to 23.9% for the twelve months ended December 31,
2004 from 20.8% in 2003. Gross margin improved to 22.7% for the three months
ended December 31, 2004 from 19.2% for the comparable period in 2003. Excluding
the results of DSC and A.N.E., gross margin was 24.8% for the twelve months
ended December 31, 2004 and was 23.0% for the three months ended December 31,
2004.
Selling, general, and administrative (SG&A) expense was $24.0 million for
the twelve months ended December 31, 2004, or 18.8% of the Company's total
revenue of $128.0 million. SG&A expense was $6.11 million for the three months
ended December 31, 2004, or 18.3% of the Company's total revenue of $33.3
million. Excluding DSC and A.N.E., SG&A expense was $19.9 million for the twelve
months ended December 31, 2004, compared with $18.7 million in 2003, and $4.98
million for the three months ended December 31, 2004, compared with $4.06
million for the comparable period in 2003.
The Company's financial results for the three months ended December 31, 2004
included several unusual expenses and credits. These unusual items included a
pre-tax charge to income of $485,000 related to the impairment of a certain
software asset; and, income related to the expected recovery of certain taxes
paid and the reduction of certain tax liabilities due to the utilization of
various tax strategies, totaling $645,000.
Operating income for the twelve months ended December 31, 2004 was $6.55
million, compared to an operating loss of $811,000 for 2003. Operating income
improved 804% to $1.44 million for the three months ended December 31, 2004,
from $159,000 for the comparable period in 2003.
Commenting on the Company's financial results, William F. Coyro, Jr.,
TechTeam Global's President and Chief Executive Officer, stated, "TechTeam
delivered top-line revenue growth of 49% in 2004 while posting record income of
$4.73 million and earnings of $.49 per share, including earnings of $.32 per
share in the second half of the year. In addition to integrating the acquisition
of two important companies in 2004 -- Digital Support Corporation and Advanced
Network Engineering -- we established new help desk operations in Bucharest,
Romania and grew our organic revenue by 11.5%."
Coyro added, "TechTeam began 2005 poised to continue executing on our
aggressive global strategy. On January 3rd, we completed our acquisition of
Sytel, Inc., of Bethesda, Maryland -- our largest acquisition ever -- which will
further expand our professional services and systems integration product
offerings. TechTeam also began 2005 with a solid balance sheet, cash reserves of
$40 million, and a very talented employee base. TechTeam remains focused on
delivering the best overall value proposition in our industry -- the best
combination of high quality, low cost, flexibility, and customer satisfaction."
Other significant components of TechTeam Global's fourth quarter and full-
year 2004 performance include the following:
* Revenue from our European operations increased 47.8% to $41.2 million for
the twelve months ended December 31, 2004 from $27.9 million in 2003. Revenue
increased 45.0% to $12.2 million for the three months ended December 31, 2004
from $8.42 million for the comparable period in 2003.
* Net cash provided by operating activities was $10.0 million for the twelve
months ended December 31, 2004, versus $8.31 million in 2003. Free cash flow
(net cash provided by operating activities less capital expenditures) was $7.57
million for the twelve months ended December 31, 2004, versus $3.96 million in
2003, an increase of 91.2%. The preceding results include the contributions of
TTCG, which has been classified as a discontinued operation.
* For the twelve months ended December 31, 2004, earnings before interest,
taxes, depreciation, and amortization expense (EBITDA) from continuing
operations was $11.3 million, compared with EBITDA of $4.73 million for 2003, an
increase of 139%. For the three months ended December 31, 2004, EBITDA from
continuing operations was $3.23 million, compared with EBITDA from continuing
operations of $1.85 million for the comparable period in 2003, an increase of
74.3%.
Excluding the results of DSC and A.N.E., EBITDA from continuing operations
was $7.91 million for the twelve months ended December 31, 2004, an increase of
67.2% from 2003. Excluding the results of DSC and A.N.E., EBITDA from continuing
operations was $2.39 million for the three months ended December 31, 2004, an
increase of 29.3% from the comparable period in 2003.
The investment community considers EBITDA an important "non-GAAP" measure of
the Company's financial performance. EBITDA presents information on earnings
that may be more comparable to companies with different finance structures,
capital investments, or capitalization and depreciation policies. The most
closely related GAAP measure is operating income. Some financial analysts also
use EBITDA to assist in the determination of a company's possible market
valuation. (For additional information regarding the determination of the EBITDA
results, please see the attached financial tables.)
* Total cash and cash equivalents were $40.4 million as of December 31,
2004. This represents $4.61 in cash and cash equivalents per common share
outstanding as of the end of 2004. This compares to total cash and cash
equivalents of $35.2 million and $3.99 per common share as of December 31, 2003.
* Total shareholders' equity increased to $66.7 million as of December 31,
2004 from $60.8 million at December 31, 2003, principally due to an increase of
$4.73 million in the Company's retained earnings. The Company's net book value
increased from $6.89 per common share outstanding at December 31, 2003 to $7.60
per common share outstanding at December 31, 2004.
* For the twelve months ended December 31, 2004, the basic weighted average
number of common shares outstanding was 8,660,557 and the diluted weighted
number of common shares and common share equivalents outstanding was 9,593,836.
For the three months ended December 31, 2004, the basic weighted average number
of common shares outstanding was 8,721,246 and the diluted weighted number of
common shares and common share equivalents outstanding was 9,654,680. The number
of common shares outstanding as of December 31, 2004 was 8,767,037.
TechTeam Global, Inc. will also host an investor teleconference to discuss
its fourth quarter 2004 financial results at 10:00 a.m. EST, today, Thursday,
February 10, 2005.
To access a simultaneous Webcast of the teleconference, go to the TechTeam
Global web site at http://www.techteam.com/investors and click on the Webcast
icon. From this site, you can download the necessary software and listen to the
teleconference. TechTeam encourages you to review the site before the
teleconference to ensure that your computer is configured properly.
A taped replay of the call will be available beginning at approximately 1:00
p.m. EST, Thursday, February 10, 2005. This toll-free replay will be available
until 1:00 p.m. EST, Thursday, February 24, 2005. To listen to the
teleconference replay, call 800-633-8284. (Outside the United States, call
+1-402-977-9140.) When prompted, enter the TechTeam reservation number:
21230800.
TechTeam anticipates announcing its subsequent quarterly financial results
for 2005 on April 28, July 28, and October 27. However, these dates are subject
to change. Consult the Company's web site for the most current information.
Future earnings announcements will be made at approximately 4:05 p.m. ET with
investor teleconferences to follow at 4:30 p.m. ET.
TechTeam Global, Inc. is a global provider of information technology and
business process outsourcing services. The Company's ability to integrate
computer services into a flexible, total single point of contact solution is a
key element of its success. Partnerships with some of the world's "best-in-
class" corporations provide TechTeam with unparalleled experience and expertise
in providing the following IT support solutions: help desk/call center services,
technical staffing, professional services/systems integration, and training
programs. For information about TechTeam Global, Inc. and its outstanding
services call 800-522-4451.
Safe Harbor Statement
The statements contained in this press release that are not purely
historical, including statements regarding the Company's expectations, hopes,
beliefs, intentions, or strategies regarding the future, are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements include statements regarding, among other things, the
growth of the Company's core business, revenue, and earnings performance going
forward, management of overhead expenses, productivity, and operating expenses.
Forward-looking statements may be identified by words including, but not limited
to, "anticipates," "believes," "intends," "estimates," "promises," "expects,"
"should," "conditioned upon," and similar expressions. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those projected in the forward- looking statements as a
result of various factors. Such factors include, but are not limited to, the
award or loss of significant client assignments, timing of contracts, recruiting
and new business solicitation efforts, the market's acceptance of and demand for
the Company's offerings, competition, unforeseen expenses, the costs and risks
associated with our expansion into Romania and in executing an offshore
strategy, the Company's exit from the leasing business, demands upon and
consumption of the Company's cash and cash equivalent resources or changes in
the Company's access to working capital, currency fluctuations, changes in the
quantity of the Company's common stock outstanding, regulatory changes and other
factors affecting the financial constraints on the Company's clients, economic
factors specific to the automotive industry, general economic conditions,
unforeseen disruptions in transportation, communications or other infrastructure
components, unforeseen or unplanned delays in the Company's ability to
consummate acquisitions, and the Company's ability to successfully integrate
acquisitions on a timely basis. All forward-looking statements included in this
press release are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward-looking
statement. Prospective investors should also review all aspects of the Company's
Reports on Forms 8-K, 10-Q, and 10-K filed with the United States Securities and
Exchange Commission, including Management's Discussion and Analysis, and the
risks described therein from time to time.
Financial Data
TechTeam Global, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except per share data)
Three Months Ended December 31, Year Ended December 31,
------------------------------------------ ------------------------------------------
2004 2003 % Change 2004 2003 % Change
------------ ------------ ------------ ------------ ------------ ------------
Revenue $ 33,316 $ 21,947 51.8% $ 127,988 $ 85,833 49.1%
Cost of revenue 25,281 17,724 42.6% 96,916 67,949 42.6%
Asset
impairment loss 485 - 485 -
------------ ------------ ------------ ------------
Gross Profit 7,550 4,223 78.8% 30,587 17,884 71.0%
SG&A expense 6,112 4,064 50.4% 24,040 18,695 28.6%
------------ ------------ ------------ ------------
Operating Income
(Loss) 1,438 159 804% 6,547 (811)
Net interest
income 216 250 (13.6)% 719 1,139 (36.9)%
Foreign currency
transaction gain
(loss) 176 470 (62.6)% (91) 920
------------ ------------ ------------ ------------
Income from
Continuing
Operations Before
Income Taxes 1,830 879 108% 7,175 1,248 475%
Income tax
provision 385 398 (3.3)% 2,547 1,438 77.1%
------------ ------------ ------------ ------------
Income (Loss) from
Continuing
Operations 1,445 481 200% 4,628 (190)
Income (loss)
from discontinued
operation,
net of tax 61 269 (77.3)% 97 (856)
------------ ------------ ------------ ------------
Net Income (Loss) $ 1,506 $ 750 101% $ 4,725 $ (1,046)
============ ============ ============ ============
Diluted Earnings
(Loss) per
Common Share
Continuing
operations $ 0.15 $ 0.05 $ 0.48 $ (0.02)
============ ============ ============ ============
Discontinued
operation $ 0.01 $ 0.03 $ 0.01 $ (0.09)
============ ============ ============ ============
Total $ 0.16 $ 0.07 $ 0.49 $ (0.10)
============ ============ ============ ============
Diluted weighted
average common
shares and common
share
equivalents 9,655 9,486 9,594 10,066
Condensed Consolidated Statements of Operations (unaudited)
(In thousands)
Three Months Ended December 31, Year Ended December 31,
------------------------------------------ ------------------------------------------
2004 2003 % Change 2004 2003 % Change
------------ ------------ ------------ ------------ ------------ ------------
EBITDA from
Continuing
Operations(1) $ 3,228 $ 1,852 74.3% $ 11,303 $ 4,728 139%
============ ============ ============ ============
(1) Reconciliation
of Operating
Income (Loss)
to EBITDA from
Continuing
Operations
Operating income
(loss) $ 1,438 159 804% $ 6,547 $ (811)
Depreciation and
amortization 1,614 1,223 32.0% 4,847 4,619 4.9%
Foreign currency
transaction
gain (loss) 176 470 (62.6)% (91) 920
------------ ------------ ------------ ------------
EBITDA from Continuing
Operations $ 3,228 $ 1,852 74.3% $ 11,303 $ 4,728 139%
============ ============ ============ ============
Condensed Consolidated Statements of Financial Position (unaudited)
(In thousands)
December 31
--------------------------- %
2004 2003 Change
------------ ------------ ------------
Current Assets
Cash and cash equivalents $ 40,436 $ 35,195 14.9%
Accounts receivable,
less reserves 28,888 22,434 28.8%
Other current assets 2,288 2,250 1.7%
Current assets of discontinued
operation 21 721 (97.1)%
------------ ------------
Total Current Assets 71,633 60,600 18.2%
Net Property, Equipment, and
Purchased Software 8,382 9,904 (15.4)%
Other Assets
Intangibles, less accumulated
amortization 3,672 3,634 1.0%
Goodwill 4,768 2,099 127%
Other 440 996 (55.8)%
Noncurrent assets of
discontinued operation 13 467 (97.2)%
------------ ------------
Total Other Assets 8,893 7,196 23.6%
------------ ------------
Total Assets $ 88,908 $ 77,700 14.4%
============ ============
Current Liabilities
Accounts payable $ 3,707 $ 2,776 33.5%
Accrued payroll, related taxes,
and withholdings 7,485 4,692 59.5%
Current portion of notes payable 27 687 (96.1)%
Accrued liabilities 4,321 3,037 42.3%
Current liabilities of discontinued
operation 12 330 (96.4)%
------------ ------------
Total Current Liabilities 15,552 11,522 35.0%
Long-Term Liabilities
Long-term liabilities 414 397 4.3%
Deferred income tax liability 1,282 - -
Long-term debt of discontinued
operation - 11 (100)%
------------ ------------
Total Long-Term Liabilities 1,696 408 316%
Redeemable Convertible Preferred Stock 5,000 5,000 -
Shareholders' Equity
Common stock 88 88 -
Additional paid-in capital 59,437 59,932 (0.8)%
Unamortized deferred compensation (533) - -
Retained earnings 4,793 68 6949%
Accumulated other comprehensive
income 2,875 682 322%
------------ ------------
Total Shareholders' Equity 66,660 60,770 9.7%
------------ ------------
Total Liabilities and
Shareholders' Equity $ 88,908 $ 77,700 14.4%
============ ============
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Year Ended December 31,
---------------------------
2004 2003
------------ ------------
Operating Activities
Net Income (loss) $ 4,725 $ (1,046)
(Income) loss from discontinued operation (97) 856
Adjustments to reconcile income (loss)
to net cash provided by operating activities -
Depreciation and amortization 4,847 4,619
Other adjustments (634) (710)
Net operating cash flow from discontinued
operation 1,193 4,593
------------ ------------
Net cash provided by operating activities 10,034 8,312
------------ ------------
Investing Activities
Purchase of property, equipment, and software,
net (2,465) (4,353)
Cash paid for acquisitions, net of cash
acquired (1,036) (6,504)
Sale of marketable securities, net - 6,492
Other - 49
Net investing cash flow from discontinued
operation - 21
------------ ------------
Net cash used in investing activities (3,501) (4,295)
------------ ------------
Financing Activities
Proceeds from issuance of Company stock 1,387 544
Purchase of Company common stock (2,744) (12,545)
Payments on notes payable, net (885) -
Proceeds from issuance of preferred stock - 4,820
Net financing cash flow from discontinued
operation (219) (468)
------------ ------------
Net cash used in financing activities (2,461) (7,649)
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents 1,169 (608)
------------ ------------
Increase in cash and cash equivalents 5,241 (4,240)
Cash and Cash Equivalents at Beginning of Period 35,195 39,435
------------ ------------
Cash and Cash Equivalents at End of Period $ 40,436 $ 35,195
============ ============
SOURCE TechTeam Global, Inc.
-0- 02/10/2005
/CONTACT: William F. Coyro, Jr., President and Chief Executive Officer,
+1-248-357-2866, wcoyro@techteam.com , or David W. Morgan, Vice President,
Chief Financial Officer, and Treasurer, +1-248-357-2866,
dmorgan@techteam.com , both of TechTeam Global, Inc./
/Web site: http://www.techteam.com/