Exhibit 99.1
TechTeam Global Reports Record Earnings of $.18 Per Share
for First Quarter 2005
* Record revenue of $42.0 million, up 39.4% from first quarter 2004 (1Q04)
* Record gross profit of $10.7 million, up 49.6% from 1Q04
* Record operating income of $2.42 million, up 93.1% from 1Q04
* Record net income of $1.75 million, up 180% from 1Q04
SOUTHFIELD, Mich., April 28 /PRNewswire-FirstCall/ -- TechTeam Global, Inc.
(Nasdaq: TEAM), a global provider of information technology and business process
outsourcing support services, today reported net income of $1.75 million, or
$.18 per diluted common share -- quarterly net income and earnings per share
records for the Company -- for the three months ended March 31, 2005. For the
three months ended March 31, 2004, the Company reported net income of $624,000,
or $.07 per diluted common share, a year-over-year improvement of 180% in net
income. For the three months ended December 31, 2004, TechTeam reported net
income of $1.51 million, or $.16 per diluted common share, sequential growth of
16.2% in net income(1).
Excluding the net income contributed from Sytel, Inc. ("Sytel"), a wholly-
owned subsidiary of the Company acquired on January 3, 2005, net income was
$1.18 million, or $.12 per diluted common share, for the three months ended
March 31, 2005.
Total revenue grew 39.4% to $42.0 million for the three months ended March
31, 2005, an increase from $30.2 million for the same period in 2004. Total
revenue also grew sequentially 26.2% from the revenue of $33.3 million reported
for the three months ended December 31, 2004. Excluding the revenue contributed
by Sytel, total revenue grew 10.9% to $33.5 million for the three months ended
March 31, 2005, an increase from $30.2 million of revenue reported for the same
period in 2004 and sequential growth of 0.4% from the revenue of $33.3 million
reported for the three months ended December 31, 2004.
Gross profit improved 49.6% to $10.7 million for the three months ended
March 31, 2005, from $7.16 million for the same period in 2004. Gross profit
also grew sequentially 41.8% from the gross profit of $7.55 million reported for
the three months ended December 31, 2004(1). Excluding the gross profit
contributed by Sytel, gross profit grew 15.6% to $8.28 million for the three
months ended March 31, 2005, and grew sequentially 9.6% from the gross profit
reported for the three months ended December 31, 2004(1).
The Company's gross margin (gross profit expressed as a percentage of
revenue) performance improved to 25.5% for the three months ended March 31, 2005
from 23.7% for the same period in 2004. Gross margin also improved sequentially
from 22.7% reported for the three months ended December 31, 2004(1). Excluding
the results of Sytel, gross margin was 24.7% for the three months ended March
31, 2005.
Selling, general, and administrative (SG&A) expense was $8.29 million for
the three months ended March 31, 2005, or 19.7% of the Company's total revenue
of $42.0 million. SG&A expense was $5.91 million, or 19.6% of revenue, for the
same period in 2004. SG&A expense was $6.11 million, or 18.3% of revenue, for
the three months ended December 31, 2004. Excluding the results of Sytel, SG&A
expense was $6.79 million for the three months ended March 31, 2005, compared
with $5.91 million for the same period in 2004, and $6.11 million for the three
months ended December 31, 2004(1).
The Company's financial results for the three months ended March 31, 2005
included a non-recurring expense which increased the Company's total SG&A
expense. As required under the Stock Purchase Agreement by which TechTeam
acquired Digital Support Corporation ("DSC") on December 31, 2003, TechTeam paid
certain key employees of DSC a one-time cash bonus of $200,000 following DSC's
successful renewal of their professional services contract with the United
States Air National Guard (see the Company's press release dated April 7, 2005).
Absent this expense, TechTeam's pro-forma net income would have been
approximately $1.87 million, or $.19 per diluted common share. Additionally, the
Company recorded $55,000 in net income, or $.01 per diluted common share, from
TechTeam Capital Group, LLC, a discontinued operation, during the first quarter
of 2005.
Operating income grew 93.1% to $2.42 million for the three months ended
March 31, 2005, an increase from $1.25 million for the same period in 2004.
Operating income also grew sequentially 68.2% from operating income of $1.44
million reported for the three months ended December 31, 2004(1). Excluding the
operating income contributed by Sytel, operating income grew 18.5% to $1.48
million for the three months ended March 31, 2005, an increase from $1.25
million of operating income reported for the same period in 2004 and sequential
growth of 3.1% from operating income of $1.44 million reported for the three
months ended December 31, 2004(1).
Commenting on the Company's financial results, William F. Coyro, Jr.,
TechTeam Global's President and Chief Executive Officer, stated, "TechTeam
delivered its strongest quarterly financial results in its 26-year history
during the first quarter of 2005: Top-line revenue growth of 39%, revenue growth
- -- excluding Sytel -- of 11%, record operating income of $2.4 million, and
record net income of $1.8 million, or $.18 per share. We also completed the
largest acquisition in the history of the Company when we bought Sytel, Inc.
- -- a premier provider of systems integration and technology solutions to the
federal government -- on January 3. Our DSC subsidiary successfully renewed its
professional services contract with the U.S. Air National Guard, its largest
customer contract, representing a potential revenue stream to the Company of
approximately $55 million over four-and-one-half years. The addition of DSC and
Sytel has helped to position TechTeam as a strong presence in the government
technology services market.
Coyro added, "TechTeam completed 2004 and has now begun 2005 well-
positioned to continue executing upon our aggressive domestic and international
growth strategy -- to become a global provider of IT and business process
outsourcing support services with $500 million in revenue by 2009 through a
combination of sustained organic growth coupled with selective, strategic, and
accretive acquisitions. TechTeam also continues to enjoy its traditionally solid
balance sheet, net cash reserves of $24 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 first quarter 2005
performance include the following:
* Revenue from our European operations increased 44.5% to $12.6 million
for the three months ended March 31, 2005 from $8.75 million during the same
period in 2004.
* Net cash provided by operating activities was $5.66 million for the
three months ended March 31, 2005, versus $5.02 million for the same period in
2004, an increase of 12.6%. Net cash from operating activities also grew
sequentially 1,354% from the net cash provided by operating activities of
$389,000 reported for the three months ended December 31, 2004(1). Free cash
flow (net cash provided by operating activities less capital expenditures) was
$4.85 million for the three months ended March 31, 2005, versus $4.46 million
for the same period in 2004, an increase of 8.7%, and a sequential improvement
from the free cash flow of ($824,000) reported for the three months ended
December 31, 2004(1).
* For the three months ended March 31, 2005, earnings before interest,
taxes, depreciation, and amortization expense (EBITDA) from continuing
operations was $3.86 million, or 9.2% of revenue, compared with EBITDA from
continuing operations of $2.04 million for the same period in 2004, an increase
of 89.4%. EBITDA from continuing operations also grew sequentially 19.7% from
the EBITDA from continuing operations of $3.23 million reported for the three
months ended December 31, 2004(1).
Excluding the results of Sytel, EBITDA from continuing operations was $2.61
million for the three months ended March 31, 2005, an increase of 27.7% from
EBITDA from continuing operations of $2.04 million reported for the same period
in 2004, but a sequential decline of 19.3% from the EBITDA from continuing
operations of $3.23 million reported for the three months ended December 31,
2004(1).
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 $37.5 million as of March 31, 2005,
while long-term debt was $13.7 million as of the same date. This represents
$2.68 in net cash and cash equivalents per common share outstanding as of the
end of the first quarter of 2005.
* Total shareholders' equity increased to $68.3 million as of March 31,
2005 from $66.7 million at December 31, 2004, principally due to an increase of
$1.75 million in the Company's retained earnings. The Company's net book value
increased from $7.60 per common share outstanding at December 31, 2004 to $7.71
per common share outstanding at March 31, 2005(1).
* For the three months ended March 31, 2005, the basic weighted average
number of common shares outstanding was 8,785,445, the basic weighted average
number of common and preferred shares outstanding was 9,475,101, and the diluted
weighted average number of common shares and common share equivalents
outstanding was 9,795,373. The number of common shares issued and outstanding as
of March 31, 2005 was 8,847,929.
(1) In order to provide greater financial reporting transparency and more
meaningful sequential comparisons between TechTeam's financial results for the
three months ended December 31, 2004 and the three months ended March 31, 2005,
the financial community should be reminded that the Company's results of
operations for the three months ended December 31, 2004 included several non-
recurring expenses and credits. These unusual items included a pre-tax charge to
gross profit of $485,000 related to the impairment of a certain software asset;
pre-tax income recorded against selling, general, and administrative expense of
$377,000 related to the expected recovery of certain non-income- based taxes
paid in prior years and the reduction of related tax liabilities; the reduction
of federal income tax expense of $396,000 related to the recovery of certain
income taxes paid in prior years and the reduction of certain federal tax
liabilities due to the utilization of various tax strategies.
TechTeam Global, Inc. will host an investor teleconference to discuss its
first quarter 2005 financial results at 4:30 p.m. EDT, today, Thursday, April
28, 2005. To participate in the teleconference, including the question and
answer session that will follow the results announcement and discussion, please
call 212-346-6506.
To access a simultaneous Webcast of the teleconference, go to the TechTeam
Global website 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 6:30 p.m. EDT,
Thursday, April 28, 2005. This toll-free replay will be available until 6:30
p.m. EDT, Thursday, May 12, 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: 21243812.
TechTeam anticipates announcing its second and third quarter 2005 financial
results on July 28 and October 27, respectively. However, these dates are
subject to change. Consult the Company's website for the most current
information.
TechTeam Global, Inc. is a worldwide provider of information technology and
business process outsourcing support services to Fortune 1000 corporations,
multinational companies, product providers, small and mid-sized companies, and
government entities. TechTeam's ability to integrate computer services into a
flexible, total single-point-of-contact (SPOC) solution is a key element of its
success. Partnerships with some of the world's "best-in-class"
corporations provide TechTeam with unique expertise and experience in providing
information technology support solutions, including diversified IT outsourcing
services, government technology services, IT consulting and systems integration,
technical staffing, and learning services. For information about TechTeam
Global, Inc. and its outstanding services, call 1-800-522-4451 or visit
http://www.techteam.com . TechTeam's common stock is traded on the NASDAQ
National Market under the symbol "TEAM."
Headquartered in Southfield, Michigan, TechTeam also has locations in
Dearborn, Michigan; Davenport, Iowa; Chantilly and Herndon, Virginia;
Portsmouth, Rhode Island; Bethesda and Germantown, Maryland; Brussels and Gent,
Belgium; Uxbridge, United Kingdom; Cologne, Germany; Gothenburg, Sweden; and
Bucharest, Romania.
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, 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, the Company's ability to successfully
integrate acquisitions and to retain key employees. 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 March 31, %
2005 2004 Change
------------ ------------ ------------
Revenue $ 42,038 $ 30,164 39.4%
Cost of services 31,330 23,007 36.2%
Gross Profit 10,708 7,157 49.6%
SG&A expense 8,290 5,905 40.4%
Operating Income 2,418 1,252 93.1%
Net interest income 83 167
Foreign currency
transaction loss (24) (199)
Income from Continuing
Operations before Income Taxes 2,477 1,220
Income tax provision 782 592
Income from Continuing
Operations 1,695 628
Income (loss) from
discontinued operation,
net of tax 55 (4)
Net Income $ 1,750 $ 624 180%
Diluted Earnings per Common Share
Continuing operations $ 0.17 $ 0.07
Discontinued operation 0.01 0.00
Total $ 0.18 $ 0.07
Diluted weighted average
common shares and common
share equivalents 9,795 9,580
EBITDA from Continuing
Operations(1) $ 3,864 $ 2,040 89.4%
(1) Reconciliation of
Operating Income to
EBITDA from Continuing
Operations
Operating income $ 2,418 $ 1,252 93.1%
Depreciation and
amortization 1,470 987 48.9%
Foreign currency
transaction loss (24) (199) (87.9)%
EBITDA from Continuing
Operations $ 3,864 $ 2,040 89.4%
Condensed Consolidated Statements of Financial Position (unaudited)
(In thousands)
March 31, December 31,
2005 2004 % Change
------------ ------------ ------------
Current Assets
Cash and cash equivalents $ 37,456 $ 40,436 (7.4)%
Accounts receivable,
less reserves 42,198 28,888 46.1%
Other current assets 2,896 2,288 26.6%
Current assets of
discontinued operation 86 97 (11.3)%
Total Current Assets 82,636 71,709 15.2%
Net Property, Equipment,
and Purchased Software 8,108 8,382 (3.3)%
Other Assets
Goodwill 19,556 4,768 310%
Intangibles, less
accumulated amortization 11,063 3,672 201%
Other 383 441 (13.2)%
Net noncurrent assets
of discontinued operation - 15 (100)%
Total Other Assets 31,002 8,896 248%
Total Assets $ 121,746 $ 88,987 36.8%
Current Liabilities
Accounts payable $ 11,770 $ 3,707 218%
Accrued payroll,
related taxes,
and withholdings 9,805 7,485 31.0%
Current portion of
notes payable 15 27 (44.4)%
Accrued liabilities,
taxes, and other 8,222 4,397 87.0%
Current liabilities of
discontinued operation 7 12 (41.7)%
Total Current Liabilities 29,819 15,628 90.8%
Long-Term Liabilities
Long-term debt 13,712 - -
Deferred income
tax liability 4,345 1,285 238%
Other long-term liabilities 612 414 47.8%
Total long-term liabilities 18,669 1,699 999%
Redeemable Preferred Stock 5,000 5,000 -
Shareholders' Equity
Common stock 88 88 -
Additional paid-in capital 60,328 59,437 1.5%
Unamortized deferred
compensation (509) (533) (4.5)%
Retained earnings 6,543 4,793 36.5%
Accumulated other
comprehensive income 1,808 2,875 (37.1)%
Total shareholders' equity 68,258 66,660 2.4%
Total Liabilities and
Shareholders' Equity $ 121,746 $ 88,987 36.8%
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Three Months Ended March 31,
2005 2004
------------ ------------
Operating Activities
Net income $ 1,750 $ 624
(Income) loss from discontinued operation (55) 4
Other adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 1,470 987
Other adjustments 2,457 2,906
Net operating cash flow from
discontinued operation 35 502
Net cash provided by operating activities 5,657 5,023
Investing Activities
Purchase of property, equipment,
and software, net (809) (564)
Cash paid for acquisitions,
net of cash acquired (21,260) (201)
Net cash used in investing activities (22,069) (765)
Financing Activities
Proceeds from issuance of long-term debt 15,000 -
Proceeds from issuance of Company stock 227 144
Payments on long-term debt and notes payable (1,299) (657)
Purchase of Company common stock - (2,744)
Net financing cash flow from
discontinued operation (11) (57)
Net cash used in financing activities 13,917 (3,314)
Effect of exchange rate changes on
cash and cash equivalents (485) 6
Increase (decrease) in cash and
cash equivalents (2,980) 950
Cash and Cash Equivalents at Beginning
of Period 40,436 35,195
Cash and Cash Equivalents at End of Period $ 37,456 $ 36,145
SOURCE TechTeam Global, Inc.
-0- 04/28/2005
/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