News Releases
Antonio MoreiraCEO at Stefanini"We are proud of our ability to deliver exceptional value to our customers and to win new business competing with the largest outsourcing companies."
CORPORATE PROFILE
Download a pdf
News Release
TechTeam Global Reports Third Quarter 2009 Financial Results
Net profits continue in Q3 2009 despite revenue decline in challenging economic environment; Substantial improvement in cash flow and debt reduction through the first nine months of 2009, versus last year
SOUTHFIELD, Mich., Nov 9, 2009 /PRNewswire-FirstCall/ -- TechTeam Global, Inc. (Nasdaq: TEAM), a worldwide provider of information technology outsourcing and business process outsourcing services, today reported net income of $0.9 million, or $0.08 per diluted share, for the three months ended September 30, 2009, compared to a net income of $1.9 million, or $0.18 per diluted share, for the three months ended September 30, 2008.
Third quarter highlights include the following:
-- Revenue was $52.3 million, a decrease of $11.8 million or 18.4% from the third quarter 2008. The decrease was largely due to $1.9 million lower revenues from the divestiture of ANE (on October 31, 2008), an approximate $1.8 million impact of exchange rates on revenue, and an approximate $8.1 million or 13.1% decrease of revenue related to erosion and the previously announced wind-down of certain customer contracts.
-- Cash provided by operations for the nine months ended September 30, 2009 was $16.4 million, a significant improvement over the $3.8 million in cash provided by operations for the same period in 2008, principally driven by improvements in profitability and working capital management.
-- The Company reduced its total debt by $16.0 million during the nine months ended September 30, 2009. Approximately 46% of the Company's outstanding debt has been eliminated over the past nine months.
-- Gross margin was 23.0% in the third quarter 2009, essentially flat versus 23.1% in the third quarter 2008. SG&A expense was $10.4 million in the third quarter 2009, a decrease of 6.1% from $11.0 million in the third quarter 2008. SG&A costs as a percent of revenue increased to 19.8% from 17.2% due to the revenue decline year over year.
-- TechTeam was named to the No. 1 position globally in help desk outsourcing in the Black Book of Outsourcing 2009 Survey on Top Infrastructure Management Outsourcing Vendors.
-- The Company continues to expand existing client relationships in its commercial business with numerous wins totaling $13 million in contract value, including substantial scope expansions with two large multi-national clients.
-- The Company's government business unit was awarded numerous re-competes and option renewals in the quarter totaling approximately $15 million in contract value. Further, the business unit won new business totaling $2 million.
"The Company's third quarter 2009 results continued to be affected by a challenging global economic environment," said Gary J. Cotshott, President and Chief Executive Officer. "We experienced some revenue erosion and new business decision delays during the quarter. To counter the challenge of price pressure and volume reductions, we continue to manage costs very closely and quickly adjust capacity to meet changes in demand. Despite the tough environment, customers continue to seek high quality, lower cost alternatives to support their IT infrastructure. As a result, our pipeline of new account opportunities continues to be strong. While decisions are subject to longer decision cycles, our pipeline provides a solid basis to recover lost revenue over time."
In the first quarter of fiscal 2009, management changed its methodology for evaluation of the performance of the Company's outsourcing services. As a result of this change, certain costs, which were previously included in Selling, general and administrative expense, are now being included in Cost of revenue in the Company's Condensed Consolidated Statement of Income because they are directly related to revenue. The Company's financial statements for fiscal year 2008 have been revised, for all periods presented, to conform to the current year presentation. This re-categorization of expenses did not change net income or earnings per share, for all periods presented, in fiscal year 2008. There was no cumulative effect to retained earnings as a result of this re-categorization, and there was no change to the carrying amount of assets and liabilities in fiscal 2008.
For additional financial information please refer to the Company's Form 10-Q, for the quarterly period ending September 30, 2009, filed today. Further information regarding the re-categorization of expense can be found in "Note 1 – Basis of Presentation" of the Form 10-Q.
Conference Call Information
TechTeam Global, Inc. will also host an investor teleconference to discuss its third quarter 2009 financial results at 4:30 p.m. EST, today, Monday November 9, 2009. To participate in the teleconference, including the question and answer session that will follow the results announcement and discussion, please call 1-877-941-8631 (outside the United States, call +1-480-629-9820). When prompted, enter the passcode: 4181028. To access a simultaneous Web cast of the teleconference, go to the TechTeam Global Web site at http://www.techteam.com/investors/investor-relations and click on the Web cast 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. EST, Monday November 9, 2009. This toll-free replay will be available through Monday November 23, 2009. To listen to the teleconference replay, call 1-800-406-7325 (outside the United States, call +1-303-590-3030). When prompted, enter the passcode: 4181028.
About TechTeam Global, Inc.
TechTeam Global, Inc. is a leading provider of IT outsourcing and business process outsourcing services to large and medium businesses, as well as government organizations. The Company's primary services include service desk, technical support, desk-side support, security administration, infrastructure management and related professional services. TechTeam also provides a number of specialized, value-added services in specific vertical markets. Founded in 1979, TechTeam has nearly 3,000 employees across the world, providing IT support in 32 languages. TechTeam's common stock is traded on the NASDAQ Global Market under the symbol "TEAM." For more information, call 800-522-4451 or visit www.techteam.com.
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. Actual results may differ materially from those expected because of various known and unknown risks and uncertainties, including, but not limited to, the ongoing U.S. recession, the existing global credit and financial crisis and other changes in general economic and industry conditions, the award or loss of significant client assignments, timing of contracts, recruiting and new business solicitation efforts, currency fluctuations, and other factors affecting the financial health of our clients. These and other risks are described in the Company's most recent annual report on Form 10-K and subsequent reports filed with or furnished to the U.S. Securities and Exchange Commission. The 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 statements.
Financial Tables to Follow on the Next Page
Financial Data
TechTeam Global, Inc.
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except per share data)
Third Quarter Nine Months
Ended September 30, Ended September 30,
----------------- ------------------
2009 2008 % 2009 2008 %
---- ---- Change ---- ---- Change
Revenue
Commercial -
IT Outsourcing
Services $26,184 $30,452 (14.0)% $80,462 $91,154 (11.7)%
IT Consulting
and Systems
Integration 2,711 6,338 (57.2)% 9,780 21,283 (54.0)%
Other Services 3,740 5,406 (30.8)% 11,981 19,358 (38.1)%
----- ----- ------ ------
Total Commercial 32,635 42,196 (22.7)% 102,223 131,795 (22.4)%
Government
Technology
Services 19,713 21,988 (10.3)% 60,557 66,230 (8.6)%
------ ------ ------ ------
Total Revenue 52,348 64,184 (18.4)% 162,780 198,025 (17.8)%
------ ------ ------- -------
Cost of Revenue
Commercial -
IT Outsourcing
Services 20,838 24,137 (13.7)% 62,903 72,847 (13.7)%
IT Consulting
and Systems
Integration 2,083 4,988 (58.2)% 7,712 16,702 (53.8)%
Other Services 2,860 4,189 (31.7)% 9,008 14,911 (39.6)%
----- ----- ----- ------
Total Commercial 25,781 33,314 (22.6)% 79,623 104,460 (23.8)%
Government
Technology
Services 14,525 16,063 (9.6)% 43,841 48,391 (9.4)%
------ ------ ------ ------
Total Cost of Revenue 40,306 49,377 (18.4)% 123,464 152,851 (19.2)%
------ ------ ------- -------
Gross Profit 12,042 14,807 (18.7)% 39,316 45,174 (13.0)%
Selling, general
and administrative
expense 10,351 11,021 (6.1)% 32,393 35,325 (8.3)%
Restructuring
charge
(credit) (57) - (756) 3,884
--- --- ---- -----
Operating Income 1,748 3,786 (53.8)% 7,679 5,965 28.7%
Net interest expense (314) (425) (918) (1,291)
Foreign currency
transaction loss (68) (277) (717) (46)
--- ---- ---- ---
Income before
Income Taxes 1,366 3,084 6,044 4,628
Income tax
provision 504 1,175 2,242 2,866
--- ----- ----- -----
Net Income $862 $1,909 $3,802 $1,762
==== ====== ====== ======
Diluted Earnings
per Common Share $0.08 $0.18 $0.36 $0.17
===== ===== ===== =====
Diluted weighted
average common
shares and common
share equivalents 10,754 10,592 10,664 10,540
====== ====== ====== ======
Condensed Consolidated Balance Sheet (unaudited)
(In thousands)
September 30, December 31,
2009 2008
----------- ------------
Current Assets
Cash and cash equivalents $16,659 $16,881
Accounts receivable, net 49,599 59,705
Prepaid expenses and other current assets 4,148 4,315
----- -----
Total current assets 70,406 80,901
------ ------
Property, Equipment and Software, Net 7,017 8,327
Goodwill and Other Intangible Assets, Net 75,224 77,361
Other Assets 662 774
--- ---
Total Assets $153,309 $167,363
======== ========
Current Liabilities
Current portion of long-term debt $7,944 $7,987
Accounts payable 5,670 6,340
Accrued payroll and related taxes 11,809 12,477
Accrued expenses and other current
liabilities 8,539 11,670
----- ------
Total current liabilities 33,962 38,474
------ ------
Long-Term Liabilities
Long-term debt, less current portion 11,203 27,202
Other long-term liabilities 2,305 2,954
----- -----
Total long-term liabilities 13,508 30,156
------ ------
Shareholders' Equity
Preferred stock - -
Common stock 111 109
Additional paid-in capital 79,385 77,939
Retained earnings 25,161 21,359
Accumulated other comprehensive income (loss) 1,182 (674)
----- ----
Total shareholders' equity 105,839 98,733
------- ------
Total Liabilities and Shareholders' Equity $153,309 $167,363
======== ========
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
Nine Months Ended
September 30,
-----------------
2009 2008
---- ----
Operating Activities
Net income $3,802 $1,762
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,059 5,813
Other adjustments, primarily changes in working
capital 7,493 (3,755)
----- ------
Net cash provided by operating activities 16,354 3,820
------ -----
Investing Activities
Purchase of property, equipment and software (1,211) (2,101)
Cash paid for acquisitions, net of cash acquired (375) (5,958)
---- ------
Net cash used in investing activities (1,586) (8,059)
------ ------
Financing Activities
Proceeds from issuance of long-term debt 600 5,000
Proceeds (expenditures) from issuance of common
stock (28) 351
Tax expense from stock options - (5)
Payments on long-term debt (16,640) (4,227)
------- ------
Net cash provided by (used in) financing
activities (16,068) 1,119
------- -----
Effect of exchange rate changes on cash and cash
equivalents 1,078 (440)
----- ----
Decrease in cash and cash equivalents (222) (3,560)
Cash and cash equivalents at beginning of period 16,881 19,431
------ ------
Cash and cash equivalents at end of period $16,659 $15,871
======= =======
Reconciliation of Third Quarter and Year-to-Date Earnings Excluding
Restructuring Charges to Net Income
(In thousands, except per share data)
2009 2008
-------------------- -------------------
Earnings
After-Tax Earnings After-Tax (Loss)
Earnings per Share Earnings per Share
--------- --------- --------- ---------
Reconciliation of Third Quarter
Earnings Excluding
Restructuring Charges to
Net Income
Earnings excluding
restructuring charges $805 $0.07 $- $-
Restructuring charges,
net of tax 57 0.01 - -
-- ---- --- ---
Net Income – Third Quarter $862 $0.08 $- $-
==== ===== == ==
Reconciliation of Year-to-Date
Earnings Excluding
Restructuring Charges to Net
Income
Earnings excluding
restructuring charges $3,046 $0.29 $4,907 $0.47
Restructuring charges,
net of tax 756 0.07 (3,145) (0.30)
--- ---- ------ -----
Net Income – Year-to-Date $3,802 $0.36 $1,762 $0.17
====== ===== ====== =====
Contacts
Margaret M. Loebl
Vice President, Chief
Financial Officer and Treasurer
(248) 357-2866
investors@techteam.com
Jessica Klenk
(301) 588-2900 Ext. 121
jklenk@boscobel.com
SOURCE: TechTeam Global, Inc.
www.techteam.com
Next Article
Defense Energy Support Center Awards IDIQ Contract to TechTeam Covernment Solutions
Last Article
TechTeam Global to Announce Third Quarter 2009 Financial Results on November 9, 2009
