SOURCE:
Computer Software Innovations, Inc.
2008-08-13 07:30:00
EASLEY, SC–(EMWNews – August 13, 2008) – Computer Software Innovations, Inc. (
-- Software Segment Revenues Increase 36.2% for the Second Quarter 2008
-- Revenues of $29.6 Million for Six Months, up 3.0% versus $28.8 Million in
2007
-- Second Quarter Revenues Increase 2.6% to $17.6 Million in Q2 2008 versus
$17.1 Million in Q2 2007
-- Second Quarter Net Income Increased 12% to $1.0 Million in Q2 2008,
versus $0.9 Million for Q2 2007
Computer Software Innovations, Inc. (
Outfitters™ (“CSI”), today announced its financial results for the
second quarter and six months ended June 30, 2008.
Financial Results:
Second Quarter 2008 Results
CSI posted revenue of approximately $17.6 million for the second quarter
ended June 30, 2008, an increase of approximately $0.4 million or 2.6%
compared to the second quarter of 2007. CSI experienced significant growth
in its software sector in the second quarter with an increase of $1.0
million or 36.2% to $3.8 million versus $2.8 million for the same period in
2007, due to increased sales in all major areas for the software segment:
software product sales, services and support. Of the increase, the
acquisition of the CSI-Greensboro operations added $0.2 million, with the
remaining $0.8 million generated from organic growth. Technology revenues
decreased from second quarter 2007 by $0.6 million or 3.9% to $13.7 million
for the second quarter of 2008. The decrease in new hardware sales was
attributed to an increase in the number of smaller-dollar sales of
interactive whiteboard systems being insufficient to surpass the impact of
a large-dollar district-wide implementation in the prior year’s same
quarter.
Gross profit for the second quarter of 2008 was approximately $4.6 million,
an increase of $0.6 million or 15.0% in comparison with the second quarter
of 2007. The increase in gross margin was driven by increased sales in the
software segment, partially offset by a decline in hardware gross profits
primarily from decreased sales of interactive whiteboard solutions.
Increased margin in the software segment added to the improvement from
sales volume while increased margin in the technology segment partially
offset the reduction from the impact of reduced technology sales volume.
Operating income for the quarter was approximately $1.81 million, a slight
decrease compared to operating income of $1.83 million for the same period
in the prior year.
CSI posted net income for the quarter ended June 30, 2008 of approximately
$1.0 million or $0.21 earnings per basic share and $0.08 earnings per
diluted share, compared to net income of approximately $0.9 million and
$0.25 earnings per basic share and $0.07 earnings per diluted share for the
same period last year.
Six Months Results
CSI posted revenue of approximately $29.6 million, an increase of $0.9
million or 3.0% in comparison with the first six months of 2007. This net
increase included a $1.3 million increase in software sales and services,
partially offset by a $0.4 million decline in technology solutions segment
sales. Technology solutions sales decreased primarily from reduced sales of
interactive whiteboard solutions, partially offset by increased sales of
other products including infrastructure solutions and increased engineering
services. The increase in the software solutions segment was primarily due
to increases in all areas including software product sales, services and
support. The acquisition of the CSI-Greensboro operations in the second
quarter of 2008 added $0.2 million of software revenues, with the remaining
$1.1 million increase from organic growth.
Gross profit for the first six months was approximately $7.7 million, an
increase of $1.1 million or 16.7% compared to 2007. The gross margin
increased from 22.8% in 2007, to 25.8% in 2008 due to the higher volume of
software product sales and shift in product mix in technology to higher
margin infrastructure products and engineering services. Operating income
for the first six months was approximately $2.6 million compared to $2.4
million for the same period in 2007. Net income was $1.4 million or
earnings of $0.30 per basic share and $0.12 per diluted share as compared
to a net income of $1.2 million or $0.34 per basic share and $0.09 per
diluted share for the same period in 2007.
Earnings before interest, taxes, depreciation and amortization (“EBITDA”)
increased $0.1 million to $2.3 million for the quarter ended June 30, 2008,
and increased $0.4 million to $3.6 million for the six months ended June
30, 2008. The increase in EBITDA was primarily due to the increase in net
income over the prior year after adding back the related tax effects of
those increases in net income. (EBITDA is a non-GAAP financial measure. See
reconciliation to GAAP measure net income (loss) which follows below.)
Nancy Hedrick, CEO of CSI, stated, “We continue to be pleased with current
year results. Once again we faced the challenge of a prior year quarter
benefited by a district-wide solutions implementation, and without a
similar deal in the current year’s quarter we grew our top and bottom
lines. We exceeded the prior year’s results by achieving greater account
penetration and customer diversification in both segments, while increasing
our gross margin from 22.8% to 25.8%. This is a tribute to the continued
hard work of all our teams, and we believe the expanded customer
relationships will aid future growth.”
Conference Call Reminder for Today
The Company will host a conference call today, Wednesday, August 13, 2008
at 11:00 a.m. Eastern Time to discuss the Company’s financial and
operational results for second quarter 2008.
Conference Call Details Date: Wednesday, August 13, 2008 Time: 11:00 a.m. (EDT) Dial-in Number: 1-800-762-8795 International Dial-in Number: 1-480-629-9041
It is recommended that participants phone-in approximately 5 to 10 minutes
prior to the start of the 11:00 a.m. call. A replay of the conference call
will be available approximately 3 hours after the completion of the call
for 7 days, until August 20, 2008. To listen to the replay, dial
1-800-406-7325 if calling within the U.S., 1-303-590-3030 if calling
internationally and enter the pass code 3909185.
The call is also being webcast and may be accessed at CSI’s website at
www.csioutfitters.com. The webcast will be archived and accessible until
September 13, 2008 on the Company website.
About Computer Software Innovations, Inc.
CSI provides software and technology solutions primarily to public sector
markets. CSI has more than doubled its revenue in the past two years to
over $55 million by using organic growth and acquisitions. Over 600 school,
government, and non-profit organizations have CSI solutions that encompass
financial management software specialized for the public sector, IT
infrastructure, IP telephony, IP video surveillance, printing/imaging, and
interactive classroom technologies. More information about CSI (
Forward-Looking and Cautionary Statements
This release contains “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Among other things, these statements relate to our
financial condition, results of operations and future business plans,
operations, opportunities and prospects. In addition, we and our
representatives may from time to time make written or oral forward-looking
statements, including statements contained in other filings with the
Securities and Exchange Commission and in our reports to stockholders.
These forward-looking statements are generally identified by the words or
phrases “may,” “could,” “should,” “expect,” “anticipate,” “plan,”
“believe,” “seek,” “estimate,” “predict,” “project” or words of similar
import. These forward-looking statements are based upon our current
knowledge and assumptions about future events and involve risks and
uncertainties that could cause our actual results, performance or
achievements to be materially different from any anticipated results,
prospects, performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are not
guarantees of future performance. Many factors are beyond our ability to
control or predict. You are accordingly cautioned not to place undue
reliance on such forward-looking statements, which speak only as of the
date that we make them. We do not undertake to update any forward-looking
statement that may be made from time to time by or on our behalf.
In our most recent Form 10-K, we have included risk factors and
uncertainties that might cause differences between anticipated and actual
future results. We have attempted to identify, in context, some of the
factors that we currently believe may cause actual future experience and
results to differ from our current expectations regarding the relevant
matter or subject area. The operations and results of our software and
systems integration businesses also may be subject to the effects of other
risks and uncertainties, including, but not limited to:
-- a reduction in anticipated sales;
an inability to perform customer contracts at anticipated cost levels;
-- our ability to otherwise meet the operating goals established by our
business plan;
-- market acceptance of our new software, technology and services offerings;
-- an economic downturn; and
-- changes in the competitive marketplace and/or customer requirements.
COMPUTER SOFTWARE INNOVATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
------------------------ ------------------------
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
----------- ----------- ----------- -----------
REVENUES
Software
applications
segment $ 3,806,286 $ 2,794,725 $ 6,863,900 $ 5,534,161
Technology
solutions segment 13,744,230 14,306,570 22,749,610 23,218,866
----------- ----------- ----------- -----------
Net sales and
service revenue 17,550,516 17,101,295 29,613,510 28,753,027
COST OF SALES
Software
applications
segment
Cost of sales,
excluding
depreciation,
amortization and
capitalization 1,984,887 1,661,868 3,651,105 3,080,595
Depreciation 27,385 16,608 51,672 30,918
Amortization of
capitalized
software costs 314,190 259,125 598,002 498,322
Capitalization of
software costs (203,892) (208,880) (499,522) (435,853)
----------- ----------- ----------- -----------
Total software
applications
segment cost of
sales 2,122,570 1,728,721 3,801,257 3,173,982
----------- ----------- ----------- -----------
Technology
solutions segment
Cost of sales,
excluding
depreciation 10,770,911 11,327,634 18,102,643 18,979,240
Depreciation 30,292 22,270 58,940 43,734
----------- ----------- ----------- -----------
Total technology
solutions segment
cost of sales 10,801,203 11,349,904 18,161,583 19,022,974
----------- ----------- ----------- -----------
Total cost of sales 12,923,773 13,078,625 21,962,840 22,196,956
----------- ----------- ----------- -----------
Gross profit 4,626,743 4,022,670 7,650,670 6,556,071
OPERATING EXPENSES
Salaries, wages and
benefits 1,804,972 1,390,359 3,123,316 2,457,563
Stock based
compensation 4,691 5,027 9,383 90,813
Acquisition
expenses 9,345 4,076 32,844 8,546
Compliance related
costs 137,654 201,178 234,153 380,756
Sales consulting
fees 55,625 48,000 118,502 96,000
Marketing costs 106,075 75,537 115,039 73,312
Travel and mobile
costs 180,073 137,128 350,924 290,609
Depreciation and
amortization 122,159 90,502 228,420 180,749
Other selling,
general and
administrative
expenses 390,362 240,209 797,671 567,261
----------- ----------- ----------- -----------
Total operating
expenses 2,810,956 2,192,016 5,010,252 4,145,609
----------- ----------- ----------- -----------
Operating income 1,815,787 1,830,654 2,640,418 2,410,462
OTHER INCOME (EXPENSE)
Interest income 35 58 100 2,763
Interest expense (130,697) (152,036) (263,022) (286,055)
Loss on disposal of
property and
equipment - - - (1,218)
----------- ----------- ----------- -----------
Net other income
(expense) (130,662) (151,978) (262,922) (284,510)
----------- ----------- ----------- -----------
Income before
income taxes 1,685,125 1,678,676 2,377,496 2,125,952
INCOME TAX EXPENSE 673,507 775,499 938,115 937,989
----------- ----------- ----------- -----------
NET INCOME $ 1,011,618 $ 903,177 $ 1,439,381 $ 1,187,963
=========== =========== =========== ===========
BASIC EARNINGS PER
SHARE $ 0.21 $ 0.25 $ 0.30 $ 0.34
=========== =========== =========== ===========
DILUTED EARNINGS PER
SHARE $ 0.08 $ 0.07 $ 0.12 $ 0.09
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 4,908,061 3,544,385 4,803,516 3,516,853
=========== =========== =========== ===========
Diluted 12,366,568 13,255,883 12,262,023 13,248,383
=========== =========== =========== ===========
COMPUTER SOFTWARE INNOVATIONS, INC.
CONSOLIDATED BALANCE SHEETS
June 30,
2008 December 31,
(Unaudited) 2007
------------ ------------
ASSETS
CURRENT ASSETS
Cash $ -- $ --
Accounts receivable, net 13,420,118 8,697,036
Inventories 2,549,374 470,485
Prepaid expenses 152,008 42,832
Taxes receivable -- 177,147
------------ ------------
Total current assets 16,121,500 9,387,500
PROPERTY AND EQUIPMENT, net 1,424,187 1,316,713
COMPUTER SOFTWARE COSTS, net 2,303,453 2,162,717
DEFERRED TAX ASSET 291,535 263,324
GOODWILL 2,430,437 1,480,587
OTHER ASSETS 1,970,132 1,574,809
------------ ------------
$ 24,541,244 $ 16,185,650
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,553,141 $ 4,023,936
Taxes payable 340,418 --
Deferred revenue 6,565,440 5,323,889
Deferred tax liability 478,232 469,046
Current portion of notes payable 294,485 283,187
Subordinated notes payable to shareholders 1,950,400 2,250,400
------------ ------------
Total current liabilities 16,182,116 12,350,458
------------ ------------
NOTES PAYABLE, less current portion 614,025 763,717
BANK LINE OF CREDIT, less current portion 3,533,000 575,000
------------ ------------
Total liabilities 20,329,141 13,689,175
------------ ------------
SHAREHOLDERS' EQUITY (DEFICIT)
Preferred stock - $0.001 par value;
15,000,000 shares authorized; 6,859,736
shares issued and outstanding 6,860 6,860
Common stock - $0.001 par value; 40,000,000
shares authorized; 4,908,061 and 4,698,970
shares issued and outstanding,
respectively 4,908 4,699
Additional paid-in capital 7,649,583 7,400,939
Accumulated deficit (3,345,338) (4,784,719)
Unearned stock compensation (103,910) (131,304)
------------ ------------
Total shareholders' equity 4,212,103 2,496,475
------------ ------------
$ 24,541,244 $ 16,185,650
============ ============
Non-GAAP Financial Measure: Explanation and Reconciliation of EBITDA and
Adjusted EBITDA
EBITDA is a non-GAAP financial measure used by management, lenders and
certain investors as a supplemental measure in the evaluation of some
aspects of a corporation’s financial position and core operating
performance. Investors sometimes use EBITDA as it allows for some level of
comparability of profitability trends between those businesses differing as
to capital structure and capital intensity by removing the impacts of
depreciation and amortization. EBITDA also does not include changes in
major working capital items such as receivables, inventory and payables,
which can also indicate a significant need for, or source of, cash. Since
decisions regarding capital investment and financing and changes in working
capital components can have a significant impact on cash flow, EBITDA is
not a good indicator of a business’s cash flows. We use EBITDA for
evaluating the relative underlying performance of the Company’s core
operations and for planning purposes, including a review of this indicator
and discussion of potential targets in the preparation of annual operating
budgets. We calculate EBITDA by adjusting net income or loss to exclude net
interest expense, income tax expense or benefit, depreciation and
amortization, thus the term “Earnings Before Interest, Taxes, Depreciation
and Amortization” and the acronym “EBITDA.”
EBITDA is presented as additional information because management believes
it to be a useful supplemental analytic measure of financial performance of
our core business, and as it is frequently requested by sophisticated
investors. However, management recognizes it is no substitute for GAAP
measures and should not be relied upon as an indicator of financial
performance separate from GAAP measures (as discussed further below).
“Adjusted EBITDA or “Financing EBITDA” is a non-GAAP financial measure used
in our calculation and determination of compliance with debt covenants
related to our bank credit facilities. Adjusted EBITDA is also used as a
representation as to how EBITDA might be adjusted by potential lenders for
financing decisions and our ability to service debt. However, such
decisions would not exclude those other items impacting cash flow which are
excluded from EBITDA, as noted above. Adjusted EBITDA is defined as net
income or loss adjusted for net interest expense, income tax expense or
benefit, depreciation, amortization, and also certain additional items
allowed to be excluded from our debt covenant calculation including other
non-cash items such as operating non-cash compensation expense (such as
stock-based compensation), and the Company’s initial reorganization or
restructuring related costs, unrealized gain or loss on financial
instrument (non-cash related) and gain or loss on the disposal of fixed
assets. While we evaluate the Company’s performance against debt covenants
on this basis, investors should not presume the excluded items to be one-
time costs. If the Company were to enter into additional capital
transactions, for example, in connection with a significant acquisition or
merger, similar costs could reoccur. In addition, the ongoing impact of
those costs would be considered in, and potential financings based on,
projections of future operating performance which would include the impact
of financing such costs.
We believe the presentation of Adjusted EBITDA is important as an indicator
of our ability to obtain additional financing for the business, not only
for working capital purposes, but particularly as acquisitions are
anticipated as a part of our growth strategy. Accordingly, a significant
part of our success may rely on our ability to finance acquisitions.
When evaluating EBITDA and Adjusted EBITDA, investors should consider,
among other things, increasing and decreasing trends in both measures and
how they compare to levels of debt and interest expense, ongoing investing
activities, other financing activities and changes in working capital
needs. Moreover, these measures should not be construed as alternatives to
net income (as an indicator of operating performance) or cash flows (as a
measure of liquidity) as determined in accordance with GAAP.
While some investors use EBITDA to compare between companies with different
investment and capital structures, all companies do not calculate EBITDA or
Adjusted EBITDA in the same manner. Accordingly, the EBITDA and Adjusted
EBITDA measures presented below may not be comparable to similarly titled
measures of other companies.
A reconciliation of Net Income reported under GAAP to EBITDA and Adjusted
(Financing) EBITDA is provided below:
Three Months Six Months
Ended Ended
June 30, June 30,
--------------- ---------------
Amounts in thousands 2008 2007 2008 2007
------- ------- ------- -------
Reconciliation of Net income (loss) per
GAAP to EBITDA and Adjusted (Financing)
EBITDA:
Net income (loss) per GAAP $ 1,012 $ 903 $ 1,439 $ 1,188
Adjustments:
Income tax expense (benefit) 674 775 938 938
Interest expense, net 131 152 263 283
Depreciation and amortization of fixed
assets and trademarks 180 129 339 255
Amortization of software development
costs 314 259 598 498
------- ------- ------- -------
EBITDA $ 2,311 $ 2,218 $ 3,577 $ 3,162
------- ------- ------- -------
Adjustments to EBITDA to exclude those
items in loan covenant calculations:
Stock based compensation (non-cash
portion) 5 5 9 91
------- ------- ------- -------
Adjusted (Financing) EBITDA $ 2,316 $ 2,223 $ 3,586 $ 3,253
======= ======= ======= =======
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