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Emtec, Inc. Reports Results for Third Quarter Ended December 31, 2003
Net Income Increased by 141.76 % for the Quarter and by 201.71% for the Nine
Months, Compared to the Same Periods in 2002
MT. LAUREL, N.J., Feb. 17 /PRNewswire-FirstCall/ -- Emtec, Inc. (BULLETIN
BOARD: ETEC) , a systems integrator providing technology solutions to enable
customers to effectively use and manage data to grow their business, announced
today its results for the third quarter ended December 31, 2003.
Net income for the three months ended December 31, 2003 rose by 141.76 percent
to $320,326, compared to a net loss of $(767,026) for the comparable period in
2002.
Net income for the nine months ended December 31, 2003, rose to $539,269
compared to a net loss of $(530,200) for the same period in 2002 - an increase
of 201.71 percent. Management attributed both of these increases in net income
to the overall increase in installation services associated with computer
roll-out projects for the various state agenciesin the State of New Jersey and
a school district in Georgia, as well as an increase in our manufacturers'
support services contract revenues to one customer.
John Howlett, CEO, Emtec, Inc., said, "Our rapidly growing net income in 2003
was a result ofour acquisitions in August 2002 of certain assets of Acentra
Technologies, Inc. and Turnkey Computer Systems, Inc., which brought us
substantial new groups of customers for our IT solutions, including a contract
with the State of New Jersey. Today, Emtec is building on that foundation. In
November 2003, we received Sun Microsystems' highest level of accreditation -
iForce Strategic Technology Integrator. In February 2004, Emtec was awarded a
backdrop contract (#CMS553A) from the New York State Office of General Services
to provide IT consulting and systems integration services to a variety of state
government entities. As a longtime provider of IT services to Fortune 1000
companies, we are becoming a solution of choice in the government and education
markets, and this is adding strongly to our bottom line."
Revenue Increases
For the three months ended December 31, 2003, total revenues for the IT
business, which includes services and consulting revenue and procurement
revenues, increased by 9.44 percent or $2.12 million, to $24.62 million,
compared to revenues of $22.49 million for the same period in 2002. Services
and consulting revenue increased by 25.11 percent, or $1.0 million, to $4.97
million. This increase was attributed to the overall increase in installation
services associated with computer roll-out projects for the various state
agencies in the State of New Jersey and a school district in Georgia, as well as
an increase in our manufacturers' support services contract revenues. The
increase in manufacturers support services contracts revenue is mainly
attributable to a third-year renewal of an annual maintenance contract to one
customer. Net revenue associated with this sale increased by approximately
$410,000 for the quarter ended December 31, 2003.
For the nine months ended December 31, 2003, total revenues for the IT business
increased by 18.61 percent or $12.36 million, to $78.82 million compared to
$66.46 million for the same nine months in 2002. The company attributed this
increase primarily to the acquisitions of Acentra Technologies, Inc. and Turnkey
Computer systems, Inc. in August 2002. Also attributed to these acquisitions is
the increase in services and consulting revenue, which rose by 20.64 percent, or
$2.31 million, to $13.53 million for the nine-month period. An 18.19 percent
rise in procurement revenues, to $65.29 million for the nine months, is also
attributed to these acquisitions.
Gross Profits
For the three months ended December 31, 2003, aggregate gross profit for the IT
business increased by 68.21 percent (or $1.56 million) to $3.84 million. This
increase was attributed to a 25.11 percent increase in services and consulting
revenues. As a percentage of total IT revenues, overall gross profit margin
also increased to 15.59 percent of total IT revenues for the quarter, compared
to 10.14 percent for the same quarter a year ago. Gross profit for product
sales during the three months increased by 6.63 percent. Gross profit for
service and consulting increased by 325.17 percent, or $1.43 million, to $1.87
million, compared with $440,986 for the same quarter in 2002.
For the nine months ended December 31, 2003, aggregate gross profit for IT
business increased by 26.28 percent, or $2.24 million, to $10.77 million. As a
percentage of total IT revenues, overall gross profit margin for the nine- month
period increased to 13.67 percent, up from 12.84 percent for the same period in
2002. Gross profit for product sales decreased slightly by 0.12 percent from
results for the same period a year ago. Gross profit for service and consulting
increased by 95.05 percent, or $2.25 million, to $4.62 million for the nine
months ended December 31, 2003. This increase was attributed to the 20.64
percent increase in services and consulting revenues.
SG&A Expenses
For the three-month period, sales, general, and administrative expenses
increased by 11.08 percent, or $334,068, to $3.35 million for the three months
ended December 31, 2003. For the nine-month period, SG&A expenses increased by
10.13 percent, or $914,085, to $9.93 million. These increases are primarily a
result of the new businesses of the company, mentioned above. Without the
acquisitions of Acentra Technologies, Inc. and Turnkey computer Systems, Inc.,
the SG&A expenses would have decreased by approximately 11.41 percent of $1.03
million, to $7.99 million for the nine months ended December 31, 2003 compared
with $9.02 million for the nine months ended December 31, 2002. This decrease
is attributable to the elimination of non-productive sales staff, reduction in
sales commission compensation plans, and eliminated duplication of non-
essential administrative support services.
About Emtec
Emtec, Inc. established in 1981, provides high-end computer systems and services
to Fortune 1000 clients ranging in size from $50 million to $500 million in
revenues. The Company specializes in evaluating and providing solutions for
data management including Enterprise Management, Managed Services
(monitoring/maintenance/helpdesk), and Data Management (storage and protection
of data). With the recent acquisitions of Intellispan (Help Desk), Acentra
(systems and services) and Turnkey Computer Systems (managed building services),
Emtec has broadened its engineering and services capabilities.
For additional information please contact Consulting For Strategic Growth 1,
Ltd, at 800-625-2236.
Certain statements in this document constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors, which may cause the actual results, performance or
achievements of Emtec, Inc. ("the Company"), or industry results, to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. The Company's future
operating results are dependent upon many factors, including but not limited to
the Company's ability to: (i) obtain sufficient capital or a strategic business
arrangement to fund its plan of operations when needed; (ii) build the
management and human resources and infrastructure necessary to support the
growth of its business; (iii) competitive factors and developments beyond the
Company's control; and (iv) other risk factors discussed in the Company's
periodic filings with the Securities and Exchange Commission which are available
for review at http://www.sec.gov/ under "Search for Company Filings." Consulting
For Strategic Growth I, Ltd. ("CFSG") has a month-to-month relationship with
Emtec, Inc. to provide consulting, business advisory, investor relations, public
relations and corporate development services to the Company for fees to be
determined. In connection with these services, CFSG prepares press releases,
corporate profiles, and other publications on behalf of and regarding the
Company. Independent of CFSG's receipt of cash compensation from Emtec, CFSG
may choose to purchase the common stock of Emtec and thereafter liquidate those
securities at any time it deems appropriate to do so.
EMTEC, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2003 2002 2003 2002
Revenues:
Procurement
services $ 19,648,683 $ 18,522,103 $ 65,286,512 $ 55,237,353
Service and
consulting 4,969,881 3,972,432 13,533,973 11,218,523
Geothermal 47,900 45,353 140,873 127,705
Total Revenues 24,666,464 22,539,888 78,961,358 66,583,581
Cost of Revenues:
Procurement
services 17,686,595 16,681,947 59,127,426 49,070,806
Service and
consulting 3,094,958 3,531,4468,917,374 8,851,590
Geothermal 61,167 18,154 91,249 53,783
Total Cost
of Revenues 20,842,720 20,231,547 68,136,049 57,976,179
Gross Profit:
Procurement
services 1,962,088 1,840,156 6,159,086 6,166,547
Service and
consulting 1,874,923 440,986 4,616,599 2,366,933
Geothermal (13,267) 27,199 49,624 73,922
Total Gross
Profit3,823,744 2,308,341 10,825,309 8,607,402
Operating Expenses:
Selling, general
and
administrative 3,350,077 3,016,008 9,934,891 9,020,806
Interest 75,333 59,359 247,885 106,926
Total Operating
Expenses 3,425,410 3,075,367 10,182,776 9,127,732
Income (Loss)
Before Income Tax
Expense 398,334 (767,026) 642,533 (520,330)
Income tax expense 78,008 - 103,264 9,870
Net Income
(Loss) $ 320,326 $ (767,026) $ 539,269 $ (530,200)
Net Income (Loss)
Per Share Basic $ .04 $ (.11) $ .08 $ (.07)
Net Income (Loss)
Per Share Diluted $ .04 $ (.11) $ .07 $ (.07)
Weighted Average
Number Of
Shares Outstanding
{Basic} 7,197,628 7,080,498 7,118,680 7,080,498
Weighted Average
Number Of
Shares Outstanding
{Diluted} 7,504,498 7,080,498 7,470,137 7,080,498
Contacts:
Stanley Wunderlich
Consulting For Strategic Growth 1, Ltd.
Public Relations
Corporate Development Consultants
Tel: 800-625-2236
Fax: 212-697-0910
E-mail:
John Howlett
Chief Executive Officer
Emtec, Inc.
Tel: 856-235-8787
Fax: 856-235-2932
E-mail:
Web site: http://www.emtecinc.com/
DATASOURCE: Emtec, Inc.
CONTACT: Stanley Wunderlich of Consulting For Strategic Growth 1, Ltd.,
1-800-625-2236, fax, +1-212-697-0910, , for Emtec; or John
Howlett, Chief Executive Officer of Emtec, Inc., +1-856-235-8787,
fax, +1-856-235-2932,
Web site: http://www.emtecinc.com/