NetSol Technologies Reports Fiscal 2014 Second Quarter Results
-- Company Generates More Than $12 Million in Cash From Operations for First Six Months --
-- Continues Training and Hiring Push to Support Growing New Business Pipeline for NFS AscentTM and Increased Joint Venture Technical Support Requirements --
-- Conference Call Scheduled Today at 9 a.m. ET (6 a.m. PT) --
CALABASAS, Calif., Feb. 13, 2014 (GLOBE NEWSWIRE) -- NetSol Technologies, Inc. (Nasdaq:NTWK), a worldwide provider of global IT and enterprise application solutions, today reported financial results for its fiscal 2014 second quarter ended December 31, 2013.
Fiscal 2014 Second Quarter Financial Results
Total second quarter revenue amounted to $8.7 million, compared with $11.8 million in the same period last fiscal year, reflecting, as expected, lower license sales during the transition to NetSol's next-generation financing and leasing solution, NFS AscentTM.
License revenue for the fiscal 2014 second quarter was $456,000, versus $3.5 million in the same period last year. Maintenance revenue for the fiscal 2014 second quarter increased to $2.9 million from $2.7 million last year, reflecting the completion of certain projects. Service revenue remained consistent at $5.4 million, principally attributable to the first-generation NFS platform and additional service and change requests from customers. Service revenue in the second quarter of fiscal 2013 was $5.6 million.
"As we discussed in our outlook last quarter, results for the second fiscal quarter reflected the anticipated contraction in license revenue during the transition from our first-generation NFS product to the next-generation NFS Ascent platform, which we officially launched in the quarter," said Najeeb Ghauri, CEO. "The launch of NFS Ascent is progressing, particularly in North America and Europe where we have developed a strong new business pipeline with potential new customers and with current customers that we support in other regions throughout the world.
"As these negotiations progress, we are actively increasing our bench of talented employees, with more than 100 new employees going through various stages of training, so that we are ready to move quickly on additional new deals as they arise," added Ghauri.
Total operating expenses for the fiscal 2014 second quarter amounted to $4.3 million, versus $3.8 million in the fiscal 2013 second quarter. Operating expenses decreased from $4.9 million in the first quarter of fiscal 2014.
Operating loss for the second quarter of fiscal 2014 was $1.6 million, compared with operating income of $2.9 million last year.
Net loss was $1.6 million for the fiscal second quarter, equal to $0.18 per share, based on 9.1 million weighted average number of diluted shares outstanding. Net income for the same period last year was $2.2 million, or $0.28 per diluted share, based on 8.0 million weighted average number of diluted shares outstanding.
For the first half of fiscal 2014, total revenue was $17.8 million, versus $22.9 million for the first six months of fiscal 2013. Net loss for the fiscal 2014 year-to-date period was $2.7 million, or $0.30 per share, compared with net income of $3.2 million, or $0.40 per diluted share, last year.
At December 31, 2013, cash and cash equivalents increased to $11.6 million from $6.8 million at September 30, 2013, reflecting improved collections in the quarter. At June 30, 2013, cash and cash equivalents were $7.9 million. Cash provided by operations for the first six months of fiscal 2014 was $12.7 million, compared with $9.4 million for the first six months of fiscal 2013.
"We are well capitalized to manage our milestone product transition and further build the organization," concluded Ghauri. "With a robust backlog of services and maintenance revenue, and a growing new business pipeline for NFS Ascent, as well as expected additional contributions from our joint-ventures, we are optimistic about our long-term business prospects moving forward."
| Fiscal 2014 Second Quarter Conference Call | |
| When: | Thursday, February 13 |
| Time: | 9:00 a.m. Eastern |
| Phone: | 1- 888-549-7880 (domestic) |
| 1- 480-629-9643 (international) | |
| Conference ID: | 4667450 |
| Webcast: | http://www.netsoltech.com/us/investors/event-presentation |
| Archived: | 90 days |
About NetSol Technologies
NetSol Technologies, Inc. (www.netsoltech.com) is a worldwide provider of global IT and enterprise application solutions that include credit and finance portfolio management systems, SAP consulting and services, custom development, systems integration and technical services for asset finance and leasing in the automotive, insurance, energy and technology markets. Headquartered in Calabasas, Calif., NetSol's product and services offerings have achieved ISO 9001, ISO 20000, ISO 27001, and SEI (Software Engineering Institute) CMMI (Capability Maturity Model) Maturity Level 5 assessments, a distinction shared by only 178 companies worldwide. The company's clients include Fortune 500 manufacturers, global automakers, financial institutions, utilities, technology providers and government agencies. NetSol has delivery and support locations in San Francisco, London, Beijing, Bangkok, Lahore, Sydney and Riyadh.
Follow NetSol Technologies on Twitter at https://twitter.com/NetSolTech
NetSol Technologies Google+ page at https://plus.google.com/+netsoltechnologies
Forward-Looking Statements
This press release may contain forward-looking statements relating to the development of the Company's products and services and future operation results, including statements regarding the Company that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. The words "expects," "anticipates," variations of such words, and similar expressions, identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, but their absence does not mean that the statement is not forward-looking. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Factors that could affect the Company's actual results include the progress and costs of the development of products and services and the timing of the market acceptance. The subject Companies expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.
(Tables Follow)
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NetSol Technologies, Inc. and Subsidiaries Consolidated Balance Sheets |
||||
| As of December 31, | As of June 30, | |||
| ASSETS | 2013 | 2013 | ||
| Current assets: | ||||
| Cash and cash equivalents | $ 11,581,042 | $ 7,874,318 | ||
| Restricted cash | 2,535,909 | 1,875,237 | ||
| Accounts receivable, net | 16,684,683 | 14,684,212 | ||
| Revenues in excess of billings | 6,271,254 | 15,367,198 | ||
| Other current assets | 2,210,215 | 2,273,314 | ||
| Total current assets | 39,283,103 | 42,074,279 | ||
| Investment under equity method | 378,835 | 545,483 | ||
| Property and equipment, net | 23,577,098 | 20,978,369 | ||
| Intangible assets, net | 29,176,897 | 29,452,654 | ||
| Goodwill | 9,653,330 | 9,653,330 | ||
| Total assets | $ 102,069,263 | $ 102,704,115 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable and accrued expenses | $ 5,411,478 | $ 4,027,147 | ||
| Current portion of loans and obligations under capitalized leases | 5,535,157 | 5,308,626 | ||
| Unearned revenues | 4,779,494 | 2,446,018 | ||
| Common stock to be issued | 320,338 | 88,325 | ||
| Total current liabilities | 16,046,467 | 11,870,116 | ||
| Long term loans and obligations under capitalized leases; less current maturities | 1,602,148 | 1,412,212 | ||
| Total liabilities | 17,648,615 | 13,282,328 | ||
| Commitments and contingencies | ||||
| Stockholders' equity: | ||||
| Common stock, $.01 par value; 15,000,000 shares authorized; 9,063,575 and 8,929,523 issued and outstanding as of December 31, 2013 and June 30, 2013 | 90,636 | 89,295 | ||
| Additional paid-in-capital | 115,551,344 | 114,292,510 | ||
| Treasury stock | (415,425) | (415,425) | ||
| Accumulated deficit | (26,545,279) | (23,821,256) | ||
| Stock subscription receivable | (2,280,488) | (2,280,488) | ||
| Other comprehensive loss | (18,295,623) | (15,714,112) | ||
| Total NetSol stockholders' equity | 68,105,165 | 72,150,524 | ||
| Non-controlling interest | 16,315,483 | 17,271,263 | ||
| Total stockholders' equity | 84,420,648 | 89,421,787 | ||
| Total liabilities and stockholders' equity | $ 102,069,263 | $ 102,704,115 | ||
|
NetSol Technologies, Inc. and Subsidiaries Consolidated Statement of Operations |
||||
| For the Three Months | For the Six Months | |||
| Ended December 31, | Ended December 31, | |||
| 2013 | 2012 | 2013 | 2012 | |
| Net Revenues: | ||||
| License fees | 455,616 | 3,505,847 | 2,708,183 | 6,747,348 |
| Maintenance fees | 2,867,195 | 2,664,813 | 5,247,604 | 4,710,519 |
| Services | 5,385,191 | 5,637,009 | 9,809,351 | 11,421,702 |
| Total net revenues | 8,708,002 | 11,807,669 | 17,765,138 | 22,879,569 |
| Cost of revenues: | ||||
| Salaries and consultants | 3,247,811 | 2,916,378 | 6,647,642 | 6,276,243 |
| Travel | 349,318 | 386,194 | 746,102 | 711,488 |
| Repairs and maintenance | 147,464 | 123,722 | 323,285 | 251,719 |
| Insurance | 40,642 | 41,007 | 80,196 | 78,726 |
| Depreciation and amortization | 1,240,715 | 1,024,007 | 2,287,384 | 1,982,158 |
| Other | 886,799 | 557,693 | 1,429,041 | 1,478,671 |
| Research and development cost | 55,114 | 33,239 | 113,802 | 59,922 |
| Total cost of revenues | 5,967,863 | 5,082,240 | 11,627,452 | 10,838,927 |
| Gross profit | 2,740,139 | 6,725,429 | 6,137,686 | 12,040,642 |
| Operating expenses: | ||||
| Selling and marketing | 908,125 | 931,210 | 1,979,537 | 1,694,173 |
| Depreciation and amortization | 430,947 | 333,435 | 857,564 | 675,436 |
| Salaries and wages | 1,458,343 | 1,192,787 | 2,899,475 | 2,346,660 |
| General and administrative | 1,546,266 | 1,348,349 | 3,527,604 | 2,902,779 |
| Total operating expenses | 4,343,681 | 3,805,781 | 9,264,180 | 7,619,048 |
| Income (loss) from operations | (1,603,542) | 2,919,648 | (3,126,494) | 4,421,594 |
| Other income and (expenses) | ||||
| Gain (loss) on sale of assets | (175,237) | (275) | (189,032) | 14,021 |
| Interest expense | (45,036) | (179,932) | (114,253) | (472,321) |
| Interest income | 39,931 | 31,617 | 72,785 | 55,784 |
| Gain on foreign currency exchange transactions | 96,039 | 504,738 | 1,207,462 | 899,894 |
| Share of net income (loss) from equity investment | (175,840) | 484,487 | (166,648) | 484,487 |
| Amortization of financing costs | -- | (74,384) | -- | (442,128) |
| Other income (expense) | (47,858) | 36 | (47,180) | 4 |
| Total other income (expenses) | (308,001) | 766,287 | 763,134 | 539,741 |
| Net income (loss) before income taxes | (1,911,543) | 3,685,935 | (2,363,360) | 4,961,335 |
| Income tax benefit (provision) | (29,270) | 2,548 | (40,401) | (11,448) |
| Net income (loss) after tax | (1,940,813) | 3,688,483 | (2,403,761) | 4,949,887 |
| Non-controlling interest | 313,905 | (1,465,500) | (320,262) | (1,797,779) |
| Net income (loss) attributable to NetSol | (1,626,908) | 2,222,983 | (2,724,023) | 3,152,108 |
| Other comprehensive income (loss): | ||||
| Translation adjustment | (420,309) | (1,394,216) | (3,843,025) | (2,163,011) |
| Comprehensive income (loss) | (2,047,217) | 828,767 | (6,567,048) | 989,097 |
| Comprehensive loss attributable to non-controlling interest | (40,980) | (399,096) | (1,261,514) | (631,652) |
| Comprehensive income (loss) attributable to NetSol | (2,006,237) | 1,227,863 | (5,305,534) | 1,620,749 |
| Net income (loss) per share: | ||||
| Basic | $ (0.18) | $ 0.28 | $ (0.30) | $ 0.41 |
| Diluted | $ (0.18) | $ 0.28 | $ (0.30) | $ 0.40 |
| Weighted average number of shares outstanding | ||||
| Basic | 9,056,024 | 7,957,521 | 9,006,015 | 7,774,719 |
| Diluted | 9,056,024 | 7,968,598 | 9,006,015 | 7,785,796 |
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NetSol Technologies, Inc. and Subsidiaries Consolidated Statement of Cash Flows |
||
| For the Six Months | ||
| Ended December 31, | ||
| 2013 | 2012 | |
| Cash flows from operating activities: | ||
| Net income (loss) | $ (2,403,761) | $ 4,949,887 |
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
| Depreciation and amortization | 3,144,948 | 2,657,594 |
| Provision for bad debts | 259,306 | 54,889 |
| Share of net loss (income) from investment under equity method | 166,648 | (484,487) |
| (Gain) loss on sale of assets | 189,032 | (14,021) |
| Stock issued for interest on notes payable | -- | 211,111 |
| Stock issued for services | 640,247 | 29,670 |
| Fair market value of warrants and stock options granted | 158,783 | 320,021 |
| Amortization of financing costs | -- | 442,128 |
| Changes in operating assets and liabilities: | ||
| Increase in accounts receivable | (2,089,498) | (2,378,873) |
| Decrease in revenue in excess of billing | 8,612,283 | 514,720 |
| Decrease in other current assets | 367,741 | 1,217,728 |
| Increase in accounts payable and accrued expenses | 3,617,465 | 1,908,178 |
| Net cash provided by operating activities | 12,663,194 | 9,428,545 |
| Cash flows from investing activities: | ||
| Purchases of property and equipment | (6,059,596) | (3,537,918) |
| Sales of property and equipment | 78,678 | 59,350 |
| Purchase of non-controlling interest in subsidiaries | (17,853) | (621,563) |
| Increase in intangible assets | (2,312,919) | (2,132,595) |
| Net cash used in investing activities | (8,311,690) | (6,232,726) |
| Cash flows from financing activities: | ||
| Proceeds from the exercise of stock options and warrants | 560,500 | 612,650 |
| Payment to common shareholders against fractional shares | -- | (194) |
| Proceeds from exercise of subsidiary options | 311,709 | 3,031 |
| Restricted cash | (660,672) | (2,257,428) |
| Dividend paid by subsidiary to Non controlling interest | (266,343) | -- |
| Proceeds from bank loans | 1,276,505 | 2,049,698 |
| Payments on capital lease obligations and loans - net | (781,756) | (723,936) |
| Net cash provided by (used in) financing activities | 439,943 | (316,179) |
| Effect of exchange rate changes in cash | (1,084,723) | (899,554) |
| Net increase in cash and cash equivalents | 3,706,724 | 1,980,086 |
| Cash and cash equivalents, beginning of the period | 7,874,318 | 7,599,607 |
| Cash and cash equivalents, end of period | $ 11,581,042 | $ 9,579,693 |
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NetSol Technologies, Inc. and Subsidiaries Reconciliation to GAAP |
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| Three Months | Three Months | Six Months | Six Months | |
| Ended | Ended | Ended | Ended | |
| December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |
| Net Income (loss) before preferred dividend, per GAAP | $ (1,626,908) | $ 2,222,983 | $ (2,724,023) | $ 3,152,108 |
| Income Taxes | 29,270 | (2,548) | 40,401 | 11,448 |
| Depreciation and amortization | 1,671,662 | 1,357,442 | 3,144,948 | 2,657,594 |
| Interest expense | 45,036 | 179,932 | 114,253 | 472,321 |
| Interest (income) | (39,931) | (31,617) | (72,785) | (55,784) |
| EBITDA | $ 79,129 | $ 3,726,192 | $ 502,794 | $ 6,237,687 |
| Weighted Average number of shares outstanding | ||||
| Basic | 9,056,024 | 7,957,521 | 9,006,015 | 7,774,719 |
| Diluted | 9,089,846 | 7,968,598 | 9,039,838 | 7,785,796 |
| Basic EBITDA | $ 0.01 | $ 0.47 | $ 0.06 | $ 0.80 |
| Diluted EBITDA | $ 0.01 | $ 0.47 | $ 0.06 | $ 0.80 |
Although the net EBITDA income is a non-GAAP measure of performance, we are providing it because we believe it to be an important supplemental measure of our performance that is commonly used by securities analysts, investors, and other interested parties in the evaluation of companies in our industry. It should not be considered as an alternative to net income, operating income or any other financial measures calculated and presented, nor as an alternative to cash flow from operating activities as a measure of our liquidity. It may not be indicative of the Company's historical operating results nor is it intended to be predictive of potential future results.
| Investor Contacts: |
| PondelWilkinson |
| Roger Pondel | Matt Sheldon |
| [email protected] |
| (310) 279-5980 |
| Media Contacts: |
| PondelWilkinson |
| George Medici | [email protected] |
| (310) 279-5968 |
Released February 13, 2014