WINDSOR, Conn., May 2, 2000 (PRIMEZONE) -- PRT Group Inc. (Nasdaq:PRTG), an I/T solutions integrator, today reported financial results for the first quarter ended March 31, 2000.
As anticipated, revenue in the first quarter ended March 31, 2000 was $12.1 million, slightly lower than the $12.4 million recorded in the fourth quarter of 1999. Revenue in the first quarter of 1999 was $18.5 million. Net loss for the first quarter of 2000 was $3.0 million, or ($0.17) per share, compared to a net loss $6.8 million, or ($0.38) per share in the first quarter of 1999.
"The first quarter of the millennium was a challenging time for PRT. We suffered some carry-over effects due to Y2K, as many of our clients did not ramp up projects as quickly as we expected, however, there were signs of positive momentum" commented Dan Woodward, president and CEO. "As we closed the quarter we saw and are continuing to see a healthy level of renewal activity from our current customer base as well as an improved new sales backlog. PRT's current sales backlog for the remainder of 2000 has grown significantly since the beginning of the year and our opportunity pipeline continues to build. Our eBusiness eNablement and Solutions Outsourcing initiatives continue to strengthen with eBusiness representing 22% of our revenues for the first quarter and producing gross margins of 41%, up from 13% of revenue in the fourth quarter of 1999. We believe these higher margin businesses as well as improved sales production will move us towards our goal of restoring profitability."
Mr. Woodward went on to say, "We are pleased with the shift in the revenue mix of our businesses. In the first quarter, our eBusiness eNablement and Solutions Outsourcing businesses represented some 32% of our revenues with IT Staffing shifting from about 90% of our revenues in 1999 to approximately 68% in the first quarter of 2000. This shift in revenue mix is in line with our plan for 2000. With our newly launched WebStarter(tm) offering and our iRAD(tm) methodology we are bringing best-in-class process and thought leadership to companies eBusiness initiatives."
In the first quarter of 2000, selling, general and administrative expenses totaled $5.4 million, a decrease of 41% over the $9.3 million recorded in the first quarter of 1999 and 26% greater than the fourth quarter of 1999 which was $4.3 million. This increase is mainly attributable to severance costs associated with the 33% reduction in the administrative workforce as well as increased marketing expenses.
PRT Group
On April 17, 2000, Tudor Investment Corporation, The Travelers Indemnity Company and EFG Eurofinancial Investment Company announced the investment of $8.0 million in PRT Group through a private placement of PRT Group Series "A" Senior Participating Convertible Preferred Stock and Warrants. The investors purchased 8 million shares of the Company's Series "A" Senior Participating Convertible Preferred Stock at a price per share of $1.00. The preferred stock may be converted into an equal number of shares of the Company's common stock. The Company also issued to the investors Warrants to purchase 4 million shares of common stock at an exercise price of $1.00 per share.
As a result of the equity infusion, the Company will record a $5.7 million deemed dividend for purposes of calculating earnings (loss) per share in second quarter ending June 30, 2000. "By strengthening our balance sheet, we believe we are now properly positioned to take advantage of the market opportunities in the areas of eBusiness and IT Solutions Outsourcing," concluded Woodward.
The Company had $3.8 million in cash and cash equivalents, and marketable securities at the end of the first quarter, compared with $6.9 million at the end of the fourth quarter. The Days Sales Outstanding (DSO) was 60 days. Total current assets are $13.0 million and current liabilities are $6.8 million, for a current ratio of approximately 2:1.
About PRT Group Inc.
PRT Group Inc. (Nasdaq:PRTG) is an I/T Solutions Integrator committed to addressing customer applications development and management needs, including: extending the value of substantial investments that have been made in legacy applications; supporting customer migration plans to next-generation E-Business platforms; and providing staffing and facility options to address customer IT professional services needs. The Company focuses on long-term customer relationships as it strives to provide flexible and evolutionary IT services through the life-cycle of its customers' applications portfolio. PRT leverages its Customer Software Engineering Center (CSEC) Model to provide centralized, comprehensive application services, combining highly skilled IT professionals, proven quality processes, and knowledge management systems. Founded in 1989, PRT Group Inc. is headquartered in Windsor, CT. For more information visit www.prt.com.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the future operations and expectations of the Company and contains statements regarding the Company's beliefs, intentions and expectations about developments, results and events that will or may occur in the future. Such forward-looking statements are based on certain assumptions and analyses made by the Company derived from its experience and perceptions. Actual results and developments may vary materially from those described, as they are subject to a number of known and unknown risks and uncertainties. Such risks and uncertainties include, but are not limited to, general economic, market and business conditions; general conditions and competition in the IT industry; concentration of revenues; the Company's ability to attract, develop, motivate and retain IT personnel who possess the necessary technical skills and experience; any anticipated benefit from the revenue shift or sales backlog described in this release; demand for the Company's services; analysis, predictions, the Company's ability to increase the amount of services rendered to existing clients and develop new clients and reduce costs of providing services; the ability to anticipate, acquire, master and exploit new technologies as they develop; failure or inability to meet a client's expectations in the performance of services giving rise to claims against the Company and various other factors set forth under the caption "Factors That May Affect Future Results" in Item 7 of PRT's Annual Report on Form 10-K for the year ended December 31, 1999.
PRT Group Inc.
Condensed Consolidated Balance Sheets
(in thousands)
March 31, 2000 Dec. 31, 1999
(unaudited)
Assets
Current Assets:
Cash, cash equivalents,
and marketable securities $ 3,780 $ 6,862
Accounts receivable, net 8,170 8,712
Other current assets 1,075 1,203
Total current assets 13,025 16,777
Property and equipment, net 6,235 6,507
Goodwill, net 16,627 16,863
Other assets 761 388
TOTAL ASSETS $36,648 $ 40,535
Liabilities and
Stockholder's Equity
Current liabilities $ 6,801 $ 7,743
Other liabilities 1,411 1,521
Total stockholders' equity 28,436 31,271
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 36,648 $ 40,535
PRT Group Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
Three Months
Ended March 31
2000 1999
---- ----
(unaudited)
Revenues $12,057 $18,541
Cost of revenues 8,713 14,902
--------- --------
Gross profit 3,344 3,639
Selling, general & administrative expenses 5,445 9,278
--------- ---------
EBITDA (2,101) (5,639)
Depreciation and amortization 1,011 1,235
---------- --------
Loss from operations (3,112) (6,874)
Other income, net 70 25
---------- ---------
Net loss: $(3,042) $ (6,849)
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Loss per share: $ (.17) $ (.38)
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Weighted average number of shares
used in calculation of loss per share 18,335,514 18,245,571
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CONTACT: Rocco Mitarotonda
Chief Financial Officer
914-345-3800
Michele Katz/ Michael Polyviou/Elric Martinez
Morgen-Walke Associates
212-850-5600