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2007 Press Releases
Workstream Announces Fiscal 2007 Second Quarter Results
Company Achieves Record Quarterly Revenue of $8 Million
Ottawa, ON, January 4, 2007 - Workstream Inc. (NASDAQ – WSTM), a provider of On-Demand Human Capital Management software, today announced its fiscal 2007 second quarter results for the period ended November 30, 2006. All figures are in U.S. dollars.
Total revenue for the second quarter was $8.0 million compared
to $7.2 million in the prior year’s comparable period,
an increase of $800,000 or 11%. Gross profit was $6.0 million
or 75% of revenue for the quarter compared to $5.0 million
or 69% of revenue for the comparable quarter a year ago. EBITDA
was positive for the first quarter of fiscal 2007 before non-cash
compensation expense and amounted to $166,000 or $.00 per
share, compared to an EBITDA loss of $1.1 million, or $(.02)
per share, in the second quarter of fiscal 2006 (GAAP reconciliation
shown below). The Company’s net loss for the quarter
ended November 30, 2006 was $2.5 million, or $(0.05) per share,
compared to a net loss of $3.3 million, or $(0.07) per share,
in last year’s comparable quarter.
“Our record revenues and positive EBITDA results from
operations validate our continued progress against our 2007
strategy and business objectives,” said Michael Mullarkey,
CEO and Chairman at Workstream. “The quality and breadth
of the on-demand HCM products we offer customers, coupled
with our secure, state-of-the-art facility we provide for
the hosting of our products, clearly makes Workstream a leader
in delivering on-demand HCM solutions.
“Our management team and employees have been collectively
focused on our corporate goals of driving revenue, controlling
expenses and reaching positive EBITDA ,” said Stephen
Lerch, Executive Vice President and Chief Financial and Operating
Officer, “We are very pleased to have achieved that
goal this quarter and are working diligently to sustaining
that momentum going forward.”
Mr. Mullarkey also announced today that the Company’s
Board of Directors have approved an agreement in principle
with its lender to amend the senior credit facility from a
$15 million Senior Secured Note with an 18 month term, to
a Senior Line of Credit, comprising a $5 million term note
drawn against the line and an additional $10 million available
through an accounts receivable backed credit facility. The
agreement in principle provides, among other things, that
the guaranteed IRR or “make-whole” payments will
be eliminated effective January 1, 2007 pursuant to the terms
of the definitive agreement. The Company and its senior lender
are currently in the process of preparing the definitive amendment
to the Loan Agreement giving effect to the above described
and other items.
Total revenue for the six months ended November 30 was $14.9
million compared to $13.5 million in the prior year’s
tear to date period, an increase of $1.4 million 9.7%. Gross
profit was $11.1 million or 74.6% of revenue for the six month
period compared to $9.2 million or 68% of revenue for the
comparable period a year ago. EBITDA loss before non-cash
compensation expense amounted to $913,000 or $.02) per share,
compared to an EBITDA loss of $3.7 million, or $(.08) per
share for the six months ended November 30, 2005 (GAAP reconciliation
shown below).
Management will host a conference call at 5:00 p.m. ET on
Thursday, January 4, 2007. The dial in number to participate
in the call is 866-898-9626 for North American participants
and 800-8989-6323 for those outside of North America. The
instant replay number for the call will be available until
January 9, 2007 by calling 800-408-3053 access code 3206465#.
EBITDA and EBITDA per share are non-GAAP financial measures
within the meaning of Regulation G promulgated by the Securities
and Exchange Commission. EBITDA is commonly defined as earnings
before interest, taxes, depreciation and amortization. We
believe that EBITDA provides useful information to investors
as it excludes transactions not related to the core cash operating
business activities. We believe that excluding these transactions
allows investors to meaningfully trend and analyze the performance
of our core cash operations. All companies do not calculate
EBITDA in the same manner, and EBITDA as presented by Workstream
may not be comparable to EBITDA presented by other companies.
Workstream defines EBITDA as earnings or loss before interest,
taxes, depreciation amortization and non-recurring goodwill
impairment. Included, following the financial statements,
is a reconciliation of net loss to EBITDA loss and EBITDA
per share that should be read in conjunction with the financial
statements.
About Workstream
Workstream provides on-demand Human Capital Management solutions
and services that help companies manage their entire employee
lifecycle – from recruitment to retirement. Workstream’s
TalentCenter provides a unified view of all Workstream products
and services including Recruitment, Benefits, Performance,
Compensation, Development and Transition. Access to TalentCenter
is offered on a monthly subscription basis under an on-demand
software delivery model to help companies build high performing
workforces, while controlling costs. With nine offices across
North America, Workstream services customers including Chevron,
The Gap, Home Depot, Kaiser Permanente, Motorola, Nordstrom,
Samsung, Sony Music Canada, VISA and Wells Fargo. For more
information visit www.workstreaminc.com or call toll free
1-866-470-WORK.
This press release contains forward-looking statements
within the meaning of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. These
statements are based on the current expectations or beliefs
of Workstream's management and are subject to a number of
factors and uncertainties that could cause actual results
to differ materially from those described in the forward-looking
statements. The following factors, among others, could cause
actual results to differ materially from those described in
the forward-looking statements: inability to grow our client
base and revenue because of the number of competitors and
the variety of sources of competition we face; client attrition;
inability to offer services that are superior and cost effective
when compared to the services being offered by our competitors;
inability to further identify, develop and achieve success
for new products, services and technologies; increased competition
and its effect on pricing, spending, third-party relationships
and revenues; as well as the inability to enter into successful
strategic relationships and other risks detailed from time
to time in filings with the Securities and Exchange Commission.
| WORKSTREAM INC. |
| CONSOLIDATED BALANCE SHEETS |
|
|
|
|
November
30, 2006 |
May
31, 2006 |
|
|
(unaudited) |
|
| ASSETS |
|
|
| Current assets: |
| Cash
and cash equivalents |
$5,527,177 |
$4,577,040 |
| Restricted
cash |
523,638 |
3,095,348 |
| Short-term
investments |
3,389 |
302,197 |
| Accounts
receivable, net |
4,612,846 |
3,100,779 |
| Prepaid
expenses and other assets |
804,555 |
527,876 |
| Total current
assets |
11,471,605 |
11,603,240 |
| Cash equivalents held as compensating balance |
10,000,000 |
|
| Property and equipment, net |
2,680,728 |
1,789,739 |
| Other assets |
194,664 |
87,468 |
| Acquired intangible assets, net |
5,263,497 |
8,067,423 |
| Goodwill |
44,718,561 |
44,721,859 |
|
|
|
|
| TOTAL ASSETS |
$74,329,055 |
$66,269,729 |
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|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
| Current liabilities: |
| Accounts
payable |
$2,306,708 |
$2,476,980 |
| Accrued
liabilities |
2,020,798 |
2,345,878 |
| Line
of credit |
- |
2,537,246 |
| Accrued
compensation |
1,118,143 |
1,073,239 |
| Current
portion of long-term obligations |
678,975 |
896,293 |
| Deferred
revenue |
3,331,204 |
3,360,766 |
| Total current
liabilities |
9,455,828 |
12,690,402 |
| Long-term obligations |
14,114,107 |
288,269 |
| Deferred revenue |
281,011 |
268,727 |
| Total liabilities |
23,850,946 |
13,247,398 |
|
|
|
|
| Commitments and contingencies |
- |
- |
|
|
|
|
| STOCKHOLDERS’ EQUITY |
|
|
| Common
stock, no par value: 50,960,845 and 50,960,845 |
|
|
|
shares issued and outstanding, respectively |
111,991,328 |
111,991,328 |
| Additional
paid-in capital |
10,367,717 |
7,547,393 |
| Accumulated
other comprehensive loss |
(894,503) |
(871,781) |
| Accumulated deficit |
(70,986,433) |
(65,644,609) |
| Total stockholders’ equity |
50,478,109 |
53,022,331 |
|
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|
|
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$74,329,055 |
$66,269,729 |
| WORKSTREAM INC. |
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
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|
Three
Months ended
November 30, |
Six
Months ended
November 30,
|
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|
2006 |
2005 |
2006 |
2005 |
|
|
|
|
|
|
| Revenues: |
|
|
|
|
| Software |
$2,683,436 |
$2,515,441 |
$5,110,189 |
$4,954,353 |
| Professional
services |
1,423,025 |
1,006,026 |
2,446,034 |
1,589,625 |
| Rewards and
discount products |
1,717,203 |
1,777,740 |
3,075,985 |
3,286,212 |
| Career services |
2,169,800 |
1,900,602 |
4,288,352 |
3,711,745 |
| Revenues, net |
7,993,464 |
7,199,809 |
14,920,560 |
13,541,935 |
| Cost of revenues: |
|
|
|
|
| Rewards and
discount products |
1,318,897 |
1,365,297 |
2,408,434 |
2,491,757 |
| Other |
679,750 |
878,326 |
1,382,834 |
1,809,148 |
Cost of revenues
(exclusive of the amortization and depreciation expense noted below) |
1,998,647 |
2,243,623 |
3,791,268 |
4,300,905 |
| Gross
profit |
5,994,817 |
4,956,186 |
11,129,292 |
9,241,030 |
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
| Selling and marketing |
1,710,462 |
1,686,535 |
3,557,887 |
3,066,034 |
| General and administrative |
3,494,031 |
3,893,055 |
7,014,676 |
7,458,214 |
| Research and development |
859,411 |
1,094,850 |
1,897,626 |
2,408,776 |
| Amortization and depreciation |
1,567,203 |
1,569,633 |
3,211,127 |
3,460,958 |
| Total operating expenses |
7,631,107 |
8,244,073 |
15,681,316 |
16,393,982 |
|
|
|
|
|
|
|
|
(1,636,290) |
(3,287,887) |
(4,552,024) |
(7,152,952) |
|
|
|
|
|
|
| Interest and other income |
117,187 |
54,362 |
242,556 |
127,501 |
| Interest and other expense |
(908,944) |
(35,986) |
(961,150) |
(67,011) |
| Other income (expense), net |
(791,757) |
18,376 |
(718,594) |
60,490 |
|
|
|
|
|
|
| Loss
before income tax |
(2,428,047) |
(3,269,511) |
(5,270,618) |
(7,092,462) |
| Current income
tax expense |
(24,000) |
(33,430) |
(71,198) |
(48,630) |
| NET LOSS FOR THE PERIOD |
$(2,452,047) |
$(3,302,941) |
$(5,341,816) |
$(7,141,092) |
|
|
|
|
|
|
| Weighted average number of common shares
outstanding |
50,960,845 |
49,194,178 |
50,960,845 |
49,193,742 |
|
|
|
|
|
|
| Basic and diluted net loss per share |
$(0.05) |
$(0.07) |
$(0.11) |
$(0.15) |
|
|
|
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WORKSTREAM INC. |
| UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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|
|
|
Six
Months ended November 30, |
|
|
2006 |
2005 |
| Cash provided by (used in) operating activities: |
|
|
| Net loss for the period |
$(5,341,816) |
$(7,141,092) |
| Adjustments to reconcile net loss to net
cash used in |
|
|
| operating
activities: |
|
|
| Amortization
and depreciation |
3,211,127 |
3,460,958 |
| Provision for
bad debt |
223,316 |
292,420 |
| Non-cash compensation
|
427,824 |
70,497 |
| Non-cash interest
expense |
656,607 |
- |
| Non-cash payment
to consultants |
- |
41,530 |
| Change in long-term
portion of deferred revenue |
15,597 |
- |
| Net change in operating components of
working capital: |
|
|
| Accounts
receivable |
(1,987,692) |
(1,309,187) |
| Prepaid
expenses and other assets |
(32,348) |
55,959 |
| Accounts
payable and accrued expenses |
(485,339) |
862,384 |
| Deferred
revenue |
(25,838) |
829,021 |
| Net cash used in operating activities |
(3,338,562) |
(2,837,510) |
|
|
|
|
| Cash provided by (used in) investing activities: |
|
|
| Purchase of property and equipment |
(212,047) |
(439,052) |
| Decrease in restricted cash |
2,737,410 |
416,052 |
| Sale of short-term investments |
79,039 |
72,543 |
| Net cash provided by investing activities |
2,604,402 |
49,543 |
|
|
|
|
| Cash provided by (used in) financing activities: |
|
|
| Proceeds from financing, net of financing
costs |
14,650,000 |
- |
| Cash equivalents held as compensating
balance |
(10,000,000) |
|
| Repayment of long-term obligations |
(451,877) |
(1,553,681) |
| Line of credit, net activity |
(2,487,205) |
(147,513) |
| Proceeds from exercise of options and
warrants |
- |
10,836 |
| Net cash provided by/(used in) financing
activities |
1,710,918 |
(1,690,358) |
|
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|
|
Effect of exchange rate changes on cash
and cash equivalents |
(26,621) |
44,846 |
|
|
|
|
| Net increase/(decrease) in cash and cash
equivalents |
950,137 |
(4,433,479) |
| Cash and cash equivalents, beginning of
period |
4,577,040 |
11,811,611 |
|
|
|
|
| Cash and cash equivalents, end of period |
$5,527,177 |
$7,378,132 |
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WORKSTREAM INC. |
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UNAUDITED RECONCILIATION OF EARNINGS OR LOSS
BEFORE INTEREST, DEPRECIATION, AMORTIZATION (EBITDA) |
|
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|
|
Three
Months ended November 30,
|
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2006 |
|
2005 |
|
|
|
|
|
|
|
Net loss, per GAAP |
|
($2,452,047) |
|
($3,302,937) |
|
Income tax expense |
|
24,000 |
|
33,430 |
|
Interest and other expense |
|
908,944 |
|
35,986 |
|
Interest and other income |
|
(117,187) |
|
(54,362) |
|
Amortization and depreciation |
|
1,567,203 |
|
1,569,633 |
|
Non cash compensation expense |
|
235,470 |
|
|
|
EBITDA
(loss) |
|
166,383 |
|
(1,718,250) |
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|
Weighted average number of common
shares outstanding |
|
50,960,845 |
|
49,194,178 |
|
|
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|
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|
Basic and diluted loss per share,
per GAAP |
|
$(0.05) |
|
$(0.07) |
|
|
|
|
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|
Basic
and diluted EBITDA loss per share |
|
$0.003 |
|
$(0.04) |
For more information
contact:
Tasha White
Workstream, Inc.
1-866-953-8800,
investorrelations@workstreaminc.com
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Customer Success
UHN Streamlines Recruitment Process and Improves HR Service Level with Workstream’s
On-Demand Recruitment Solution.
Learn more »
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