NGRU Netguru

netGuru, Inc. (Nasdaq:NGRU) reported financial results for fiscal 2005 fourth quarter and year ended March 31, 2005. For fourth-quarter fiscal 2005, the Company reported net income of $138,000, or one cent per diluted share, compared to net income of $77,000, or one cent per diluted share, in fourth-quarter fiscal 2004. Diluted shares for the quarter were 21,187,269 versus 19,813,808 for fiscal 2004 fourth quarter. Net revenues for the quarter were $4.70 million, compared to $4.78 million in fourth-quarter fiscal 2004. Net revenues from engineering and collaborative software products and services rose to $3.66 million from $3.49 million, but net revenues from IT services declined to $1.05 million from $1.29 million. Cost of revenues for the quarter fell 37% to $838,000 from $1.33 million in fourth quarter last year due to lower costs related to all products and services. Gross profit for the quarter rose to $3.86 million, or 82% of net revenues, compared to $3.45 million, or 72% of net revenues, in fourth-quarter fiscal 2004. Operating expenses for the quarter were $3.6 million, compared to $3.41 million in fourth-quarter fiscal 2004; the $186,000 increase due primarily to a $176,000 increase in reserves for bad debt. Operating income rose to $262,000 from $40,000 in fourth-quarter last year. Net loss for fiscal 2005 narrowed to $788,000, or four cents per share, from a net loss of $3.11 million, or 18 cents per share, for fiscal 2004. Net loss for fiscal 2005 included a gain from discontinued operations of $67,000, or one cent per share, while net loss for fiscal 2004 included losses from discontinued operations of $508,000, or three cents per share. Excluding the effects of discontinued operations for both periods, net loss for fiscal 2005 was $855,000, or five cents per share, versus net losses of $2.60 million, or 15 cents per share, in fiscal 2004. Net revenues for fiscal 2005 were $15.84 million, compared to $16.56 million for fiscal 2004. Net revenues from engineering and collaborative software products and services were $11.64 million versus $11.55 million in fiscal 2004, and net revenues from IT services were $4.2 million versus $5.0 million. Cost of revenues fell 29% to $3.54 million from $4.97 million in fiscal 2004 due to lower costs related to all products and services. Gross profit rose to $12.30 million, or 78% of net revenues, compared to $11.59 million, or 70% of net revenues, for fiscal 2004. Operating expenses for fiscal 2005 fell to $12.68 million from $13.65 million in fiscal 2004. Operating losses for fiscal 2005 narrowed to $376,000 from $2.06 million in operating losses last year. netGuru Chairman and Chief Executive Amrit Das commented: "We are very pleased to have achieved our profit goal for the quarter, the second consecutive quarter of positive cash flow from operations, and a substantial reduction in losses for the fiscal year, and we are looking forward to making further progress in fiscal 2006, driven primarily by revenue growth. Business process outsourcing operations are expanding, and we are also seeing rising activity in STAAD.Pro and eReview software, including custom development for end users in several industries. "We have also brought our Company's cost structure down to a level that should not only be sustainable but is also intended to support expected higher revenues," Das continued. "This holds positive implications for gross and operating margins, as the revenue growth we expect this year begins to show. As a result, we expect to report higher revenues and a profit for fiscal 2006." Teleconference information: netGuru management will hold a teleconference today at 1:30 p.m. PDT (4:30 p.m. EDT) to review the financial results. To participate in the teleconference, please call toll-free 800-608-3625 (or 706-634-0478 for international callers) approximately 10 minutes prior to the above start time. The company will archive the teleconference on its website, www.netguru.com (requires RealPlayer streaming audio software, available at www.real.com). A telephone playback will also be available for 48 hours beginning today at 5 p.m. PDT. The playback can be accessed by dialing 800-642-1687 (or 706-645-9291 for international callers) and providing Conference ID 7850385. About netGuru, Inc. netGuru is an engineering information technology and services company offering engineering and design collaboration software and solutions, and professional and technical services and support to businesses worldwide. netGuru serves its global markets and clients through offices located in the United States, Europe, Asia, and the Middle East, and through distributors in 40 countries. The Company licenses its engineering software and solutions to more than 19,000 businesses in 100 countries. For more information please visit www.netguru.com. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: With the exception of historical or factual information, other matters discussed in this press release, including revenue growth, sustainability of cost structure, anticipated improvements in gross and operating margins, and expected fiscal 2006 results are forward looking statements that involve risks and uncertainties. Actual future results may differ. Factors that could cause or contribute to such differences in results include, but are not limited to, market conditions regionally and worldwide, demand for engineering services, the Company's ability to increase revenue and conduct marketing efforts while controlling costs and expenses, technological change, economic conditions, changes in governmental regulations and policies, competitive products and services, unforeseen technical issues, and other factors discussed in the "Risk Factors" Section of the Company's Form 10-KSB for the fiscal year ended March 31, 2005, as filed with the U.S. Securities and Exchange Commission. -0- *T NETGURU, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) March March 31, 31, 2005 2004 (See Note 1) -------- -------- Assets Current assets: Cash and cash equivalents $3,681 $1,646 Short term investment - 100 Accounts receivable (net of allowance for doubtful accounts of $705 and $615, as of March 31, 2005 and March 31, 2004, respectively) 4,334 3,340 Income tax receivable 15 16 Notes and related party loans receivable 12 35 Deposits 96 67 Prepaid expenses and other current assets 1,343 1,174 Assets of subsidiary held for sale - 327 -------- -------- Total current assets 9,481 6,705 Property, plant and equipment, net 1,682 2,215 Goodwill 3,088 2,891 Other assets 242 219 -------- -------- $14,493 $12,030 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt, net of discount of $222 and $186, as of March 31, 2005 and March 31, 2004 respectively $1,397 $975 Current portion of capital lease obligations 144 109 Accounts payable 464 600 Income taxes payable 29 55 Accrued expenses 1,136 1,160 Deferred revenues 2,697 1,834 Other liabilities 212 208 Liabilities of subsidiary held for sale - 186 -------- -------- Total current liabilities 6,079 5,127 Long-term bank debt, net of current portion, net of discount of $200 and $185, as of March 31, 2005 and March 31, 2004, respectively 2,108 1,382 Capital lease obligations, net of current portion 343 368 Deferred gain on sale-leaseback 678 747 -------- -------- Total liabilities 9,208 7,624 -------- -------- Stockholders' equity: Preferred stock, par value $.01 (Authorized 5,000,000 shares; no shares issued and outstanding) - - Common stock, par value $.01; authorized 150,000,000 shares; issued and outstanding 19,117,154 and 18,087,154 shares as of March 31, 2005 and March 31, 2004, respectively 191 181 Additional paid-in capital 36,869 35,352 Accumulated deficit (31,232) (30,444) Accumulated other comprehensive loss: Cumulative foreign currency translation adjustments (543) (683) -------- -------- Total stockholders' equity 5,285 4,406 -------- -------- $14,493 $12,030 ======== ======== NETGURU, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) Three Three Twelve Twelve Months Months Months Months Ended Ended Ended Ended March March March March 31, 31, 31, 31, 2005 2004 2005 2004 (See (See Note 1) Note 1) ------- --------- -------- -------- Net revenues: Engineering and collaborative software products and services $3,655 $3,491 $11,636 $11,550 IT services 1,045 1,290 4,207 5,012 ------- --------- -------- -------- Total net revenues $4,700 $4,781 $15,843 $16,562 Cost of revenues: Engineering and collaborative software products and services 209 301 786 1,011 IT services 629 1,026 2,757 3,960 ------- --------- -------- -------- Total cost of revenues 838 1,327 3,543 4,971 ------- --------- -------- -------- Gross profit 3,862 3,454 12,300 11,591 ------- --------- -------- -------- Operating expenses: Selling, general and administrative 2,781 2,712 9,753 10,602 Research and development 363 463 1,578 2,042 Bad debt expense 186 10 355 60 Depreciation 270 229 990 944 ------- --------- -------- -------- Total operating expenses 3,600 3,414 12,676 13,648 ------- --------- -------- -------- Operating income (loss) 262 40 (376) (2,057) ------- --------- -------- -------- Other expense (income): Interest, net 165 129 543 658 Other (41) (19) (102) (128) ------- --------- -------- -------- Total other expense 124 110 441 530 ------- --------- -------- -------- Income (loss) from continuing operations before income taxes 138 (70) (817) (2,587) Income tax (benefit) expense - (149) 38 15 ------- --------- -------- -------- Income (loss) from continuing operations 138 79 (855) (2,602) (Loss) income from discontinued operations - (2) 67 (508) ------- --------- -------- -------- Net Income (loss) $138 $77 $(788) $(3,110) ======= ========= ======== ======== NETGURU, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - continued (In thousands, except share and per share amounts) Three Three Twelve Twelve Months Months Months Months Ended Ended Ended Ended March March March March 31, 31, 31, 31, 2005 2004 2005 2004 (See (See Note 1) Note 1) ----------- ----------- ------------ ------------ Income (loss) per common share: Income (loss) per common share from continuing operations (Basic) $0.01 $0.00 $(0.05) $(0.15) Income (loss) from discontinued operations - - 0.01 (0.03) ----------- ----------- ------------ ------------ Basic net loss per common share $0.01 $0.00 $(0.04) $(0.18) ----------- ----------- ------------ ------------ Diluted net income (loss) per common share $0.01 $0.01 $(0.04) $(0.18) =========== =========== ============ ============ Common shares used in computing basic net loss per common share: 19,117,154 18,044,297 18,857,866 17,602,584 =========== =========== ============ ============ Common shares used in computing diluted net income (loss) per common share: 21,187,269 19,813,808 18,857,866 17,602,584 =========== =========== ============ ============ Note 1: Reclassified for discontinued operations of our telecom entity as filed in Form 8-K dated April 29, 2005. *T