Thomas Group, Inc. (NasdaqCM:TGIS), a leading operational
consulting firm, today announced third quarter 2006 net income of
$3.0 million, or $0.27 per diluted share, on revenues of $15.9
million, compared to net income of $2.7 million, or $0.25 per
diluted share, on revenues of $11.8 million for the third quarter
of 2005. Third quarter 2006 income from continuing operations
increased 61% to $4.5 million compared to $2.8 million in the third
quarter of 2005. For the first nine months of 2006, income from
continuing operations before income taxes increased 86% to $11.7
million compared to $6.3 million for the first nine months of 2005.
�Although we manage our business for long-term success, I am
pleased with our continued increases in quarterly revenue and
earnings per share,� said Jim Taylor, CEO. �Our profitability
increases as we leverage existing S,G&A against increasing
revenue, while maintaining our gross margin through high
utilization of our Resultants. I remain confident in our ability to
sustain profitable, organic growth. This growth will come from
expanding the skill sets and subject matter expertise of our
Resultants, as we continue to grow as Knowledge Leaders.� Third
Quarter and First Nine Months 2006 Financial Performance: Revenue:
Revenue for the third quarter of 2006 was $15.9 million, which
represents a $4.1 million increase, or 35%, from the third quarter
of 2005. Revenue for the first nine months of 2006 was $44.7
million, which represents a $13.3 million increase, or 42%, over
the first nine months of 2005. For the first nine months of 2006,
revenue from commercial clients represented 7% of total revenues,
as compared to 4% in the first nine months of 2005. Gross Margins:
Gross profit margins for the third quarter of 2006 were 55%,
compared to 56% for the third quarter of 2005. Gross profit margins
for the first nine months of 2006 were 53% compared to 54% for the
first nine months of 2005. The decrease in 2006 gross margin
relates primarily to the accrual for year-end bonuses. Selling,
General & Administrative (S,G&A): S,G&A costs for the
third quarter of 2006 increased $0.5 million to $4.3 million from
$3.8 million in the third quarter of 2005, but decreased as a
percentage of revenues to 27% compared to 32% in 2005. This
increase in dollars is primarily due to a $0.3 million increase in
stock-based compensation and a $0.2 million increase in legal and
recruiting costs. For the first nine months of 2006, S,G&A
costs increased $2.0 million to $12.1 million and 27% of revenue
from $10.1 million and 32% of revenue in the first nine months of
2005. Although the percentage of revenue decreased, the dollar
increase is primarily due to a $1.0 million increase in stock-based
compensation, $0.4 million in legal and recruiting costs, $0.3
million in commercial selling and marketing costs, $0.1 million in
sales commissions on increased revenue and $0.2 million in other
costs. Cash Flow: For the first nine months of 2006, net cash
provided by operating activities was $8.1 million, compared to $5.2
million for the first nine months of 2005. The increase in net cash
provided is primarily due to 2006 profits in excess of 2005
profits. Cash used for investing activities consisted primarily of
upgrades to office equipment and software and totaled $272,000 for
the first nine months of 2006 compared to $75,000 for the first
nine months of 2005. Cash used for financing activities for the
first nine months of 2006 was $1.1 million, consisting of $1.9
million in dividends paid offset by $0.8 million in cash received
and tax benefit realized from the exercise of stock options. In the
first nine months of 2005, net cash used in financing activities
was $2.8 million, comprised of $1.8 million used to repay debt,
$1.3 million used to repurchase all outstanding warrants, offset by
$0.3 million generated from the issuance of common stock upon the
exercise of outstanding options and warrants. For the first nine
months of 2006, the net change in cash was a net increase of $6.7
million, compared to a net increase of $2.4 for the first nine
months of 2005. Income Taxes: The Company�s annual effective tax
rate (ETR) for 2006 is estimated to be approximately 34%, compared
to an ETR of approximately 3% in 2005 due to utilization of net
operating loss carryforwards (NOL) in that year. As a result of
this rate differential, third quarter 2006 income taxes of $1.5
million, or $0.14 per diluted share, compares unfavorably to
$89,000, or $0.01 per diluted share in the third quarter of 2005.
For the first nine months of 2006, income taxes were $3.9 million,
or $0.36 per diluted share, compared to $0.2 million, or $0.02 per
diluted share in the first nine months of 2005. Business
Development: During the third quarter of 2006, the Company signed
$11.1 million in new and extended business, pushing the total for
2006 to $41.2 million. For the year, 92% of bookings have been US
government contracts and 8% have been commercial contracts.
Backlog: At September 30, 2006, the Company had signed backlog of
$11.8 million. Of this amount, $7.3 million is contracted for 2006,
with the remaining $4.5 million contracted for 2007. Backlog does
not include extensions or option periods, and therefore does not
always represent the full scope of the clients� commitment to
Thomas Group. However, backlog does accurately represent the
portion that has been contracted for in writing. Thomas Group, Inc.
(NasdaqCM:TGIS) is an international, publicly traded operational
consulting firm. Thomas Group�s unique brand of process improvement
and performance management services enable businesses to enhance
operations, improve productivity and quality, reduce costs,
generate cash and drive higher profitability. Known as The Results
CompanySM, Thomas Group creates and implements customized
improvement strategies for sustained performance improvements in
all facets of the business enterprise. Thomas Group has offices in
Dallas, Detroit, and Hong Kong. For additional information on
Thomas Group, Inc., please go to www.thomasgroup.com. Safe Harbor
Statement under the Private Securities Litigation Reform Act:
Statements in this release that are not strictly historical are
�forward looking� statements, which should be considered as subject
to the many uncertainties that exist in the Company�s operations
and business environment. These uncertainties, which include
economic and business conditions that may impact clients and the
Company�s performance-oriented fees, timing of contracts and
revenue recognition, competitive and cost factors, and the like,
are set forth in the Company�s filings from time to time with the
Securities and Exchange Commission, including the Company�s Form
10-K for the year ended December 31, 2005. Except as required by
law, the Company expressly disclaims any intent or obligation to
update any forward looking statements. Thomas Group, Inc. Selected
Consolidated Financial Data (Unaudited) � � Three Months Nine
Months Ended September 30, Ended September 30, � 2006� � 2005� �
2006� � 2005� In thousands, except per share data � Consulting
revenue before reimbursements $ 15,693� $ 11,763� $ 44,302� $
31,333� Reimbursements � 166� � 23� � 423� � 29� Total revenue �
15,859� � 11,786� � 44,725� � 31,362� Cost of sales before
reimbursable expenses 6,961� 5,210� 20,744� 14,284� Reimbursable
expenses � 166� � 23� � 423� � 29� Total cost of sales � 7,127� �
5,233� � 21,167� � 14,313� Gross profit 8,732� 6,553� 23,558�
17,049� Selling, general and administrative 4,326� 3,818� 12,124�
10,129� Sublease (gain) loss � �� � �� � (16) � 610� Operating
income 4,406� 2,735� 11,450� 6,310� Interest income (expense), net
� 118� � 21� � 244� � (49) Income from continuing operations before
income taxes 4,524� 2,756� 11,694� 6,261� Income taxes � 1,510� �
89� � 3,931� � 187� Income from continuing operations 3,014� 2,667�
7,763� 6,074� (Gain)/Loss on discontinued operations, net of
related income taxes � (4) � 4� � (1) � 404� Net income $ 3,018� $
2,663� $ 7,764� $ 5,670� � Earnings per share: Basic: Income from
continuing operations $ 0.28� $ 0.25� $ 0.72� $ 0.58� Loss on
discontinued operations, net of tax effect � �� � �� � �� � 0.04�
Net income $ 0.28� $ 0.25� $ 0.72� $ 0.54� Diluted: Income from
continuing operations $ 0.27� $ 0.25� $ 0.71� $ 0.57� Loss on
discontinued operations, net of tax effect � �� � �� � �� � 0.04�
Net Income $ 0.27� $ 0.25� $ 0.71� $ 0.53� � Weighted average
shares: Basic 10,962� 10,655� 10,791� 10,465� Diluted 11,109�
10,784� 11,002� 10,649� Thomas Group, Inc. Selected Consolidated
Financial Data (Unaudited) � Selected Revenue Data � � Three Months
Ended Nine Months Ended September 30, September 30, � 2006� � 2005�
� 2006� � 2005� Amounts in thousands � North America $ 15,818� $
11,786� $ 44,654� $ 31,333� Europe �� �� �� �� Asia/Pacific � 41� �
�� � 71� � 29� Total Revenue $ 15,859� $ 11,786� $ 44,725� $
31,362� � � September 30, 2005 (unaudited) December 31, 2005
Amounts in thousands � Cash $ 10,144� $ 3,481� Trade Accounts
Receivables 10,064� 8,382� Total Current Assets 21,469� 12,451�
Total Assets 22,083� 13,031� Total Current Liabilities 6,491�
4,340� Total Liabilities 6,495� 4,614� Total Stockholders� Equity $
15,588� $ 8,417� Thomas Group, Inc. (NasdaqCM:TGIS), a leading
operational consulting firm, today announced third quarter 2006 net
income of $3.0 million, or $0.27 per diluted share, on revenues of
$15.9 million, compared to net income of $2.7 million, or $0.25 per
diluted share, on revenues of $11.8 million for the third quarter
of 2005. Third quarter 2006 income from continuing operations
increased 61% to $4.5 million compared to $2.8 million in the third
quarter of 2005. For the first nine months of 2006, income from
continuing operations before income taxes increased 86% to $11.7
million compared to $6.3 million for the first nine months of 2005.
"Although we manage our business for long-term success, I am
pleased with our continued increases in quarterly revenue and
earnings per share," said Jim Taylor, CEO. "Our profitability
increases as we leverage existing S,G&A against increasing
revenue, while maintaining our gross margin through high
utilization of our Resultants. I remain confident in our ability to
sustain profitable, organic growth. This growth will come from
expanding the skill sets and subject matter expertise of our
Resultants, as we continue to grow as Knowledge Leaders." Third
Quarter and First Nine Months 2006 Financial Performance: Revenue:
Revenue for the third quarter of 2006 was $15.9 million, which
represents a $4.1 million increase, or 35%, from the third quarter
of 2005. Revenue for the first nine months of 2006 was $44.7
million, which represents a $13.3 million increase, or 42%, over
the first nine months of 2005. For the first nine months of 2006,
revenue from commercial clients represented 7% of total revenues,
as compared to 4% in the first nine months of 2005. Gross Margins:
Gross profit margins for the third quarter of 2006 were 55%,
compared to 56% for the third quarter of 2005. Gross profit margins
for the first nine months of 2006 were 53% compared to 54% for the
first nine months of 2005. The decrease in 2006 gross margin
relates primarily to the accrual for year-end bonuses. Selling,
General & Administrative (S,G&A): S,G&A costs for the
third quarter of 2006 increased $0.5 million to $4.3 million from
$3.8 million in the third quarter of 2005, but decreased as a
percentage of revenues to 27% compared to 32% in 2005. This
increase in dollars is primarily due to a $0.3 million increase in
stock-based compensation and a $0.2 million increase in legal and
recruiting costs. For the first nine months of 2006, S,G&A
costs increased $2.0 million to $12.1 million and 27% of revenue
from $10.1 million and 32% of revenue in the first nine months of
2005. Although the percentage of revenue decreased, the dollar
increase is primarily due to a $1.0 million increase in stock-based
compensation, $0.4 million in legal and recruiting costs, $0.3
million in commercial selling and marketing costs, $0.1 million in
sales commissions on increased revenue and $0.2 million in other
costs. Cash Flow: For the first nine months of 2006, net cash
provided by operating activities was $8.1 million, compared to $5.2
million for the first nine months of 2005. The increase in net cash
provided is primarily due to 2006 profits in excess of 2005
profits. Cash used for investing activities consisted primarily of
upgrades to office equipment and software and totaled $272,000 for
the first nine months of 2006 compared to $75,000 for the first
nine months of 2005. Cash used for financing activities for the
first nine months of 2006 was $1.1 million, consisting of $1.9
million in dividends paid offset by $0.8 million in cash received
and tax benefit realized from the exercise of stock options. In the
first nine months of 2005, net cash used in financing activities
was $2.8 million, comprised of $1.8 million used to repay debt,
$1.3 million used to repurchase all outstanding warrants, offset by
$0.3 million generated from the issuance of common stock upon the
exercise of outstanding options and warrants. For the first nine
months of 2006, the net change in cash was a net increase of $6.7
million, compared to a net increase of $2.4 for the first nine
months of 2005. Income Taxes: The Company's annual effective tax
rate (ETR) for 2006 is estimated to be approximately 34%, compared
to an ETR of approximately 3% in 2005 due to utilization of net
operating loss carryforwards (NOL) in that year. As a result of
this rate differential, third quarter 2006 income taxes of $1.5
million, or $0.14 per diluted share, compares unfavorably to
$89,000, or $0.01 per diluted share in the third quarter of 2005.
For the first nine months of 2006, income taxes were $3.9 million,
or $0.36 per diluted share, compared to $0.2 million, or $0.02 per
diluted share in the first nine months of 2005. Business
Development: During the third quarter of 2006, the Company signed
$11.1 million in new and extended business, pushing the total for
2006 to $41.2 million. For the year, 92% of bookings have been US
government contracts and 8% have been commercial contracts.
Backlog: At September 30, 2006, the Company had signed backlog of
$11.8 million. Of this amount, $7.3 million is contracted for 2006,
with the remaining $4.5 million contracted for 2007. Backlog does
not include extensions or option periods, and therefore does not
always represent the full scope of the clients' commitment to
Thomas Group. However, backlog does accurately represent the
portion that has been contracted for in writing. Thomas Group, Inc.
(NasdaqCM:TGIS) is an international, publicly traded operational
consulting firm. Thomas Group's unique brand of process improvement
and performance management services enable businesses to enhance
operations, improve productivity and quality, reduce costs,
generate cash and drive higher profitability. Known as The Results
Company(SM), Thomas Group creates and implements customized
improvement strategies for sustained performance improvements in
all facets of the business enterprise. Thomas Group has offices in
Dallas, Detroit, and Hong Kong. For additional information on
Thomas Group, Inc., please go to www.thomasgroup.com. Safe Harbor
Statement under the Private Securities Litigation Reform Act:
Statements in this release that are not strictly historical are
"forward looking" statements, which should be considered as subject
to the many uncertainties that exist in the Company's operations
and business environment. These uncertainties, which include
economic and business conditions that may impact clients and the
Company's performance-oriented fees, timing of contracts and
revenue recognition, competitive and cost factors, and the like,
are set forth in the Company's filings from time to time with the
Securities and Exchange Commission, including the Company's Form
10-K for the year ended December 31, 2005. Except as required by
law, the Company expressly disclaims any intent or obligation to
update any forward looking statements. -0- *T Thomas Group, Inc.
Selected Consolidated Financial Data (Unaudited) Three Months Nine
Months Ended Ended September 30, September 30, ------------------
----------------- 2006 2005 2006 2005 -------- -------- --------
-------- In thousands, except per share data Consulting revenue
before reimbursements $15,693 $11,763 $44,302 $31,333
Reimbursements 166 23 423 29 -------- -------- -------- --------
Total revenue 15,859 11,786 44,725 31,362 -------- --------
-------- -------- Cost of sales before reimbursable expenses 6,961
5,210 20,744 14,284 Reimbursable expenses 166 23 423 29 --------
-------- -------- -------- Total cost of sales 7,127 5,233 21,167
14,313 -------- -------- -------- -------- Gross profit 8,732 6,553
23,558 17,049 Selling, general and administrative 4,326 3,818
12,124 10,129 Sublease (gain) loss -- -- (16) 610 -------- --------
-------- -------- Operating income 4,406 2,735 11,450 6,310
Interest income (expense), net 118 21 244 (49) -------- --------
-------- -------- Income from continuing operations before income
taxes 4,524 2,756 11,694 6,261 Income taxes 1,510 89 3,931 187
-------- -------- -------- -------- Income from continuing
operations 3,014 2,667 7,763 6,074 (Gain)/Loss on discontinued
operations, net of related income taxes (4) 4 (1) 404 --------
-------- -------- -------- Net income $ 3,018 $ 2,663 $ 7,764 $
5,670 ======== ======== ======== ======== Earnings per share:
Basic: Income from continuing operations $ 0.28 $ 0.25 $ 0.72 $
0.58 Loss on discontinued operations, net of tax effect -- -- --
0.04 -------- -------- -------- -------- Net income $ 0.28 $ 0.25 $
0.72 $ 0.54 Diluted: Income from continuing operations $ 0.27 $
0.25 $ 0.71 $ 0.57 Loss on discontinued operations, net of tax
effect -- -- -- 0.04 -------- -------- -------- -------- Net Income
$ 0.27 $ 0.25 $ 0.71 $ 0.53 Weighted average shares: Basic 10,962
10,655 10,791 10,465 Diluted 11,109 10,784 11,002 10,649 *T -0- *T
Thomas Group, Inc. Selected Consolidated Financial Data (Unaudited)
Selected Revenue Data Three Months Ended Nine Months Ended
September 30, September 30, ----------------- -----------------
2006 2005 2006 2005 -------- -------- -------- -------- Amounts in
thousands North America $15,818 $11,786 $44,654 $31,333 Europe --
-- -- -- Asia/Pacific 41 -- 71 29 -------- -------- --------
-------- Total Revenue $15,859 $11,786 $44,725 $31,362 ========
======== ======== ======== *T -0- *T ------------- ------------
September 30, December 31, 2005 2005 (unaudited) -------------
------------ Amounts in thousands Cash $ 10,144 $ 3,481 Trade
Accounts Receivables 10,064 8,382 Total Current Assets 21,469
12,451 Total Assets 22,083 13,031 Total Current Liabilities 6,491
4,340 Total Liabilities 6,495 4,614 Total Stockholders' Equity $
15,588 $ 8,417 *T
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