EX-99.1 2 netguru_8kex99-1.txt Exhibit 99.1 [netGuru logo here] Bruce Nelson Santanu Das Dan Matsui/Gene Heller Chief Financial Officer Chief Operating Officer Silverman Heller Associates (714) 974-2500 x-215 (714) 974-2500 x-329 (310) 208-2550 NETGURU INC. REPORTS FISCAL 2005 THIRD-QUARTER RESULTS Positive Cash Flow, Narrow Losses Yorba Linda, Calif.--Feb. 2, 2005--netGuru, Inc. (Nasdaq: NGRU) reported financial results for fiscal 2005 third quarter and nine months ended December 31, 2004. Third-quarter net revenues were $3.72 million, compared to $3.88 million in the third quarter a year ago. Net revenues from engineering and collaborative software products and services rose to $2.70 million from $2.66 million last year, but net revenues from the staffing division of IT services declined. Cost of revenues fell to $0.83 million from $1.22 million, reflecting lower costs related to all products and services compared to the same period last year. Gross profit for the third quarter rose to $2.89 million, or 78% of net revenues, compared to $2.67 million, or 69% of net revenues in the third quarter of last year. Total operating expenses for the quarter declined by approximately $0.99 million to $2.99 million from $3.98 million in the third quarter of the previous year, primarily due to lower sales, general, and administrative (SG&A) expenses. SG&A expenses in third quarter of last year included $642,000 in expenses related to severance and strategic consulting and investor relations. Net loss for the third quarter narrowed to $223,000, or $(0.01) per share, compared to a net loss of $2.02 million, or $(0.11) per share, for the third quarter of last year. Net revenues for the nine months ended December 31, 2004, were $11.14 million, compared to $11.78 million for nine months ended December 31, 2003. Net revenues from engineering and collaborative software products and services were $8.0 million compared to $8.1 million for the nine months a year ago. Net revenues from the staffing division of IT services were $2.53 million versus $3.32 million. Total gross profit rose to $8.4 million, or 76% of net revenues, compared to $8.1 million, or 69% of net revenues, for the same period last fiscal year, primarily due to the higher gross profit from the steel detailing component of the IT services business. Operating expenses for nine months ended December 31, 2004, fell to $9.10 million from $10.40 million for nine months a year ago. Nine-month operating loss narrowed to $0.64 million from an operating loss of $2.30 million for the same period in the prior year. Nine-month net loss also narrowed to $1.02 million, or $(0.05) per share, from a net loss of $3.19 million, or $(0.18) per share, for the nine-month period last year. Net loss for nine months ended December 31, 2004, included a gain from discontinued operations of $67,000, or $0.01 per share, while net loss for nine months ended December 31, 2003, included a loss from discontinued operations of $341,000, or $(0.02) per share related to our travel subsidiary. netGuru Chairman and Chief Executive Amrit Das commented: "We are pleased with the reductions in our costs and expenses, and the narrower loss for the quarter and nine months ended December 31, 2004. We also improved our recurring revenues by significantly increasing our software maintenance and service billings, which are not fully recognized as revenue in the third quarter, since they are recognized over the service period. As a result, we generated positive cash flows from operations for the quarter. However, steel detailing and engineering services revenues that we expected to recognize in the third quarter slipped into the fourth quarter, and we did not achieve profitability in the third quarter. Our decisions during the past year to streamline operations, focus on our core product and services, and reduce costs and expenses overall are now providing the results we expected and have positioned the Company to achieve anticipated profitability in fiscal fourth quarter ending March 31, 2005. "Our longer-term outlook for top-line growth also remains positive, a result of product enhancements and several strategic partnerships we have secured," Das continued. "Our business strategy continues to be to strengthen the competitive position of our engineering software, increase the number of distribution channels for our software, and expand our engineering project management business and business process outsourcing operations. We believe the ongoing improvement in business and construction activity in the U.S. and abroad provides a favorable backdrop for our strategy to generate revenue growth in all areas of netGuru's business." Teleconference information: The Company will hold a teleconference today at 1:30 p.m. Pacific Standard Time (4:30 p.m. EST) to review the financial results, followed by a live Q&A session. 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. For those unable to attend, the company will host an archive of the call on its website, www.netguru.com (requires RealPlayer streaming audio software, available at www.real.com). Additionally, a telephone playback will be available for 48 hours beginning today at 5 p.m. PST. The playback can be accessed by dialing 800-642-1687 (or 706-645-9291 for international callers) and providing conference ID 3823536. About netGuru, Inc. netGuru is an engineering information technology and services company offering engineering and design collaborative software, 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 20,000 businesses in 85 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, the matters discussed in this press release, including profitability, sales/revenues, and business strategy, 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 acceptance and use of the Company's products, market conditions in Asia and worldwide, engineering needs, our ability to increase revenue and control costs and expenses, technological changes, 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, 2004, as filed with the U.S. Securities and Exchange Commission. [Financial tables next pages] NETGURU, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except share and per share amounts)
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS ENDED ENDED ENDED ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 2004 2003 2004 2003 ------------- ------------- ------------- ------------- Net revenues: Engineering and collaborative software products and services $ 2,704 $ 2,664 $ 7,981 $ 8,060 IT services 1,016 1,218 3,162 3,721 ------------- ------------- ------------- ------------- Total net revenues $ 3,720 $ 3,882 $ 11,143 $ 11,781 Cost of revenues: Engineering and collaborative software products and services 145 246 577 710 IT services 684 969 2,128 2,934 ------------- ------------- ------------- ------------- Total cost of revenues 829 1,215 2,705 3,644 ------------- ------------- ------------- ------------- Gross profit 2,891 2,667 8,438 8,137 ------------- ------------- ------------- ------------- Operating expenses: Selling, general and administrative 2,353 3,190 6,972 8,034 Research and development 390 545 1,216 1,601 Bad debt expense 4 15 169 49 Depreciation 244 231 720 715 ------------- ------------- ------------- ------------- Total operating expenses 2,991 3,981 9,077 10,399 ------------- ------------- ------------- ------------- Operating loss (100) (1,314) (639) (2,262) ------------- ------------- ------------- ------------- Other expense (income): Interest, net 111 246 340 529 Other (4) (26) (61) (109) Loss on substantial modification of debt -- -- 133 -- ------------- ------------- ------------- ------------- Total other expense 107 220 412 420 ------------- ------------- ------------- ------------- Loss from continuing operations before income taxes (207) (1,534) (1,051) (2,682) Income tax expense 16 53 38 165 ------------- ------------- ------------- ------------- Loss from continuing operations (223) (1,587) (1,089) (2,847) (Loss) gain from discontinued operations: -- (431) 67 (341) ------------- ------------- ------------- ------------- Net loss $ (223) $ (2,018) $ (1,022) $ (3,188) ============= ============= ============= ============= Basic and diluted loss per common share Loss per common share from continuing operations $ (0.01) $ (0.09) $ (0.06) $ (0.16) (Loss) gain from discontinued operations -- (0.02) 0.01 (0.02) ------------- ------------- ------------- ------------- Basic and diluted net loss per common share $ (0.01) $ (0.11) $ (0.05) $ (0.18) ============= ============= ============= ============= Common shares used in computing basic and diluted net loss per common share 18,865,523 17,701,176 18,775,554 17,456,417 ============= ============= ============= =============
-more- NETGURU, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) DECEMBER 31, MARCH 31, 2004 2004 (UNAUDITED) --------- --------- ASSETS Current assets: Cash and cash equivalents $ 2,942 $ 1,646 Short-term investments -- 100 Accounts receivable (net of allowance for doubtful accounts of $700 and $615, as of December 31, 2004 and March 31, 2004, respectively) 3,915 3,340 Income tax receivable 2 16 Notes and related party loans receivable 29 35 Deposits 97 67 Prepaid expenses and other current assets 1,331 1,174 Assets of subsidiary held for sale -- 327 --------- --------- Total current assets 8,316 6,705 Property, plant and equipment, net 1,865 2,215 Goodwill (net of accumulated amortization of $3,652) 3,116 2,892 Other assets 189 218 --------- --------- $ 13,486 $ 12,030 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt, net of discount of $195 $ 1,167 $ 975 Current portion of capital lease obligations 141 109 Accounts payable 436 600 Accrued expenses 1,045 1,160 Income taxes payable 25 55 Deferred revenues 2,228 1,834 Other liabilities 264 208 Liabilities of subsidiary held for sale -- 186 --------- --------- Total current liabilities 5,306 5,127 Long-term bank debt, net of current portion and net of discount of $229 1,976 1,382 Capital lease obligations, net of current portion 381 368 Deferred gain on sale-leaseback 695 747 --------- --------- Total liabilities 8,358 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 December 31, 2004 and March 31, 2004, respectively 191 181 Additional paid-in capital 36,899 35,352 Accumulated deficit (31,466) (30,444) Accumulated other comprehensive loss: Cumulative foreign currency translation adjustments (496) (683) --------- --------- Total stockholders' equity 5,128 4,406 --------- --------- $ 13,486 $ 12,030 ========= ========= # # #