Thomas Group Announces Third Quarter Results
13 November 1998
Thomas Group Announces Third Quarter Results; Earnings Per Share from Continuing Operations Up 21.9%
DALLAS--Nov. 13, 1998--Thomas Group, Inc. today announced results for the third quarter of 1998. Diluted earnings per share from continuing operations for the third quarter 1998 were $0.39 compared to $0.32 for the same period last year, a 21.9% increase. This represents sequential growth of 56% from $0.25 per share (excluding nonrecurring charges) in the second quarter of 1998. Revenues for the third quarter 1998 were $17.4 million, down 5.5% from $18.5 million in third quarter 1997. Including the negative impact of discontinued operations, diluted earnings per share were $0.30 for third quarter 1998 compared to $0.20 for third quarter 1997.For the first nine months of 1998, revenues from continuing operations were $49.7 million, down 5.3% from $52.5 million for the first nine months of 1997. Net income from continuing operations, prior to total non-recurring pre-tax charges of $10.4 million, was $4.1 million, or $0.75 per diluted share, compared to net income of $5.5 million, or $0.87 per diluted share, for the first nine months of 1997. Including non-recurring charges, losses from continuing operations for the first nine months of 1998 were $2.7 million, or $0.51 per basic share.
Fixed fee revenues for the third quarter of 1998 were $14.2 million or 81% of revenue, as compared to $12.2 million or 66% of revenue in the third quarter of 1997. Business under commitment was $63 million at September 30, 1998, compared to $59 million at June 30, 1998.
Commenting on the Company's third quarter performance, J. Thomas Williams, Chief Executive Officer and President said, "I am pleased and encouraged by our third quarter results. The disposal of our information technology business segment has allowed us to fully concentrate on as well as align our costs to effectively support and grow our core business, making companies faster. The reduction of incentive revenue as a percentage of total revenue is in line with our strategy to reduce the volatility of our revenue stream, although incentive programs continue to be a strong marketing tool."
Lee Grubb, Chief Financial Officer and President of the Automotive Business Unit, commenting on the results of the quarter said, "The restructuring charge taken in the second quarter of 1998 has allowed us to achieve a gross margin of 44.8%, selling, general and administrative expenses as a percentage of sales of 26.8% and ultimately net income before taxes as a percentage of sales of 17.7% for the third quarter of 1998. The selling, general and administrative expense percentage will reduce further as revenues rise. Additionally, we were able to eliminate borrowings and maintain a cash position of $2.6 million at September 30, 1998. Now that our financial structure is in order we will continue to focus on different ways of doing business, including introducing new products and potentially entering into partnerships to improve our deal flow."
Thomas Group, Inc. is an international, publicly-traded company (TGIS) providing solutions to significantly improve many business processes for major corporate clients. Thomas Group's Resultants work on-site with client companies to analyze operations, and to develop and implement speed-based improvement strategies. Thomas Group has offices in Dallas, Detroit, Frankfurt, and Singapore. For additional information on Thomas Group, Inc. please visit the company on the World Wide Web at 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 Thomas Group, Inc. Form 10-K for the 1997 fiscal year filed with the Securities and Exchange Commission.
THOMAS GROUP, INC.
Selected Consolidated Financial Data (Unaudited)
(Amounts stated in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1998 1997 1998 1997
------------------ -----------------
Revenues $17,439 $18,457 $49,650 $52,468
Cost of Sales 9,621 10,161 29,422 29,815
------------------ -----------------
Gross Margin 7,818 8,296 20,228 22,653
Selling, General and
Administrative 4,668 4,819 13,543 13,571
------------------ -----------------
Operating Income (Loss) 3,150 3,477 6,685 9,082
Interest Income (Expense),
Net (70) 35 (131) 103
------------------ -----------------
Income (Loss) from
Continuing Operations
Before Income Taxes 3,080 3,512 6,554 9,185
Income Taxes (Benefit) 1,124 1,423 2,429 3,691
------------------ -----------------
Income from Continuing
Operations excluding
non-recurring
charges 1,956 2,089 4,125 5,494
------------------ -----------------
Non-recurring charges, net
of income tax - - (6,851) -
------------------ -----------------
Income (Loss) from
Continuing Operations 1,956 2,089 (2,726) 5,494
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Discontinued Operations
Loss from Operations, net
of income tax - (788) (993) (1,984)
(Loss) on disposal, net
of income tax (435) - (3,084) -
------------------ -----------------
Net Income $1,521 $1,301 $(6,803) $3,510
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Earnings (Loss) per share:
Basic:
Income from Continuing
Operations excluding
non-recurring charges $0.40 $0.34 $0.76 $0.90
Income from Continuing
Operations 0.40 0.34 (0.51) 0.90
Discontinued Operations:
Loss from operations - (0.13) (0.18) (0.32)
Estimated Loss on
Disposal (0.09) - (0.57) -
------------------ -----------------
Net Income (Loss) $0.31 $0.21 $(1.26) $ 0.58
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Diluted:
Income from Continuing
Operations excluding
nonrecurring charges $0.39 $ 0.32 $0.75 $0.87
Income from Continuing
Operations 0.39 0.32 N/A 0.87
Discontinued Operations:
Loss from Operations - (0.12) N/A (0.31)
Estimated Loss on Disposal (0.09) - N/A -
------------------ -----------------
Net Income (Loss) $0.30 $0.20 N/A $0.56
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Weighted Average Shares:
Basic 4,946,380 6,102,643 5,403,607 6,085,812
Diluted 5,055,283 6,435,390 5,524,468 6,304,487
THOMAS GROUP, INC.
Selected Consolidated Financial Data (Unaudited)
(Amounts stated in thousands, except per share amounts)
Selected Segment Sales Data
Three Months Nine Months Ended
Ended September 30, September 30,
------------------- -----------------
1998 1997 1998 1997
------------------- -----------------
Business Improvement
Programs
United States $12,568 $13,045 $34,265 $38,682
Europe 3,972 3,908 12,697 10,556
Asia/Pacific 899 1,544 2,688 3,230
------------------- -----------------
Total Revenue $17,439 $18,457 $49,650 $52,468
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Selected Balance Sheet Data
September 30, December 31,
1998 1997
------------- ------------
Cash $2,641 $11,254
Trade Accounts Receivable 8,290 10,278
Unbilled Receivables 3,599 2,083
Total Current Assets 18,223 27,434
Total Assets 29,645 44,386
Total Current Liabilities 8,696 6,696
Total Liabilities 11,448 9,678
Total Stockholders' Equity 18,197 34,708