Beacon Enterprise Solutions Group, Inc., an emerging global leader in the design, implementation and management of high performance Information Technology Systems (ITS), announced its fiscal year end and fourth quarter financial results for the period ended September 30, 2011.
Financial Highlights for the Fiscal Year ended September 30, 2011:
• Net Sales for the year increased 35% to $18.9 million from $13.9 million in the prior year;
• Gross Profit for the year increased 14% to $6.7 million from $5.9 million in the prior year;
• Operating Expenses for the year decreased 12% to $10.2 million from $11.6 million in the prior year;
• Loss from Operations for the year improved by 39% to ( $3.4 million ) from ( $5.7 million ) in the prior year;
• Net Income per share for the year was positive $0.09 vs. a loss of ($0.57) in the prior year;
• The Company’s cash position increased by 250% to $861,000 from $246,000 at the end of the prior year;
• The Company’s total assets remained constant at approximately $12 million while total liabilities decreased by 41% to $8.4 million from $14.1 million in the prior year, which resulted in a $5.7 million improvement to shareholders equity from ( $2 million ) at the end of the prior year to $3.6 million as of September 30, 2011.
Financial Highlights for the Fiscal 2011 Fourth Quarter:
• Net Sales for the quarter increased 26% to $5.4 million from $4.3 million in the year-ago fourth quarter;
• Gross profit for the quarter increased 77% to $2.1 million from $1.2 million in the year-ago fourth quarter;
• Operating Expenses from core business units for the quarter decreased by 33% to $2.1 million from $3.1 million in the year-ago fourth quarter;
• Income from operations from core business units for the quarter improved by $2 million to $47,000 from a loss of ( $1.9 million ) in the year-ago fourth quarter;
• EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) from core business units for the quarter was $166,000 up from a loss of ( $1.9 million ) in the year-ago fourth quarter.
Bruce Widener , Chairman and CEO of Beacon Solutions stated, “I’m pleased to report another quarter of double digit growth despite the challenges presented by the current economic environment. Year-over-year net sales and gross margin are both up and operating expenses and current liabilities are down. Our cash position is the best it’s been since inception and for the first time in our Company’s history we generated positive income from operations from our core business units during the most recent quarter.”
“During the year we refocused our sales efforts on higher-margin professional services business, redefined and documented our business processes and implemented a new cloud-based ERP solution,” added Widener. “We isolated the legacy middle-market business from Beacon’s daily operations and aligned our workforce with the goals and objectives of our Company and our clients. We believe the changes we’ve made in the past year provide for a more efficient method of operation and will meet the market opportunity and more importantly, specific, individual marquee customer needs that will enable significant growth in 2012.”
Jerry Bowman, President and Chief Operating Officer commented, “During last fiscal year by simply mining our existing backlog it became obvious that through expanding the breadth of engineering services for mission critical environments that we could increase the average revenue per data center and computer room, in some cases resulting in a 6-fold increase, with no sacrifice in margin or associated increase in overhead costs. The equation of same sales people, same client, same services employees, but with increased scope of work, makes a lot of sense and is working very well for us. This sales mining strategy is working equally well in expanding backlog from existing clients without any additional sales costs.”
“During 2011 we also observed that some of the individual services that were bundled together, made sense for our client, but not when linked to other services,” continued Bowman. “One of these individual services, documentation, reduces the cost to survey and assess remote sites, provides a client-accessible database, for planning consolidation and M&A projects with updated data. The foundational documentation services, to mobilize just-in-time wired and wireless field engineering resources while reducing cost, enabled Beacon to move forward this fall with the first of the mega projects that were delayed early last year. As a result of adapting our services to shifting client requirements we now have people on site performing wireless documentation services to roughly 10 million square feet of space.”
“With the implementation of our new CRM system completed, in fiscal 2011 we stopped using our estimated backlog tool, and began using the capabilities our new cloud-based CRM tool to better forecast contract backlog and integrate new clients and project opportunities,” continued Bowman. “The new weighted forecast includes contracted backlog along with weighted opportunities based on the five stages of the sale, classified by whether the client is new, an existing client with no enterprise agreement in place, or whether it’s an existing client with a contract in place. We took a two-year look-back at project opportunities to determine what percentage of the opportunities resulted in recognized revenue to date, and then applied those percentages to each new opportunity within the CRM. Currently the aggregate value of these projects, referred to as our Blended Project Funnel, stands at $111 million with $37 million in weighted project value over the next 12-18 months. It is important to note that this is not a revenue forecast, but rather an indicator of project activity which could accelerate or decelerate as we progress through the upcoming year.”
“Another positive indicator lies in our ITS Contract Services group where work ticket volume, which is a measure of customer activity, increased by 31% to 1,588 in fiscal year 2011 up from 1,214 in fiscal year 2010. Tickets can range from $300 up to $300,000 dollars in value. While this service is one of the most challenging to implement, it also holds some of the most explosive growth potential. Beacon has consistently proven that we can facilitate internal client savings and permit them to focus on their core business with our ITS Contract Services (ICS). Once a contract is in place long enough for us to baseline client activity, this revenue adds stability and predictability that helps us more accurately forecast and reach revenue goals,” concluded Bowman.
S. Scott Fitzpatrick, Vice President Corporate Controller and Treasurer said, “The increase in sales volume, continued performance in driving margin through our business model and operating expense management has resulted in significant operational improvements. We will continue to focus on these three operating metrics as our drive toward profitability continues.”
“During the fourth quarter of 2011 as a percent of revenue, gross profit was in line with our expectations at 39%,” continued Fitzpatrick. “We expect we will continue to see margin performance consistent with our results in the fourth quarter, with variances depending on our mix of higher margin work and the relative delivery stage of our larger projects and programs. In the third quarter of fiscal 2011, our margin was higher due to the fact that we began several major programs in the period and our higher margin work is typically delivered near the beginning of these programs.”
“We also made significant improvements in our cash performance metrics during fiscal 2011. Our DSO stood at 78 days as of September 30, 2011 as compared with 92 days at the end of fiscal 2010, our A/R turnover increased from 3.9 to 4.6. As a result of this improved performance and our improved operational performance, our cash burn significantly decreased in the second half of 2011. We would expect to continue to make improvements in our cash management in fiscal 2012 as our revenue continues to increase and we continue to leverage our existing infrastructure and resources,” concluded Fitzpatrick.
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