SOURCE: Telvent GIT, S.A.

August 30, 2006 16:30 ET

Telvent Announces Second Quarter 2006 Financial Results

Revenues Increase 11.4% to EUR 106.6 Million Year-Over-Year; Pro Forma EPS of EUR 0.11 per Diluted Share, an Increase of 12.1%

MADRID, SPAIN -- (MARKET WIRE) -- August 30, 2006 -- Telvent GIT, S.A. (NASDAQ: TLVT), the Global RealTime IT Company, today announced unaudited financial results for the second quarter ended June 30, 2006.

Telvent's second quarter 2006 revenues totaled EUR 106.6 million, an increase of EUR 10.9 million or 11.4 percent, versus EUR 95.8 million reported for the second quarter of 2005.

Net income for second quarter 2006 was EUR 1.9 million, a decrease of EUR 0.2 million or 10.4 percent, versus EUR 2.1 million reported for the second quarter of 2005. Earnings per diluted share for the second quarter of 2006 were EUR 0.06 (based on a weighted average of 29,247,100 shares outstanding), compared to EUR 0.07 per diluted share (29,247,100 shares) in the second quarter of 2005.

Pro forma net income for the second quarter 2006 was EUR 3.2 million, an increase of 12.0 percent, versus EUR 2.8 million for the second quarter of 2005. Pro forma earnings per diluted share for the second quarter 2006 were EUR 0.11, versus EUR 0.10 for the second quarter of 2005.

Revenues for the first six months of 2006 totaled EUR 201.9 million, an increase of EUR 30.6 million or 17.9 percent, versus EUR 171.3 million reported for the first six months of 2005.

Net income for the first six months of 2006 was EUR 6.6 million, an increase of EUR 1.5 million or 28.3 percent, versus EUR 5.2 million reported for the first six months of 2005. Earnings per diluted share for the first six months of 2006 were EUR 0.23 (based on a weighted average of 29,247,100 shares outstanding), compared to EUR 0.18 per diluted share (29,247,100 shares) in the same period of 2005.

Pro forma net income for the first six months of 2006 was EUR 8.5 million, an increase of 27.5 percent, versus EUR 6.7 million for the first six months of 2005. Pro forma earnings per diluted share for the first six months of 2006 were EUR 0.29, versus EUR 0.23 for the same period of 2005.

Pro forma net income excludes the amortization of intangible assets from the purchase price allocations in our acquisitions, stock compensation plan expenses and mark to market hedging, that Telvent believes are not indicative of its core performance or results. A reconciliation between GAAP, pro forma net income and EPS is provided in this release in a table immediately following the condensed consolidated financial statements.

"Revenues grew in most of our core sectors of activity during the quarter, demonstrating the continued strength and momentum of our business. The first half of the year has been extremely active for Telvent. Our major initiatives delivered positive results in client renewals, revenue and sales pipeline growth, and expansion of capabilities and geographic reach. In addition, acquisitions in the strategically important U.S. and China markets have significantly increased our global capabilities in our ITS Traffic business.

"This is giving us the confidence that our 2006 expectations are on track and that we are executing well on our business plans for the year. We are well-positioned for further growth and remain focused on delivering value to our clients and shareholders," said Manuel Sánchez Ortega, Telvent's chairman and chief executive officer.

Gross margin was 21.1 percent in the second quarter of 2006 compared to 20.2 percent in the second quarter of 2005. Gross margin for the first six months of 2006 was 22.7 percent compared to 22.1 percent in the same period last year.

Operating expenses, as a percentage of revenues, were 17.0 percent in the second quarter of 2006. This represented an increase of EUR 2.3 million or 0.5 percentage points from the same period last year. Operating expenses, as a percentage of revenues, for the first six months of 2006 were 18.0 percent, compared to 17.4 percent in the same period last year.

Income from operations, as a percentage of revenues, was 4.2 percent in the second quarter of 2006, compared to 3.7 percent in the second quarter of 2005. For the first six months of 2006, income from operations, as a percentage of revenues, was 4.8 percent unchanged from the same period last year.

As of June 30, 2006, cash and cash equivalents were EUR 81.6 million and total debt (including net EUR 25.1 million credit line due to related parties) was EUR 79.3 million, resulting in a net cash position of EUR 2.3 million. As of December 31, 2005, net cash position was EUR 58.1 million.

For the first six months of 2006, cash used in operating activities net of property, plant and equipment additions, was EUR 46.0 million. For the same period in 2005, cash used was EUR 30.3 million.

Segment Discussion

Energy

Revenues for the Energy segment in the second quarter of 2006 were EUR 49.8 million, an increase of EUR 5.1 million, or 11.4 percent, from EUR 44.7 million in second quarter 2005. Gross margin in this segment was 21.0 percent in the second quarter of 2006, versus 22.2 percent in 2005.

In the Oil and Gas sector, the most important contract was with Petroleos Mexicanos (PEMEX) in Mexico for the fire and gas detection system in the Akal-C offshore platforms. This safety system includes fire and gas detection; fire suppression for 3 control rooms, automation of fire pumps and OASyS DNA. This is one of the biggest contracts signed so far for this type of project and is an important precedent in the highly competitive Mexican market. The total contract amount is U.S.$9.0 million (approx. EUR 7.0 million).

In the Electricity Sector, the most significant contract was the upgrade of the Supervisory, Control and Data Acquisition (SCADA) system for the Toronto Hydro Electric in Canada. The SCADA is based on our OASyS DNA platform. The total contract amount is EUR 1.4 million.

Revenues for the first six months of 2006 were EUR 91.2 million, an increase of EUR 11.2 million, or 14.0 percent, from EUR 80.0 million in the same period of 2005. Gross margin in this segment was 23.2 percent in the first six months of 2006 versus 22.9 percent in 2005.

Traffic

Revenues for the Traffic segment during the second quarter 2006 were EUR 29.6 million, a decrease of EUR 2.5 million, or 7.8 percent, from EUR 32.2 million recorded in the same period of 2005. Gross margin in this segment was 18.8 percent in the second quarter of 2006, versus 16.7 percent in the second quarter of 2005. The most significant contract in the Traffic segment during the second quarter was the traffic command and control center project for Shanxi Jindieng Public Security Bureau. With this project, the Chinese authority aims to foster a multi-modal urban transport system, which is planned, designed, and used for the safe, efficient and healthy movement of people and goods. The total contract amount is EUR 4.1 million.

Revenues for the first six months of 2006 were EUR 56.5 million, a decrease of EUR 0.2 million, or 0.3 percent, from EUR 56.7 million in the same period of 2005. Gross margin in this segment was 20.1 percent in the first six months of 2006, versus 18.7 percent in 2005.

Transport

Revenues for the Transport segment during the second quarter 2006 were EUR 7.6 million, an increase of EUR 3.0 million, or 65.9 percent, from EUR 4.6 million during the same period in 2005. Gross margin in this segment was 30.8 percent in the second quarter of 2006, versus 15.9 percent in the same period of 2005. The most significant contract in this segment was the Automatic Fare Collection (AFC) system for line 2 extension of Mexico's Metro Monterrey (Monterrey-San Nicolás-Escobedo), and the upgrade of AFC systems on lines 1 and 2. The contract includes the supply and installation of the access control system and the automatic ticket vending machines, which are based on contact less technology. The contract amount is EUR 4 million.

Revenues for the first six months of 2006 were EUR 16.5 million, an increase of EUR 8.4 million, or 103.4 percent, from EUR 8.1 million in the same period of 2005. Gross margin in this segment was 22.5 percent in the first six months of 2006 versus 20.6 percent in 2005.

Environment

Revenues for the Environment segment during the second quarter of 2006 were EUR 8.9 million, an increase of EUR 2.8 million, or 46.7 percent, from EUR 6.1 million during the same period in 2005. Gross margin in this segment was 18.7 percent in the second quarter of 2006, versus 32.6 percent in the same period of 2005. The most significant contract in this segment was the upgrade of the National Weather Radar Observation network for the Spanish National Meteorological Institute (INM). The contract involves the modernization of the existing 15 radar sites and the radar information systems at the Regional Centers and the National headquarters in Madrid. The upgraded system will allow the Spanish Meteorological Service to improve their capability to survey and track severe weather countrywide. The contract amount is EUR 3.8 million.

Revenues for the first six months of 2006 were EUR 18.3 million, an increase of EUR 7.5 million, or 69.4 percent, from EUR 10.8 million in the same period of 2005. Gross margin in this segment was 23.5 percent in the first six months of 2006, versus 27.5 percent in 2005.

Other

Revenues for the Other segment (Public Administration, Healthcare IT and Managed Services), during the second quarter of 2006 were EUR 10.7 million, an increase of EUR 2.5 million, or 29.7 percent, from EUR 8.3 million in the same period in 2005. Gross margin in this segment was 23.5 percent in first quarter 2006, versus 16.5 percent in 2005. In our Public Administration activity, the most significant contract was the implementation of a Corporate Territorial Information System for the management and supervision of the geo-spatial information of the Guadalquivir river basin and the upgrade of the contents of the web and intranet with the development of an information system for Confederación Hidrográfica del Guadalquivir. The contract amount exceeds EUR 1.0 million.

In our Healthcare activity, the most significant contract in this quarter was the Hospital Information System for San Juan de Dios hospitals in the south of Spain. It is an important reference for Telvent's TiCares product, which is a tool used daily by more than 2,000 healthcare professionals. The contract amount is EUR 2.6 million and involves the deployment of a patient administration system for 14 hospitals and the modernization of existing clinical information systems.

Revenues for the first six months of 2006 were EUR 19.5 million, an increase of EUR 3.7 million, or 23.6 percent, from EUR 15.8 million in the same period of 2005. Gross margin in this segment was 27.7 percent in the first six months of 2006, versus 27.8 percent in 2005.

Backlog

Backlog (representing the portion of signed contracts for which performance is pending) as of June 30, 2006 was EUR 427.7 million, which reflects 29.6 percent growth over the EUR 330.1 million in backlog at the end of June 2005.

New Bookings

New order bookings (or new contracts signed) in the second quarter of 2006 were EUR 85.0 million, an 18.5 percent decrease from EUR 104.3 million during the same period in 2005. The accumulated bookings figure for the first six months of 2006 was EUR 228.7 million, a 10.8 percent increase from the same period in 2005.

Pipeline

Pipeline, measured as management's estimates of real opportunities within the next 6 to 12 months, is approximately EUR 1.23 billion.

Use of Non-GAAP Financial Information

To supplement our consolidated financial statements presented in accordance with U.S. GAAP, we use certain non-GAAP measures, including pro forma net income and EPS. Pro forma net income and EPS are adjusted from GAAP-based results to exclude certain costs and expenses that we believe are not indicative of our core operating results. Pro forma results are one of the primary indicators management uses for evaluating historical results and for planning and forecasting future periods. We believe pro forma results provide consistency in our financial reporting which enhances our investors' understanding of our current financial performance as well as our future prospects. Pro forma results should be viewed in addition to, and not in lieu of, GAAP results.

Conference Call Details

Telvent Chairman and CEO, Manuel Sánchez, Chief Financial Officer Ana Plaza, and Jose Ignacio del Barrio, Executive Vice President of Business Development and Head of Investor Relations, will conduct a conference call to discuss the second quarter 2006 results, which will be simultaneously webcast at 9:00 A.M. Eastern Time / 3:00 P.M. Madrid Time on Thursday, August 31, 2006.

To access the conference call, participants in North America should dial 800-374-0724 and international participants should dial +1 (706) 634-1387. A live webcast of the conference call will be available on the investor relations zone of Telvent's corporate web site at www.telvent.com. Please visit the web site at least 15 minutes early to register for the teleconference webcast and download any necessary audio software. A replay of the call will be available on the web site approximately two hours after the conference call is completed. To access the replay, participants in North America should dial 800-642-1687 and international participants should dial +1 (706) 645-9291. The passcode for the replay is 4260293.

About Telvent

Telvent (NASDAQ: TLVT), the Global RealTime IT Company, specializes in high value add solutions and services in four industry sectors (Energy, Traffic, Transport and Environment). Its technology allows high performing companies to make real-time business decisions using data acquisition, control, and advanced operational applications, providing secure actionable information delivery to the enterprise.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often are proceeded by words such as "believes," "expects," "may," "anticipates," "plans," "intends," "assumes," "will" or similar expressions. Forward-looking statements reflect management's current expectations, as of the date of this press release, and involve certain risks and uncertainties. Telvent's actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Some of the factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the "Risk Factors" described in Telvent's Annual Report on Form 20-F for the year ended December 31, 2005, filed with the Securities and Exchange Commission on May 3, 2006, and Telvent´s Quarterly Reports on Form 6-K for the quarters ended March 31, 2006 and June 30, 2006 filed May 30, 2006 and August 30, 2006, respectively.

Unaudited Consolidated Balance Sheets
(In thousands of Euros, except share and per share amounts)

                                                     As of        As of
                                                    June 30,   December 31,
                                                      2006         2005
                                                  (Unaudited)   (Audited)
                                                  ------------ ------------

Assets:
Current assets:
  Cash and cash equivalents                       EUR   81,560 EUR   80,010
  Restricted cash                                            -        3,183
  Other short-term investments                             494          709
  Derivative contracts                                   2,296        1,194
  Accounts receivable (net of allowances of EUR
    3,071 as of June 30,
  2006 and EUR  2,650 as of December 31, 2005)          91,360       92,494
  Unbilled revenues                                    120,273       77,069
  Due from related parties                              15,853       45,449
  Inventory                                             23,017       11,622
  Other taxes receivable                                13,869        8,434
  Deferred tax assets                                    5,712        6,043
  Other current assets                                   5,424        1,532
                                                  ------------ ------------
    Total current assets                          EUR  360,128 EUR  327,739
  Deposits and other investments                         1,721        1,870
  Property, plant and equipment, net of
   accumulated depreciation of  EUR  43,618
   as of June 30, 2006 and EUR  40,368 as of
   December 31, 2005                                    50,732       52,965
  Long-term receivables and other assets                 8,599       11,317
  Deferred tax assets                                   16,527       14,446
  Other intangible assets, net of accumulated
   amortization of EUR  14,851
   as of June 30, 2006 and EUR  14,231 as of
   December 31, 2005                                    13,299       10,143
  Goodwill                                              18,922       16,862
                                                  ------------ ------------
    Total assets                                  EUR  469,928 EUR  435,342
                                                  ============ ============
Liabilities and shareholders' equity:
  Accounts payable                                EUR  147,940 EUR  150,246
  Billings in excess of costs and estimated
   earnings                                             19,315       20,417
  Accrued and other liabilities                         16,357        9,418
  Income and other taxes payable                         8,852       17,835
  Deferred tax liabilities                               5,850        3,082
  Due to related parties                                39,485       11,146
  Current portion of long-term debt                      3,909        8,515
  Short-term debt                                       36,920       23,958
  Short-term leasing obligations                         1,698        1,948
  Derivative contracts                                   2,328        1,440
                                                  ------------ ------------
    Total current liabilities                     EUR  282,654 EUR  248,005
  Long-term debt less current portion                   13,374       15,310
  Long-term leasing obligations                          3,119        4,035
  Other long term liabilities                            6,173        7,507
  Deferred tax liabilities                                  79          673
  Unearned income                                          283          211
                                                  ------------ ------------
    Total liabilities                             EUR  305,682 EUR  275,741
                                                  ------------ ------------


Unaudited Consolidated Balance Sheets
(In thousands of Euros, except share and per share amounts)


                                                   As of         As of
                                                  June 30,    December 31,
                                                    2006          2005
                                                (Unaudited)     (Audited)
                                                ------------- ------------

Minority interest                                       1,068        1,604

Commitments and contingencies

Shareholders´ equity:
  Common stock, EUR  3.005 par value,
   29,247,100 shares authorized,
  issued and outstanding, same class and series        87,889       87,889
  Additional paid-in-capital                           39,383       40,471
  Deferred compensation                                     -       (2,044)
  Accumulated other comprehensive income                  494        2,883
  Retained earnings                                    35,412       28,798
                                                ------------- ------------
    Total shareholders' equity                  EUR  163,178  EUR  157,997
                                                ------------- ------------
    Total liabilities and shareholders' equity  EUR  469,928  EUR  435,342
                                                ============= ============


Unaudited Consolidated Statements of Operations
(In thousands of Euros, except share and per share amounts)


                        Three Months Ended           Six Months Ended
                               June 30,                  June 30,
                    --------------------------  --------------------------
                        2006          2005          2006          2005
                    ------------  ------------  ------------  ------------

Revenues            EUR  106,636  EUR   95,759  EUR  201,942  EUR  171,349
Cost of revenues          84,104        76,373       156,022       133,428
                    ------------  ------------  ------------  ------------
Gross profit        EUR   22,532  EUR   19,386  EUR   45,920  EUR   37,921
                    ------------  ------------  ------------  ------------
General and
 administrative            8,193         6,816        16,415        12,229
Sales and marketing        3,606         3,097         8,676         6,287
Research and
 development               4,203         3,685         7,183         7,054
Depreciation and
 amortization              2,102         2,222         3,986         4,235
                    ------------  ------------  ------------  ------------
    Total operating
     expenses       EUR   18,104  EUR   15,820  EUR   36,260  EUR   29,805
                    ------------  ------------  ------------  ------------
Income from
 operations                4,428         3,566         9,660         8,116
Financial expense,
 net                      (1,691)         (510)       (1,120)         (924)
                    ------------  ------------  ------------  ------------
    Total other
     income
     (expense)      EUR   (1,691) EUR     (510) EUR   (1,120) EUR     (924)
                    ------------  ------------  ------------  ------------
Income before
 income taxes              2,737         3,056         8,540         7,192
Income tax expense           710         1,046         1,908         1,530
                    ------------  ------------  ------------  ------------
Net income before
 minority interest  EUR    2,027  EUR    2,010  EUR    6,632  EUR    5,662
                    ------------  ------------  ------------  ------------
Loss/(profit)
 attributable to
 minority interests         (136)          100           (18)         (506)
                    ------------  ------------  ------------  ------------
Net income          EUR    1,891  EUR    2,110  EUR    6,614  EUR    5,156
                    ============  ============  ============  ============

Earnings per share
  Basic and
  diluted net
  income per
  share             EUR     0.06  EUR     0.07  EUR     0.23  EUR     0.18
                    ============  ============  ============  ============
Weighted average
 number of shares
 outstanding
    Basic and
     diluted          29,247,100    29,247,100    29,247,100    29,247,100
                    ============  ============  ============  ============


Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands of Euros, except share and per share amounts)


                                                Six Months Ended June 30,
                                                    2006          2005
                                                ------------  ------------

Cash flows from operating activities:
Net income before minority interest             EUR    6,632  EUR    5,662
Adjustments to reconcile net income to net cash
 provided by operating activities                      6,596         7,779
Change in operating assets and liabilities           (56,899)      (34,679)
Change in operating assets and liabilities due
 to temporary joint ventures                          (2,299)       (9,067)
                                                ------------  ------------
    Net cash used in operating activities       EUR  (45,970) EUR  (30,305)
                                                ------------  ------------
Cash flows from investing activities:
Restricted cash - guaranteed deposit of long
 term investments
 And commercial transactions                           3,183         8,028
Due from related parties                              27,499        22,088
Acquisition of subsidiaries, net of cash              (7,971)       (3,147)
Purchase of property, plant & equipment               (1,790)       (2,955)
Disposal /(Purchase) of investments                      149       (18,100)
                                                ------------  ------------
    Net cash provided by investing activities   EUR   21,070  EUR    5,914
                                                ------------  ------------
Cash flows from financing activities:
Proceeds from short-term debt, net                    12,962         3,276
Repayment of long-term debt, net                      (9,042)       (5,934)
Due to related parties                                20,311         8,983
                                                ------------  ------------
    Net cash used in financing activities       EUR   24,231  EUR    6,325
                                                ------------  ------------
    Net decrease in cash and cash equivalents   EUR     (669) EUR  (18,066)
Net effect of foreign exchange in cash and cash
 equivalents                                           2,219         3,017
Cash and cash equivalents at the beginning of
 period                                               67,796        69,582
Joint venture cash and cash equivalents at the
 beginning of period                                  12,214        10,933
                                                ------------  ------------
Cash and cash equivalents at the end of period  EUR   81,560  EUR   65,466
                                                ============  ============
Supplemental disclosure of cash information:
Cash paid for the period:
Income taxes                                    EUR        -  EUR        -
Interest                                        EUR    2,407  EUR    2,314
                                                ============  ============

Non-cash transactions:

Capital leases                                  EUR      483  EUR    1,196


Reconciliation between GAAP and Proforma Income and EPS
(In thousands of Euros, except share and per share amounts)

                            Three months ended        Six Months ended
                                 June 30,                  June 30,
                            2006         2005         2006         2005
                        -----------  -----------  -----------  -----------

GAAP basis income
 before income taxes    EUR   2,737  EUR   3,056  EUR   8,540  EUR   7,192

Adjustments to Net
 Income
Amortization of
 intangibles                    763          572        1,304          974
Stock compensation plan
 expenses                       461          254          955          464
Mark to market
 derivatives                    496          145          196          691
                        -----------  -----------  -----------  -----------
Total Adjustments             1,720          971        2,455        2,129

                        -----------  -----------  -----------  -----------
Adjusted income before
 income taxes           EUR   4,457  EUR   4,027  EUR  10,995  EUR   9,321
                        -----------  -----------  -----------  -----------

Income tax provision         (1,151)      (1,298)      (2,433)      (2,113)
Profit attributable to
 minority interests            (136)         100          (18)        (506)

                        -----------  -----------  -----------  -----------
Proforma Net Income     EUR   3,170  EUR   2,829  EUR   8,544  EUR   6,702
                        ===========  ===========  ===========  ===========

Earnings per share
   Basic and diluted
    net income per
    share               EUR    0.11  EUR    0.10  EUR    0.29  EUR    0.23
                        ===========  ===========  ===========  ===========
Weighted average number
 of shares outstanding
   Basic and diluted     29,247,100   29,247,100   29,247,100   29,247,100
                        ===========  ===========  ===========  ===========

Contact Information

  • Investor Relations Contact:

    José Ignacio del Barrio
    Phone: +34 902-335599
    Email: Email Contact

    Mark Jones
    Phone: +1 646 284-9414
    Email: Email Contact