NEW YORK, NY--(Marketwire - August 14, 2007) - CoActive Marketing Group, Inc. (
NASDAQ:
CMKG),
a full-service marketing, sales promotion and interactive services company,
reported financial results for its first quarter ended June 30, 2007.
Operating Results - First Quarter ended June 30, 2007
Sales:
For the three months ended June 30, 2007, the Company reported sales of $20
million, compared to sales of $27 million for the three months ended June
30, 2006, a decrease of $7 million.
Operating Revenue:
The Company believes that "operating revenue" is a key performance
indicator. Operating revenue is defined as sales, less reimbursable
program costs and expenses and outside production costs and other direct
program expenses. Operating revenue is the net amount derived from sales
to customers which the Company believes is available to fund its
compensation and general and administrative expenses, debt service and
capital expenditures. For the three months ended June 30, 2007, operating
revenue amounted to $7.8 million, compared to $9 million in the three
months ended June 30, 2006.
Operating Results:
The Company reported a net loss and fully diluted loss per share of
$246,000 and $.04 per share, respectively, for the three months ended June
30, 2007. This compares to a net income of $756,000 and fully diluted net
earnings per share of $.11 for the three months ended June 30, 2006.
Balance Sheet:
At June 30, 2007, the Company's working capital deficit was $3.5 million,
compared to a working capital deficit of $3.3 million at June 30, 2006.
During the first quarter, the Company repaid all bank loan obligations. As
a result of the loan pay-off, the Company is seeking to arrange a new
banking facility and is in discussions with several lending institutions
for this purpose.
Outlook - Fiscal Year 2008
Charlie Tarzian, CoActive's President and Chief Executive Officer,
commented, "As we have described in the past our goal is to act as a
strategic marketing partner to all our clients by taking our strength in
events, experiential, promotions and interactive and integrating those
services through customer data capture, analytics and segmentation. To that
end, we have been reshaping our talent and business mix adding strategic
and digital talent, winning integrated marketing work with existing and new
clients and exiting the business of one-off promotional work. Our shift in
focus has been underway for about six months and showed in the Q1 results
as compared to the prior year's first fiscal quarter in several ways. The
decline in operating revenue was adversely affected by the elimination of
one-off non-recurring project work while benefiting, but to a lesser
extent, from increased solutions related recurring operating revenue from
both existing and new clients. Compensation as a percentage of operating
revenue remained high reflecting the addition of new talent and
capabilities in order to implement our business strategy. However, despite
the shift in client mix, the addition of senior talent and the incurrence
of an anticipated loss, we achieved 15% sequential quarter to quarter
growth in operating revenue from $6,800,000 in fourth quarter of 2007 to
$7,814,000 in the first quarter of fiscal 2008."
Susan Murphy, Interim CFO, stated: "The first quarter saw significant
change in the finance function as well. We successfully completed the
conversion to a new IT finance system enabling better, more efficient
information management and controls. With the elimination of the costs
associated with pursuing one-off project work and better controls, SG&A
spending was reduced. We paid off our remaining bank debt and currently
are in discussions with several lenders to secure a line of credit.
Finally, accounts receivables increased considerably in the first quarter
due to a systems problem at one of our largest clients, resulting in a
reduction in cash balances at the end of the quarter. After the close of
the quarter, the problem was corrected and cash balances have improved
significantly to approximately $6.5 million as of August 10th."
Mr. Tarzian concluded, "We have largely completed the purging of the
project work. Our pipeline is strong, we are winning integrated marketing
work from existing and new clients, and we expect to see year over year
revenue growth and profitability for the remaining quarters of fiscal
2008."
This press release includes statements which constitute forward-looking
statements made pursuant to the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements in
this press release are not promises or guarantees and are subject to risks
and uncertainties that could cause our actual results to differ materially
from those anticipated. These statements are based on management's current
expectations and assumptions and are naturally subject to uncertainty and
changes in circumstances. We caution you not to place undue reliance upon
any such forward-looking statements. Actual results may vary materially
from those expressed or implied by the statements herein. Factors that
could cause actual results to differ materially from the Company's
expectations are set forth in the Company's Annual Report on Form 10-K for
the fiscal year ended March 31, 2007 under "Risk Factors," including but
not limited to "Internal Control Deficiencies," "Unpredictable Revenue
Patterns," "Customers," "Competition," "Need for Additional Funding,"
"Recent Loss" "Dependence on Key Personnel," and "Control by Executive
Officers and Directors" and include the risk that projected business
opportunities will fail to materialize or will be delayed. The Form 10-K
may be obtained by accessing the database maintained by the Securities and
Exchange Commission at
http://www.sec.gov.
CoActive Marketing Group, Inc.
Consolidated Statements of Operations
(unaudited)
Three Months Ended
-------------------------------
June 30, 2007 June 30, 2006
-------------- --------------
Sales $ 20,408,000 $ 27,021,000
Operating Income (Loss) (359,000) 1,536,000
Income (Loss) from Continuing Operations
before Provision for Income Taxes (366,000) 1,555,000
Provision (Benefit) for Income Taxes (120,000) 622,000
-------------- --------------
Income (Loss) from Continuing Operations (246,000) 933,000
Discontinued Operations - (177,000)
-------------- --------------
Net Income (Loss) (246,000) 756,000
============== ==============
Basic Earnings (Loss) per Share:
Income (Loss) from Continuing
Operations $ (.04) $ .14
Discontinued Operations - (.03)
-------------- --------------
Net Income (Loss) $ (.04) $ .11
============== ==============
Diluted Earnings (Loss) per Share:
Income (Loss) from Continuing
Operations $ (.04) $ .13
Discontinued Operations - (.02)
-------------- --------------
Net Income (Loss) $ (.04) $ .11
============== ==============
Weighted Average Shares Outstanding:
Basic 6,923,751 6,785,054
Diluted 6,923,751 7,012,784
Consolidated Balance Sheet
June 30, 2007 March 31, 2007
(unaudited) (audited)
Total Assets $ 39,942,000 $ 42,141,000
Current Debt - 2,000,000
Total Liabilities 30,050,000 32,085,000
Stockholders' Equity 9,892,000 10,056,000
Operating Revenue Schedule
Three Months Ended
--------------------------------
June 30, 2007 June 30, 2006
--------------- ---------------
Sales $ 20,408,000 $ 27,021,000
Reimbursable Program Costs and Outside
Production Expenses 12,594,000 18,070,000
--------------- ---------------
Operating Revenue $ 7,814,000 $ 9,014,000
=============== ===============
Contact Information: Contact:
CoActive Marketing Group, Inc.
Charles Tarzian
President and Chief Executive Officer
212-366-3407