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Cartesian Reports Second Quarter 2017 Financial Results
OVERLAND PARK, Kan., Aug. 14, 2017 (GLOBE NEWSWIRE) -- Cartesian, Inc. (NASDAQ:CRTN), a specialist provider of consulting services and managed solutions to the global communications, technology and digital media industries, reported financial results for the second quarter ended July 1, 2017.Q2 2017 Financial Highlights (results compared to the same year-ago quarter)GAAP revenues were $13.0 million compared to $18.9 millionNon-GAAP revenues (on a constant currency basis) were $14.2 million (see reconciliations to GAAP, below)Selling, general and administrative expenses were $5.4 million compared to $8.2 millionManagement CommentaryCartesian CEO Peter Woodward commented: "Due to the continued uncertainty and project delays surrounding recent M&A activity in the media and telecom industries, Q2 was another challenging quarter for us. While our revenues were impacted by these temporary headwinds, we ended the quarter with a strong pipeline of business. We also made notable progress in restructuring the company to leverage our key strengths so that we are aligned with and building expertise and specialization in the areas of significant investment of our customers. This process has required not only proactive tactical measures, such as our ongoing cost-cutting initiatives, but also longer-term strategic changes that can position us to drive greater value for both customers and shareholders alike."With our lower cost structure, refined offerings, more targeted and selective sales efforts, and overall streamlined operations, we believe we are in a good position to excel in this new era of digital transformation and ultimately, to build on our top-line and achieve sustainable profitability."Q2 2017 Financial ResultsRevenues in the second quarter of 2017 decreased by 31% to $13.0 million from $18.9 million in the same year–ago period. The decrease was primarily due to lower volumes of projects in both North America and EMEA compared to the prior year quarter. The decrease was also partially due to the impact of a $1.2 million unfavorable change in foreign currency exchange rates.On a non-GAAP constant currency basis, revenues in the second quarter of 2017 were $14.2 million, a decrease of 25% from $18.9 million in the same year-ago period (see reconciliation to GAAP, below).Gross margin was 30% in the second quarter of 2017 compared to 33% in the second quarter of 2016 primarily due to project mix. Gross profit decreased 37% to $4.0 million in the second quarter of 2017 compared to $6.3 million in the second quarter of 2016. The decrease in gross profit was primarily due to unfavorable project mix in North America.Selling, general and administrative expenses in the second quarter of 2017 were $5.4 million (41% of revenues), a 35% decrease, compared to $8.2 million (44% of revenues) in the second quarter of 2016. The decrease in selling, general and administrative expenses was primarily due to lower compensation (largely driven by lower head-count) and other related expenses. The decrease was also partially affected by the impact of the change in foreign currency exchange rates.GAAP loss from operations in the second quarter of 2017 totaled $1.4 million, compared to GAAP loss from operations of $12.8 million in the second quarter of 2016. The GAAP loss from operations for the second quarter of 2016 included a non-cash goodwill impairment charge of $10.8 million. Excluding this non-cash goodwill impairment charge, the loss from operations would have been $1.9 million for the second quarter of 2016.Non-GAAP adjusted loss from operations in the second quarter of 2017 totaled $1.1 million, as compared to non-GAAP adjusted loss from operations of $0.5 million in the second quarter of 2016 (see reconciliation to GAAP, below).GAAP net loss for the second quarter of 2017 was $1.4 million, or $0.16 per diluted share, compared to a GAAP net loss of $12.9 million, or $1.49 per diluted share in the second quarter of 2016. Excluding the non-cash goodwill impairment charge, the net loss would have been $2.1 million for the second quarter of 2016.Non-GAAP adjusted net loss for the second quarter of 2017 totaled $1.1 million or $0.13 per diluted share, compared to a non-GAAP adjusted net loss of $0.5 million, or $0.06 per diluted share in the same year-ago period (see reconciliation to GAAP, below).At quarter-end, cash and cash equivalents totaled $3.0 million, as compared to $3.2 million at the end of the prior quarter. Management believes that, if the Elutions note is not called for redemption, the Company's current cash position, cash generated from operations, and working capital funding available from its accounts receivable arrangements, will be sufficient to meet the Company's cash requirements over the next 12 months.Conference CallCartesian management will hold a conference call today (August 14, 2017) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results. The call may also include discussion of company developments, forward-looking information and other material information about Cartesian's business and financial matters.Cartesian CEO Peter Woodward and CFO John Ferrara will host the presentation, followed by a question and answer period.Date: Monday, August 14, 2017Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)U.S. dial-in: 1-877-425-9470International dial-in: 1-201-389-0878Please call the conference telephone number 10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.The conference call will be broadcasted live and available for replay via the investor section of the company's website.A replay of the call will be available after 7:30 p.m. Eastern time on the same day through September 14, 2017.U.S. replay dial-in: 1-844-512-2921International replay dial-in: 1-412-317-6671Replay ID: 13668560About Cartesian, Inc.Cartesian, Inc. (NASDAQ:CRTN) is a specialist provider of consulting services and managed solutions to leaders in the global communications, technology and digital media industries. Cartesian provides strategic advice, management consulting, and managed solutions to clients worldwide. The company has offices in Boston, Kansas City, London, New York, and Philadelphia. For more information, visit www.cartesian.com.Non-GAAP AdjustmentsIn addition to reporting results of operations on a GAAP basis, this press release contains certain non-GAAP adjustments which are described in the schedules accompanying this press release entitled "Reconciliation of GAAP Loss from Operations to Non-GAAP Adjusted Loss from Operations and GAAP Net Loss to Non-GAAP Adjusted Net Loss" and "Reconciliation of Non-GAAP Constant Currency Revenues to GAAP Revenues". In making these non-GAAP adjustments, the Company took into account certain non-cash expenses, including non-cash goodwill impairment, certain non-cash benefits and the impact of certain items that are generally not expected to be on-going in nature or that are unrelated to the Company's core operations, including in each case tax effects as applicable. In calculating revenues for the second quarter and year-to-date period of fiscal 2017 on a constant currency basis, the Company applied average foreign exchange rates from the comparable period of the prior fiscal year to the Company's foreign-denominated revenues in the second quarter and year-to-date period of the current fiscal year. Management believes non-GAAP financial information provides a useful basis for evaluating underlying business performance, but should not be considered in isolation, is not in accordance with GAAP and is not a substitute for GAAP financial information. The Company believes that providing such adjusted results allows investors and other users of the Company's financial statements to better understand Cartesian's comparative operating performance for the periods presented.Cartesian's management uses the non-GAAP financial measures in its own evaluation of the Company's performance, particularly when comparing performance to the prior year. Cartesian's non-GAAP measures may differ from similar measures used by other companies, even if similar terms are used to identify such measures. Although Cartesian's management believes the non-GAAP financial measures are useful in evaluating the performance of its business, Cartesian acknowledges that items excluded from such measures have a material impact on the Company's loss from operations, net loss, net loss per diluted share and revenues calculated in accordance with GAAP. Therefore, management uses non-GAAP measures in conjunction with GAAP results. Investors and other users of our financial information should also consider the above factors when evaluating Cartesian's results.Cautionary Statement Regarding Forward Looking InformationThis release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, any statements that do not relate to historical or current facts constitute forward-looking statements, including any statements contained herein regarding expectations with respect to the Company's future business, financial condition and results of operations. Forward-looking statements are subject to known and unknown risks, uncertainties, and contingencies, many of which are beyond the Company's control, which may cause actual results, performance, or achievements to differ materially from those projected or implied in such forward-looking statements. Factors that might affect actual results, performance, or achievements include, among other things, our ability to generate sufficient cash flow from operations and obtain sufficient financing to pay our promissory note issued to Elutions if called for redemption by Elutions, our ability to successfully implement our strategic relationship with Elutions, conditions in the industry sectors that the Company serves, overall economic and business conditions, the demand for the Company's services (including the slowing of client decisions on proposals and project opportunities along with scope reduction of existing projects), the level of cash and non-cash expenditures incurred by the Company, our ability to retain the limited number of large clients that constitute a major portion of our revenues, our ability to protect client or Cartesian data or information systems from security breaches and cyber-attacks, technological advances and competitive factors in the markets in which the Company competes, foreign currency exchange rate fluctuations, and the factors described in this press release and in Cartesian's filings with the Securities and Exchange Commission, including the risks described in its periodic reports filed with the SEC, including, but not limited to, "Cautionary Statement Regarding Forward Looking Information" under Part I and "Risk Factors" in Item 1A of its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and subsequent periodic reports containing updated disclosures of such risks. These filings are available at the SEC's web site at www.sec.gov. Any forward-looking statements made in this release speak only as of the date of this release. Cartesian does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances, except as may be required by law. CARTESIAN, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(unaudited) Thirteen Weeks Ended Twenty-Six Weeks Ended July 1, 2017 July 2, 2016 July 1, 2017 July 2, 2016Revenues $12,998 $18,899 $27,264 $39,216 Cost of services 9,045 12,609 18,846 25,904 Gross Profit 3,953 6,290 8,418 13,312 Selling, general and administrative expenses (includes non-cash share-based compensation (benefit) expense of $(128) and $56 for the thirteen weeks ended July 1, 2017 and July 2, 2016, respectively, and $(9) and $189 for the twenty-six weeks ended July 1, 2017 and July 2, 2016, respectively) 5,372 8,235 11,363 16,001 Goodwill ...Full story available on Benzinga.com
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