Beacon Enterprise Solutions Reports Results for Fiscal Second Quarter 2012

-- Conference Call To Be Held Today at 10:00 A.M. Eastern Time --

News provided by

Beacon Enterprise Solutions Group, Inc.

May 02, 2012, 07:30 ET

LOUISVILLE, Ky., May 2, 2012 /PRNewswire/ -- Beacon Enterprise Solutions Group, Inc. (OTCBB: BEAC) (www.askbeacon.com), an emerging global leader in the design, implementation and management of high performance Information Technology Systems ("ITS") infrastructure solutions, reports fiscal second quarter financial results for the period ended March 31, 2012, which are discussed below:

(Logo: http://photos.prnewswire.com/prnh/20101021/DA85933LOGO)

Financial Highlights for the Fiscal Second Quarter and Six Months ended March 31, 2012:

  • Net sales increased 4% for the six months ended to $9.3 million from $9.0 million in the corresponding year-ago period;
  • For the six months ended gross profit increased 38% from $2.6 million to $3.6 million in fiscal 2011 compared to fiscal 2012;
  • Gross profit margins increased 9 basis points to 37% from 28% in Q2 compared with the same period in 2011;
  • For the six-month period, gross profit margins improved to 38% as compared with 29% in the comparable year-ago period;
  • Total operating expenses for the quarter decreased 13% to $2.5 million from $2.8 million in the year-ago second quarter;
  • EBIT (Earnings Before Interest and Taxes) increased for both the three and six month periods in 2012 as compared with 2011, improving 15% for the quarter and 59% for the six months ended.

"While we have experienced a challenging most recent quarter, I am very proud of the leadership team we have in place," commented Bruce Widener, Chairman and CEO of Beacon.  "Our recently announced leadership and positioning changes do not represent a radical shift in how we go to market.  These changes represent a continuation of the building process we began two years ago to move from a tactical vendor, used on an as-needed basis, to a strategic business partner of our Fortune 1000 clients.  Beacon is now better positioned to continue to grow its business, strengthen our client relationships and expand our capabilities despite the challenges in the global market place."

"Today we have a stronger Beacon team and an impressive customer base that expects nothing less than consistent and reliable execution," stated Paris Arey, Executive Vice President Sales and Marketing.  "The Beacon Solution's portfolio will enable the infrastructure layer to become business relevant by increasing IT implementation and accelerating their business impact.  Beacon is leveraging our 5-year history of cost-effectively managing the IT infrastructure and proven service capabilities for organic growth.  Market dynamics are requiring CIOs to play a larger roll in business responsiveness and decisions in which the IT infrastructure supports.  I am optimistic the second half of the year (fiscal 2012) will be better than the first half of the year.  We expect progress in all areas of our business and anticipate year-over-year improvements.  This will position Beacon for a strong 2013."

"Enterprises around the world are becoming more in tune with the fact the physical IT infrastructure is the first step in enabling any enterprise service change," added Michael Martin, Executive Vice President Global Services.  "The impact we've had with our existing client base is they value Beacon's focus on simplifying the challenges associated with the delivery of physical infrastructure.  This unique offering allows predictable, consistent standards implementation on a global scale, reducing design and deployment time to accelerate the delivery of business solutions."

"Despite the challenging revenue environment we experienced in the second quarter, we have positioned the Company to be profitable and cash flow positive in the future," stated S. Scott Fitzpatrick, Vice President Corporate Controller and Treasurer.  "Our comparisons with the previous fiscal year for the six-month periods remain favorable for revenue, margin percent and operating expenses.  We will continue to maintain our capacity to grow in order to take advantage of the measures we have implemented over the past year for sustained profitability as we achieve our revenue goals."

"For the prior quarter and six months, gross profit margins increased 9 basis points to 37 and 38 respectively for each period," concluded Mr. Fitzpatrick.  "We expect our improvements in gross margin to remain consistent in the second half of the year.  We continue to address our cost structure and realized an improvement in operating costs equating to a 13% reduction.  It should also be pointed out that our cash position remained neutral and consistent with the year-end 2012 levels."

Earnings Conference Call Today, Wednesday, May 2, 2012 @ 10:00 a.m. EDT:

Beacon's Management will hold a conference call today, Wednesday, May 2, 2012 at 10:00 a.m. EDT to discuss its fiscal second quarter 2012 financial results for the period ending March 31, 2012. Participants on the call will include Bruce Widener, Chairman and CEO; Paris Arey, Executive Vice President Sales and Marketing; Michael Martin, Executive Vice President Global Services and S. Scott Fitzpatrick, Vice President Corporate Controller and Treasurer.  The teleconference can be accessed by calling 888-495-3916 and entering conference ID # 74625231.  Participants outside of the U.S. and Canada can join by calling 706-634-7530 and entering the same conference ID.  Please dial in 15 minutes prior to the beginning of the call.   The conference call will be simultaneously webcast and available on the company's website, http://www.askbeacon.com, under the "Investor Relations" tab.  A digital recording of the conference call will be available for replay two hours after the end of the call's completion until 11:59 p.m. EDT on Friday, May 4, 2012 by calling 404-537-3406 and entering conference ID # 74625231.

About Beacon Enterprise Solutions Group, Inc.

Beacon Enterprise Solutions Group is an emerging global leader in the design, implementation and management of high performance Information Technology Systems ("ITS") infrastructure solutions.  Beacon offers fully integrated, turnkey IT infrastructure solutions capable of fully servicing the largest companies in the world as they increasingly outsource to reduce costs while optimizing critical IT design and infrastructure management.  Beacon is headquartered in Louisville, Kentucky, with regional headquarters in Cincinnati, Ohio, Dublin, Ireland, Prague, Czech Republic and personnel located throughout the United States and Europe.

For additional information, please visit Beacon's corporate website: www.askbeacon.com

This press release may contain "forward-looking statements." Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements.  These forward-looking statements may include, without limitation, statements about our market opportunity, strategies, competition, expected activities and expenditures as we pursue our business plan.  Although we believe that the expectations reflected in any forward looking statements are reasonable, we cannot predict the effect that market conditions, customer acceptance of products, regulatory issues, competitive factors, or other business circumstances and factors described in our filings with the Securities and Exchange Commission may have on our results.  The company undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this press release.

-- Financial Tables Follow --

Beacon Enterprise Solutions Group, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(all amounts in 000's except share data)







March 31,

September 30,


2012

2011





ASSETS

(unaudited)






Current assets:




Cash and cash equivalents

$            893

$            861

Accounts receivable, net

2,985

3,752

Inventory, net

-

-

Prepaid expenses and other current assets

2,048

1,345


Total current assets

5,926

5,958





Property and equipment, net

268

249

Goodwill

2,792

2,792

Other intangible assets, net

2,776

2,905

Other assets

40

18

Total assets

$       11,802

$       11,922





LIABILITIES AND STOCKHOLDERS' EQUITY 








Current liabilities:




Bridge note - related party

$            100

$            100

Note payable

300

-

Current portion of long-term debt

94

180

Senior secured notes payable

4,196

2,952

Accounts payable

2,427

3,204

Accrued expenses and other current liabilities

2,326

1,691


Total current liabilities

9,443

8,127





Long-term debt, less current portion

-

24

Deferred tax liability

241

212

Total liabilities

9,684

8,363








Commitments and contingencies (Note 6)











Stockholders' equity




Preferred Stock: $0.01 par value, 5,000,000 shares





authorized, 1,598 and 1,491 shares outstanding in the





following classes:





Series A convertible preferred stock, $1,000 stated value, 





  4,500 shares authorized, 30 shares issued and outstanding





  at March 31, 2012 and September 30, 2011 respectively, 





  (liquidation preference $99)

30

30


Series A-1 convertible preferred stock, $1,000 stated value, 





  1,000 shares authorized, 311 shares issued and outstanding





  at March 31, 2012 and September 30, 2011 respectively, 





  (liquidation preference $492)

311

311


Series B convertible preferred stock, $1,000 stated value, 





  4,000 shares authorized, 700 shares issued and outstanding 





  at March 31, 2012 and September 30, 2011 respectively, 





  (liquidation preference $1,048)

700

700


Series C-1 convertible preferred stock, $1,500 stated value, 





  400 shares authorized, 350 issued and outstanding 





  at March 31, 2012 and September 30, 2011, respectively





  (liquidation preference $724)

525

525


Series C-2 convertible preferred stock, $1,500 stated value, 





  2,000 shares authorized, 100 issued and outstanding 





  at March 31, 2012 and September 30, 2011, respectively





  (liquidation preference $204)

150

150


Series C-3 convertible preferred stock, $1,500 stated value, 





  110 shares authorized, 107 issued and outstanding 





  at March 31, 2012 (liquidation preference $211)

160

-

Common stock, $0.001 par value 70,000,000 shares authorized





37,611,396 and 37,376,396 shares issued and outstanding





at March 31, 2012 and September 30, 2011, respectively.

38

38

Additional paid in capital

38,840

38,342

Accumulated deficit

(38,747)

(36,583)

Accumulated other comprehensive income

111

46


Total stockholders' equity 

2,118

3,559

Total liabilities and stockholders' equity 

$       11,802

$       11,922

 

 

Beacon Enterprise Solutions Group, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(all amounts in 000's except share and per share data)















For the Three

For the Three

For the Six

For the Six




Months Ended

Months Ended

Months Ended

Months Ended




March 31,

March 31,

March 31,

March 31,




2012

2011

2012

2011

Net sales

$       3,317

$       5,003

$       9,319

$       8,977


Cost of goods sold

41

350

118

626


Cost of services

2,034

3,253

5,642

5,776

Total cost of sales and services

2,075

3,603

5,760

6,402

Gross profit

1,242

1,400

3,559

2,575




37%

28%

38%

29%

Operating expenses









Salaries and benefits

1,433

1,863

2,897

3,538


Selling, general and administrative

1,042

980

1,824

1,868


Total operating expenses

2,475

2,843

4,721

5,406

Loss from operations

(1,233)

(1,443)

(1,162)

(2,831)











Other expenses








Interest expense

(159)

(77)

(291)

(133)

Effect of foreign currency transaction

57

88

(170)

(14)

Amortization of deferred finance fees

(167)

(69)

(399)

(84)

Other expenses

(24)

(207)

(39)

(319)


Total other expenses

(293)

(265)

(899)

(550)











Net loss before income taxes

(1,526)

(1,708)

(2,061)

(3,381)











Income tax (expense) benefit

2

(126)

(30)

(88)











Loss from continuing operations

(1,524)

(1,834)

(2,091)

(3,469)

Income from discontinued operations

-

-

-

7,892











Net (loss) income

(1,524)

(1,834)

(2,091)

4,423











 Preferred Stock:








Contractual dividends

(44)

(19)

(73)

(38)











Net (loss) income available to common stockholders

$     (1,568)

$      (1,853)

$      (2,164)

$       4,385











Net loss per share to common stockholders - basic and diluted








Net loss per share from continuing operations

$        (0.04)

$        (0.05)

$        (0.06)

$        (0.09)

Net (loss) income per share from discontinued operations

-

-

-

0.21




$        (0.04)

$        (0.05)

$        (0.06)

$         0.12











Weighted average shares outstanding








basic and diluted

37,611,396

37,376,396

37,611,396

37,376,396











Other comprehensive income, net of tax








Net (loss) income 

$      (1,568)

$      (1,853)

$      (2,164)

$       4,385

Foreign currency translation adjustment

99

(43)

99

545

Comprehensive (loss) income 

$      (1,469)

$      (1,896)

$      (2,065)

$       4,930






















Income (loss) from operations

(1,233)

(1,443)

(1,162)

(2,831)

Depreciation and amortization

111

126

223

258

EBITDA

(1,122)

(1,317)

(939)

(2,573)












Other Adjustments








Non-cash investor relations

67

22

132

81

Non-cash share based compensation

247

257

499

533

Non-recurring costs

38

191

111

370

Adjusted EBITDA

$         (771)

$         (847)

$         (197)

$      (1,589)











SOURCE Beacon Enterprise Solutions Group, Inc.

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