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COLUMBIA, MD, Nov 13, 2009 (MARKETWIRE via COMTEX News Network) -- Fortress International Group, Inc. (NASDAQ: FIGI) ("Fortress"), a provider of consulting and engineering, construction management and 24/7/365 site services for mission-critical facilities, today announced its financial results for the third quarter ended September 30, 2009.
For the three-month period ended September 30, 2009, the Company reported revenue of $16.0 million, compared with revenue of $25.8 million for the third quarter of 2008. The decrease in revenue was primarily attributable to continued delays in the commencement of projects as a result of continued weakness in the broader economy.
Gross profit for the third quarter of 2009 was $3.4 million, or 21.3%, compared with gross profit of $5.1 million, or 19.8%, for the third quarter of 2008.
Net income for the third quarter of 2009 was $20,000, or $0.00 per share, compared with a net loss of ($3.2) million, or ($0.26) per share, for the third quarter of 2008. Adjusted EBITDA for the third quarter ended September 30, 2009 was approximately $716,000, compared with adjusted EBITDA of approximately $885,000 for the third quarter of 2008. The Company defines adjusted EBITDA as earnings before non-cash equity-based compensation, interest, taxes, depreciation and amortization, impairment loss on goodwill and other intangibles, and provision for bad debt expense. Adjusted EBITDA is a non-GAAP measurement presented to provide further information about the Company's operating trends.
For the nine-month period ended September 30, 2009, the Company reported revenue of $61.0 million, compared with revenue of $65.4 million for the nine-month period ended September 30, 2008.
Gross profit for the nine months ended September 30, 2009 was $8.9 million, or 14.6%, compared with gross profit of $10.6 million, or 16.2%, for the nine months ended September 30, 2008.
Net loss for the nine months ended September 30, 2009 was ($17.8) million, or ($1.40) per share, compared with a net loss of ($11.5) million, or ($0.95) per share, for the nine months ended September 30, 2008. Adjusted EBITDA loss (as defined above) for the nine months ended September 30, 2009 was approximately ($355,000), compared with adjusted EBITDA loss of ($2.7) million for the nine months ended September 30, 2008.
As of September 30, 2009, Fortress' backlog totaled $39.9 million, compared with a backlog of $42.7 million as of June 30, 2009.
Commenting on the results, Chief Executive Officer Thomas P. Rosato stated, "We made notable progress in the third quarter as evidenced by our return to adjusted EBITDA profitability. Our gains were largely attributable to our continued careful expense control, which has enabled us to reduce SG&A by over 35% compared to the third quarter of 2008. We have seen a number of positive signs across the industry, as capital constraints have begun to loosen and our customers are becoming more agile in their ability to move forward with previously delayed projects. Including the $39.4 million in contract awards that we announced in October, we have closed a total of $49.1 million of new business since the end of the second quarter.
"While the overall economic situation remains uncertain, we are encouraged by increased potential and pipeline activity from both existing and potential customers and we expect to see increased project spending over the next few quarters. We believe that Fortress' service offering is among the best in the industry and are well positioned to capitalize on new business opportunities as the markets we serve continue to recover," Mr. Rosato concluded.
Chief Financial Officer Timothy C. Dec added, "The sequential increase in gross margin in the third quarter was due primarily to the completion of a large-scale construction management project, as well as increased profitability in our facilities management division. The Company has been dramatically impacted by the challenging economic environment over the past 12 months. During that time we took strategic steps to significantly reduce our SG&A, which has enabled us to achieve positive adjusted EBITDA for three out of the last four quarters, as well as positive net income in the third quarter of 2009 for the first time in our company history. We will continue to maintain tight expense controls in-line with our anticipated revenue streams."
Quarterly Conference Call Details
The Company will conduct its regularly scheduled financial announcement conference call on Friday, November 13, 2009, at 9:00 a.m. EST. Investors may listen to the conference call via telephone at: 877-941-1427 (U.S./Canada) or 480-629-9664 (international) or via live audio web cast on the investor relations section of the Company's website at www.thefigi.com.
An audio replay of the conference call will also be available approximately two hours after the conclusion of the call and will be available until Friday, November 27, 2009. The audio replay can be accessed by dialing 800-406-7325 (U.S./Canada) or 303-590-3030 (international) and entering conference call ID 4180472, or via an archived webcast available on the investor relations section of the Company's website at www.thefigi.com.
About Non-GAAP Financial Measures
The Company uses adjusted EBITDA as a measure of the Company's operating trends. Investors are cautioned that adjusted EBITDA is not a measure of liquidity or of financial performance under Generally Accepted Accounting Principles (GAAP). The adjusted EBITDA numbers presented may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP. Consistent with Regulation G under the U.S. federal securities laws, the non-GAAP measures in this press release have been reconciled to the nearest GAAP measure, and this reconciliation is located under the heading "Adjusted EBITDA Reconciliation" following the Consolidated Statements of Operations included in this press release.
About Fortress International Group, Inc.
Fortress International Group, Inc. is leading mission-critical facilities into a new era of maximum uptime and efficiency. By combining the knowledge and experience of Total Site Solutions and Rubicon Professional Services, two experts in critical facilities infrastructure, Fortress provides consulting and engineering, construction management and 24/7/365 site services for the world's most technology dependent organizations. Serving as a trusted advisor, Fortress delivers the strategic guidance and pre-planning that makes every stage of the critical facility lifecycle more efficient. For those who own, lease or manage mission-critical facilities, Fortress provides innovative end-to-end capital management, energy, IT strategy, procurement, design, construction, implementation and operations solutions that optimize performance and reduce cost.
Fortress International Group, Inc. is headquartered in Maryland, with offices throughout the U.S. For more information, visit: www.FortressInternationalGroup.com or call 888-321-4877.
Fortress International Group, Inc. -- setting a new standard for the optimized critical facility.
Forward Looking Statements
This press release may contain "forward-looking statements" -- that is, statements related to future -- not past -- events, plans, and prospects. In this context, forward-looking statements may address matters such as our expected future business and financial performance, and often contain words such as "guidance," "expects," "anticipates," "intends," "plans," "believes," "seeks," "should," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Particular uncertainties that could adversely or positively affect the Company's future results include: the Company's reliance on a significant portion of its revenues from a limited number of customers; risks relating to our ability to continue as a going concern; the uncertainty whether the Company can raise substantial additional funds to continue its operations; risks associated with our effort to meet our working capital requirements and scheduled maturities of indebtedness absent restructuring; the uncertainty as to whether the Company can replace its declining backlog; risks involved in properly managing complex projects; risks relating to revenues under customer contracts, many of which can be canceled on short notice; the uncertainty whether potential contracts and our backlog would materialize; risks relating to our ability to implement a reduction in our expenses; risks relating our ability to continue to implement our business plan; risks relating to our liquidity; risks relating to our ability to meet all of the terms and conditions of our debt obligations; uncertainty related to current economic conditions and the related impact on demand for our services; and other risks and uncertainties disclosed in the Company's filings with the Securities and Exchange Commission. These uncertainties may cause the Company's actual future results to be materially different than those expressed in the Company's forward-looking statements. The Company does not undertake to update its forward-looking statements.
FORTRESS INTERNATIONAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
--------------------------
September 30, December 31,
2009 2008
------------ ------------
Current Assets
Cash and cash equivalents $ 2,364,992 $ 12,448,157
Contract and other receivables, net 11,479,504 21,288,660
Costs and estimated earnings in excess of
billings on uncompleted contracts 2,865,426 3,742,530
Prepaid expenses and other current assets 531,410 539,124
------------ ------------
Total current assets 17,241,332 38,018,471
Property and equipment, net 627,191 824,487
Goodwill 4,474,563 4,811,000
Other intangible assets, net 117,930 13,559,234
Other assets 280,036 225,853
------------ ------------
Total assets $ 22,741,052 $ 57,439,045
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable, current portion $ 482,572 $ 1,688,845
Convertible note, current portion 2,000,000 -
Accounts payable and accrued expenses 10,709,344 24,394,990
Billings in excess of costs and estimated
earnings on uncompleted contracts 2,825,020 6,047,765
------------ ------------
Total current liabilities 16,016,936 32,131,600
Notes payable, less current portion 228,187 311,709
Convertible notes, less current portion 2,000,000 4,000,000
Other liabilities 57,536 137,198
------------ ------------
Total liabilities 18,302,659 36,580,507
Commitments and Contingencies - -
Stockholders' Equity
Preferred stock- $.0001 par value; 1,000,000
shares authorized; no shares issued or
outstanding - -
Common stock- $.0001 par value, 100,000,000
shares authorized; 12,870,626
and 12,797,296 issued; 12,676,767 and
12,621,716 outstanding at September 30, 2009
and December 31, 2008, respectively 1,290 1,279
Additional paid-in capital 62,655,305 61,262,218
Treasury stock- 226,193 and 175,580 shares
at cost at September 30, 2009 and December
31, 2008 (918,099) (869,381)
Accumulated deficit (57,300,103) (39,535,578)
------------ ------------
Total stockholders' equity 4,438,393 20,858,538
------------ ------------
Total liabilities and stockholders' equity $ 22,741,052 $ 57,439,045
============ ============
FORTRESS INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited)
For the Three Months Ended For the Nine Months Ended
------------------------ --------------------------
September September September September
30, 2009 30, 2008 30, 2009 30, 2008
----------- ----------- ------------ ------------
Results of
Operations:
Revenue $16,005,741 $25,781,523 $ 61,016,490 $ 65,363,481
Cost of revenue 12,595,265 20,660,103 52,157,345 54,719,170
----------- ----------- ------------ ------------
Gross profit 3,410,476 5,121,420 8,859,145 10,644,311
Operating
expenses:
Selling,
general and
administrative 3,140,715 4,838,291 11,632,284 15,275,116
Depreciation
and
amortization 101,474 125,716 309,934 355,810
Amortization of
intangibles 93,211 702,569 1,476,171 2,104,067
Impairment loss
on goodwill
and other
intangibles - 2,973,000 13,062,133 4,190,000
----------- ----------- ------------ ------------
Total operating
costs 3,335,400 8,639,576 26,480,522 21,924,993
Operating loss 75,076 (3,518,156) (17,621,377) (11,280,682)
Interest income
(expense), net (55,321) (49,653) (143,140) (194,661)
----------- ----------- ------------ ------------
Loss from
operations before
income taxes 19,755 (3,567,809) (17,764,517) (11,475,343)
Income tax expense
(benefit) - (349,898) - 37,102
----------- ----------- ------------ ------------
Net income (loss) $ 19,755 $(3,217,911) $(17,764,517) $(11,512,445)
=========== =========== ============ ============
Per Common Share
(Basic and Diluted):
Basic and diluted
net loss $ 0.00 $ (0.26) $ (1.40) $ (0.95)
Weighted average
common shares
outstanding-basic
and diluted 12,675,630 12,326,397 12,665,242 12,164,454
FORTRESS INTERNATIONAL GROUP, INC.
ADJUSTED EBITDA RECONCILIATION
(Unaudited) (Unaudited)
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------ ----------------------------
2009 2008 2009 2008
------------ ----------- ------------- -------------
Net income (loss) $ 19,755 $(3,217,911) $ (17,764,517) $ (11,512,445)
Interest (income)
expense, net 55,321 49,653 143,140 194,661
Income tax expense
(benefit) - (349,898) - 37,102
Depreciation and
amortization 101,474 125,716 309,934 355,810
Amortization of
intangibles 93,211 818,075 1,476,171 2,491,477
------------ ----------- ------------- -------------
EBITDA 269,761 (2,574,365) (15,835,272) (8,433,395)
Stock and
warrant-based
compensation 446,358 456,835 1,393,098 1,469,252
Impairment loss on
goodwill and other
intangibles - 2,973,000 13,062,133 4,190,000
Provision for bad
debts - 29,933 1,025,083 119,728
------------ ----------- ------------- -------------
Adjusted EBITDA $ 716,119 $ 885,403 $ (354,958) $ (2,654,415)
============ =========== ============= =============
Company Contact: Timothy C. Dec Chief Financial Officer Fortress International Group, Inc. Phone: (410) 423-7438 Investor Relations: Kristen McNally/Brandi Floberg The Piacente Group, Inc. Phone: (212) 481-2050 figi@tpg-ir.com
SOURCE: Fortress International Group, Inc.
mailto:figi@tpg-ir.com
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