DynTek Announces Results for the Third Quarter Fiscal Year 2019

IRVINE, Calif., April 22, 2019 (GLOBE NEWSWIRE) -- DynTek, Inc. (DYNE.OTC), a leading provider of professional technology services, today announced results for its third fiscal quarter ended March 31, 2019. 

Financial & Business Highlights

Third Quarter, 2019 Ended March 31, 2019

• Revenues increased 28.3% to $44.5 million
• Gross profit increased 24.5% to $8.2 million
• Total operating expenses increased 25.0% to $6.7 million
• Net earnings increased >100% to $1 million
• Diluted earnings per share increased to $0.42
• EBITDA increased 50.3% to $2.0 million

Nine Months Ended March 31, 2019

• Revenues increased 21.7% to $146.8 million
• Gross profit increased 17.8% to $25.6 million
• Total operating expenses increased 1.8% to $19.6 million
• Net earnings increased >100% to $4.1 million
• Diluted earnings per share increased to $0.57
• EBITDA increased 57.8% to $7.0 million

Management Comment

Third quarter results reflect a 28.3% growth in revenue, primarily in security and data center solutions. Gross Profit rose 24.5% to $8.2 million. EBITDA rose 50.3% from $1.4 million to $2.0 million, driven primarily by the increase in gross profit, while controlling expenses.

In our nine months year to date, we achieved significant year-on-year growth in revenue and gross profit, due in part to increased volume. Our year to date EBITDA and net earnings growth reflects control over selling and operating expenses as revenues continue to rise. General and Administration expenses for the first nine months of FY19 compared to prior year, when adjusted for the prior year stock option buyback charge of $1.4 million which was reclassed to Equity at FY18 year end, reflect a 6.9% increase, while net earnings on a comparative basis were 34% higher than prior year earnings.

“As our top line revenue continues to grow at a double-digit pace, our focus has remained on controlled and astute investments in our sales, technical and operational resources in order to maximize profitability,” said Ron Ben-Yishay, DynTek’s chief executive officer. “We are developing offerings that drive economies of scale and efficiencies internally and for our clients such as our recently announced Security Operations Center, cloud computing solutions and other managed services.”

EBITDA
The Company defines EBITDA as net income from operations before interest, taxes, depreciation and amortization, and stock-based compensation. Other companies may calculate EBITDA differently. Although EBITDA is a widely used financial indicator of a company's ability to service debt, it is not a recognized measure for financial statement presentation under generally accepted accounting procedures (GAAP). EBITDA should not be considered in isolation or as superior or as an alternative to net income or to cash flows from operating activities as determined in accordance with GAAP. Nonetheless, the Company believes that EBITDA provides useful supplemental information for investors and others to measure operating performance, especially in situations where a company has significant non-cash operating expenses that are not indicative of core business operating results. EBITDA is widely used in the IT services industry to analyze comparable company performance, and management of the Company also uses EBITDA, in addition to GAAP information, as a measure of operating performance for assessing its business units.

About DynTek
As a national systems integrator and risk management partner, DynTek delivers exceptional, cost-effective professional IT consulting services, end-to-end IT solutions, managed IT services, and IT product sales to state and local government, educational, healthcare and enterprise customers in the largest IT markets nationwide. Our broad range of technical expertise and vendor partnerships allow us to deliver solutions that support digital business transformation including IT Security, Digital Infrastructure, Modern Workplace, Data Center and Cloud solutions. DynTek's multidisciplinary approach allows our clients to turn to a single source for their most critical technology requirements. For more information, visit http://www.dyntek.com.

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Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that forward-looking statements made in this press release, involve known and unknown risks and uncertainties that could cause actual results to materially differ from the forward-looking statements. Such risks and uncertainties include, among others, our success in reaching target markets for services and products in a highly competitive market; our ability to maintain existing customers and attract future customers; our ability to finance and sustain operations, including our ability to comply with the terms of the revolving line of credit and the Company’s other existing and future indebtedness; our ability to achieve profitability and positive cash flow from operations; our ability to maintain business relationships with IT product vendors; the size and timing of additional significant orders for our products and services and our ability to fulfill such orders; the continuing desire of state and local governments to outsource to private contractors and the availability of budgets to place orders for our products and services; our ability to retain skilled professional staff and certain key executives; the performance of our government and commercial technology services; and the continuation of general economic and business conditions that are conducive to outsourcing of IT services. We have no obligation to publicly revise any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

 

DYNTEK, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except share and per share data)
		Quarter Ended March 31,				Nine Months Ended March 31,				PYQ Ended March 31,				PYTD Nine Months Ended March 31,
		2019				2019				2018				2018
REVENUES
Product revenues		$	36,253			$	121,564			$	26,334			$	96,875
Service revenues			8,275				25,211				8,366				23,737
TOTAL REVENUES			44,529				146,775				34,701				120,612
COST OF REVENUES
Cost of products			29,155				99,624				20,793				78,632
Cost of services			7,138				21,535				7,294				20,227
TOTAL COST OF REVENUES			36,293				121,159				28,087				98,859
GROSS PROFIT			8,236				25,616				6,614				21,753
OPERATING EXPENSES:
Selling			4,565				14,260				4,089				13,727
General and administrative			2,083				5,090				1,278				5,468
Depreciation and amortization			106				287				34				99
TOTAL OPERATING EXPENSES			6,754				19,637				5,402				19,295
INCOME FROM OPERATIONS			1,481				5,979				1,212				2,458
EBITDA			2,034				6,957				1,353				4,409
OTHER INCOME (EXPENSE):
Interest expense			30				(111)				(107)				(441)
TOTAL OTHER EXPENSE			30				(111)				(107)				(441)
INCOME BEFORE INCOME TAXES			1,511				5,868				1,105				2,018
Income tax  provision			506				1,770				990				1,354
NET INCOME		$	1,005			$	4,098			$	115			$	664
NET INCOME PER SHARE:
Basic		$	0.44			$	1.78			$	0.05			$	0.29
Diluted		$	0.42			$	1.71			$	0.05			$	0.28
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic			2,304,692				2,304,692				2,286,124				2,275,230
Diluted			2,405,233				2,395,456				2,373,533				2,361,818

For more information, contact:
Linda Ford
DynTek, Inc.
949-271-6705
[email protected]