Source: DynTek Services, Inc.

DynTek Announces Results for the Third Quarter Fiscal Year 2018

NEWPORT BEACH, Calif., April 19, 2018 (GLOBE NEWSWIRE) -- DynTek, Inc. (DYNE.OTC), a leading provider of professional technology services, today announced results for its third quarter ended March 31, 2018.

Financial & Business Highlights

Third Quarter 2018 Ended March 31, 2018

  • Revenues decreased 16.4% to $34.7 million
  • Gross profit decreased 11.8% to $6.6 million
  • Total operating expenses decreased 2.3% to $5.4 million
  • Net earnings decreased 87.8% to $.115 million
  • EBITDA decreased 33.9% to $1.4 million
  • Diluted earnings per share decreased to $0.05

Nine Months Ended March 31, 2018

  • Revenues increased 12.4% to $120.6 million
  • Gross profit increased 17.5% to $21.8 million
  • Total operating expenses increased 14.6% to $17.9 million plus a $1.4 million charge for the Company’s stock option buyback which brought total expenses to $19.3 million
  • EBITDA increased 39.7% to $4.4 million
  • Net earnings decreased 40.9% to $.664 million
  • Diluted earnings per share decreased to $0.28

Management Comment

In our third quarter, we continued our solid performance in revenue and gross profit but had several product orders delayed due to manufacturer shortages.  The reduced operating expenses reflect the lower sales in this quarter.

In our nine months year to date, we achieved significant year-on-year growth in revenue and gross profit, due in part to delivering higher volume, higher margin solutions.  Our year to date EBITDA growth of 39.7% reflects control over operating expenses as revenues continue to rise.   

Our net earnings for the quarter and year to date were impacted by a $.650 million non-cash tax provision for the revaluation of certain deferred tax assets at the lower tax rates from the 2018 Tax Act.  The final provision will be recorded next quarter in preparation for our fiscal year end.

“The need to modernize and secure data centers and IT infrastructure in support of the new digital economy is a driving factor in our double-digit year to date growth,” said Ron Ben-Yishay, DynTek’s chief executive officer.  “Cybersecurity solutions – both products and service engagements – are a de facto component of every strategy session with clients.  In addition, cloud adoption continues to increase as our clients embrace hybrid cloud architecture to support critical business initiatives and improve their customer and employee experiences.”

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

DynTek is a leading provider of professional technology services to mid-market companies, such as state and local governments, educational institutions and commercial entities in the largest IT markets nationwide. From virtualization and cloud computing to unified communications and collaboration, DynTek provides professional technology solutions across the three core areas of our customers’ technical environment: Infrastructure/Data Center, Microsoft Platforms, End Point Computing. 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.

For more information, contact:
Linda Ford
DynTek, Inc.

(EBITDA presentation)
(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,
   2018    2017   2017 
Product revenues $26,334  $96,875  $34,629  $84,863 
Service revenues  8,366   23,737   6,866   22,458 
TOTAL REVENUES  34,701   120,612   41,495   107,321 
Cost of products  20,793   78,632   27,945   69,664 
Cost of services   7,294   20,227    6,049   19,151 
TOTAL COST OF REVENUES  28,087   98,859   33,994   88,815 
GROSS PROFIT  6,614   21,753   7,500   18,505 
Selling  4,089   13,727   4,374   12,496 
General and administrative  1,278   5,468   1,113   2,984 
Depreciation and amortization  34   99   42   133 
TOTAL OPERATING EXPENSES  5,402   19,295   5,528   15,612 
INCOME FROM OPERATIONS  1,212   2,458   1,972   2,893 
EBITDA  1,353   4,409   2,047   3,156 
Interest expense  (107)  (441)  (424)  (1,042)
TOTAL OTHER EXPENSE  (107)  (441)  (424)  (1,042)
INCOME BEFORE INCOME TAXES  1,105   2,018   1,548   1,851 
Income tax provision  (990)  (1,354)  (607)  (728)
NET INCOME $115  $664  $941  $1,123 
Basic $0.05  $0.29  $0.42  $0.50 
Diluted $0.05  $0.28  $0.38  $0.46 
Basic  2,286,124   2,275,230   2,264,390   2,264,390 
Diluted  2,373,533   2,361,818   2,462,240   2,441,376