How Will the Crowd React to Cartesian, Inc. (NASDAQ:CRTN)’s Third Quarter 2016 Financial Results?

Specialist provider of consulting services and managed solutions to the global communications, technology and digital media industries, Cartesian, Inc. (NASDAQ:CRTN), releases its financial results for Q3, 2016.

OVERLAND PARK, Kan., Nov. 10, 2016 (GLOBE NEWSWIRE) — Cartesian, Inc. (CRTN), a specialist provider of consulting services and managed solutions to the global communications, technology and digital media industries, reported financial results for the third quarter ended October 1, 2016.

Q3 2016 Operational Highlights

    Sales execution and cost management drive significant operating income improvement

    Mix of services improves, with a greater percentage of higher margin projects in the EMEA region

    Strong growth in consulting projects for European regulatory customers

    Added several new customers, including a Tier 2 operator in EMEA and a network service provider in North America

Q3 2016 Financial Highlights (results compared to the same year-ago quarter)

    GAAP revenues declined 18% to $17.3 million

    Gross profit decreased 20% to $6.1 million

    GAAP income from operations increased $0.6 million, turning positive to $0.1 million

    Non-GAAP revenues (on a constant currency basis) decreased 10% to $19.0 million (see reconciliation to GAAP, below)

    Non-GAAP adjusted income from operations was $0.8 million (see reconciliation to GAAP, below)

Management Commentary

Cartesian CEO, Peter Woodward, commented, “We are very pleased with the progress we made in the third quarter.  The significant impact of currency translation contributed to our lower reported revenue, but our level of sales activity continues to improve consistent with our strategy to grow within current customers and selectively add new customers. We also executed against our cost management goals. As a result, we were able to report significantly improved bottom line performance. The fourth quarter is seasonally lower, but we currently expect to see the underlying improved performance continue in 2017. Ongoing industry consolidation should provide opportunities to support our customers through transition, and long-term technological innovation is driving change in the industry.”

Q3 2016 Financial Results

Revenues in the third quarter of 2016 decreased by 18% to $17.3 million from $21.2 million in the same year–ago period.  The decrease was primarily due to a large customer engagement in North America during the third quarter of 2015 that was substantially completed as scheduled during the first half of fiscal 2016. The decrease was also partially due to the impact of a $1.6 million unfavorable change in foreign currency exchange rates.

On a non-GAAP constant currency basis, revenues in the third quarter of 2016 were $19.0 million, a decrease of 10% from $21.2 million in the same year-ago period (see reconciliation to GAAP, below).

Gross profit decreased 20% to $6.1 million (35% of revenues) in the third quarter of 2016 compared to $7.6 million (36% of revenues) in the third quarter of 2015. The decrease in gross profit was primarily due to lower revenues and unfavorable project mix in North America.

Selling, general and administrative expenses in the third quarter of 2016 were $6.0 million (35% of revenues), compared to $8.1 million (38% of revenues) in the third quarter of 2015. The decrease in selling, general and administrative expenses as a percentage of revenues was primarily due to lower compensation and other related expenses.   The decrease was also partially affected by the impact of the change in foreign currency exchange rates.

GAAP income from operations in the third quarter of 2016 totaled $0.1 million, an improvement from GAAP loss from operations of $0.5 million in the third quarter of 2015.

Non-GAAP adjusted income from operations in the third quarter of 2016 totaled $0.8 million, as compared to non-GAAP adjusted income from operations of $0.8 million in the third quarter of 2015 (see reconciliation to GAAP, below).

GAAP net income for the third quarter of 2016 was break-even, an improvement from a GAAP net loss of $1.1 million, or $0.13 per diluted share in the third quarter of 2015.

Non-GAAP adjusted net income for the third quarter of 2016 totaled $0.7 million or $0.08 per diluted share, an improvement from non-GAAP adjusted net income of $0.6 million, or $0.07 per diluted share in the same year-ago period (see reconciliation to GAAP, below). 

At quarter-end, cash and cash equivalents totaled $4.2 million, as compared to $4.5 million at the end of the prior quarter. Management believes 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 Call

Cartesian management will hold a conference call today (November 10, 2016) 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: Thursday, November 10, 2016

Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)

U.S. dial-in: 1-877-407-0784

International dial-in: 1-201-689-8560

Please 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 December 10, 2016.

U.S. replay dial-in: 1-844-512-2921

International replay dial-in: 1-412-317-6671

Replay ID: 13649401

About Cartesian, Inc.

Cartesian, Inc. (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, Philadelphia and Washington. For more information, visit www.cartesian.com.

Non-GAAP Adjustments

In 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 Net Income (Loss) to Non-GAAP Adjusted Net Income (Loss) and GAAP Income (Loss) from Operations to Non-GAAP Adjusted Income (Loss) from Operations” 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, and 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 third quarter and year-to-date period of fiscal 2016 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 third quarter and year-to-date period of the current fiscal year (other than revenues from the Farncombe business acquired in the third quarter of fiscal 2015). Management believes non-GAAP financial information provides a useful basis for evaluating underlying business performance, but should not be considered in isolation 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’s period. 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 income (loss) from operations, net income (loss), net income (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.

Original Source

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Cartesian, Inc. (NASDAQ:CRTN) shares are trading +5.45% on the news and in the range of $0.50 – 0.58 during the current trading session.  When taking a look at which direction the stock might be headed, investors often look to brokerage analysts who cover the stock.  Sell-side research firms on Wall Street currently have a consensus one-year price target of $1.60 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.

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In looking at where the stock is trading on a technical level, the stock is trading -11.64% away from its 50-day moving average of $0.66.  Based on the most recent available data, the equity is -77.61% off of its 52-week high of $2.59 and +16.00% away from its 52-week low which is $0.50.

Today, the stock opened at $0.55 and the last bid at the time of writing stood at $0.58.  During the session thus far, the equity dipped down to $0.50 and touched $0.58 as the high point.  Cartesian, Inc. (NASDAQ:CRTN) has a market cap of $5.21M and has seen an average daily volume of 37,625 over the past three months.

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Disclaimer: Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

 

 

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