SYS-CON MEDIA Authors: Adrian Bridgwater, Yeshim Deniz, Elizabeth White, Sean Houghton, Glenn Rossman

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Sysorex Global Holdings Corp. Announces Results for the Quarter Ended June 30, 2014

Sysorex Global Holdings Corp. (NASDAQ:SYRX) (“Sysorex”), an emerging growth technology company, today reported its financial results for the three months ended June 30, 2014.

Second Quarter 2014 Financial Highlights

  • Second quarter 2014 revenue of $17.1 million
  • Second quarter 2014 consolidated gross profit margins of 33.1%
  • Second quarter 2014 non-GAAP Adjusted EBITDA of $455,000*
  • Second quarter 2014 GAAP net loss of ($0.13) per share

*See Adjusted EBITDA definition below under Reconciliation of Adjusted EBITDA to Net Loss and Pro Forma Net Loss Per Share to GAAP Net Loss Per Share

"We are very pleased to continue realizing both revenue growth and margin expansion as a result of the acquisitions we have made since 2013. Our results from the second quarter also show the progress we are making in our strategy to increase margins in the Lilien business by adding more data analytics services,” said Nadir Ali, CEO of Sysorex Global Holdings Corp. "We accomplished a great deal in the second quarter including raising capital, acquiring AirPatrol and listing our common stock on the NASDAQ Capital Market. We believe our foundation is stronger than ever and our integration and transition continues according to plan," he continued.

Second Quarter 2014 Financial Results

Revenues for the three-month period ended June 30, 2014 were $17,145,000 compared to $14,789,000 for the comparable period in the prior year. This increase of $2,356,000 was primarily attributable to Sysorex’s acquisitions of Shoom in August 2013 and AirPatrol in April 2014.

Cost of revenues for the three months ended June 30, 2014 was $11,465,000 compared to $11,790,000 for the comparable period in the prior year, a slight decrease of $325,000 primarily attributable to increased higher margin data analytics revenues from Lilien offset by the inclusion of Shoom and AirPatrol cost of revenues. Operating expenses for the three months ended June 30, 2014 were $8,050,000 compared to $3,429,000 for the comparable period in the prior year, an increase of $4,621,000. The increase in operating expenses was primarily attributable to increased Lilien operating expenses and the Shoom and AirPatrol acquisitions.

Loss from operations for the three months ended June 30, 2014 was ($2,370,000) compared to ($430,000) for the comparable period in the prior year. This increase of $1,940,000 was primarily attributable to acquisition transaction costs, expenses and amortization of intangibles related to the pursuit of Sysorex’s acquisition strategy.

Adjusted EBITDA for the three months ended June 30, 2014 was $455,000 compared to $190,000 for the comparable period in the prior year. Consolidated net loss attributable to Sysorex shareholders was ($2,407,000) or ($0.13) per share compared to ($436,000) or ($0.03) per share for the comparable period in the prior year. Pro forma net loss per share was ($0.01) per share compared to ($0.00) per share for the comparable period in the prior year.

Reconciliation of Adjusted EBITDA to Net Loss and Pro Forma Net Loss per Share to GAAP Net Loss per Share

Management believes that certain financial measures not in accordance with generally accepted accounting principles ("GAAP") are useful measures of operations. EBIDTA, Adjusted EBITDA and pro forma net loss per share are non-GAAP measures. Sysorex defines “EBITDA” as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. Management uses Adjusted EBITDA as the matrix in which it manages the business and Sysorex defines “Adjusted EBITDA” as EBITDA plus adjustments for other income or expense items, non-recurring items and non-cash stock-based compensation. Sysorex defines “pro forma net loss per share” as GAAP net loss per share adjusted for stock-based compensation, amortization of intangibles and one time non-recurring charges such as acquisition and offering costs.

Management provides Adjusted EBITDA and pro forma net loss per share measures so that investors will have the same financial information that management uses, which may assist investors in assessing Sysorex’s performance on a period-over-period basis. Adjusted EBITDA or pro forma net loss per share is not a measure of financial performance under GAAP, and should not be considered an alternative to net income (loss) or any other measure of performance under GAAP, or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. Adjusted EBITDA and pro forma net loss per share have limitations as analytical tools and should not be considered either in isolation or as a substitute for analysis of Sysorex’s results as reported under GAAP.

The following table presents a reconciliation of net income/loss attributable to stockholders of Sysorex, which is our GAAP operating performance measure, to Adjusted EBITDA for the three months ended June 30, 2014 and 2013:

 

Three
Months
ended
June 30,
2014

 

Three
Months
ended
June 30,
2013

Adjusted EBITDA $ 455,000 $ 190,000
 
Gain on settlement of obligations -- 15,000
Cost of public offering - non recurring one time charges -- (87,000 )
Acquisition transaction costs - non-recurring one time charges (771,000 ) (144,000 )
Stock-based compensation – included in acquisition costs (320,000 ) --
Stock-based compensation – included in SG&A expense (332,000 ) (127,000 )
Other interest expense (104,000 ) (59,000 )
Depreciation and amortization   (1,335,000 )   (224,000 )
Net loss attributable to stockholders of Sysorex Global Holdings Corp. $ (2,407,000 ) $ (436,000 )
 

The following table presents a reconciliation of net loss per share – basic and diluted, which is our GAAP operating performance measure, to pro forma net loss per share for the three months ended June 30, 2014 and 2013:

 

Three
Months
ended
June 30,
2014

 

Three
Months
ended
June 30,
2013

Net loss per share – basic and diluted $ (0.13 ) $ (0.03 )
 
Amortization of intangibles 0.06 0.02
Stock based compensation 0.02 0.01
Stock based compensation – acquisition costs 0.02 --
Acquisition costs   0.04   --
Proforma net loss per share $ (0.01 ) $ (0.00 )
 

Third Quarter 2014 Business Outlook

  • Third quarter 2014 revenue forecast to be between $18 million to $21 million
  • Third quarter 2014 gross margin forecast to be between 33% to 35%

Sysorex Conference Call Information

Sysorex will host a conference call today at 5:00 pm Eastern Time to discuss the release of its financial results and corporate developments for the quarter ended June 30, 2014. Following management's prepared remarks, there will be a question and answer session.

To listen to the conference call, interested parties within the U.S. should dial 1-866-652-5200 five to ten minutes before the scheduled start time. International callers should dial +1-412-317-6060. All callers should request to be connected to the Sysorex Global Holdings Corporation conference call. The conference call will also be available through a live webcast at http://client.irwebkit.com/Sysorex/events.

A replay of the call will be available approximately one hour after the end of the call through September 15, 2014. The replay can be accessed via Sysorex’s website or by dialing 1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference ID number is 7752.

About Sysorex Global Holdings Corp.

Through focused, custom technology solutions, Sysorex (NASDAQ:SYRX) provides cyber security, data analytics, custom application development, cloud solutions, Mobile/BYOD solutions and strategic outsourcing to government and commercial clients in major industries around the world. From identifying security risks to helping clients realize value from their big data strategies, Sysorex has the experience, technology, partners, and agility to be your trusted IT partner. Visit www.sysorex.com, follow @SysorexGlobal and Like us on Facebook.

Safe Harbor Statement

All statements in this release that are not based on historical fact are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While management has based any forward looking statements included in this release on its current expectations, the information on which such expectations were based may change. These forward looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties and other factors, many of which are outside of our control, which could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not limited to, the fluctuation of global economic conditions, the performance of management and our employees, our ability to obtain financing, competition, general economic conditions and other factors that are to be detailed in our periodic and current reports available for review at www.sec.gov. Furthermore, we operate in a highly competitive and rapidly changing environment where new and unanticipated risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. We disclaim any intention to, and undertake no obligation to, update or revise forward-looking statements.

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