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MED GEN INCORPORATED (OTCBB: MDIN | Quote | Chart | News | PowerRating) "Up 300.00% on Thursday"
Detailed Quote: http://www.otcpicks.com/quotes/MDIN.php
Med Gen Inc., in business since 1996, manufactures and markets specialty products using its proprietary delivery system, Spray's the Way ("STW"). It is best known for producing the world's first patented liquid spray snoring relief formula, Snorenz . Since its existence, Med Gen has continued to develop its STW technology, introducing Good Nights Sleep , the UnDiet system and GOOD NIGHTS SLEEP Sleep Strips into its family of brands. FabULust, the company's newest product, a female sexual stimulant, has been launched in test markets throughout the country. While STW technology is mainly used, the company also produces other products that deal with common health issues using other delivery systems. The company markets its products to distributors, direct sales via the company web site and direct to consumer television, radio and print advertising. The company also distributes its brands internationally under various private labels or existing names. The Company also offers specialty financial and investment services through its Financial Services division, to small emerging public companies.
MDIN News:
August 7 - China Emerging as a Major Customer for Med Gen Products
Med Gen Inc. (OTCBB: MDIN | Quote | Chart | News | PowerRating) ("MDIN"), manufacturers of nationally branded OTC healthier life products and specialty financial services, reports that the documentation approving the shipment of Snorenz has been completed. Snorenz will be shipped under an agreement with its distributor, Sonergy , under a Sonergy-Snorenz label.
Chinese shipments will commence within 90 days to an estimated 48,000 distributors that form a network marketing company in China, which now handles Sonergy dietary supplements and other Sonergy products. Sonergy is a manufacturer of Dietary Supplements, Nutritional Water and Cosmetics.
NOBLE INTERNATIONAL LIMITED (NASDAQ: NOBL | Quote | Chart | News | PowerRating) "Up 69.28% on Thursday"
Detailed Quote: http://www.otcpicks.com/quotes/NOBL.php
Noble International, Ltd., through its subsidiaries, provides laser-welded blanks, tubular products, and roll-formed products for the automotive industry primarily in North America and Europe. The company's flat, tubular, shaped, and enclosed formed structures are used in various automobile applications, including doors, fenders, body side panels, pillars, bumpers, door beams, load floors, windshield headers, door tracks, door frames, and glass channels. It sells products directly to automotive original equipment manufacturers (OEMs) and companies that are suppliers to OEMs. The company was founded in 1993 and is headquartered in Troy, Michigan.
NOBL News:
August 6 - Noble International Announces Second Quarter Financial Results
* Diluted earnings per share of $0.35 versus $0.13 a year ago
* Net sales of $314.9 million, up 72.4% versus a year ago
* Operating profit of $11.9 million versus $6.3 million a year ago
* Free Cash Flow of $31.2 million versus $11.6 million a year ago
* Inventory levels were reduced by $13.7 million since March 31, 2008
* Net debt levels were reduced by $26.5 million since March 31, 2008
Noble International, Ltd. (Nasdaq: NOBL | Quote | Chart | News | PowerRating) ("Noble" or the "Company") reported financial results for the second quarter ended June 30, 2008.
For the second quarter of 2008, Noble reported net sales of $314.9 million and net earnings of $9.0 million, or $0.35 per diluted share. The results reflect the negative impact of a $1.0 million after-tax charge, or $0.03 per diluted share, related to severance for certain executives who departed the Company. These financial results compare with net sales of $182.7 million and net earnings of $1.8 million, or $0.13 per diluted share, for the second quarter of 2007.
"In the second quarter, we realized the benefits of our geographic and customer diversification efforts," stated Thomas L. Saeli, Noble's Chief Executive Officer. "Despite the challenging North American operating environment which was exacerbated by the UAW strike of American Axle in April and May, we were still able to deliver solid earnings in the second quarter due to the strong performance of our overseas operations."
Total North American light vehicle production in the second quarter of 2008 was down 14.2% versus the second quarter of 2007. Total "Detroit 3" North American light vehicle production was down 19.9% over the same time period. This negative market environment was primarily responsible for net sales in North America decreasing by $37.1 million, a 20.9% decrease versus the second quarter of 2007. However, the North American sales decrease was more than offset by $166.2 million of revenue at facilities acquired from ArcelorMittal ("the Arcelor Business") and a $3.2 million increase in sales at the Company's Australian operations.
The North America segment reported operating profit of $1.5 million on $143.7 million of sales in the second quarter of 2008 versus operating profit of $8.3 million on sales of $177.5 million in the second quarter of 2007. The decrease in operating profit was primarily driven by the large reduction in light vehicle production in North America. Corporate and central costs contributed an operating loss of $4.4 million in the second quarter of 2008 versus an operating loss of $2.2 million in the second quarter of 2007. The larger loss was attributable in part to severance costs for certain departed executives as well as increased professional costs.
The Europe/Rest of World segment reported operating profit of $14.8 million on $170.3 million of sales in the second quarter of 2008. In the first quarter of 2008, the Europe/Rest of World segment reported operating profit of $5.9 million on $145.3 million of sales. The increase in sales was driven by higher production volumes and an increase in steel and scrap pricing. The increase in operating profit was driven by margin on higher volumes, operational efficiencies, scrap pricing, timing of steel price increases and a reduction in professional fees.
Noble's Chief Financial Officer, David J. Fallon commented, "Given the drastic reduction in North American light vehicle production, management across the Company focused on cost reductions, managing capital spending and reducing working capital. The results of these efforts are demonstrated by our strong Free Cash Flow figures for the second quarter."
Free Cash Flow in the second quarter of 2008 was $31.2 million. These figures compare with Free Cash Flow of $11.6 million in the second quarter of 2007. The Free Cash Flow realized in the second quarter of 2008 was primarily utilized to pay down net indebtedness by $26.5 million and distribute approximately $1.9 million of dividends to common shareholders.
In the second quarter, management implemented cost saving strategies primarily related to scrap, quality and labor which should yield $12.0 million of annual cost savings in 2009. In addition, the Company progressed on its rationalization efforts related to the closure of two North American facilities and the restructuring of two contract manufacturing operations in Europe. These initiatives, once completed, will result in approximately $11.0 million of cost savings in 2009. In light of the current and forecasted economic conditions, management will continue to assess the appropriateness of the Company's manufacturing footprint, and is ready to implement further restructuring efforts should they be necessary.
In addition to the above cost reductions, management initiated other cash generating activities in the second quarter in response to the decreasing light vehicle production. Management spent significant time decreasing working capital levels and scrutinizing capital expenditure requirements. In the second quarter, the Company generated $15.9 million of cash from reducing its working capital needs, which included a $13.7 million reduction of inventory levels. Capital expenditures in the second quarter were $8.1 million, and the Company's year-to-date capital spending through the second quarter was $16.3 million. Management originally had estimated full year capital expenditures of $35 million but now anticipates a significantly lower figure.
Noble's Chief Executive Officer, Thomas L. Saeli commented, "Despite the headwinds of the North American light vehicle production environment, we delivered strong results in the second quarter. The cost savings initiatives and working capital discipline we implemented in the past six months will make the Company much stronger when economic conditions provide for a better operating environment. That being said, there is still significant uncertainty regarding short term economic conditions and fuel prices and their impact on global light vehicle production. Given this uncertainty, we are choosing not to update our previous full year 2008 guidance that we will be profitable for the full year."
QUALITY DISTRIBUTION INCORPORATED (NASDAQ: QLTY | Quote | Chart | News | PowerRating) "Up 66.67% in after hours trading on Thursday"
Detailed Quote: http://www.otcpicks.com/quotes/QLTY.php
Quality Distribution, Inc., through its subsidiary, Quality Distribution, LLC, engages primarily in truckload transportation of bulk chemicals in North America. It provides bulk transportation of a range of liquid and dry chemical products, as well as offers tank wash facilities, ISO depot services, leasing, transloading services, logistics, and other value-added services. The company's bulk service network consists of company operated terminals, independently owned third-party affiliate terminals, and independent owner-operator drivers. As of December 31, 2007, Quality Distribution managed a fleet of approximately 3,900 tractors and 7,500 tank trailers. It also operated a network of 121 trucking terminals, 38 tank wash facilities, and 10 ISO depot services terminals, as of the above date. The company was founded in 1984. It was formerly known as MTL, Inc. and changed its name to Quality Distribution, Inc. in 1999. Quality Distribution is headquartered in Tampa, Florida.
QLTY News:
August 7 - Quality Distribution, Inc. Announces Second Quarter Results
Quality Distribution, Inc. (Nasdaq: QLTY | Quote | Chart | News | PowerRating) (the "Company" or "QDI") reported the results for its second quarter and six months ended June 30, 2008. Total revenue for the quarter increased $29.2 million, or 15%, over the second quarter of 2007 from $194.7 million to $224.0 million. Of this increase, $21.8 million was generated from the Company's subsidiary, Boasso America Corporation ("Boasso") which was acquired effective December 18, 2007. Revenue, excluding fuel surcharge and the revenue from Boasso, decreased by $10.8 million, or 6.3% driven by softer volumes in the housing and auto markets, as well as general economic conditions.
Total revenue increased $59.7 million, or 16% from $372.8 million for the six months ended June 30, 2007 to $432.5 million for the six months ended June 30, 2008. Of the increase, $41.6 million was generated from Boasso. Excluding fuel surcharge and Boasso, revenue decreased by $11.4 million, or 3.5% due to the factors discussed above.
The Company recorded net income for the second quarter of 2008 of $0.4 million, or $0.02 per diluted share, as compared with net income for the same period last year of $2.3 million, or $0.12 per diluted share. The second quarter results include a pre-tax restructuring charge of $2.4 million, primarily related to the elimination of approximately 75 positions. As a result, the annual reduction in payroll related costs is expected to exceed $5.0 million. The second quarter results also contain a pre-tax gain on the sale of real property of $1.1 million. Applying a normalized tax rate of 39%, and excluding the restructuring charge and the property gain, would have resulted in net income of $1.3 million, or $0.07 per diluted share for the second quarter of 2008, as compared with net income of $2.7 million, or $0.14 per diluted share for the same prior year period.
For the six months ended June 30, 2008, the Company recorded a net loss of $1.6 million, or ($0.08) per diluted share, as compared with net income of $2.1 million or $0.11 per diluted share for the 2007 six-month period.
Gary Enzor, President and Chief Executive Officer, commented, "The personnel reductions we took in the second quarter were difficult, but necessary in light of these challenging economic times. I am pleased to report that we are making tangible progress on profitability initiatives designed to improve our top line, our profit margins and cash flow. Our insurance expense is trending favorably due to the success of our proactive safety initiatives and our borrowing availability was $46.0 million at June 30, 2008."
The Company will host a conference call for investors to discuss these results on August 8, 2008 at 11:00 a.m. Eastern Time. The toll free dial in number is 888-713-4485; the toll number is 913-312-0695; the passcode is 1127924. A replay of the call will be available until September 8, 2008, by dialing 888-203-1112; passcode; 1127924. Copies of this earnings release and other financial information about the Company may be accessed in the Investor Relations section of the Company's website at www.qualitydistribution.com.
GUARDIAN TECHNOLOGIES INTERNATIONAL (OTCBB: GDTI | Quote | Chart | News | PowerRating) "Up 50.00% on Thursday"
Detailed Quote: http://www.otcpicks.com/quotes/GDTI.php Guardian Technologies International, Inc. engages in the design and development of imaging informatics solutions for the aviation, homeland security, and healthcare markets primarily in the Americas and the United Kingdom. It utilizes imaging technologies and analytics to create integrated information management technology products and services that address problems for corporations and governmental agencies. The company's intelligent imaging informatics (3i) technology engine enables extraction of embedded knowledge from digital images, as well as analyzes and detects image anomalies. Its products include PinPoint, a 3i technology for the detection of guns, explosives, and other threat items at airport baggage areas; and FlowPoint, which consists of Web-enabled radiology information system, and picture archiving and communication system that manage radiology workflow, patient information, treatment history, and billing information. FlowPoint also manages digital images through image viewers, compression technologies, storage, image archiving, image retrieval, and transfer. The company markets and sells its PinPoint products through its internal sales force, agents, distributors, and consultants; and FlowPoint products through licensing arrangements with other software or hardware providers. Guardian Technologies has a strategic alliance and joint development agreement with Control Screening, LLC to facilitate and promote the delivery of fully integrated, automated threat detection hardware and software solutions for the homeland security markets. The company was founded in 1989 and is headquartered in Herndon, Virginia.
GDTI News:
August 7 - Guardian Technologies International Enters $2.5 Billion Worldwide Tuberculosis Pathology Market
Collaborative Relationship With The Aurum Institute To Deliver First Generation Automated Sputum Analysis Technology In 2008
Guardian Technologies International, Inc. (OTCBB: GDTI), announced further developments in its Agreements with the Aurum Institute for Health Research in South Africa. Based on the broadly reviewed results of Guardian's product prototype for sputum analysis, using Signature Mapping capabilities for the automated detection and quantification of Tuberculosis, Guardian has expanded its relationship with Aurum to include collaboration on product development and commercialization, as well as marketing and distribution rights in South Africa. It is anticipated that Aurum's distribution rights will extend to additional automated pathology products developed as a result of this collaboration, as well as additional international markets. Aurum will be responsible for the marketing, sales, installation, training and ongoing customer support within its geographical markets.
Both companies agreed to collaborate in the further development of a full product suite for pathology, as well as fully automated imaging analysis systems for the early identification and quantification of tuberculosis, silicosis and other infectious and non-infectious diseases.
Using Signature Mapping technology integrated into a digital pathology workflow system will significantly improve diagnostic detection accuracy, reduce diagnostic processing time and lower the cost to analyze tens of millions of sputum microscopy specimens around the world for Tuberculosis. The strategic objectives outlined in the Agreement are inline with the guidelines and objectives of the World Heath Organization (WHO): (1) to promote and improve the performance of testing procedures, (2) to make testing procedures easier to complete and less expensive to operate, and (3) to bring diagnosis closer to the point of primary care1.
"Improved diagnostics supports early detection, which translates into early commencement of treatment, one of the most powerful weapons against diseases such as TB," says Dr. Dave Clark, Aurum's Executive Director. "We believe that Signature Mapping will play a key role in the automation of early-stage diagnostics in several clinical and pathology settings. Our goal is to further develop and distribute Signature Mapping, in tandem with Guardian, to help reduce labor costs, provide faster diagnoses and redirect scarce professional skill application in developing countries."
WHO has declared tuberculosis a global health emergency and estimates that over 83 million sputum microscopy tests are performed annually at a cost to the worldwide health system of approximately $2.5 billion2. Of that total cost, 80% of the disease occurs in 22 high-burden countries, including India, China, Indonesia, Nigeria, Pakistan, South Africa, and the Russian Federation. Microscopic sputum analysis is a labor-intensive and tedious process requiring trained technologists to analyze hundreds of glass slide samples per day, in a manual process that is prone to fatigue and human error. Even with these challenges, WHO guidelines clearly state that sputum microscopy is still the preferred field method for diagnosis of TB. With only 40% of TB accurately detected by microscopy, sensitivity improvements are needed to update the methodology while reducing the current analysis costs. Signature Mapping technology holds the potential to significantly improve the accuracy of diagnosis while lowering the cost and time to diagnose, all of which is critical to the treatment and management of TB.
Bill Donovan, President and Chief Operating Officer of Guardian Technologies International states, "We believe this collaboration is simply a perfect blending of technology and clinical science to save lives by advancing new technology products to the market. We have developed, beyond a doubt, a groundbreaking technology that we project could generate in excess of $200 million in revenues during the first thirty-six months of product introduction. It is our expectation that the product will be introduced in South Africa during the fourth quarter of 2008. The intangible benefit to this endeavor is that we get the opportunity to save lives and benefit all of mankind."
"TB is an entirely treatable and curable disease, yet every four seconds someone becomes infected with TB and every ten seconds someone dies from TB. The world needs a better technology to quickly, accurately and cost effectively detect TB," states Dr. Clark. "The moment we reviewed the results of Guardian's Signature Mapping applied to a set of case studies we had provided, I knew we had found a basis for a new and better way of detection of TB - I am very encouraged by our initial results. Our success in this program will potentially revolutionize the diagnosis of TB leading to real time treatment in remote areas, where it could be weeks before test results would be determined by conventional methods."
ABOUT AURUM INSTITUTE
The Aurum Institute for Health Research is an independent medical scientific organization for the treatment of and research into epidemic and other diseases in developing countries. The negative impact of the poor understanding and management of these epidemics is vast, affecting individuals, communities and economies. The recognition of the huge advantages of controlling these diseases is Aurum's motivation.
Aurum has an international reputation for its work in the fields of tuberculosis, HIV/AIDS and is the recipient of research, awards and other grants from South African and international agencies and institutions.
POMEROY IT SOLUTIONS INCORPORATED (NASDAQ: PMRY | Quote | Chart | News | PowerRating) "Up 36.09% on Thursday"
Detailed Quote: http://www.otcpicks.com/quotes/PMRY.php
Pomeroy IT Solutions, Inc. is a leading provider of IT infrastructure solutions focused on enterprise, network and end-user technologies. Leveraging its core competencies in IT Outsourcing and Professional Services, Pomeroy delivers consulting, deployment, operational, staffing and product sourcing solutions through the disciplines of Six-Sigma, program and project management, and industry best practices. Pomeroy's consultative approach and adaptive methodology enables Fortune 2000 corporations, government entities, and mid-market clients to realize their business goals and objectives by leveraging information technology to simplify complexities, increase productivity, reduce costs, and improve profitability.
PMRY News:
August 6 - Pomeroy IT Solutions, Inc. Reports Second Quarter 2008 Results
Pomeroy IT Solutions, Inc. (Nasdaq: PMRY), an information technology ("IT") solutions provider with a comprehensive portfolio of hardware, software, technical staffing services, as well as infrastructure and lifecycle services, reported second quarter revenue of $155.0 million and net income of $1.5 million, or $0.12 per fully diluted share.
"We are very pleased to achieve our first quarterly profit in the last year. The positive results reflect improved gross margins in each of our product, technical staffing and infrastructure services segments combined with the cost reductions achieved through the first stage of resizing our workforce to match our current business environment. Additional cost reduction efforts are now nearly complete and we expect to see the benefits of those efforts in the second half of the year. We believe that the Company is now positioned to return to consistent quarterly operating profitability." said Keith Coogan, CEO and President of Pomeroy IT Solutions.
Second Quarter Financial Results
Total Net Revenues: Total net revenues increased $16.7 million or 12.1% in the second quarter of fiscal 2008 as compared to the second quarter of fiscal 2007. For the second quarters of fiscal 2008 and fiscal 2007, the net revenues were $155.0 million and $138.3 million, respectively.
Product revenue was $92.7 million and $91.6 million, respectively, for the second quarters of fiscal 2008 and fiscal 2007. Product revenue increased $1.1 million, an increase of 1.2% in the second quarter of fiscal 2008 as compared to the second quarter of fiscal 2007. This increase was due primarily to growth in our state, local and education customers and also in our commercial healthcare, retail and financial services accounts offset by continued delays in product deployment.
Service revenue was $62.3 million in the second quarter of fiscal 2008 compared to $46.7 million in the second quarter of fiscal 2007, an increase of $15.6 million or 33.5% from fiscal 2007. The Company groups services revenue into Technical Staffing and Infrastructure Services. Technical Staffing Services support clients' project requirements, ensures regulatory and customer compliance requirements and promotes success of the staffing projects. Infrastructure Services help clients optimize the various elements of distributed computing environments. Encompassing the complete IT lifecycle, these services include desktop and mobile computing, server and network environments.
Technical Staffing revenue was $31.6 million and accounted for approximately 50.6% of total service revenues in the second quarter of fiscal 2008, compared to $18.9 million and 40.5% in for the second quarter of fiscal 2007. This increase is primarily the result of recognizing revenue for the gross billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business. Overall, volume in our staffing business was relatively consistent.
The company anticipates that technical staffing revenue will decrease in subsequent quarters as a result of the announcement made in June 2008 that it elected to not renew a technical staffing services contract with a major customer because the terms they required meant this business would not be profitable for the company.
Infrastructure Service revenue was $30.7 million and $27.8 million, respectively, for the second quarter of fiscal 2008 and 2007. Infrastructure Service revenues were approximately 49.4% of total service revenues in the second quarter of fiscal 2008, compared to 59.5% for the second quarter of fiscal 2007. The increase in revenue is primarily the result of new service engagements started at the beginning of 2008.
Gross Profit: Gross profit was $19.3 million in the second quarter of fiscal 2008, compared to $15.6 million in the second quarter of 2007. Gross profit, as a percentage of revenue, was 12.4% in second quarter of fiscal 2008, compared to 11.3% in the second quarter of fiscal 2007.
Product gross profit was $9.2 million for the second quarter of fiscal 2008, compared to $7.3 million for the same period of fiscal 2007. Product gross profit as a percentage of product revenue increased to 9.9% in the second quarter of fiscal 2008, compared to 8.0% for the same period of fiscal 2007. The increase in product gross margin is due primarily to margin improvements as a result of increased rebates from improved tracking of OEM partner promotional initiatives and targeting more profitable growth segments such as networking, server, storage and peripherals.
Service gross profit was $10.1 million for the second quarter of fiscal 2008, compared to $8.3 million in the second quarter of fiscal 2007. Service gross profit as a percentage of service revenue decreased to 16.2% in the second quarter of fiscal 2008, compared to 17.8% for the same period of fiscal 2007.
Gross profit from Technical Staffing Services was $3.6 million for the second quarter of fiscal 2008, compared to $3.2 million for the second quarter of fiscal 2007. This increase of $0.4 million is primarily due to increased use of higher-margin Pomeroy employees on staffing projects. Gross profit as a percentage of technical staffing revenues decreased to 11.5% in the second quarter of fiscal 2008 from 17.1% in the second quarter of fiscal 2007. This decrease in gross margin is primarily the result of recognizing revenue for billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business at very low incremental margin.
Gross profit from Infrastructure Services was $6.5 million for the second quarter of fiscal 2008 compared to $5.1 million for the second quarter of fiscal 2007. Gross profit as a percentage of infrastructure service revenues increased to 21.1% in the second quarter of fiscal 2008 from 18.2% in the second quarter of fiscal 2007. This increase in gross profit and margin is primarily a result of driving higher utilization of personnel, reduction of work force in the Infrastructure Services technical resources and as a result of renegotiation and termination of unprofitable contracts.
Operating Expenses: Total operating expenses were $17.7 million in the second quarter of 2008, compared to $17.0 million in the second quarter of 2007, an increase of $0.7 million. This increase is primarily driven by an increase of $1.0 million in personnel-related expenditures, and related general and administrative expenses, to support our product and service businesses and investments to improve customer, vendor and back office support functions; severance charges of $0.3 million; offset by a decrease of $0.6 million related to professional and outside service provider fees.
Operating expenses as a percentage of revenue were 11.5% for the second quarter of fiscal 2008 compared to 12.3% for the second quarter of fiscal 2007.
Income (Loss) from Operations: Income from operations was $1.6 million in the second quarter of 2008, as compared to a loss of $1.4 million for the same period of 2007. This increase is a result of the increase in gross profit offset by the increase in operating expenses in the second quarter of 2008, as described above.
Net Interest Income (Expense): Net interest expense was $77 thousand during the second quarter of 2008 as compared to income of $90 thousand during the second quarter of 2007. During the second quarter of 2008, the Company had amounts outstanding under its credit facility due to the timing of payments of accounts payables and payroll and collections of receivables.
Income Tax: For the second quarter of 2008, the Company had no income tax expense or income tax benefit. During the second quarter of fiscal 2008, the Company decreased its tax valuation allowance by $0.6 million for a total allowance of $15.9 million at July 5, 2008. The tax valuation allowance results from the future uncertainty of the Company's ability to utilize its deferred tax assets. For the second quarter of fiscal 2008, the $0.6 million decrease in tax valuation reserve offset what would have been an income tax expense; the effective income tax rate would have been 43.4% prior to recording the tax valuation reserve. The effective income tax rate for the second quarter of fiscal 2007 was 35.4%.
Net Income (Loss): Net income was $1.5 million in the second quarter of 2008 as compared to a net loss of $0.9 million in the second quarter of 2007, resulting from the factors described above.
July 5, 2008 YTD versus July 5, 2007 YTD
Total Net Revenues: Total net revenues increased $19.9 million or 7.1% in the first six months of fiscal 2008 as compared to the same period of fiscal 2007. For the first six months of fiscal 2008 and fiscal 2007, the net revenues were $300.2 million and $280.3 million, respectively.
Product revenue was $174.2 million and $183.8 million, respectively, for the first six months of fiscal 2008 and fiscal 2007. Product revenue decreased $9.6 million, a decrease of 5.3% in the first six months of fiscal 2008 as compared to the first six months of fiscal 2007. This decrease was due primarily to continued delays of product deployments.
Service revenue was $126.0 million in the first six months of fiscal 2008 compared to $96.4 million in the first six months of fiscal 2007, an increase of $29.6 million or 30.7% from fiscal 2007. The Company groups services revenue into Technical Staffing and Infrastructure Services. Technical Staffing Services support clients' project requirements, ensures regulatory and customer compliance requirements and promotes success of the staffing projects. Infrastructure Services help clients optimize the various elements of distributed computing environments. Encompassing the complete IT lifecycle, these services include desktop and mobile computing, server and network environments.
Technical Staffing revenue was $64.1 million and accounted for approximately 50.8% of total service revenues in the first six months of fiscal 2008, compared to $39.3 million and 40.8% in for the first six months of fiscal 2007. This increase is primarily the result of recognizing revenue for billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business.
We anticipate technical staffing revenue to decrease in subsequent quarters as a result of the announcement made in June 2008 that we elected to not renew a technical staffing services contract with a major customer because the terms they required meant this business would not be profitable for our company.
Infrastructure Service revenue was $61.9 million and $57.1 million, respectively, for the first six months of fiscal 2008 and 2007. Infrastructure Service revenues were approximately 49.2% of total service revenues in the first six months of fiscal 2008, compared to 59.2% for the first six months of fiscal 2007. The increase in revenue is primarily the result of new service engagements started at the beginning of 2008.
Gross Profit: Gross profit was $34.5 million in the first six months of fiscal 2008, compared to $32.8 million in the first six months of 2007. Gross profit, as a percentage of revenue, was 11.5% in the first six months of fiscal 2008, compared to 11.7% in the first six months of fiscal 2007.
Product gross profit was $17.2 million for the first six months of fiscal 2008, compared to $15.2 million for the same period of fiscal 2007. Product gross profit as a percentage of product revenue increased to 9.9% in the first six months of fiscal 2008, compared to 8.3% for the same period of fiscal 2007. The increase in product gross margin is due primarily to margin improvements as a result of the increased rebates from improved tracking of OEM partner promotional initiatives and targeting more profitable growth segments such as networking, server, storage and peripherals.
Service gross profit was $17.4 million for the first six months of fiscal 2008, compared to $17.6 million in the first six months of fiscal 2007 for a decline in service gross profit of $0.2 million. Service gross profit as a percentage of service revenue decreased to 13.8% in the first six months of fiscal 2008, compared to 18.2% for the same period of fiscal 2007.
Gross profit from Technical Staffing Services was $6.2 million for the first six months of fiscal 2008, compared to $6.7 million for the first six months of fiscal 2007. Gross profit as a percentage of technical staffing revenues decreased to 9.7% in the first six months of fiscal 2008 from 17.1% in the first six months of fiscal 2007. This decrease in gross margin is primarily the result of recognizing revenue for billings on subcontractor personnel which historically have been recorded as fee based services in our vendor management business at very low incremental margin.
Gross profit from Infrastructure Services was $11.2 million for the first six months of fiscal 2008 compared to $10.9 million for the first six months of fiscal 2007 due to the increase in revenue related to new service engagements started at the beginning of 2008. Gross profit as a percentage of infrastructure service revenues decreased to 18.0% in the first six months of fiscal 2008 from 19.0% in the first six months of fiscal 2007. This decrease in gross profit margin is primarily the result of unprofitable customer contracts during the first quarter that were exited during the second quarter and reduced utilization and productivity of infrastructure services technical resources in the first quarter of 2008.
Operating Expenses: Total operating expenses were $37.1 million in the first six months of 2008, compared to $31.4 million in the first six months of 2007, an increase of $5.7 million. This increase is primarily driven by an increase of $0.9 million in sales and marketing costs, primarily related to increased commissions relating to improved product margins; an increase of $2.5 million in personnel-related expenditures, and related general and administrative expenses, to support our product and service businesses and investments to improve customer, vendor and back office support functions; a net charge of approximately $0.9 million to reserve against the collection of amounts incorrectly billed by subcontractors in our technical staffing business for years 2005 and 2006, as a result of an audit by our largest staffing customer; an increase related to severance charges of $0.9 million; an increase of $0.3 million for start up expenses related to new engagements; and an increase of $0.2 million related to costs for the retirement of directors.
Operating expenses as a percentage of revenue were 12.4% for the first six months of fiscal 2008 compared to 11.2% for the first six months of fiscal 2007.
Income (Loss) from Operations: Loss from operations was $2.6 million in the first six months of 2008, as compared to income of $1.4 million for the same period of 2007. This decrease is primarily the result of an increase in operating expenses for the first six months of fiscal 2008, as described above.
Net Interest Income (Expense): Net interest expense was $147 thousand during the first six months of 2008 as compared to income of $261 thousand during the first six months of 2007. During the first six months of 2008, the Company had amounts outstanding under its credit facility due to the timing of payments of accounts payables and payroll and collections of receivables.
Income Tax: For the first six months of 2008, the Company had no income tax expense or income tax benefit. During the first six months of fiscal 2008, the Company increased its tax valuation allowance by $931 thousand for a total allowance of $15.9 million at July 5, 2008. The tax valuation allowance results from the future uncertainty of the Company's ability to utilize its deferred tax assets. For the first six months of fiscal 2008, the $931 thousand increase in tax valuation reserve offset what would have been an income tax benefit; the effective income tax rate would have been 34.3% prior to recording the tax valuation reserve. The effective income tax rate for the first quarter of fiscal 2007 was 42.5%.
Net Income (Loss): Net loss was $2.7 million in the first six months of 2008 as compared to net income of $1.0 million in the first six months of 2007, resulting from the factors described above.
VIROGEN INCORPORATED (OTC: VRGI | Quote | Chart | News | PowerRating) "Up 31.58% on Thursday"
Detailed Quote: http://www.otcpicks.com/quotes/VRGI.php
Virogen, Inc. is the developer and patent holder of a revolutionary vaccine to combat Newcastle disease, a deadly disease that kills chickens worldwide.
VRGI News:
August 6 - Virogen's Distributor Signs Multi-Million Dollar Contracts
Virogen, Inc. (OTC: VRGI | Quote | Chart | News | PowerRating) announced that its distributor has signed contracts with the largest poultry producers in Egypt and Saudi Arabia. Vaccine sales of two million in the first year and four to five million thereafter are projected based upon these contracts alone.
While poultry vaccines are now available in the form of a spray or nasal inhalant, the product developed by Virogen is 2000 times more potent than those now on the market. It is injected directly into the chicken embryo and provides immunity up to ten weeks, with the average time to market being six weeks. The trend in protection of livestock is to administer vaccines in-ovo wherever possible, and the Virogen vaccine (inovo-immune) not only fulfills that preference, but is also far cheaper to produce, more effective, and far less expensive to the purchaser than conventional vaccines.
Newcastle is a deadly disease which can decimate entire flocks should an outbreak occur. The most recent outbreak, which occurred in California in the 90s, cost the government over $300 million and the loss of hundreds of thousands of birds. Another outbreak occurred in Texas with similar results. Most outbreaks worldwide go unreported. Fully 85% of the worldwide market resides outside of the United States with Asia, South America, and the Middle East comprising the largest markets. The company has made the strategic decision to concentrate its resources on these world markets in order to maximize revenues and market penetration in the shortest possible time frames. These markets are experiencing rapid growth as protein consumption abroad is rising at a far more rapid rate than in the US domestic market.
To position itself to reach the worldwide market, the company entered into a manufacturing agreement with Romvac, a company headquartered in Bucharest, Romania that has been manufacturing veterinary medicines since 1978. Romvac is an established, well respected manufacturer and meets the highest standards available for a certified distributor. Manufacturing within a European Union member country allows access to the EU market and allows the company to fast track registration of the vaccine in countries worldwide in the shortest possible time. This strategy has not only been cost effective, but has also shortened the commercialization to world markets by several years.
Paul Hogan, CEO of Virogen, Inc., notes that "Every production bird in the world is required to be vaccinated, and since Virogen's vaccine is the only in-ovo patent-protected product on the market, the company anticipates it will capture this exclusive market for several years. With approximately 45 billion birds being produced annually outside of the United States, and consumption growing by close to 30% per annum and expected to increase further, one can anticipate the revenue opportunity for this vaccine is in the tens of millions over the product life cycle."
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