Fortune Industries with 1Q net loss
April 16 (SmallCapInvestor.com) – Shares of Indianapolis, Ind.-based Fortune Industries, Inc. (AMEX: FFI) are lower following news of a net loss for the second quarter ended Feb. 28, 2007 and the acquisition of human resources company Employer Solutions Group.
As part of its strategy of redeploying cash flows created by cost reductions, Fortune Industries has acquired Salt Lake City-based Employer Solutions Group for $11.2 million, it said before the opening bell today. ESG is a full service Professional Employer Organization (PEO) servicing small to mid-size businesses in the Salt Lake City and Loveland/Denver metropolitan markets.
“The acquisition of ESG strengthens our position as one of the leading professional employment organization services providers in the nation,” CEO Fisbeck said. Fisbeck added that he expects consolidated revenue in excess of $200 million for the fiscal year 2008, which begins Sep. 1, 2007.
Fortune Industries announced cost reductions after reporting a net loss in the latest quarter. The net loss for the three months ended Feb. 28, 2007, was $7.8 million, or $0.63 per share, compared with a net income of $0.3 million, or $0.03 per share, for the same period of 2006.
“This quarter proved to be a transitioning point for certain divisions of our company,” CEO John Fisbeck said in a statement after Friday’s close. “Quarterly losses were primarily generated from a delay in the release of new work from our customers in the Wireless Infrastructure segment and cost overages within one of our electronic subsidiaries.”
The company has initiated cost reduction initiatives to increase productivity and improve cash flows, saying it expects annual savings of approximately $3.9 million.
At 12:30 ET shares were down $0.20, or 4.88%, to $3.90.
