Zanett Inc (fka ZANE)

[RandyKCMO]

Q3 Results... GOOD NEWS.

Zanett Reports 32% Revenue Growth in Third Quarter
Friday November 14, 8:00 am ET
--Record Quarterly Revenue, Positive Net Income and Improved Gross Profit Margins--
Conference Call Today, November 14, 2008 at 11:00 am EST


NEW YORK--(BUSINESS WIRE)--Zanett, Inc. (NasdaqCM: ZANE), a leading consulting firm specializing in business process outsourcing (BPO), IT enabled services (ITES), and information technology (IT) serving Fortune 500 corporations and mid-market companies, has announced its financial results for Q3 and nine months ended September 30, 2008.
Financial highlights for Q3 and first nine months of 2008 include:


32% revenue growth led to a record $12.6 million in Q3 2008 vs. $9.6 million in Q3 2007.
23% revenue growth to $36.9 million in the first nine months of 2008 vs. $30.0 million in the comparable 2007 period.
Gross profit margins for Q3 2008 increased to 31.8% from 23.4% in the same period 2007 .
Operating income improved to $535,000 in the Q3 of 2008 vs. an operating loss of $330,000 in the same period in 2007. Nine-month operating income was $1.0 million in 2008 vs. an operating loss of $1.0 million in the 2007 nine-month period.
Operating income from continuing operations improved to $174,000 in the third quarter of 2008 compared with a loss of $823,000 in the third quarter of 2007. For the nine-month period of 2008 the company had an operating loss of $127,000 compared with a $2.4 million loss in the 2007 nine-month period.
Earnings per share from continuing operations was $0.02 for the 2008 third quarter compared with a loss of $0.12 per share in the comparable 2007 period. For the nine-month period, the company’s loss per share from continuing operations improved to $0.03 in 2008, compared with a loss per share of $0.33 in the comparable 2007 period.
Cash provided by operating activities in the first nine months of 2008 reached $535,000 vs. cash used in operating activities of $783,000 in the comparable period of 2007.
The company paid down $8.3 million in debt in 2008.
Net interest expenses decreased by 27% in Q3 2008, vs. the comparable period 2007; for the nine month period the decrease was 16%.
GAAP profitability continued into Q3 2008.
Claudio Guazzoni, Chairman and CEO of Zanett, said, “We set our goals high this quarter, exceeded our expectations and attained record quarterly revenue, all this, despite the poor economic conditions that have plagued our economy. Our improvements this quarter resulted from new customers as well as expanding our business with existing customers. Significantly, during the quarter we added several new contracts, with a combined total of nearly $7 million. Much of our growth during the quarter was a direct result of steps we put into place in early 2007, including the alignment of our different Oracle platforms. The alignment has enabled us to expand our national practice expertise, and we believe it will help us implement future efficiencies, improve our bill rates, and better position us for growth.”

Mr. Guazzoni continued, “We anticipate continued improvements throughout the fourth quarter and beyond, through expanding our business with existing clients as well as from new customers. We also continue to seek acquisitions, and believe that today’s economic environment presents us with solid opportunities as valuations become more attractive.”

Dennis Harkins, President and CFO of Zanett, said, “Our emphasis on increased marketing activities during the year has paid off in terms of revenue growth, as we achieved record quarterly revenue with dramatic increases in gross profit margins. Late last year we made a strategic decision to target our efforts on those industries that are experiencing greater economic health, in order to enhance revenue opportunities while minimizing our risk. Those efforts have paid off as has been demonstrated in our results. We provide our clients with not only strong Oracle-centric technology, but also with an exceptional ROI and help them deliver profitable results. Importantly, the strong relationships that our staff has nurtured with our existing clients have also provided a very health recurring revenue stream.”

Mr. Harkins continued, “Our recently announced letter of intent to acquire PS GoLive, which we expect to close soon, demonstrates our commitment to develop world-class Oracle/PeopleSoft capabilities and provides yet another platform for us to further improve our business. Our acquisition strategy remains focused on businesses that would enable us to expand our geographical footprint as well as on those that would help us expand our Oracle business.”

Conference Call

Management of Zanett will host a conference call today at 11 a.m. EST to discuss the company’s financial results and achievements. Those who wish to participate in the conference call may telephone [phone] from the U.S. or for international callers, 973-321-1100, conference ID# 72702236, approximately 15 minutes before the call. A digital replay will be available approximately 2 hours after the completion of the call by telephone for two weeks and may be accessed by dialing 800-642-1687, from the U.S., or 706-645-9291, for international callers, conference ID# 72702236.

About Zanett, Inc.

Zanett is a leading business process outsourcing (BPO), IT enabled services (ITES), and information technology (IT) consulting firm serving Fortune 500 corporations, mid-market companies, and highly classified federal agencies involved in Homeland Defense and Homeland Security. The company has historically operated in two segments, Government Solutions and Commercial Solutions. With the sale of its Government Division, Zanett will focus exclusively on its Commercial Solutions business.

The Commercial Solutions segment provides BPO, ITES, IT and Management Consulting Services, as well as delivers custom business solutions that integrate and implement Oracle's full suite of product offerings - Oracle, JD Edwards, PeopleSoft, Seibel, together with associated Oracle Fusion technologies. A wide range of industry-focused delivery expertise is provided to clients, including Managed Services, Enterprise Applications, Business Intelligence, SOA, and Middleware Technologies. Zanett also provides full infrastructure and application hosting, utilizing local and international resources, remote and onsite DBA support, all on a 24x7 basis.

Zanett currently employs over 228 people nationwide, is headquartered in New York City, and operates out of 8 offices (Atlanta, Boston, Cincinnati, Detroit, Indianapolis, Jacksonville, New York City and the Philippines). For more information, please visit http://www.zanett.com.