Company Revenues Grow to $10.8 Million; Auction Volume Nearly $1.4 Billion;
Potential Savings to Customers Estimated at More Than $300 Million
PITTSBURGH, April 17 /PRNewswire/ -- FreeMarkets, Inc. (Nasdaq: FMKT), the
world's leading B2B eMarketplace, today announced its results of operations
for the first quarter ended March 31, 2000.
Revenues for the first quarter were $10.8 million, compared to
$3.5 million for the same period last year. This represents an increase of
209% over the prior year's first quarter and 38% over the quarter ended
December 31, 1999. Gross margins rose from 39% in the 4th quarter of 1999 to
41% in the first quarter of 2000. Net loss for the first quarter, excluding
stock-based expense and non-cash acquisition-related costs, was $8.4 million,
or $.24 per diluted share, compared to a net loss of $492,000, or $.04 per
diluted share in the first quarter of 1999.
"Our first quarter results demonstrate our continued commitment to
delivering results for our customers and strengthening our business across all
fronts, including growing our recurring revenue streams and increasing our
gross margins," said Glen T. Meakem, Chairman and CEO of FreeMarkets. "During
the quarter, we grew the number of customers who use our B2B eMarketplace from
34 to 47. We also added over 30 new supply verticals and over 1,000 new
suppliers participated in our online auctions, bringing our total number of
supplier participants to more than 4,000 from over 50 countries.
Additionally, we entered the Surplus Asset space with the launch of
FreeMarkets(R) AssetExchange, and bolstered our leadership position in this
space by acquiring iMark.com, Surplus Record, Inc. and SR Auction, Inc. We
are particularly pleased with our success in diversifying our revenue base
during the quarter and we are optimistic about our continued growth in 2000."
During the first quarter, FreeMarkets conducted online auctions for nearly
$1.4 billion worth of direct materials, commodities and services, creating an
estimated $300 million in potential savings for its customers. Since 1995,
over $5.4 billion of commerce has been conducted through the FreeMarkets B2B
eMarketplace, creating an estimated $1 billion in potential savings for
buyers.
The number of customers served through the FreeMarkets B2B eMarketplace
grew to 47 in the first quarter, compared to 8 in the same period last year,
and 34 in the quarter ended December 31, 1999. New customers announced in the
first quarter include: Bayer, Bechtel, Daimler Chrysler Aerospace and Giant
Eagle.
On April 17, FreeMarkets announced a five-year, strategic relationship
with Visteon Corporation. Under the terms of the five-year, multimillion
dollar agreement, FreeMarkets will provide Visteon with access to its B2B
eMarketplace for strategic sourcing. Visteon will also pay FreeMarkets
incremental, volume-based fees as it uses the FreeMarkets B2B eMarketplace
beyond specified market volumes. The agreement is FreeMarkets' largest
customer contract to date.
In the first quarter, FreeMarkets grew its staff from 376 at December 31,
1999 to 497. The Company also added offices in Hong Kong, Singapore, New
Delhi, San Jose, Austin, Chicago and Detroit.
During March, FreeMarkets acquired iMark.com, a business-to-business
online marketplace for surplus equipment and inventory. FreeMarkets also
acquired the assets of Surplus Record and SR Auction, a directory and network
of dealers and buyers and an online surplus asset trade site for business
surplus, new and used industrial equipment, machinery and machine tools.
First quarter results include $9.5 million of non-cash acquisition-related
costs. These costs consist of a $7.4 million write-off of in-process research
and development and goodwill amortization of $2.1 million associated with the
acquisition of iMark.com. Including these non-cash acquisition-related costs,
net loss for the first quarter was $18.1 million, or $0.51 per diluted share.
Total operating cash burn for the quarter, excluding acquisition-related
working capital payments, was approximately $8 million, while cash used for
capital expenditures was approximately $4 million.
About FreeMarkets
FreeMarkets is the original and world's leading B2B eMarketplace, with
online markets for industrial parts, raw materials, commodities and services.
The Company has executed online auctions for over $5.4 billion of purchase
orders to date, and created potential estimated savings of more than
$1 billion for its customers. Since 1995, FreeMarkets has created online
auctions for products in more than 100 supply verticals, including injection
molded plastic parts, commercial machinings, metal fabrications, chemicals,
printed circuit boards, corrugated packaging and coal. More than 4,000
suppliers from over 50 countries have participated in the FreeMarkets B2B
eMarketplace. FreeMarkets is the only B2B eMarketplace that includes
industry-leading online auction technology, technical operations, industrial
market making services, access to a global database of suppliers and supplier
research, call center support to buyers and suppliers in over 30 languages,
and marketplace rules. The Company's current customers include Visteon
Corporation, United Technologies Corporation, The Quaker Oats Company, Owens
Corning, Eaton Corporation, Emerson Electric Company, FirstEnergy Corp.,
SmithKline Beecham plc, Navistar International and Delphi Automotive Systems
Corporation. FreeMarkets can be found on the Web at http://www.freemarkets.com.
FreeMarkets is a registered trademark of FreeMarkets, Inc.
Forward-looking statements
Statements in this press release that are not historical facts, including
those statements that refer to FreeMarkets' plans, prospects, expectations,
strategies, intentions, hopes and beliefs, are forward-looking statements.
These forward-looking statements are based on information available to
FreeMarkets today, and FreeMarkets assumes no obligation to update these
statements as circumstances change. There are risks and uncertainties that
could cause actual results to differ materially from the forward-looking
statements, including, without limitation, market acceptance of FreeMarkets'
B2B eMarketplace, the competitive nature of the market for business-to-
business online auction services, FreeMarkets' ability to retain and increase
revenue from existing customers and to attract new customers, FreeMarkets'
ability to attract and retain qualified personnel, the size of the market for
used equipment and surplus inventory, the demand for online auction and other
asset recovery services by buyers and suppliers, and FreeMarkets' ability to
integrate acquisitions. Risk factors are described in more detail in
FreeMarkets' filings with the Securities and Exchange Commission.
FreeMarkets, Inc.
(Unaudited; $ in thousands, except per share amounts)
Three Months Ended
March 31,
2000 1999
Revenues $10,808 $3,499
Cost of revenues 6,334 1,566
Gross profit 4,474 1,933
Operating costs:
Research & development 2,884 555
Sales & marketing 7,420 593
General & administrative 5,166 1,243
Stock-based expense 226 -
Non-cash acquisition-related costs 9,542 -
Total operating costs 25,238 2,391
Operating loss (20,764) (458)
Interest income (expense), net 2,627 (34)
Net loss $(18,137) $(492)
Basic & diluted EPS $(0.51) $(0.04)
Weighted average shares 35,498,829 11,810,399
Net loss excluding stock-based expense
& non-cash acquisition-related costs $(8,369) $(492)
Per basic & diluted share (0.24) (0.04)
Operational data:
Auction volume $1,355,092 $220,666
Estimated potential savings $300,000 $36,000
Number of customers 47 8
Number of employees 497 151
March 31, December 31,
2000 1999
Balance sheet data:
Cash and short-term investments $174,302 $210,244
Working capital 167,753 208,850
Total assets 558,378 231,654
Long-term debt, excluding current
portion 3,508 3,278
Total stockholders' equity 533,570 218,654
For more information, contact Karen Kovatch, Senior Manager, Corporate
Communications, 412-297-8767, or kkovatch@freemarkets.com, or Gary Doyle,
Director of Investor Relations, 412-297-8849, or gdoyle@freemarkets.com, both
of FreeMarkets.
SOURCE FreeMarkets, Inc.
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Related links:
http://www.freemarkets.com
CONTACT:
Karen Kovatch, Senior Manager, Corporate
Communications, 412-297-8767, or kkovatch@freemarkets.com, or
Gary Doyle, Director of Investor Relations, 412-297-8849, or
gdoyle@freemarkets.com, both of FreeMarkets
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