Merriman Curhan Ford & Co and Noble Financial Group, market makers in the shares of ProLink Holdings, the world’s largest provider of global positioning system golf course management systems and on-course advertising, have assessed the performance of the company following publication of its fourth quarter and year end results and both conclude that the company’s shares should continue to be rated ‘buy’.
“4Q07 revenue results exceed our estimates,” said Merriman. “ProLink reported 4Q revenue of $6.4m, which exceeded our estimate of $6.2m. Even more impressive was the growth in domestic system sales to $4.1m from $2.7m in the year-ago quarter – and the fact that 4Q revenue exceeded last year’s total even without any contribution from Elumina following the termination of the company’s distribution relationship.
“ProLink wrote down $4.6m of receivables from Elumina in 4Q as the legal dispute continues. Although management expects to receive some of those receivables in a settlement and from insurance, they took this conservative step. Excluding one-time charges, operating expenses declined $1.0M from 4Q06 and $0.7M from 3Q07 levels.”
“The Company needs to find a new distributor outside of the US in order to help make up some of the lost sales to Elumina, which was about 22% of sales in 2006,” comments Noble Financial Group. “The sales of about $6.4 million in 4Q:07 is impressive for two reasons, in our view: first there were no sales with previous European distributor Elumina for the quarter; and, secondly, sales for the seasonally slow 4Q was slightly less than PLKH’s seasonally strong 2Q:07.”
“With the confusion over the Elumina acquisition now behind the company and demonstrated results that ProLink continues to take market share and remains on-track with its media initiative, we are maintaining our Buy rating,” conclude Merriman Curhan Ford & Co.
“During 2007, the Company made substantial progress in transforming itself into a digital out of home media company,” said Lawrence D. Bain, CEO of ProLink Solutions. “Our advertising sales increased significantly, helping to drive improved operating margins and results. Our agreement with ABC News Media Sales will allow the company to develop a national footprint through one of the most respected global media companies.
“We are well positioned for 2008 as we have commitments from multiple respected national brands to use our direct to the consumer digital platform in their 2008 advertising activities. Our domestic equipment sales remain strong, as we continue to gain additional market share.
“Golf courses world wide increasingly recognize the value that the ProLink System creates. During the third quarter, we announced that we would reduce operating costs as we refined our business model. I am pleased to announce in Q4 that we lowered operating expenses by approximately $0.9 million from the 2007 first quarter. We have implemented additional cost reduction initiatives during the first quarter of 2008 and anticipate that 2008 operating expenses will be materially lower than 2007.”
“Despite the many accomplishments last year, we are highly focused on meeting several of the challenges ahead,” continued Mr. Bain. “Our decision to terminate Elumina Iberica, S.A., as an international distributor, will impact revenue near-term. We are completing our due diligence on two separate distributors for France and Spain and remain confident that we will soon be able to announce new partners for the area.
“Fortunately, it has allowed us to get closer to our international customers and vendors, which should facilitate longer-term diversified growth and stability. We also are aware of the challenges posed by a slowing economy, particularly in the area of consumer spending, which could impact all areas of the golf industry. However, we believe that growing domestic system sales, increasing advertising revenue and tight cost controls will help mitigate or eliminate the short-term impact of any international weakness.”
ProLink Holdings www.goprolink.com
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