ITEX CEO Steven White�s Annual Message To Its Stockholders
Dear Valued Stockholders,
Operating any business involves balancing a number of variables,
including growth, capital resources (human, equity and cash),
strategy, vision, execution and various stakeholder needs and
expectations. It is my job as CEO, with the Board�s oversight, to
allocate our resources wisely for their best long-term benefit, to
focus on the right opportunities, to avoid distractions, and try to
meet the needs and expectations of our various constituencies
without compromising the integrity and stability of our
The majority of our decisions are based on what we believe to be
best for ITEX�s long term success, not on maximizing short-term
gains or taking unnecessary risk. We believe our long-term
perspective is evident in our consistent and steadily improving
In 2003, our newly-elected Board and management team set four key
priorities for the organization that we still follow today. The
Increase the value proposition to our members by making
participation in the ITEX Marketplace cost effective, easy and
exceptional service to our franchisees, paying an equitable revenue
share to assist in their success;
Fairly compensate our employees and provide a secure, innovative
work environment that provides opportunity for professional
Increase stockholder value by improving operating performance,
building assets and long-term potential.
Historical Results Since 2003
We have accomplished much over the last seven years to the benefit
of all ITEX stakeholders.
ITEX is in the best financial condition in its history; our member
and broker base is considerably larger due to successful
acquisitions; our brokers and staff have excellent tools and
resources to be efficient and productive; the value proposition for
our members continues to improve; our technological infrastructure
is robust and scalable; we are timely, compliant and transparent in
our public company reporting; our stock price has consistently
appreciated over the years; we now pay quarterly stock dividends;
and our position ranking as number one in our industry is
undisputed. It has taken a lot of hard work from our cohesive team
and astute management of our assets to get us where we are today.
Notable Accomplishments Since 2003 Include:
Fiscal 2010 In Review
I�m pleased to report in fiscal 2010 our financial condition
continued to strengthen. Fiscal 2010 represented our seventh
consecutive profitable year, reflecting increases in revenues,
operational income, net income, assets, stockholder�s equity and
stock price. In addition, we have a strong, high quality balance
sheet, ending the fiscal year with $5 million in cash, double last
year. Operational income increased to $1.674 million compared to
$1.027 million last year; a 63% increase. Net income increased to
$946,000 or $0.26 a share.
We attribute our financial success, in part, to the disciplined
management of our finances, our ability to utilize a lean, smart,
and industry-experienced staff, and our dedicated brokers. We have
sought to only add positions suitable for a company our size to
ensure profitability in difficult economic times. SG&A expenses,
including corporate salaries and benefits (excluding depreciation)
have steadily declined as a percentage of revenue from 41% in 2003
to 23% in 2010.
During this same period, the cost of Marketplace revenue, which
represents compensation and investment in our Broker Network,
increased from 60% to 64%. We are very proactive in helping our
franchisees succeed. For example, we have a highly qualified
corporate staff dedicated to servicing their needs; we continually
upgrade internet tools and marketing materials; we host weekly sales
and customer service training calls; we host a �CEO call� with
franchisees every few weeks, which includes a Q&A session; and each
year we sponsor a national convention and two regional conferences
that facilitate teamwork between our staff and franchisees. Last
month, we held the largest regional conference in our history on the
gulf coast of Florida.
In 2010 we continued our investment in our technology, our web
services initiatives, and various broker initiatives including new
desktop computers and the latest software packages.
We announced a $2 million stock buyback plan in March 2010 and
commenced a first ever quarterly cash dividend payment in June 2010.
As a result of our strategic decisions and execution, key
acquisitions and a lot of hard work, ITEX is now in its best
financial position and poised to have success in the future.
Selected Fiscal 2010 Highlights Compared To Fiscal 2009
Income from operations increased to $1.674 million from $1.027
Revenue increased to $16.925 million from $16.502 million;
Net income increased to $946,000 from $607,000;
Earnings per share increased to $0.26 from $0.17;
Cash at end of period increased to $5.169 million from $2.557
Stockholder equity increased to $14.869 million from $13.981
our revolving credit facility from $1.5 million to $2.5 million
with a lower interest rate; and
Paid a cash dividend in the amount of $0.025 per share during
the fourth quarter.
ITEX�s future continues to be very bright. We have a healthy balance
sheet with access to more than $8 million in capital, including our
bank credit facility. Access to capital is the key for pursuing
Operational cash flow in 2011 is expected to remain strong, allowing
us to continue to invest in our Broker Network and in our
technology, make quarterly cash dividend payments, and fund our
stock buyback plan. We will review our cash position quarterly to
balance between the short and long-term needs of our business and
determine the best return to our stockholders.
While cash preservation is not our sole objective, it has great
value in uncertain economic conditions. ITEX�s results since 2003
demonstrate the benefit of maintaining a longer-term perspective.
Although cash can be readily dissipated on short-term objectives, it
takes discipline to develop capital to preserve our ability to
capitalize on opportunities when they arise.
We continue to work on improvements to our proprietary TEAM software
and plan to launch a new platform in late 2011. When completed, all
trading community participants will benefit from an even more
robust, flexible, and efficient technology platform.
We approach our business with a sense of pride and with a focus on
excellence. The policies and strategies we have implemented over the
past several years are creating revenue, reducing expenses, and
continue to foster a high-performance culture. We are optimistic
that our strong performance will continue � to the benefit of all
Once again, I would like to personally thank our employees and the
franchise network (and their staff) whose dedication and drive is a
vital component in our success; our members, for whom we strive to
deliver value and service; and our valued stockholders for your
continued support and interest.
Chairman and CEO