SANTA MONICA, CA / ACCESSWIRE / October 4, 2017 / The New York City commercial real estate market is thriving from both a square footage perspective (2.75 million leased in August) and pricing perspective ($73.86 per square foot). That’s good news for FTE Networks (FTNW), as the willingness for NYC businesses to spend is showing up in the microcap’s new contracts and large backlog. Through two operating subsidiaries, FTE Networks was making a name for itself in network infrastructure and services, but the addition of Benchmark Builders and its highly complementary operations, an acquisition that was completed in April, substantially added to FTE’s scale immediately and for the future.
Benchmark Builders provides construction management for complex projects. Benchmark added to FTE’s portfolio expertise in technologically complex interior construction, including telecommunications, commercial real estate, industrial, healthcare and educational, amongst other industries, with a particular specialty for projects in its hometown of New York City.
Benchmark was ranked No. 6 in the May issue of real estate publication “The Real Deal” among the top general contractors for alteration and renovation projects in NYC (based upon initial estimated costs filed on permits with the Dept. of Building). This reputation is evident in revenue generation, which investors are getting a taste of since the buyout was completed during the second quarter.
In the quarter ended June 30, 2017, FTE reported $50.7 million in consolidated revenue, $43.1 million of which was generated by Benchmark during the period of April 21 – June 30, the 39 days the company was a unit of FTE. FTE still operated at a net loss, but as costs associated with the acquisition and operational synergies are realized the company should begin to improve the bottom line results. To that point, FTE reported adjusted operating income of $2.3 million for the quarter, which factored in $4.6 million in one-time cash and non-cash costs associated with the Benchmark acquisition.
Against that backdrop, investors will be watching for results from the third quarter ended September 30, 2017. The stage is also set for the fourth quarter as measured by news last month that Benchmark was awarded an aggregate of $61.6 million in new projects. The three projects, all in the NYC market, include infrastructure and technology expansions comprised of approximately 370,000 square feet of build-outs. Moreover, all of these projects are expected to be completed by the end of the year, speaking to the efficiency at which Benchmark operates.
The $61.6 million in new contracts brings the overall backlog of awarded projects under the cumulative FTE umbrella to $346.7 million, which positions the company for a strong end of 2017 and start to 2018.
Michael Palleschi, President and Chief Executive Officer at FTE Networks sees the combined company as a major force in the interior fill-out sector already with anticipation for continued growth going forward, saying recently, “We expect to dramatically expand even beyond this impressive upward trajectory.”
It’s fair to say that Palleschi’s optimism is not uncommon for the top executive of a young OTC-traded company; most are quick to express ‘plans’ for growth. What is an anomaly amongst OTC peers, though, is the execution under the guidance of a solid management team to build an integrated company that can feed revenue and build a brand by cross-selling services. Leveraging the strong sales of Benchmark further gives FTE uncommonly large revenue for a company with a market capitalization that averages about $40 million over the last ten days, according to data from Yahoo! Finance.
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