Agilysys Reports Unaudited Fiscal 2012 Third-Quarter and Nine-Month Results
ATLANTA, Feb. 9, 2012 /PRNewswire/ -- Agilysys, Inc. (Nasdaq: AGYS), a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality and retail industries, today announced unaudited financial results for the fiscal 2012 third quarter and nine months ended December 31, 2011. As previously announced, Agilysys closed the sale of its Technology Solutions Group ("TSG") business on August 1, 2011, and accordingly, TSG's operating results, including the gain on the sale, as well as its assets and liabilities, are reported as components of discontinued operations.
Summary Fiscal 2012 Third-Quarter Unaudited Financial Results From Continuing Operations
-- Total net sales declined 12.6% to $51.6 million, compared with $59.0
million in the same prior-year period. Sales from the Company's
Hospitality Solutions Group and its Retail Solutions Group decreased
12.1% and 12.9%, respectively.
-- Gross margin expanded 620 basis points to 38.6%, driven by higher
quality revenue on hardware and services and the improvement in mix.
Gross profit increased 4.1% to $19.9 million, compared with $19.1
million from the previous period.
-- The reported operating loss from continuing operations of $7.0 million
included $3.2 million in restructuring charges, versus the operating
loss of $5.3 million in last year's comparable quarter, which included
minimal restructuring charges.
-- Adjusted EBITDA (defined as operating income plus depreciation and
amortization, excluding charges and one-time items), narrowed to
breakeven for the quarter, compared with a loss of $3.1 million a year
ago. (See reconciliation below.)
-- The net loss from continuing operations for the quarter was $5.8
million, or $0.26 per share, compared with a loss from continuing
operations of $2.3 million, or $0.10 per share, last year.
Summary Fiscal 2012 Nine-Month Unaudited Financial Results From Continuing Operations
-- Consolidated net sales for the nine-month period increased to $156.9
million from the $155.7 million reported in the first nine months of
fiscal 2011. The nine-month period includes a prior-period adjustment
to sales and gross profit that negatively impacted revenue by $1.0
million. This adjustment relates to periods prior to fiscal year 2012.
Excluding the impact of this adjustment, revenues increased
approximately 1.4% year over year.
-- Gross profit margin increased 176 basis points to 37.6% from 35.9% year
over year. Excluding the previously mentioned prior-period adjustment,
gross profit margin for the nine-month period was 38.1%.
-- Operating loss from continuing operations was $21.2 million for the
nine-month period, compared with an operating loss of $16.5 million in
the prior fiscal year. Excluding the previously mentioned prior-period
adjustment, operating loss from continuing operations was $20.1 million.
-- Year to date, Adjusted EBITDA was a loss of $2.7 million, versus a loss
of $8.8 million in the first nine months of the prior fiscal year. (See
reconciliation below.)
-- The net reported loss from continuing operations was $16.2 million, or
$0.72 per share, versus the previous year's net loss from continuing
operations of $15.5 million, or $0.68 per share. The net reported loss
excluding the previously mentioned prior-period adjustments was $15.1
million or $0.67 per share.
President and CEO James Dennedy commented: "The Company recorded four percent more in gross profit on lower overall revenues and $3 million more in adjusted EBITDA in the current quarter versus the same quarter a year ago. In the quarter, Hospitality and Retail experienced lower hardware revenue; while Hospitality experienced growth in proprietary support and Retail experienced growth in proprietary services. For the nine months, hardware remained essentially flat and software revenues were down; however, both proprietary services and proprietary support are up, reflecting an improved revenue mix in Retail and more subscription-based sales in Hospitality. The revenue and gross profit performance reflects the business strategy emphasis on improving overall revenue quality and acquisition of recurring revenue streams. The adjusted EBITDA performance reflects ongoing expense management initiatives, and we remain on plan to achieve the guidance issued earlier this year."
"We have made significant progress in moving our corporate services from Solon, Ohio, to Alpharetta, Georgia," added Robb Ellis, the Company's chief financial officer. "As we have shifted to more of a software-based company over the past year, we have also transformed and dramatically improved our corporate services team to comply with the needs of the business. This will allow us the ability to provide greater insight to the business to assist in our growth initiatives, provide more efficient and streamlined policies and procedures across the Company, and provide our investors with increased visibility into the Company."
Ellis continued, "During the third quarter, we identified errors in the approach the Company was taking in recognizing revenue for certain software license and service arrangements in prior periods. We concluded these errors were not material to any previously issued financial statements or to this fiscal year and therefore revised previously issued fiscal year 2012 financial statements to correct the effect of these errors and have included errors associated with periods prior to fiscal year 2012 in our first quarter fiscal 2012 financial statements. We have included these adjustments as one-time items in the adjusted EBITDA reconciliation included in this release."
Conference Call Information
A conference call will be held today, Feb. 9, 2012, at 11 a.m. ET to review unaudited third-quarter and nine-month fiscal 2012 results. To participate in the live call, dial (877) 317-6789 (International: (412) 317-6789) 10 minutes before the call begins, or 10:50 a.m. ET. The conference ID is 10009141. A slide deck will be the basis for the review. Both the slide deck and the conference call can be accessed via the Investor Relations section of www.agilysys.com. In addition, a replay of the call will be archived on the website for approximately 30 days.
To be added to Agilysys' email distribution list, please click on the link below:
http://www.agilysys.com/home/InvestorRelations/
Forward-Looking Language
This release contains certain management expectations, which may constitute forward-looking information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934, and the Private Securities Reform Act of 1995. Forward-looking information speaks only as to the date of this Quarterly Report and may be identified by use of words such as "may," "will," "believes," "anticipates," "plans," "expects," "estimates," "projects," "targets," "forecasts," "continues," "seeks," or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information including, without limitation, competitive factors, disruption of supplies, changes in market conditions, pending or future claims or litigation, or technology advances. No assurances can be provided as to the outcome of cost reductions, expected benefits and outcomes from our recent ERP implementation, business strategies, future financial results, unanticipated downturns to our relationships with customers and macroeconomic demand for IT products and services, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, consequences related to the concentrated ownership of our outstanding shares by MAK Capital, unanticipated deterioration in economic and financial conditions in the United States and around the world, consequences associated with the sale of the Company's TSG business, and uncertainties regarding restructuring actions and/or the relocation of the Company's corporate headquarters. The Company does not undertake to update or revise any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, will not be realized.
Other potential risks and uncertainties that may cause actual results to be materially different from those in forward-looking information are described in "Risk Factors," which is included in Part I, Item 1A of the Company's Annual Report for the fiscal year ended March 31, 2011. Copies are available from the SEC or the Agilysys website.
Use of Non-GAAP Financial Information
To supplement the unaudited condensed consolidated financial statements presented in accordance with U.S. GAAP in this press release, certain non-GAAP financial measures as defined by the SEC rules are used. These non-GAAP financial measures include Adjusted EBITDA; and revenues, gross profit margin, operating loss and net loss excluding prior period adjustments. Management believes that such information can enhance investors' understanding of the Company's ongoing operations. See the accompanying table that can be found below for a reconciliation of Adjusted EBITDA to the comparable GAAP measures.
About Agilysys
Agilysys is a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality and retail industries. The Company specializes in market-leading point-of-sale, property management, inventory and procurement, and mobile and wireless solutions that are designed to streamline operations, improve efficiency and enhance the consumer's experience. Agilysys serves casinos, resorts, hotels, foodservice venues, stadiums, cruise lines, grocery stores, convenience stores, general and specialty retail businesses and partners. Headquartered in Alpharetta, Georgia, Agilysys operates extensively throughout North America, with additional sales and support offices in the United Kingdom, Singapore and Hong Kong. For more information, visit www.agilysys.com.
Investor Contact:
Robb Ellis
Chief Financial Officer
Agilysys, Inc.
770-810-7970
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In
thousands,
except
share
and
per
share
data) Three Months Ended Nine Months Ended
Dec 31, Dec 31,
------- -------
2011 2010 2011 2010
---- ---- ---- ----
Net
sales:
Products $25,721 $33,970 $80,371 $81,653
Services 25,861 25,027 76,487 74,072
------ ------ ------ ------
Total
net
sales 51,582 58,997 156,858 155,725
Cost
of
goods
sold:
Products 20,109 26,777 63,536 63,326
Services 11,541 13,079 34,302 36,538
------ ------ ------ ------
Total
cost
of
goods
sold 31,650 39,856 97,838 99,864
------ ------ ------ ------
Gross
margin 19,932 19,141 59,020 55,861
Selling,
general
and
administrative
expenses 23,743 24,401 72,307 71,851
Asset
impairment
charges - - - 59
Restructuring
charges 3,238 3 7,954 406
----- --- ----- ---
Operating
loss (7,049) (5,263) (21,241) (16,455)
Other
expenses
(income):
Other
expenses
(income),
net 22 (321) 293 (2,281)
Interest
income (4) (21) (54) (61)
Interest
expense 60 316 937 880
--- --- --- ---
Loss
before
income
taxes (7,127) (5,237) (22,417) (14,993)
Income
tax
(benefit)
expense (1,353) (2,947) (6,209) 505
------ ------ ------ ---
Loss
from
continuing
operations (5,774) (2,290) (16,208) (15,498)
Income
from
discontinued
operations,
net
of
taxes (735) 4,288 10,403 5,030
---- ----- ------ -----
Net
(loss)
income $(6,509) $1,998 $(5,805) $(10,468)
======= ====== ======= ========
Net
(loss)
income
per
share
-
basic
and
diluted:
Loss
from
continuing
operations $(0.26) $(0.10) $(0.72) $(0.68)
(Loss)
income
from
discontinued (0.03) 0.19 0.46 0.22
operations ----- ---- ---- ----
Net
(loss)
income $(0.29) $0.09 $(0.26) $(0.46)
====== ===== ====== ======
Weighted
average
shares
outstanding:
Basic
and
diluted 22,147,867 22,752,632 22,650,289 22,751,042
AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION
(UNAUDITED) (In thousands)
Three Months Ended Dec 31, 2011 Three Months Ended Dec 31, 2010
------------------------------- -------------------------------
Reportable Segments Reportable Segments
------------------- -------------------
HSG RSG Corporate/ Consolidated HSG RSG Corporate/ Consolidated
--- --- ------------ --- --- ------------
Other Other
----- -----
Total
Net
Revenue $21,680 $29,902 $- $51,582 $24,663 $34,334 $- $58,997
Gross
margin $13,956 $5,976 $- $19,932 $13,346 $5,795 $- $19,141
Gross
margin
percentage 64.4% 20.0% 38.6% 54.1% 16.9% 32.4%
Operating
income
(loss) $1,680 $1,323 $(10,052) $(7,049) $1,955 $1,042 $(8,260) $(5,263)
Other
(expenses)
income,
net - - (22) (22) - - 321 321
Interest
expense,
net - - (56) (56) - - (295) (295)
--- --- --- --- --- --- ---- ----
Income
(loss)
from
continuing
operations
before
income
taxes $1,680 $1,323 $(10,130) $(7,127) $1,955 $1,042 $(8,234) $(5,237)
====== ====== ======== ======= ====== ====== ======= =======
Nine Months Ended Dec 31, 2011 Nine Months Ended Dec 31, 2010
------------------------------ ------------------------------
Reportable Segments Reportable Segments
------------------- -------------------
HSG RSG Corporate/ Consolidated HSG RSG Corporate/ Consolidated
--- --- ------------ --- --- ------------
Other Other
----- -----
Total
Net
Revenue $63,491 $93,367 $- $156,858 $68,898 $86,827 $- $155,725
Gross
margin $40,187 $18,833 $- $59,020 $38,848 $17,013 $- $55,861
Gross
margin
percentage 63.3% 20.2% 37.6% 56.4% 19.6% 35.9%
Operating
income
(loss) $2,036 $5,090 $(28,367) $(21,241) $4,408 $3,889 $(24,752) $(16,455)
Other
(expenses)
income,
net - - (293) (293) - - 2,281 2,281
Interest
expense,
net - - (883) (883) - - (819) (819)
--- --- ---- ---- --- --- ---- ----
Income
(loss)
from
continuing
operations
before
income
taxes $2,036 $5,090 $(29,543) $(22,417) $4,408 $3,889 $(23,290) $(14,993)
====== ====== ======== ======== ====== ====== ======== ========
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Dec 31, March 31,
(In thousands, except share
data) 2011 2011
---- ----
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $44,061 $70,559
Short-term investments -
available for sale 39,994 -
Accounts receivable, net 30,055 31,926
Inventories, net 11,694 10,921
Deferred income taxes -
current 17 -
Prepaid expenses 3,356 2,829
Income taxes receivable 1,460 1,403
Other current assets 8,524 6,344
Assets of discontinued
operations - current - 105,810
--- -------
Total current assets 139,161 229,792
Goodwill 15,084 15,211
Intangible assets, net 21,611 22,535
Other non-current assets 3,781 11,709
Assets of discontinued
operations - non-current - 8,296
Property and equipment, net 19,136 24,855
Total assets $198,773 $312,398
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $20,603 $17,852
Deferred revenue 13,318 23,995
Accrued and other current
liabilities 20,888 14,594
Income taxes payable 626 265
Deferred income taxes -
current - 77
Capital lease obligations -
current 819 999
Liabilities of discontinued
operations - current - 89,005
--- ------
Total current liabilities 56,254 146,787
Deferred income taxes - non-
current 4,043 3,894
Capital lease obligations -
non-current 499 907
Other non-current liabilities 6,133 11,972
Liabilities of discontinued
operations - non-current - 734
Shareholders' equity:
Common shares, without par
value, at $0.30 stated 9,482 9,482
value; authorized 80,000,000
shares; 31,606,831
issued; and 21,972,661 and
23,022,398 shares
outstanding at December 31,
2011 and March 31,
2011, respectively
Treasury shares (9,634,170
shares at December 31, (2,892) (2,575)
2011 and 8,584,433 at March
31, 2011)
Capital in excess of stated
value (15,378) (5,421)
Retained earnings 140,854 146,659
Accumulated other
comprehensive loss (222) (41)
Total shareholders' equity 131,844 148,104
------- -------
Total liabilities and
shareholders' equity $198,773 $312,398
======== ========
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
(In thousands) Dec 31,
-------
Operating activities: 2011 2010
---- ----
Net loss $(5,805) $(10,468)
Less: Loss from discontinued operations $(10,403) $(5,030)
-------- -------
Loss from continuing operations (16,208) (15,498)
Adjustments to reconcile net loss from
continuing operations to net cash used
for
operating activities:
Restructuring charges 7,954 406
Payments for restructuring charges (3,916) -
Gain on redemption of Company-owned
life insurance policies - (2,065)
Gain on redemption of investment in The
Reserve Fund's Primary Fund - (147)
Asset impairment charges - 59
Loss on the sale of securities 163 -
Depreciation 5,813 2,508
Amortization 4,757 5,554
Deferred income taxes 54 4,462
Stock based compensation 2,350 2,075
Change in cash surrender value of
company owned life insurance policies (83) 247
Changes in operating assets and
liabilities:
Accounts receivable 1,746 (18,670)
Inventories (773) (766)
Accounts payable 2,771 6,200
Deferred revenue (10,677) 2,520
Accrued and other liabilities (4,846) (3,260)
Income taxes payable 1,635 31
Other changes, net (509) (90)
Total adjustments 6,439 (756)
----- ----
Net cash used for operating activities (9,769) (16,254)
Investing activities:
Proceeds from the sale of business 59,470 -
Proceeds from The Reserve Fund's Primary
Fund - 147
Proceeds from redemption of/borrowings
against Co.-owned life insurance
policies 347 4,349
Investments in Company-owned life
insurance policies (112) (1,015)
Proceeds from the sale of marketable
securities 5,025 14
Investments in marketable securities (40,039) (2,101)
Capital expenditures (3,089) (4,728)
Net cash provided by (used for)
investing activities 21,602 (3,334)
Financing activities:
Proceeds from borrowings under credit
facility - 15,325
Principal payments under credit facility - (15,325)
Purchase of treasury stock (12,127) -
Repurchases of shares to satisfy
employee tax withholding (1,118) -
Principal payment under long term
obligations (823) (260)
Net cash used for financing activities (14,068) (260)
Effect of exchange rate changes on cash (135) 218
---- ---
Cash flows used for continuing
operations (2,370) (19,630)
Cash flows used for discontinued
operations:
Operating cash flows, net (24,128) (594)
Investing cash flows, net - (869)
Net decrease in cash (26,498) (21,093)
Cash at beginning of period 70,559 62,801
------ ------
Cash at end of period $44,061 $41,708
======= =======
AGILYSYS, INC.
RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO
ADJUSTED EBITDA
(UNAUDITED)
(In
thousands) Three Months Ended Nine Months Ended
Dec 31, Dec 31,
------- -------
2011 2010 2011 2010
---- ---- ---- ----
Net loss
from
continuing
operations $(5,774) $(2,290) $(16,208) $(15,498)
Plus:
Interest
expense,
net (a) 56 164 315 426
Income tax
(benefit)
expense (1,353) (2,947) (6,209) 505
Depreciation
and
amortization
expense 3,764 2,463 10,003 7,669
Other
expenses
(income),
net 22 (321) 293 (2,281)
--- ---- --- ------
Adjusted
EBITDA
(b) $(3,285) $(2,931) $(11,806) $(9,179)
Restructuring
charges 3,238 3 7,954 406
Impact
from
revision
to prior
period - (140) 1,127 (79)
financial
statements
Asset
impairment
expense - - - 59
--- --- --- ---
Adjusted
EBITDA
excluding
charges
and one-
time
items $(47) $(3,068) $(2,725) $(8,793)
==== ======= ======= =======
(a) Interest expense excludes amortization of deferred
financing fees totaling $0 and $131 for the
three months ended Dec 31, 2011 and 2010, respectively, and
$568 and $393 for the nine months ended
Dec 31, 2011 and 2010, respectively.
(b) Non-GAAP financial measure
SOURCE Agilysys