Agilysys Reports Unaudited Fiscal 2010 Second-Quarter and First-Half Results
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CLEVELAND, Nov. 4 /PRNewswire-FirstCall/ --
-- Quarterly Net Income from Continuing Operations Improves Sharply to $2.9
Million, or $0.12 Per Diluted Share, on 9% Lower Revenue
-- Revenue Increases 20% Sequentially
-- Debt Free With $48.2 Million Cash on Hand at Sept. 30 vs $36.2 Million
at Fiscal Year-End
Agilysys, Inc. (Nasdaq: AGYS), a leading provider of innovative IT solutions, today announced unaudited financial results for the fiscal 2010 second quarter and first half ended September 30, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030915/AGLSLOGO )
Second-Quarter Unaudited Results of Operations
Revenue declined 9.0% to $156.0 million, compared with $171.4 million in the second quarter of fiscal 2009. Hardware sales declined 3.5%, services declined 32.6% and software sales increased 14.0%. Consolidated revenues rebounded 19.8% from the $130.2 million reported in the first quarter, due to double-digit growth in hardware, software and services.
Cost-cutting initiatives and lower acquisition-related intangible amortization drove selling, general and administrative (SG&A) expense down $12.4 million, or 23.9%, to $39.6 million. The Company recently executed an additional $9 million in annual savings of which approximately $4 million will be realized in the second half of fiscal 2010.
The Company's operating income, excluding restructuring and asset impairment charges ("Charges"), improved $6.2 million to $4.3 million from the operating loss of $1.9 million last year. Lower sales and gross profit year-over-year were more than offset by lower SG&A expense. Adjusted EBITDA (operating income plus depreciation and amortization), excluding Charges, increased 44.9% to $7.4 million for the quarter, compared with $5.1 million a year ago.
Agilysys reported net income from continuing operations of $2.9 million, or $0.12 per diluted share, a significant increase from the loss of $105.3 million, or a loss of $4.66 per share, recorded in the previous year.
"We are pleased to report strong sequential growth in sales and positive net earnings for the quarter. The improvement in profitability reflects the tangible benefits realized from our cost-saving efforts," said Martin Ellis, President and Chief Executive Officer. "In addition to improved bottom-line performance, our order pipeline has started to show modest recovery from the depressed levels of the past several quarters."
Fiscal 2010 First-Half Unaudited Results of Operations
First-half 2010 revenue was $286.2 million compared with revenue of $351.2 million in the first six months of 2009. Revenue in the first half of fiscal 2010 decreased 18.5% reflecting lower sales in each of the company's three business segments. Hardware declined 13.6%, services declined 36.3% and software decreased 8.2%.
SG&A expense declined $23.7 million, or 22.0%, to $84.1 million, largely due to cost reductions. Approximately $44 million in annual costs have been eliminated since the first quarter of fiscal year 2009 when the company began aggressively reducing SG&A expenses to align cost structure with deteriorating market demand. Adjusted EBITDA, excluding Charges, was $1.1 million for the six-month period, versus $3.3 million in the comparable period of fiscal 2009.
For the first six months of fiscal 2010, the company reported a net loss from continuing operations of $9.5 million, or a loss of $0.42 per share, compared with a net loss from continuing operations of $165.4 million, or a loss of $7.33 per share, in the first six months of fiscal 2009.
Business Outlook
The year-over-year declines in revenue have moderated and while some economic indicators have improved, market conditions still reflect uncertainty regarding the overall business environment and demand for IT products. Ellis commented: "The business is stabilizing, our pipeline has improved, and we expect to see a seasonal increase in sales in our third quarter ending December. As we look to the balance of fiscal 2010, we plan to continue to focus on those items under our control that can help produce tangible improvements in results. Near-term, we are optimistic regarding our outlook for the third quarter of the fiscal year and expect financial performance in second half to improve versus the first half."
Conference Call Information
A conference call will be held at 11:00 a.m. ET on November 4, 2009 to review unaudited second-quarter and first-half fiscal 2010 results. 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 Web site. If you are unable to participate during the live webcast, the call will be archived at the Investor Relations section of www.agilysys.com.
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 presentation 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, business strategies, future financial results, unanticipated downturns to our relationships with customers, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, and unanticipated deterioration in economic and financial conditions in the United States and around the world. We do 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 the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC), under Item 1A, "Risk Factors." 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 release, certain non-GAAP financial measures as defined by the SEC rules are used. Management believes that such information can enhance investors' understanding of the Company's ongoing operations and is a measure used in the Company's debt agreement. The non-GAAP measures included in this release have been reconciled to the comparable GAAP measures within an accompanying table, shown on the last page of this release.
About Agilysys, Inc.
Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The Company uses technology--including hardware, software and services--to help customers resolve their most complicated IT needs. The Company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales offices in the United Kingdom and Asia.
News releases and other information on Agilysys are available on the Internet at: www.agilysys.com.
Investor Contact:
Curtis Stout
Vice President and Treasurer
Agilysys, Inc.
440-519-8635
curtis.stout@agilysys.com
Media Contact:
Maureen Morreale
Senior Communications Manager
Agilysys, Inc.
440-519-8161
maureen.morreale@agilysys.com
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended
(In thousands, except Sep 30, Sep 30,
share and per-share ----------------------- -----------------------
data) 2009 2008 2009 2008
---- ---- ---- ----
Net sales:
Products $126,925 $128,313 $231,818 $265,892
Services 29,070 43,125 54,367 85,297
------ ------ ------ ------
Total net sales 155,995 171,438 286,185 351,189
Cost of goods sold:
Products 99,623 99,449 185,503 212,890
Services 12,499 21,881 24,958 41,169
------ ------ ------ ------
Total cost of
goods sold 112,122 121,330 210,461 254,059
------- ------- ------- -------
Gross margin 43,873 50,108 75,724 97,130
Selling, general and
administrative expenses 39,618 52,032 84,144 107,834
Asset impairment
charges - 112,020 - 145,643
Restructuring charges 54 510 68 23,573
-- --- -- ------
Operating income (loss) 4,201 (114,454) (8,488) (179,920)
Other expense
(income):
Other expense (income),
net 81 (242) (390) (480)
Interest income (9) (215) (42) (462)
Interest expense 253 197 460 452
--- --- --- ---
Income (loss) before
income taxes 3,876 (114,194) (8,516) (179,430)
Income tax expense
(benefit) 988 (8,917) 1,003 (14,080)
--- ------ ----- -------
Income (loss) from
continuing operations 2,888 (105,277) (9,519) (165,350)
Loss from discontinued
operations (52) (1,312) (41) (1,274)
--- ------ --- ------
Net income (loss) $2,836 $(106,589) $(9,560) $(166,624)
====== ========= ======= =========
Income (loss) per share
- basic
Income (loss) from
continuing operations $0.13 $(4.66) $(0.42) $(7.33)
Loss from
discontinued
operations (0.00) (0.06) (0.00) (0.05)
----- ----- ----- -----
Net income (loss) $0.13 $(4.72) $(0.42) $(7.38)
===== ====== ====== ======
Income (loss) per share
- diluted
Income (loss) from
continuing
operations $0.12 $(4.66) $(0.42) $(7.33)
Loss from
discontinued
operations (0.00) (0.06) (0.00) (0.05)
----- ----- ----- -----
Net income (loss) $0.12 $(4.72) $(0.42) $(7.38)
Weighted average
shares outstanding
Basic 22,625,654 22,601,549 22,626,491 22,569,206
Diluted 22,879,030 22,601,549 22,626,491 22,569,206
Cash dividends per
share $0.03 $0.03 $0.06 $0.06
AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION (UNAUDITED)
Three Months Ended Six Months Ended
Sep 30, Sep 30,
----------------------- -----------------------
(In thousands) 2009 2008 2009 2008
---- ---- ---- ----
Hospitality (HSG)
Total revenue $23,836 $23,488 $40,386 $48,242
Elimination of
intersegment revenue (514) (43) (1,057) (82)
---- --- ------ ---
Revenue from
external customers $23,322 $23,445 $39,329 $48,160
======= ======= ======= =======
Gross margin $14,237 $14,435 $23,777 $28,844
======= ======= ======= =======
61.0% 61.6% 60.5% 59.9%
Depreciation and
amortization $1,104 $1,855 $2,227 $3,186
Operating income
(loss) 3,997 (102,906) 2,095 (108,765)
----- -------- ----- --------
Adjusted EBITDA $5,101 $(101,051) $4,322 $(105,579)
====== ========== ====== =========
Goodwill and
intangible asset
impairment $- $103,387 $- $110,852
Retail (RSG)
Total revenue $23,582 $29,437 $47,970 $67,704
Elimination of
intersegment revenue (19) (148) (20) (316)
--- ---- --- ----
Revenue from
external customers $23,563 $29,289 $47,950 $67,388
======= ======= ======= =======
Gross margin $4,694 $6,094 $10,070 $14,493
====== ====== ======= =======
19.9% 20.8% 21.0% 21.5%
Depreciation and
amortization $44 $53 $94 $141
Operating income
(loss) 1,133 (5,942) 2,763 (20,314)
----- ------ ----- -------
Adjusted EBITDA $1,177 $(5,889) $2,857 $(20,173)
====== ======= ====== ========
Goodwill impairment $- $6,549 $- $24,910
Technology (TSG)
Total revenue $109,126 $120,047 $198,950 $238,748
Elimination of
intersegment revenue (16) (1,343) (44) (3,107)
--- ------ --- ------
Revenue from
external customers $109,110 $118,704 $198,906 $235,641
======== ======== ======== ========
Gross margin $24,909 $29,009 $42,638 $51,446
======= ======= ======= =======
22.8% 24.4% 21.4% 21.8%
Depreciation and
amortization $817 $4,061 $4,768 $8,534
Operating income
(loss) 6,320 5,732 3,786 (26,313)
----- ----- ----- -------
Adjusted EBITDA $7,137 $9,793 $8,554 $(17,779)
====== ====== ====== ========
Goodwill impairment $- $2,084 $- $9,881
Restructuring charge $- $510 $- $23,573
AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION
(Unaudited)
Three Months Ended Six Months Ended
Sep 30, Sep 30,
----------------------- -----------------------
(In thousands) 2009 2008 2009 2008
---- ---- ---- ----
Corporate / Other
Gross margin $33 $570 $(761) $2,347
=== ==== ===== ======
Depreciation and
amortization (a) $1,205 $1,079 $2,409 $2,098
Operating loss (7,249) (11,338) (17,132) (24,528)
------ ------- ------- -------
Adjusted EBITDA $(6,044) $(10,259) $(14,723) $(22,430)
======= ======== ======== ========
Restructuring charge $54 $- $68 $-
Consolidated
Total revenue $156,544 $172,972 $287,306 $354,694
Elimination of
intersegment
revenue (549) (1,534) (1,121) (3,505)
---- ------ ------ ------
Revenue from
external customers $155,995 $171,438 $286,185 $351,189
======== ======== ======== ========
Gross margin $43,873 $50,108 $75,724 $97,130
======= ======= ======= =======
28.1% 29.2% 26.5% 27.7%
Depreciation and
amortization (a) $3,170 $7,048 $9,498 $13,959
Operating income
(loss) 4,201 (114,454) (8,488) (179,920)
----- -------- ------ --------
Adjusted EBITDA $7,371 $(107,406) $1,010 $(165,961)
====== ========= ====== =========
Goodwill and
intangible asset
impairment $- $112,020 $- $145,643
Restructuring charge $54 $510 $68 $23,573
(a) Does not include the amortization of deferred financing fees
totaling $132 and $57 for the three months ended Sept. 30, 2009 and
2008, respectively, and $220 and $113 for the six months ended
Sept. 30, 2009 and 2008, respectively, all of which related to the
Corporate/Other segment.
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Sep 30, Mar 31,
(In thousands) 2009 2009
---- ----
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $48,197 $36,244
Accounts receivable, net 125,166 151,944
Inventories, net 22,036 27,216
Deferred income taxes - current,
net 6,845 6,836
Prepaid expenses and other
current assets 5,337 4,564
Income taxes receivable 3,874 3,871
Assets of discontinued operations
- current 285 1,075
--- -----
Total current assets 211,740 231,750
Goodwill 50,563 50,382
Intangible assets, net 29,877 35,699
Deferred income taxes - non-current,
net 511 511
Other non-current assets 18,467 29,008
Assets of discontinued operations -
non-current - 56
Property and equipment, net 29,471 27,030
------ ------
Total assets $340,629 $374,436
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $92,832 $28,042
Floor plan financing - 74,159
Deferred revenue 20,435 18,709
Accrued liabilities 20,665 37,807
Long-term debt - current 195 238
Liabilities of discontinued
operations - current 575 1,176
--- -----
Total current liabilities 134,702 160,131
Other non-current liabilities 21,827 21,588
Shareholders' equity:
Common shares, without par value,
at $0.30 stated value; authorized
80,000,000 shares; 31,606,831
shares issued and 23,031,119
shares outstanding at Sep 30, 2009 9,370 9,366
Treasury stock (8,575,712 and
8,896,778 shares at Sep 30, 2009,
and Mar 31, 2009, respectively) (2,670) (2,670)
Capital in excess of stated value (9,934) (11,036)
Retained earnings 189,027 199,947
Accumulated other comprehensive
loss (1,693) (2,890)
------ ------
Total shareholders' equity 184,100 192,717
------- -------
Total liabilities and
shareholders' equity $340,629 $374,436
======== ========
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
(In thousands) Sep 30,
------------------------
Operating activities: 2009 2008
---- ----
Net loss $(9,560) $(166,624)
Add: Loss from discontinued
operations 41 1,274
-- -----
Loss from continuing operations (9,519) (165,350)
Adjustments to reconcile net loss
from continuing operations to net
cash provided by (used for)
operating activities (net of
effects from business acquisitions):
Impairment of goodwill and
intangible assets - 166,223
Gain on redemption of cost basis
investment - (51)
Gain on partial redemption of
investment in The Reserve Fund's
Primary Fund (70) -
Loss on the sale of securities 91 -
Depreciation 1,891 1,927
Amortization 7,827 12,145
Deferred income taxes (9) (18,372)
Stock-based compensation 1,073 2,152
Changes in working capital:
Accounts receivable 26,778 32,699
Inventories 5,180 2,001
Accounts payable 65,150 (76,327)
Accrued and other liabilities (15,309) (40,816)
Income taxes payable (798) 946
Other changes, net (866) (3,252)
Other non-cash adjustments (2,357) (2,487)
------ ------
Total adjustments 88,581 76,788
------ ------
Net cash provided by (used for)
operating activities 79,062 (88,562)
Investing activities:
Proceeds from (claim on) The Reserve
Fund's Primary Fund 2,337 (7,657)
Proceeds from redemption of cost
basis investment - 7,172
Proceeds from the borrowings against
company-owned life insurance
policies 12,500 -
Change in cash surrender value of
company-owned life insurance
policies (107) (103)
Acquisition of businesses, net of
cash acquired - (2,381)
Purchase of property and equipment (5,923) (2,603)
------ ------
Net cash provided by (used for)
investing activities 8,807 (5,572)
Financing activities:
Floor plan financing agreement, net (74,159) 75,551
Proceeds from borrowings under
credit facility 5,000 -
Principal payments under credit
facility (5,000) -
Principal payment under long-term
obligations (206) (47)
Issuance of common shares 33 -
Debt financing costs (1,520) -
Dividends paid (1,360) (1,358)
------ ------
Net cash used for (provided by)
financing activities (77,212) 74,146
Effect of exchange rate changes
on cash 1,092 (101)
----- ----
Cash flows provided by (used for)
continuing operations 11,749 (20,089)
Cash flows of discontinued operations:
Operating cash flows 204 (29)
Investing cash flows - 35
-- --
Net increase (decrease) in cash 11,953 (20,083)
Cash at beginning of period 36,244 69,935
------ ------
Cash at end of period $48,197 $49,852
======= =======
AGILYSYS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(Unaudited)
Three Months Ended Six Months Ended
Sep 30, Sep 30,
----------------------- -----------------------
(In thousands) 2009 2008 2009 2008
---- ---- ---- ----
Net income (loss) $2,836 $(106,589) $(9,560) $(166,624)
Plus:
Interest expense, net 244 (18) 418 (10)
Other income, net 81 (242) (390) (480)
Income tax expense
(benefit) 988 (8,917) 1,003 (14,080)
Depreciation and
amortization
expense (a) 3,170 7,048 9,498 13,959
Loss from discontinued
operations, net of
tax 52 1,312 41 1,274
-- --- -- -----
Adjusted EBITDA 7,371 (107,406) 1,010 (165,961)
Asset impairment
charges - 112,020 - 145,643
Restructuring charges 54 510 68 23,573
-- --- -- ------
Adjusted EBITDA excluding
asset impairment and
restructuring charges $7,425 $5,124 $1,078 $3,255
====== ====== ====== ======
(a) Depreciation and amortization expense excludes amortization of
deferred finance costs, totaling $132 and $57 for the three months
ended Sept. 30, 2009 and 2008, respectively, and totaling $220 and
$113 for the six months ended Sept. 30, 2009 and 2008,
respectively, as such costs are already included in interest
expense, net.
SOURCE Agilysys
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