TechWeb

Agilysys Reports Unaudited Fiscal 2012 Fourth-Quarter Results and Guidance for Fiscal Year 2013

Jun 07, 2012 (04:06 PM EDT)
URL: http://www.techweb.com/show-press-release/X908096/agilysys-reports-unaudited-fiscal-2012-fourth-quarter-results-and-guidance-for-fiscal-year-2013.html

Momentum in the business yields 11% revenue increase in the quarter and guidance indicating earnings improvement for fiscal 2013

ATLANTA, June 7, 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 fourth quarter and full year ended March 31, 2012.

To align with the company's strategic restructuring, revenue and cost of goods sold are now being reported in three categories: Products; Support, Maintenance and Subscription Services; and Professional Services. In addition, operating expenses are now differentiated in the following subcategories: product development, sales and marketing, and general and administrative. Finally, operating results from the company's former Technology Solutions Group (TSG), including the gain on its sale, as well as its assets and liabilities, are reported as components of discontinued operations.

Summary Fiscal 2012 Fourth-Quarter Unaudited Financial Results From Continuing Operations

  • Total net revenue grew 11% to $52.0 million, compared with $47.0 million in the same prior-year period.
  • Restructuring and related charges were $5.3 million. Asset impairments and related charges reflecting the accelerated amortization of developed technology and related customer liabilities totaled $9.7 million.
  • Loss from continuing operations was $18.0 million, or ($0.83) per share, versus the loss of $7.5 million, or ($0.33) per share for the same period in fiscal 2011.
  • Net loss narrowed to $17.0 million, or ($0.78) per share, from the loss of $45.0 million, or ($1.98) per share, for the same period in fiscal 2011.
  • Adjusted EBITDA (non-GAAP) from continuing operations for the period, which excludes interest, taxes, depreciation, amortization, the impact from revisions to prior-period financial statements and non-recurring charges, was a loss of $2.4 million, compared with a loss of $1.8 million a year ago. (See reconciliation below.)
  • Adjusted net loss (non-GAAP) from continuing operations for the period, which excludes amortization of intangibles, stock compensation and non-recurring charges, was $3.7 million, or ($0.17) per share, compared with the adjusted net loss of $2.5 million, or ($0.11) per share, last year. (See reconciliation below.)


Summary Fiscal 2012 Full-Year Unaudited Financial Results From Continuing Operations

  • Total net revenue for fiscal 2012 increased 3% to $208.9 million from $202.7 million in fiscal 2011. Reported revenue and gross profit in fiscal 2012 include a negative adjustment of $0.7 million and $1.3 million, respectively, related to periods prior to fiscal 2012.
  • Loss from continuing operations was $34.2 million, or ($1.53) per share, compared with the loss of $23.0 million or ($1.01 per share) for fiscal 2011.
  • Net loss narrowed to $22.8 million, or ($1.02) per share, from the loss of $55.5 million, or ($2.44) per share, last year.
  • Adjusted EBITDA (non-GAAP) from continuing operations for the period, which excludes interest, taxes, depreciation, amortization, the impact from revisions to prior-period financial statements and non-recurring charges, was a loss of $4.6 million, compared with the loss of $10.2 million last year. (See reconciliation below.)
  • Adjusted net loss (non-GAAP) from continuing operations for the period, which excludes amortization of intangibles, stock compensation and non-recurring charges, was $7.2 million, or ($0.32) per share, versus the previous year's adjusted net loss of $14.2 million, or ($0.63) per share.  (See reconciliation below.)

"During fiscal 2012, we successfully repositioned the company by divesting the lower-margin TSG business and focusing on our core competencies in the hospitality and retail industries," stated President and CEO James Dennedy. "We have essentially completed the restructuring and have better aligned cost structure with continuing operations, implemented procedures to increase accountability and enhanced the corporate services team. At the same time, we returned capital to shareholders with the repurchase of 1.6 million shares during the year. Entering the new fiscal year, Agilysys is a leaner company with a flatter organizational structure and two solid growth platforms on which to build."

Chief Financial Officer Robb Ellis commented, "Cash from continuing operations was very strong for the quarter and full year. Adjusted for non-recurring cash expenses related to restructuring and BEP/SERP payments, cash generated from continuing operations for fiscal 2012 increased to $16.2 million, compared with $4.6 million in cash used for continuing operations in the prior year.

"Despite using significant amounts of cash for share repurchases, restructuring charges and divesture expenses, the company's financial condition and liquidity remain robust. We are debt free and held $97.6 million in cash and equivalents at year end, providing sufficient financial strength to execute our refined strategy."

Outlook
"As a result of the shift away from lower-margin hardware revenue," Ellis added, "we anticipate less seasonality and overall volatility in future financial results. Moreover, with improved processes and procedures, our visibility into the business has been enhanced, allowing us to provide better and more detailed guidance."

The company indicated that in fiscal 2013 it expects revenue to be between $208 million and $211 million. Adjusted operating income is expected to be in a range of $3.5 million to $4.5 million, reversing the $7.9 million adjusted operating loss in fiscal 2012. Full-year adjusted earnings per share are anticipated to improve from the $0.32 loss reported for fiscal 2012 to positive earnings per diluted share of between $0.16 and $0.21 in the current year.

Conference Call Information
A conference call will be held today, June 7, 2012, at 4:30 p.m. ET to review unaudited fourth-quarter and full-year fiscal 2012 results. To participate in the live call dial, 877-317-6789 (International: 412-317-6789) 10 minutes before the call begins, or 4:20 p.m. ET. The conference ID is 10014147. 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 press release and other publicly available documents, including the documents incorporated herein and therein by reference, contain, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management's current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the risk factors set forth in 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. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.

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 operating loss, adjusted EBITDA, adjusted net loss and adjusted cash flow from operations; and revenue, 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 tables below for reconciliations of adjusted operating loss and adjusted net loss, adjusted EBITDA and adjusted cash flow from operations to the comparable GAAP measures.

Guidance
Guidance figures are based on the Company's current estimates and are subject to change by factors outside the Company's control. While this guidance is provided to give investors insight into expectations for the period, actual results are likely to vary.

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.  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.  
770-810-7800
Robb.Ellis@agilysys.com

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)






(In thousands, except per share data)


Three Months Ended


Twelve Months Ended

March 31,


March 31,



2012


2011


2012


2011










Net revenue:









Products


$      24,765


$      23,116


$    105,141


$    104,769

Support, maintenance and
      subscription services


19,467


18,765


73,171


70,729

Professional services


7,810


5,075


30,577


27,183

Total net revenue


52,042


46,956


208,889


202,681

Cost of goods sold:









Products


19,817


16,764


83,550


80,090

Support, maintenance and
      subscription services


6,435


6,634


25,706


25,507

Professional services


4,962


3,780


19,797


21,445

Total cost of goods sold


31,214


27,178


129,053


127,042

Gross profit


20,828


19,778


79,836


75,639

Operating expenses:









Product development


6,931


7,999


30,309


27,531

Sales and marketing


7,149


5,635


24,006


22,212

General and administrative


9,424


7,820


32,889


37,121

Depreciation of fixed assets


1,426


1,406


4,602


3,914

Amortization of intangibles


904


1,188


3,686


5,122

Asset impairment and related charges


9,681


900


9,681


959

Restructuring and related charges


5,262


-


15,853


405

Operating loss


(19,949)


(5,170)


(41,190)


(21,625)

Other (income) expenses:









Interest income


(50)


(12)


(103)


(73)

Interest expense


41


416


978


1,297

Other (income) expenses, net


(112)


(12)


181


(2,294)

Loss before income taxes


(19,828)


(5,562)


(42,246)


(20,555)

Income tax (benefit) expense


(1,797)


1,915


(8,007)


2,420

Loss from continuing operations


(18,031)


(7,477)


(34,239)


(22,975)

Income (loss) from discontinued
      operations, net of taxes


1,053


(37,530)


11,456


(32,500)

Net loss


$    (16,978)


$    (45,007)


$    (22,783)


$    (55,475)










Net (loss) income per share – basic and diluted:









Loss from continuing operations


$        (0.83)


$        (0.33)


$        (1.53)


$        (1.01)

Income (loss) from discontinued
      operations


0.05


(1.65)


0.51


(1.43)

Net loss


$        (0.78)


$        (1.98)


$        (1.02)


$        (2.44)










Weighted average shares outstanding:









Basic and diluted


21,773


22,805


22,432


22,785


 

AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION
(UNAUDITED) (In thousands)






Three Months Ended March 31, 2012


Three Months Ended March 31, 2011


Reportable Segments



Reportable Segments



HSG

RSG

Corporate/

Other

Consolidated


HSG

RSG

Corporate/Other

Consolidated

Revenue:










   Products

$ 6,761

$18,004

$             -

$  24,765


$10,712

$12,404

$           -

$  23,116

   Support, maintenance and
      subscription services

12,780

6,687

-

19,467


11,696

7,069

-

18,765

   Professional services

3,355

4,455

-

7,810


2,704

2,371

-

5,075

Total net revenue

$22,896

$29,146

$             -

$  52,042


$25,112

$21,844

$           -

$  46,956











Gross profit

$15,178

$ 5,650

$             -

$ 20,828


$15,820

$  3,958

$           -

$  19,778

Gross profit margin

66.3%

19.4%


40.0%


63.0%

18.1%


42.1%











Operating (loss) income

$(8,628)

$    308

$(11,629)

$(19,949)


$ 1,695

$  (465)

$(6,400)

$  (5,170)

Interest (income) expense, net

-

-

(9)

(9)


-

-

404

404

Other income, net

-

-

(112)

(112)


-

-

(12)

(12)

(Loss) income from
   continuing operations before
   income taxes

$(8,628)

$    308

$(11,508)

$(19,828)


$ 1,695

$  (465)

$ (6,792)

$  (5,562)






















Twelve Months Ended March 31, 2012


Twelve Months March 31, 2011


Reportable Segments



Reportable Segments



HSG

RSG

Corporate/Other

Consolidated


HSG

RSG

Corporate/Other

Consolidated

Revenue:










   Products

$25,148

$ 79,993

$             -

$105,141


$35,306

$69,463

$             -

$  104,769

   Support, maintenance and
      subscription services

48,072

25,099

-

73,171


45,053

25,676

-

70,729

   Professional services

13,155

17,422

-

30,577


13,650

13,533

-

27,183

Total net revenue

$86,375

$122,514

$             -

$208,889


$94,009

$108,672

$             -

$  202,681











Gross profit

$55,354

$  24,482

$             -

$  79,836


$54,669

$ 20,970

$             -

$    75,639

Gross profit margin

64.1%

20.0%


38.2%


58.2%

19.3%


37.3%











Operating (loss) income

$(6,552)

$    5,481

$(40,119)

$(41,190)


$5,836

$  3,164

$ (30,625)

$  (21,625)

Interest expense, net

-

-

875

875


-

-

1,224

1,224

Other expenses (income), net

-

-

181

181


-

-

(2,294)

(2,294)

(Loss) income from
   continuing operations before
   income taxes

$(6,552)

$    5,481

$(41,175)

$(42,246)


$ 5,836

$ 3,164

$(29,555)

$  (20,555)











 

AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS








March 31,


March 31,

(In thousands, except share data)

2012


2011

ASSETS


(Unaudited)



Current assets:





Cash and cash equivalents


$ 97,587


$ 74,354

Accounts receivable, net of allowance of $632 and
            $661, respectively


32,531


31,926

Inventories, net of allowance of $1,066 and $1,851,
             respectively


15,710


10,921

Prepaid expenses


2,975


2,829

Other current assets


5,492


7,747

Assets of discontinued operations – current


-


102,015

Total current assets


154,295


229,792

Property and equipment, net


16,504


24,855

Goodwill


15,198


15,211

Intangible assets, net of accumulated amortization of
    $21,560 and $20,068, respectively


14,135


22,535

Other non-current assets


4,007


11,709

Assets of discontinued operations – non-current


-


8,296

Total assets


$  204,139


$ 312,398

LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Accounts payable


$    24,938


$ 17,852

Deferred revenue


28,441


23,995

Accrued and other current liabilities


23,983


14,936

Capital lease obligations – current


647


999

Liabilities of discontinued operations – current


-


89,005

Total current liabilities


78,009


146,787

Deferred income taxes – non-current


5,135


3,894

Capital lease obligations – non-current


347


907

Other non-current liabilities


6,210


11,972

Liabilities of discontinued operations – non-current


-


734

Shareholders' equity:





Common shares, without par value, at $0.30 stated
             value; authorized 80,000,000 shares; 31,606,831
             issued; and 21,875,850 and 23,022,398 shares
             outstanding at March 31, 2012, and March 31,
             2011, respectively


9,482


9,482

Treasury shares (9,730,981 shares at March 31, 2012
             and 8,584,433 at March 31, 2011)


(2,919)


(2,575)

Capital in excess of stated value


(16,032)


(5,421)

Retained earnings


123,876


146,659

Accumulated other comprehensive loss


31


(41)

Total shareholders' equity


114,438


148,104

Total liabilities and shareholders' equity


$  204,139


$ 312,398

 

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)






Twelve Months Ended

(In thousands)


March 31,

Operating activities:


2012


2011

Net loss


$  (22,783)


$ (55,475)

Less: Income (loss) from discontinued operations


11,456


(32,500)

Loss from continuing operations


(34,239)


(22,975)

Adjustments to reconcile net loss from continuing operations
             to net cash used for operating activities:





Restructuring and related charges


15,853


405

Payments and settlements for restructuring charges


(5,896)


(1,610)

Asset impairments and related charges


9,681


959

Depreciation


4,602


3,914

Amortization


5,910


7,343

Stock-based compensation


2,896


2,812

Change in cash surrender value of company-owned life insurance
           policies


(371)


179

Loss on the sale of securities


148


-

Deferred income taxes


62


4,449

Gain on redemption of company-owned life insurance policies


(46)


(2,065)

Gain on redemption of investment in The Reserve Fund's Primary Fund


-


(147)

Changes in operating assets and liabilities:





Accounts receivable


(621)


10,256

Inventories


(4,789)


(859)

Accounts payable


5,994


(20,477)

Deferred revenue


4,066


2,865

Accrued and other liabilities


328


(2,499)

Income taxes payable


1,464


7,562

Other changes, net


259


974

Total adjustments


39,540


14,061

Net cash provided by (used in) operating activities from continuing operations


5,301


(8,914)

Net cash (used in) provided by operating activities from discontinued operations


(26,999)


23,697

Net cash (used in) provided by operating activities


(21,698)


14,783

Investing activities:





Proceeds from the sale of business


55,840


-

Proceeds from the sale of marketable securities


9,237


14

Capital expenditures


(4,920)


(6,077)

Proceeds from redemption of/borrowings against co.-owned life insurance 
      policies


347


15,980

Investments in Company-owned life insurance policies


(112)


(1,129)

Investments in marketable securities


(53)


(13,731)

Proceeds from The Reserve Fund's Primary Fund


-


147

Net cash provided by (used in) investing activities from continuing operations


60,339


(4,796)

Net cash used in investing activities from discontinued operations


-


(914)

Net cash provided by (used in) investing activities


60,339


(5,710)

Financing activities:





Purchase of treasury stock


(13,173)


-

Exercise of employee stock options


210


-

Repurchases of shares to satisfy employee tax withholding and option price


(1,449)


(238)

Principal payment under long-term obligations


(1,001)


(370)

Proceeds from borrowings under credit facility


-


15,235

Principal payments under credit facility


-


(15,235)

Net cash used in financing activities from continuing operations


(15,413)


(608)

Net cash provided by financing activities from discontinued operations


-


(49)

Net cash used in financing activities


(15,413)


(657)

Effect of exchange rate changes on cash


5


403

Cash flows provided by (used for) continuing operations


50,232


(13,915)

Cash flows (used for) provided by discontinued operations


(26,999)


22,734

Net increase in cash


23,233


8,819

Cash at beginning of year


74,354


65,535

Cash at end of year


$   97,587


$    74,354

 

AGILYSYS, INC.
RECONCILIATION OF OPERATING LOSS TO ADJUSTED NET LOSS
(UNAUDITED)






(In thousands, except per-share data)


Three Months Ended


Twelve Months Ended

March 31,


March 31,



2012


2011


2012


2011










Operating loss


$  (19,949)


$    (5,170)


$ (41,190)


$   (21,625)

Stock compensation expense


546


738


2,896


2,812

Amortization of intangibles


904


1,188


3,686


5,122

Asset impairments and related charges


9,681


900


9,681


959

Impact from revision to prior-period
   financial statements


-


(560)


1,127


(639)

Restructuring and related charges


5,262


-


15,853


405

Adjusted operating loss from continuing
   operations (a)


(3,556)


(2,904)


(7,947)


(12,966)










Other (income) expense


(121)


392


1,056


(1,070)

Cash income tax (b)


(23)


(20)


(264)


(209)

Adjusted net loss from continuing
   operations (a)


$    (3,700)


$    (2,532)


$   (7,155)


$   (14,245)










Weighted average shares outstanding: basic and diluted


21,773


22,805


22,432


22,785

Adjusted loss per share (a)


$     (0.17)


$     (0.11)


$    (0.32)


$     (0.63)










(a)  Non-GAAP financial measure

(b) Taxes calculated based upon our cash tax rate for the three and twelve months ended March 31, 2012 and 2011.
   


 

AGILYSYS, INC.
RECONCILIATION OF OPERATING LOSS TO ADJUSTED EBITDA
(UNAUDITED)







(In thousands)


Three Months Ended


Twelve Months Ended


March 31,


March 31,




2012


2011


2012


2011












Operating loss


$  (19,949)


$    (5,170)


$  (41,190)


$   (21,625)


   Depreciation of fixed assets


1,426


1,406


4,602


3,914


   Amortization of intangibles and
      developed technology


1,152


1,658


5,342


6,819


   Asset impairments and related charges


9,681


900


9,681


959


   Impact from revision to prior-period
      financial statements


-


(560)


1,127


(639)


   Restructuring and related charges


5,262


-


15,853


405


Adjusted EBITDA from continuing
      operations (a)


$    (2,428)


$    (1,766)


$    (4,585)


$   (10,167)



(a)     Non-GAAP financial measure

 

 

AGILYSYS, INC.
RECONCILIATION OF OPERATING CASH FLOWS FROM CONTINUING OPERATIONS TO ADJUSTED CASH FLOWS FROM CONTINUING OPERATIONS
(UNAUDITED)




(In thousands)


Twelve Months Ended March 31,



2012


2011

Operating activities:





Net cash provided by (used in) continuing operations


$        5,301


$        (8,914)

Non-recurring cash items:





Restructuring payments


5,896


1,610

BEP/SERP payments


5,017


2,722

Adjusted cash provided by (used in) continuing operations


$      16,214


$      (4,582)

 

SOURCE Agilysys, Inc.