EX-99.1B 2 ex99.htm EXHIBIT 99
Exhibit 99
 
FOR IMMEDIATE RELEASE

For More Information, Contact:
John Neale
Laurie Berman/Matt Sheldon
QAD Senior Vice President and Treasurer
PondelWilkinson Inc.
805.566.5117
310.279.5980
investor@qad.com
pwinvestor@pondel.com
 
 

QAD REPORTS FISCAL 2014 THIRD QUARTER FINANCIAL RESULTS

SANTA BARBARA, Calif. – November 26, 2013 – QAD Inc. (NASDAQ: QADA) (NASDAQ: QADB), a leading provider of enterprise business software and services for global manufacturers, today reported financial results for the fiscal 2014 third quarter ended October 31, 2013.

Total revenue grew to $65.7 million for the fiscal 2014 third quarter, up from $61.7 million for the same quarter last year.  License revenue was $6.8 million for the third quarter of fiscal 2014, down from $7.0 million for the third quarter of fiscal 2013.  Maintenance and other revenue rose to $35.6 million, up from $34.8 million for last year's third quarter.  Subscription revenue, which includes QAD's On Demand deployment option, grew to $5.1 million, up from $3.8 million for last year's third fiscal quarter.  Professional services revenue equaled $18.2 million, an increase from $16.1 million for the third quarter of fiscal 2013.  Revenue related to CEBOS, which was acquired by QAD in December 2012, totaled $700,000 for the fiscal 2014 third quarter.

Net income for the fiscal 2014 third quarter was $2.0 million, or $0.13 per diluted Class A share and $0.11 per diluted Class B share.  Net income for the fiscal 2013 third quarter totaled $1.8 million, or $0.12 per diluted Class A share and $0.10 per diluted Class B share.

"We achieved better than expected revenue and earnings in our third quarter. Strong year-to-date bookings of our On Demand offering are reflected in the growth of our subscription revenue," said Karl Lopker, Chief Executive Officer of QAD Inc.  "Stabilizing market conditions in global manufacturing, and our competitive position in the cloud ERP space for manufacturing companies, contributed to our performance."

Gross profit for the fiscal 2014 third quarter totaled $36.8 million, or 56 percent of total revenue, compared with $35.2 million, or 57 percent of total revenue, for the fiscal 2013 third quarter.

Total operating expenses amounted to $33.0 million, or 50 percent of total revenue, for the fiscal 2014 third quarter, versus $32.1 million, or 52 percent of total revenue, for the same quarter last year.  Expenses related to CEBOS totaled $1.1 million for the fiscal 2014 third quarter.

Operating income for the third quarter of fiscal 2014 was $3.8 million, which included $1.2 million in stock compensation expense.  For the third quarter of fiscal 2013, operating income was $3.1 million, which included $1.1 million in stock compensation expense.

For the fiscal 2014 year-to-date nine month period, total revenue rose to $192.8 million, up from $186.4 million for the first nine months of fiscal 2013.  Net income for the nine months ended October 31, 2013 totaled $2.0 million, or $0.13 per diluted Class A share and $0.11 per diluted Class B share.  Net income for the fiscal 2013 year-to-date period was $4.6 million, or $0.29 per diluted Class A share and $0.25 per diluted Class B share.
QAD Inc.
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During the fiscal 2014 third quarter, QAD paid quarterly cash dividends totaling $1.1 million.

QAD's cash and equivalents balance increased to $65.8 million at October 31, 2013, from $65.0 million at January 31, 2013.  Cash provided by operations for the first nine months of fiscal 2014 was $11.6 million, compared with $10.7 million for the first nine months of fiscal 2013.

2014 Third Quarter Highlights:
·
Received orders from 21 customers representing more than $500,000 each in combined license, maintenance, subscription and professional services billings, including six orders in excess of $1.0 million;
·
Received license or On Demand orders from companies across QAD's six vertical markets, including:  ANCA Pty Ltd., Arthrex, Inc., Aunt Bessie's Limited, Boots Contract Manufacturing, Energizer Holdings, Inc., Imperial Tobacco Group, International Paint Ltd., Mitek Industries Inc., Nexteer Automotive Corporation, Takata, and Vitatech Nutritional Sciences;
·
Released QAD Enterprise Applications 2013.1, the latest version of the company's enterprise applications suite;
·
Selected by the Automotive Industry Action Group to provide Materials Management Operations Guidelines/Logistics Evaluation (MMOG/LE) training in Spanish to suppliers in Mexico;
·
Announced QAD On Demand Automotive Edition, which delivers the benefits of the company's cloud enterprise resource planning solution to global automotive suppliers;
·
Held several user conferences around the world including in the United States, United Kingdom and China.

Business Outlook
For the fourth quarter of fiscal 2014, QAD anticipates total revenue of approximately $69 million and earnings of approximately $0.16 per diluted Class A share and $0.13 per diluted Class B share.

Calculation of Earnings Per Share
EPS is reported based on the company's dual-class share structure, and includes a calculation for both Class A and Class B shares.  Since Class A shares have rights to 120% of dividends paid on Class B shares, net income is apportioned so that earnings per share attributable to a Class A share are 120% of earnings per share attributable to a Class B share.  

Investor Conference Call
QAD management will host an investor conference call today at 2:00 p.m. PT (5:00 p.m. ET) to review the company's financial results and operations for the fiscal 2014 third quarter.  The conference call will be webcast live and is accessible through the investor relations section of QAD's web site at www.qad.com, where it will be available for approximately one year.  Interested parties may participate in the call by dialing 800-230-1059 (domestic) or 612-234-9959 (international).  A replay of the call will be accessible through December 4, 2013 by dialing 800-475-6701 (domestic) or 320-365-3844 (international), passcode 299497.
QAD Inc.
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About QAD
QAD Inc. (Nasdaq: QADA) (Nasdaq: QADB), is a leading provider of enterprise software and services designed for global manufacturing companies.  For more than 30 years, QAD has provided global manufacturing companies with an enterprise resource planning (ERP) system that supports operational requirements; including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. QAD offers flexible deployment options like QAD On Premise software and QAD On Demand software-as-a-service.  Customers can operate in a blended environment where some users can be deployed On Premise and some users deployed via On Demand while offering the same end-user experience.  With QAD, customers and partners in the automotive, consumer products, food and beverage, high technology, industrial products and life sciences industries can better align daily operations with their strategic goals to meet their vision of becoming more Effective Enterprises.

For more information about QAD, telephone +1 805-566-6000 or visit www.qad.com.

"QAD" is a registered trademark of QAD Inc. All other products or company names herein may be trademarks of their respective owners. 

Note to Investors: This press release contains certain forward-looking statements made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.  Words such as "expects," "believes," "anticipates," "could," "will likely result," "estimates," "intends," "may," "projects," "should," and variations of these words and similar expressions are intended to identify these forward looking statements.  Forward-looking statements are based on the company's current expectations and assumptions regarding its business, the economy and future conditions.  A number of risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements.  These risks include, but are not limited to, evolving demand for the company's software products and products that operate with the company's products; the company's ability to sustain license and service demand; the company's ability to leverage changes in technology; the company's ability to sustain customer renewal rates at current levels; the publication of opinions by industry and financial analysts about the company, its products and technology; the reliability of estimates of transaction and integration costs and benefits; the entry of new competitors or new offerings by existing competitors and the associated announcement of new products and technological advances by them; delays in localizing the company's products for new or existing markets; the ability to recruit and retain key personnel; delays in sales as a result of lengthy sales cycles; changes in operating expenses, pricing, timing of new product releases, the method of product distribution or product mix; timely and effective integration of newly acquired businesses; general economic conditions; exchange rate fluctuations; and, the global political environment.  In addition, revenue and earnings in the enterprise resource planning (ERP) software industry are subject to fluctuations.  Software license revenue, in particular, is subject to variability with a significant proportion of revenue earned in the last month of each quarter.  Given the high margins associated with license revenue, modest fluctuations can have a substantial impact on net income.  Investors should not use any one quarter's results as a benchmark for future performance. For a more detailed description of the risk factors associated with the company and the industries in which it operates, please refer to the company's Annual Report on Form 10-K for fiscal 2013 ended January 31, 2013, and in particular, the section entitled "Risk Factors" therein, and in other periodic reports the company files with the Securities and Exchange Commission.
 
-- Financial Tables Follow –

QAD Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)
 
 
  
Three Months Ended
 October 31,
    
Nine Months Ended
 October 31,
  
 
  
2013
    
2012
    
2013
    
2012
  
Revenue:
  
   
   
   
 
License fees
  
$
6,761
    
$
6,996
    
$
21,583
    
$
21,767
  
Maintenance and other
    
35,629
      
34,799
      
105,084
      
103,205
  
Subscription fees
    
5,104
      
3,815
      
13,601
      
10,783
  
Professional services
    
18,166
      
16,099
      
52,513
      
50,631
  
Total revenue
    
65,660
      
61,709
      
192,781
      
186,386
  
Cost of revenue:
                                
License
    
1,158
      
969
      
3,171
      
2,682
  
Maintenance, subscription and other
    
11,399
      
10,018
      
33,508
      
30,359
  
Professional services
    
16,348
      
15,544
      
49,628
      
47,128
  
Total cost of revenue
    
28,905
      
26,531
      
86,307
      
80,169
  
Gross profit
    
36,755
      
35,178
      
106,474
      
106,217
  
Operating expenses:
                                
Sales and marketing
    
15,183
      
14,747
      
47,089
      
44,990
  
Research and development
    
9,817
      
9,697
      
31,131
      
28,441
  
General and administrative
    
7,776
      
7,566
      
24,153
      
24,049
  
Amortization of intangibles from acquisitions
    
178
      
88
      
531
      
145
  
Total operating expenses
    
32,954
      
32,098
      
102,904
      
97,625
  
Operating income
    
3,801
      
3,080
      
3,570
      
8,592
  
Other (income) expense:
                                
Interest income
    
(55
)
    
(139
)
    
(225
)
    
(466
)
Interest expense
    
218
      
159
      
630
      
775
  
Other (income) expense, net
    
209
      
376
      
(873
)
    
914
  
Total other (income) expense, net
    
372
      
396
      
(468
)
    
1,223
  
Income before income taxes
    
3,429
      
2,684
      
4,038
      
7,369
  
Income tax expense
    
1,380
      
859
      
1,998
      
2,741
  
Net income
  
$
2,049
    
$
1,825
    
$
2,040
    
$
4,628
  
 
                                
Diluted Net Income per Share
                                
Class A
  
$
0.13
    
$
0.12
    
$
0.13
    
$
0.29
  
Class B
  
$
0.11
    
$
0.10
    
$
0.11
    
$
0.25
  
 
                                
Diluted Weighted Shares
                                
Class A
    
12,990
      
13,016
      
12,930
      
13,107
  
Class B
    
3,235
      
3,260
      
3,234
      
3,272
  
QAD Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
 
 
  
October 31,
    
January 31,
  
 
  
2013
    
2013
  
Assets
  
   
 
Current assets:
  
   
 
Cash and equivalents
  
$
65,799
    
$
65,009
  
Accounts receivable, net
    
44,522
      
72,564
  
Deferred tax assets, net
    
4,287
      
4,414
  
Other current assets
    
12,914
      
13,806
  
Total current assets
    
127,522
      
155,793
  
 
                
Property and equipment, net
    
33,519
      
32,526
  
Capitalized software costs, net
    
3,475
      
4,180
  
Goodwill
    
11,385
      
11,412
  
Long-term deferred tax assets, net
    
15,855
      
16,431
  
Other assets, net
    
5,042
      
5,606
  
 
                
Total assets
  
$
196,798
    
$
225,948
  
 
                
Liabilities and stockholders' equity
                
Current liabilities:
                
Current portion of long-term debt
  
$
384
    
$
372
  
Accounts payable and other current liabilities
    
36,971
      
43,952
  
Deferred revenue
    
78,933
      
101,193
  
Total current liabilities
    
116,288
      
145,517
  
 
                
Long-term debt
    
15,183
      
15,474
  
Other liabilities
    
5,917
      
6,759
  
 
                
Stockholders' equity:
                
Common stock
    
18
      
18
  
Additional paid-in capital
    
150,962
      
149,777
  
Treasury stock
    
(28,946
)
    
(31,093
)
Accumulated deficit
    
(54,718
)
    
(52,468
)
Accumulated other comprehensive loss
    
(7,906
)
    
(8,036
)
Total stockholders' equity
    
59,410
      
58,198
  
 
                
Total liabilities and stockholders' equity
  
$
196,798
    
$
225,948
  

QAD Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
 
 
  
Nine Months Ended
  
 
  
October 31,
  
 
  
2013
    
2012
  
 
  
   
 
Net cash provided by operating activities
  
$
11,575
    
$
10,723
  
 
                
Cash flows from investing activities:
                
Purchase of property and equipment
    
(3,997
)
    
(2,534
)
Acquisition of businesses, net of cash acquired
    
-
      
(4,713
)
Capitalized software costs
    
(217
)
    
(374
)
Other, net
    
31
      
-
  
Net cash used in investing activities
    
(4,183
)
    
(7,621
)
 
                
Cash flows from financing activities:
                
Repayments of debt
    
(279
)
    
(214
)
Tax payments, net of proceeds, related to stock awards
    
(894
)
    
(1,114
)
Excess tax benefits from share-based payment arrangements
    
82
      
171
  
Repurchase of stock
    
(686
)
    
(6,025
)
Dividends paid in cash
    
(4,209
)
    
(2,763
)
Net cash used in financing activities
    
(5,986
)
    
(9,945
)
 
                
Effect of exchange rates on cash and equivalents
    
(616
)
    
(382
)
Net increase (decrease) in cash and equivalents
    
790
      
(7,225
)
Cash and equivalents at beginning of period
    
65,009
      
76,927
  
Cash and equivalents at end of period
  
$
65,799
    
$
69,702