EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1

FOR IMMEDIATE RELEASE

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

QAD REPORTS FISCAL 2014 FOURTH QUARTER AND FULL-YEAR FINANCIAL RESULTS

Company Posts Record Revenue for Fiscal 2014

SANTA BARBARA, Calif. – March 13, 2014 – 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 fourth quarter and full year ended January 31, 2014.

Total revenue grew 12 percent to $73.5 million for the fiscal 2014 fourth quarter, up from $65.8 million for the same quarter last year.  License revenue grew to $14.6 million for the fourth quarter of fiscal 2014, up from $9.5 million for the fourth quarter of fiscal 2013.  Maintenance and other revenue was $34.5 million, compared with $35.4 million for last year’s fourth quarter.  Subscription revenue rose to $5.8 million, from $4.1 million for last year’s fourth quarter, driven by growth of sales in the QAD Enterprise Cloud, in particular from sales of QAD Cloud ERP.  Professional services revenue increased to $18.7 million, from $16.9 million for the fourth quarter of fiscal 2013. 

Net income for the fiscal 2014 fourth quarter was $4.3 million, or $0.27 per diluted Class A share and $0.23 per diluted Class B share.  Net income for the fiscal 2013 fourth quarter totaled $2.0 million, or $0.13 per diluted Class A share and $0.11 per diluted Class B share.

“We are very pleased to report record revenues for the year and a strong finish with solid fourth quarter performance,” said Karl Lopker, Chief Executive Officer of QAD Inc.  “We achieved better than expected results in our license and services businesses, enhanced by continued growth in subscription revenue from the QAD Enterprise Cloud.  We continue to see growing acceptance and opportunities in the Cloud, and expect momentum to continue into fiscal 2015.”

Gross profit for the fiscal 2014 fourth quarter totaled $42.8 million, or 58 percent of total revenue, compared with $38.4 million, or 58 percent of total revenue, for the fiscal 2013 fourth quarter.

Total operating expenses amounted to $37.0 million, or 50 percent of total revenue, for the fiscal 2014 fourth quarter, versus $35.1 million, or 53 percent of total revenue, for the same quarter last year.

Operating income for the fourth quarter of fiscal 2014 grew to $5.8 million, which included $966,000 in stock compensation expense.  For the fourth quarter of fiscal 2013, operating income was $3.2 million, which included $1,002,000 in stock compensation expense.

For the full fiscal year ended January 31, 2014, total revenue rose to a record $266.3 million, up from $252.2 million last year.  Net income for fiscal 2014 totaled $6.4 million, or $0.41 per diluted Class A share and $0.34 per diluted Class B share.  Net income for fiscal 2013 was $6.6 million, or $0.42 per diluted Class A share and $0.35 per diluted Class B share.
QAD Inc.
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During the fiscal 2014 fourth quarter, QAD paid quarterly cash dividends totaling $1.1 million.

QAD’s cash and equivalents balance increased to $76.0 million at January 31, 2014, from $65.0 million at January 31, 2013.  Cash provided by operations for fiscal 2014 was $24.1 million, compared with $16.0 million for fiscal 2013.

2014 Fourth Quarter Highlights:
· Received orders from 44 customers representing more than $500,000 each in combined license, maintenance, subscription and professional services billings, including 12 orders in excess of $1.0 million, of which four were in excess of $2.0 million;
· Received license or Cloud orders from companies across QAD’s six vertical markets, including: AKZO Nobel NV, Grand Moulins de Paris SA, Hewlett-Packard Nederland BV, Invacare France Ops SAS, Key Safety Systems, Inc., Lem International SA, Nexteer Automotive, PANalytical B.V., Pentair Aquatic Systems, PPG Industries Inc., Sunrise Medical Limited, Vascular Solutions Inc., Vention Medical Inc. and Visteon Corporation;
· Opened registration for the 2014 QAD Explore user conference, being held May 5-8, 2014 in New Orleans; and
· Held user conference in Kunming, China attended by local Chinese customers as well as global customers with operations in China.

Business Outlook
For the first quarter of fiscal 2015, QAD anticipates total revenue of approximately $67 million and breakeven earnings per share.  For the full fiscal 2015 year, QAD expects a revenue growth rate similar to that which it achieved in fiscal 2014, and earnings roughly equal to fiscal 2014 levels.

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 fourth quarter and full year.  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 800-230-1766 (domestic) or 612-234-9960 (international).  A replay of the call will be accessible through midnight March 20, 2014 by dialing 800-475-6701 (domestic) or 320-365-3844 (international), passcode 313755.
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 delivers offerings that can be deployed On Premise, in the Cloud (as Software as a Service) or in a blended model combining both with a consistent 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.
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QAD Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(unaudited)

 
  
Three Months Ended
 January 31,
    
Twelve Months Ended
 January 31,
  
 
  
2014
    
2013
    
2014
    
2013
  
Revenue:
  
   
   
   
 
License fees
  
$
14,593
    
$
9,493
    
$
36,176
    
$
31,260
  
Maintenance and other
    
34,473
      
35,358
      
139,557
      
138,563
  
Subscription fees
    
5,805
      
4,055
      
19,406
      
14,838
  
Professional services
    
18,659
      
16,880
      
71,172
      
67,511
  
Total revenue
    
73,530
      
65,786
      
266,311
      
252,172
  
Cost of revenue:
                                
License
    
1,807
      
1,350
      
4,978
      
4,032
  
Maintenance, subscription and other
    
11,439
      
9,996
      
44,947
      
40,355
  
Professional services
    
17,453
      
16,078
      
67,081
      
63,206
  
Total cost of revenue
    
30,699
      
27,424
      
117,006
      
107,593
  
Gross profit
    
42,831
      
38,362
      
149,305
      
144,579
  
Operating expenses:
                                
Sales and marketing
    
18,920
      
17,233
      
66,009
      
62,223
  
Research and development
    
10,106
      
9,891
      
41,237
      
38,332
  
General and administrative
    
7,793
      
7,903
      
31,946
      
31,952
  
Amortization of intangibles from acquisitions
    
179
      
119
      
710
      
264
  
Total operating expenses
    
36,998
      
35,146
      
139,902
      
132,771
  
Operating income
    
5,833
      
3,216
      
9,403
      
11,808
  
Other (income) expense:
                                
Interest income
    
(59
)
    
(124
)
    
(284
)
    
(590
)
Interest expense
    
199
      
215
      
829
      
990
  
Other (income) expense, net
    
(421
)
    
204
      
(1,294
)
    
1,118
  
Total other (income) expense, net
    
(281
)
    
295
      
(749
)
    
1,518
  
Income before income taxes
    
6,114
      
2,921
      
10,152
      
10,290
  
Income tax expense
    
1,768
      
910
      
3,766
      
3,651
  
Net income
  
$
4,346
    
$
2,011
    
$
6,386
    
$
6,639
  
 
                                
Diluted Net Income per Share
                                
Class A
  
$
0.27
    
$
0.13
    
$
0.41
    
$
0.42
  
Class B
  
$
0.23
    
$
0.11
    
$
0.34
    
$
0.35
  
 
                                
Diluted Weighted Shares
                                
Class A
    
13,224
      
12,940
      
12,985
      
13,063
  
Class B
    
3,249
      
3,250
      
3,238
      
3,266
  

QAD Inc.
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QAD Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)

 
  
January 31,
    
January 31,
  
 
  
2014
    
2013
  
Assets
  
   
 
Current assets:
  
   
 
Cash and equivalents
  
$
75,984
    
$
65,009
  
Accounts receivable, net
    
71,337
      
72,564
  
Deferred tax assets, net
    
4,737
      
4,414
  
Other current assets
    
14,980
      
13,806
  
Total current assets
    
167,038
      
155,793
  
 
                
Property and equipment, net
    
33,085
      
32,526
  
Capitalized software costs, net
    
3,315
      
4,180
  
Goodwill
    
11,377
      
11,412
  
Long-term deferred tax assets, net
    
15,184
      
16,431
  
Other assets, net
    
4,814
      
5,606
  
 
                
Total assets
  
$
234,813
    
$
225,948
  
 
                
Liabilities and stockholders' equity
                
Current liabilities:
                
Current portion of long-term debt
  
$
389
    
$
372
  
Accounts payable and other current liabilities
    
45,241
      
43,952
  
Deferred revenue
    
104,160
      
101,193
  
Total current liabilities
    
149,790
      
145,517
  
 
                
Long-term debt
    
15,085
      
15,474
  
Other liabilities
    
5,733
      
6,759
  
 
                
Stockholders' equity:
                
Common stock
    
18
      
18
  
Additional paid-in capital
    
150,837
      
149,777
  
Treasury stock
    
(28,220
)
    
(31,093
)
Accumulated deficit
    
(51,472
)
    
(52,468
)
Accumulated other comprehensive loss
    
(6,958
)
    
(8,036
)
Total stockholders' equity
    
64,205
      
58,198
  
 
                
Total liabilities and stockholders' equity
  
$
234,813
    
$
225,948
  

QAD Inc.
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QAD Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)

 
  
Twelve Months Ended
  
 
  
January 31,
  
 
  
2014
    
2013
  
 
  
   
 
Net cash provided by operating activities
  
$
24,140
    
$
16,039
  
 
                
Cash flows from investing activities:
                
Purchase of property and equipment
    
(4,779
)
    
(3,071
)
Acquisition of businesses, net of cash acquired
    
-
      
(7,817
)
Capitalized software costs
    
(366
)
    
(492
)
Other, net
    
33
      
(1
)
Net cash used in investing activities
    
(5,112
)
    
(11,381
)
 
                
Cash flows from financing activities:
                
Repayments of debt
    
(372
)
    
(312
)
Tax payments, net of proceeds, related to stock awards
    
(1,286
)
    
(1,185
)
Excess tax benefits from share-based payment arrangements
    
72
      
462
  
Repurchase of stock
    
(686
)
    
(7,530
)
Dividends paid in cash
    
(5,304
)
    
(8,076
)
Net cash used in financing activities
    
(7,576
)
    
(16,641
)
 
                
Effect of exchange rates on cash and equivalents
    
(477
)
    
65
  
Net increase (decrease) in cash and equivalents
    
10,975
      
(11,918
)
Cash and equivalents at beginning of period
    
65,009
      
76,927
  
Cash and equivalents at end of period
  
$
75,984
    
$
65,009