8-K_Q3FY14EarningsRelease

0000078749-14-000002.txt : 20140131 0000078749-14-000002.hdr.sgml : 20140131 20140131095754 ACCESSION NUMBER: 0000078749-14-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20140130 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140131 DATE AS OF CHANGE: 20140131 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AGILYSYS INC CENTRAL INDEX KEY: 0000078749 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 340907152 STATE OF INCORPORATION: OH FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05734 FILM NUMBER: 14563071 BUSINESS ADDRESS: STREET 1: 1000 WINDWARD CONCOURSE STREET 2: SUITE 250 CITY: ALPHARETTA STATE: 2Q ZIP: 30005 BUSINESS PHONE: 7708107800 MAIL ADDRESS: STREET 1: 1000 WINDWARD CONCOURSE STREET 2: SUITE 250 CITY: ALPHARETTA STATE: 2Q ZIP: 30005 FORMER COMPANY: FORMER CONFORMED NAME: PIONEER STANDARD ELECTRONICS INC DATE OF NAME CHANGE: 19920703 8-K 1 a8-k_q3fy14earningsrelease.htm 8-K 8-K_Q3FY14EarningsRelease

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

Date of Report: January 30, 2014

(Date of earliest event reported)

AGILYSYS, INC.

(Exact name of registrant as specified in its charter)




Ohio	000-5734	34-0907152

(State or other jurisdiction	(Commission File Number)	(IRS Employer Identification No.)
of incorporation)




425 Walnut Street, Suite 1800 Cincinnati, Ohio		45202

(Address of principal executive offices)		(ZIP Code)

Registrant’s telephone number, including area code: (770) 810-7800

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



¨		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02		Results of Operations and Financial Condition; and

Item 7.01		Regulation FD Disclosure

The following information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On January 30, 2014, Agilysys, Inc. issued a press release announcing its results for fiscal 2014 third quarter and period ended December 31, 2013. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.




Item 9.01		Financial Statements and Exhibits

(d) Exhibits

The following item is furnished as an exhibit to this current report on Form 8-K:



Exhibit Number		Description

99.1		Press release issued by Agilysys, Inc. dated January 30, 2014, announcing its results for the third quarter and period ended December 31, 2013.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



	AGILYSYS, INC.
	By:	/s/JANINE K. SEEBECK
		Janine K. Seebeck
		Senior Vice President, Chief Financial Officer,
		and Treasurer

Date: January 31, 2014

Exhibit Index



Exhibit Number		Description

99.1		Press release issued by Agilysys, Inc. dated January 30, 2014, announcing its results for the third quarter and period ended December 31, 2013.

EX-99.1 2 exh991q3fy14pressrelease.htm EXHIBIT 99.1 Q3 FY14 PRESS RELEASE Exh99.1 Q3FY14 Press Release

EXHIBIT 99.1

AGILYSYS REPORTS THIRD QUARTER REVENUE OF $26.0 MILLION INCLUSIVE OF 11% GROWTH IN RECURRING REVENUE TO $13.6 MILLION

Third Quarter Adjusted Operating Income from Continuing Operations Rises $0.8 Million to $0.3 Million; Reports Adjusted and GAAP Earnings per Diluted Share from Continuing Operations of $0.01 and a Loss of $(0.09), Respectively

Alpharetta, GA - January 30, 2014 - Agilysys, Inc. (Nasdaq: AGYS), a leading developer and provider of innovative software enabled solutions for the hospitality industry, today reported operating results for its fiscal 2014 third quarter.

All financial results presented below reflect the classification of the Company’s former Retail Solutions Group (“RSG”) as a discontinued operation following the sale of this business on July 1, 2013.

Summary of Fiscal 2014 Third Quarter Financial Results


•	Total net revenue of $26.0 million compares to total net revenue of $28.2 million in the comparable prior-year period, a decrease of 8%, driven primarily by a decrease in sales of lower margin remarketed products.


•	Recurring revenues (which are comprised of support, maintenance and subscription services) for the quarter were $13.6 million, an increase of 11% over the same period in fiscal 2013.


•	Gross margin was 60% in the fiscal 2014 third quarter, compared to 55% in the prior-year period.


•	Adjusted operating income (non-GAAP) from continuing operations (excluding stock-based compensation, amortization of intangibles and other one-time items) increased $0.8 million year over year to $0.3 million from an adjusted operating loss from continuing operations of $(0.5) million in the year-ago period (see reconciliation below).


•	Adjusted income (non-GAAP) from continuing operations grew $1.0 million to $0.2 million, or $0.01 per diluted share, compared with an adjusted net loss of $0.8 million, or $(0.03) per share, last year (see reconciliation below).


•	Net loss in the period was $(2.7) million, or $(0.12) per diluted share, compared to net income of $0.5 million, or $0.02, in the prior-year period.

James Dennedy, President and CEO of Agilysys, commented, “Our fiscal 2014 third quarter and year-to-date results demonstrate Agilysys’ continued ability to grow higher-margin recurring revenue as we focus on providing innovative solutions and exceptional customer support to clients across the hospitality industry. Our current products, including several recently introduced mobile products, continue to change the way the hospitality industry engages with guests, enabling our customers to deliver higher quality customer experiences and to operate their businesses more efficiently.

“In addition, we continue to see solid commercial success from our capital investments and we have delivered several important new innovations in this fiscal year. Our ongoing investments in current products and in our next generation products will help accelerate our revenue growth, drive improvements in operating leverage, and provide higher operating and net income, resulting in enhanced shareholder value.”

Summary of Fiscal 2014 Nine Months Financial Results


•	Total net revenue for the period increased $2.3 million, or 3%, to $77.1 million, compared with $74.8 million in the comparable prior-year period. Product growth was impacted by the above noted lower margin remarketed product sales which occurred in the third fiscal quarter of the prior year and did not repeat in the current period.


•	Recurring revenues (which are comprised of support, maintenance and subscription services) for the period were $39.9 million, an increase of 8% over the first nine months of fiscal 2013.


•	Gross margin of 64% compares to gross margin of 59% in the prior-year period.


•	Adjusted operating income (non-GAAP) from continuing operations (excluding stock-based compensation, amortization of intangibles and other one-time items) for the first nine months of fiscal 2014 increased year over year by $4.1 million to $2.6 million, from an adjusted operating loss of $(1.5) million in the comparable year-ago period (see reconciliation below).


•	Adjusted income (non-GAAP) from continuing operations grew to $2.4 million, or $0.11 per diluted share, compared with an adjusted net loss of $(2.0) million, or $(0.09) per share, in the first nine months of fiscal 2013 (see reconciliation below).


•	Net income was $19.1 million, or $0.86 per share, in the first nine months of fiscal 2014 compared with a net loss of $1.6 million, or $(0.07) per share, in the year-ago period.

Janine Seebeck, Chief Financial Officer, added, “Our performance so far in fiscal 2014 reflects our success in addressing the needs of the hospitality industry with higher-margin solutions as well as our prudent fiscal discipline. Through the first nine months of fiscal 2014 we have improved gross margin by 470 basis points and generated positive adjusted operating income in all three quarters, leading to a $4.1 million improvement in adjusted operating income from continuing operations. We have achieved these improvements even as we continue to invest above historical levels as a percentage of revenue in our current and future products. Our healthy balance sheet with nearly $100 million in cash and no debt, provides us with the financial flexibility to continue investing in long-term growth through the development of our next generation platform as well as through potential acquisitions that would help grow our addressable markets.”

Unaudited pro forma condensed consolidated statements of operations for the three month periods ended June 30, 2012, September 30, 2012, December 31, 2012 and March 31, 2013, as well as for the fiscal year ended March 31, 2013, are provided at the end of this press release. These statements of operations give effect to the sale of the Company’s Retail Solutions Group and adjustments as if they had occurred on April 1, 2012, and carried forward through the latest period. The unaudited pro forma condensed consolidated statements of operations should be read in conjunction with the historical audited consolidated financial statements and notes thereto included in the Company’s 2013 Annual Report.

2014 Third Quarter Conference Call and Webcast

Agilysys is hosting a conference call and webcast today, January 30, 2014, beginning at 4:30 p.m. ET. Both the call and the webcast are open to the public. The conference call number is 224-357-2393 (domestic or international). Please call five minutes prior to the presentation to ensure that you are connected.

Interested parties may also access the conference call live on the Internet at http://agilysys.com/home/InvestorRelations/EventPresentation.htm. Approximately two hours after the call has concluded, an archived version of the webcast will be available for replay at the same location.

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, such as the statements

made in the second paragraph following the bullets under the heading “Summary of Fiscal 2014 Third Quarter Financial Results” above and the last sentence in the first paragraph following the bullets under the heading “Summary of Fiscal 2014 Nine Months Financial Results” above. 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, 2013. 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 income (loss) from continuing operations, adjusted net income (loss), adjusted net income (loss) per share from continuing operations and adjusted cash flow from continuing operations. 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 income (loss) from continuing operations and adjusted net income (loss) from continuing operations, and adjusted cash flow from continuing operations to the comparable GAAP measures.

About Agilysys

Agilysys is a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality industry. The company specializes in market-leading point-of-sale, property management, inventory & procurement and mobile & wireless solutions that are designed to streamline operations, improve efficiency and enhance the guest experience. Agilysys serves casinos, resorts, hotels, foodservice venues, stadiums and cruise lines. Agilysys operates extensively throughout North America, Europe and Asia, with corporate services located in Alpharetta, GA, EMEA headquarters in Cheshire, UK, and APAC offices in Singapore, Hong Kong and Malaysia. For more information, visit www.agilysys.com.

# # #

Investor Contact:

Janine Seebeck

Chief Financial Officer

Agilysys, Inc.

770-810-7800 or investorrelations@agilysys.com

Richard Land, Norberto Aja, Jim Leahy

JCIR

212-835-8500 or agys@jcir.com

- Financial tables follow -

AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



(In thousands, except share data)	December 31,			March 31,
	2013			2013
ASSETS
Current assets:
Cash and cash equivalents	$	96,357		$	82,931
Accounts receivable, net of allowance of $971 and $786, respectively	24,459			17,892
Inventories	2,408			1,709
Prepaid expenses	3,103			3,167
Other current assets	1,649			671
Current assets - discontinued operations	—			40,007
Total current assets	127,976			146,377
Property and equipment, net	13,850			13,855
Goodwill	17,747			14,128
Intangible assets, net	10,947			11,283
Capitalized software development, net	13,613			5,596
Other non-current assets	3,626			4,179
Non-current assets - discontinued operations	—			2,162
Total assets	$	187,759		$	197,580

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	11,341		$	10,427
Deferred revenue	19,958			20,461
Accrued and other current liabilities	12,180			12,938
Capital lease obligations – current	43			58
Current liabilities - discontinued operations	—			30,372
Total current liabilities	43,522			74,256
Deferred income taxes – non-current	3,904			4,002
Capital lease obligations – non-current	38			28
Other non-current liabilities	6,204			4,640
Non-current liabilities - discontinued operations	—			798
Shareholders’ equity:
Common shares, without par value, at $0.30 stated value; authorized 80,000,000 shares; 31,606,831 issued; and 22,426,958 and 22,145,915 shares outstanding at December 31, 2013 and March 31, 2013 , respectively	9,482			9,482
Treasury shares (9,179,873 and 9,460,916 shares at December 31, 2013 and March 31, 2013, respectively)	(2,756		)	(2,838		)
Capital in excess of stated value	(13,452		)	(14,267		)
Retained earnings	141,684			122,578
Accumulated other comprehensive loss	(867		)	(1,099		)
Total shareholders’ equity	134,091			113,856
Total liabilities and shareholders’ equity	$	187,759		$	197,580

AGILYSYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



(In thousands, except per share data)	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2013			2012			2013			2012

Net revenue:
Products	$	8,693		$	12,467		$	26,294		$	26,757
Support, maintenance and subscription services	13,607			12,245			39,945			37,147
Professional services	3,707			3,478			10,847			10,907
Total net revenue	26,007			28,190			77,086			74,811
Cost of goods sold:
Products	4,663			8,135			12,443			15,555
Support, maintenance and subscription services	3,129			2,561			8,061			7,987
Professional services	2,508			2,144			7,320			7,002
Total cost of goods sold	10,300			12,840			27,824			30,544
Gross profit	15,707			15,350			49,262			44,267
Operating expenses:
Product development	6,074			6,260			19,555			17,965
Sales and marketing	3,400			3,667			11,014			10,798
General and administrative	5,981			5,852			16,051			16,379
Depreciation of fixed assets	584			508			1,592			1,639
Amortization of intangibles	2,365			806			3,953			2,478
Asset impairment and related charges	309			—			327			208
Restructuring, severance and other charges	206			(31		)	822			1,524
Operating loss	(3,212		)	(1,712		)	(4,052		)	(6,724		)
Other (income) expenses :
Interest income	(19		)	—			(52		)	(8		)
Interest expense	44			(13		)	150			231
Other (income) expense, net	(5		)	217			(45		)	201
Loss before income taxes	(3,232		)	(1,916		)	(4,105		)	(7,148		)
Income tax benefit	(1,154		)	(813		)	(1,760		)	(1,975		)
Loss from continuing operations	(2,078		)	(1,103		)	(2,345		)	(5,173		)
(Loss) income from discontinued operations, net of taxes	(584		)	1,619			21,451			3,545
Net (loss) income	$	(2,662	)	$	516		$	19,106		$	(1,628	)

Basic and diluted weighted average shares outstanding	22,150			21,900			22,100			21,873

Net (loss) income per share – basic and diluted:
Loss from continuing operations	$ (0.09)			$ (0.05)			$ (0.11)			$ (0.24)
(Loss) income from discontinued operations	(0.03)			0.07			0.97			0.17
Net (loss) income per share	$ (0.12)			$ 0.02			$ 0.86			$ (0.07)

AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



	Nine Months Ended
(In thousands)	December 31,
	2013		2012
Operating activities:
Net income (loss)	$ 19,106		$	(1,628	)
Less: Income from discontinued operations	21,451		3,545
Loss from continuing operations	(2,345)		(5,173)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
Restructuring, severance and other charges	822		1,524
Payments for restructuring, severance and other charges	(1,530	)	(6,306		)
Payments for legal settlements	(87	)	—
Asset impairments and related charges	327		208
Depreciation	1,592		1,639
Amortization of intangibles	4,053		3,223
Share-based compensation	1,543		1,006
Excess tax benefit from equity awards	(209	)	—
Changes in operating assets and liabilities:
Accounts receivable	(6,158	)	(4,300		)
Inventories	(598	)	(111		)
Prepaids	(747	)	3
Accounts payable	577		4,687
Deferred revenue	(1,379	)	(6,105		)
Accrued and other liabilities	(1,451	)	(6,208		)
Income taxes payable	(2,118	)	(319		)
Other changes, net	205		(29		)
Net cash used in operating activities from continuing operations	(7,503	)	(16,261		)
Net cash used in operating activities from discontinued operations	(1,018	)	(1,127		)
Net cash used in operating activities	(8,521	)	(17,388		)

Investing activities:
Proceeds from sale of RSG	36,024		—
Cash paid for acquisitions, net	(1,801	)	—
Capital expenditures	(3,235	)	(1,530		)
Capitalized software development costs	(8,247	)	(1,767		)
(Investments in) proceeds from company owned life insurance policies, net and marketable securities	(87	)	4,262
Net cash provided by investing activities from continuing operations	22,654		965
Net cash used in investing activities from discontinued operations	(117	)	(754		)
Net cash provided by investing activities	22,537		211

Financing activities:
Repurchases of shares to satisfy employee tax withholding and option price	(729	)	(148		)
Exercise of employee stock options	64		67
Excess tax benefit from equity awards	209		—
Principal payment under long-term obligations	(53	)	(257		)
Net cash used in financing activities from continuing operations	(509	)	(338		)
Net cash used in financing activities from discontinued operations	(80	)	(288		)
Net cash used in financing activities	(589	)	(626		)

Effect of exchange rate changes on cash	(1	)	54
Cash flows provided by (used in) continuing operations	14,641		(15,580		)
Cash flows used in discontinued operations:	(1,215	)	(2,169		)
Net increase (decrease) in cash	13,426		(17,749		)
Cash and cash equivalents at beginning of period	82,931		97,587
Cash and cash equivalents at end of period	$ 96,357		$ 79,838

AGILYSYS, INC.

RECONCILIATION OF OPERATING LOSS FROM CONTINUING OPERATIONS TO ADJUSTED INCOME (LOSS) FROM CONTINUING OPERATIONS

(UNAUDITED)



(In thousands, except per share data)	Three Months Ended						Nine Months Ended
	December 31,						December 31,
	2013			2012			2013			2012

Operating loss	$	(3,212	)	$	(1,712	)	$	(4,052	)	$	(6,724	)
Share-based compensation expense	651			439			1,543			1,006
Amortization of intangibles	2,365			806			3,953			2,478
Asset impairments and related charges	309			—			327			208
Restructuring, severance and other charges	206			(31		)	822			1,524
Adjusted operating income (loss) from continuing operations (a)	319			(498		)	2,593			(1,508		)

Other expenses, net	20			204			53			424
Cash income tax expense (b)	51			50			110			113
Adjusted income (loss) from continuing operations (a)	$	248		$	(752	)	$	2,430		$	(2,045	)

Weighted average shares outstanding:
Basic and diluted	22,150			21,900			22,100			21,873

Adjusted income (loss) per share from continuing operations (a):
Basic and diluted	$	0.01		$	(0.03	)	$	0.11		$	(0.09	)

(a) Non-GAAP financial measure

(b) Taxes calculated based upon our estimated cash tax payments, exclusive of payments related to AMT, for the three and nine months ended December 31, 2013 and 2012.

AGILYSYS, INC.

RECONCILIATION OF OPERATING CASH FLOWS FROM CONTINUING OPERATIONS TO ADJUSTED CASH FLOWS FROM CONTINUING OPERATIONS

(UNAUDITED)



	Nine Months Ended
(In thousands)	December 31,
	2013			2012
Operating activities:
Net cash used in continuing operations	$	(7,503	)	$	(16,261	)
Non-recurring cash items:
Restructuring, severance and other payments	1,530			6,306
Payments for legal settlements	87			—
BEP/SERP payments	—			4,468
Adjusted cash used in continuing operations (a)	$	(5,886	)	$	(5,487	)

(a) Non-GAAP financial measure

AGILYSYS, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS



(In thousands, except per share data)
	Fiscal 2013
	Three months ended								Twelve months ended
	June 30		September 30		December 31		March 31		March 31, 2013

Net revenue:
Products	$ 6,778		$ 7,512		$ 12,467		$ 6,760		$ 33,517
Support, maintenance and subscription services	12,169		12,733		12,245		13,089		50,236
Professional services	3,442		3,987		3,478		3,702		14,609
Total net revenue	22,389		24,232		28,190		23,551		98,362
Cost of goods sold:
Products	3,581		3,839		8,135		3,092		18,647
Support, maintenance and subscription services	2,624		2,802		2,561		2,516		10,503
Professional services	2,291		2,567		2,144		2,291		9,293
Total cost of goods sold	8,496		9,208		12,840		7,899		38,443
Gross profit	13,893		15,024		15,350		15,652		59,919
Operating expenses:
Product development	4,420		7,285		6,260		6,727		24,692
Sales and marketing	4,201		2,930		3,667		3,948		14,746
General and administrative	5,279		5,248		5,852		5,481		21,860
Depreciation of fixed assets	585		546		508		517		2,156
Amortization of intangibles	855		817		806		806		3,284
Asset impairment and related charges	208		—		—		(88	)	120
Legal settlements	—		—		—		1,664		1,664
Restructuring, severance and other charges	1,125		430		(31	)	(29	)	1,495
Operating loss	(2,780	)	(2,232	)	(1,712	)	(3,374	)	(10,098	)
Other (income) expenses :
Interest income	(4	)	(4	)	—		(4	)	(12	)
Interest expense	264		(20	)	(13	)	35		266
Other expense (income), net	144		(160	)	217		(64	)	137
Loss before income taxes	(3,184	)	(2,048	)	(1,916	)	(3,341	)	(10,489	)
Income tax benefit	(529	)	(633	)	(813	)	(1,468	)	(3,443	)
Loss from continuing operations	$ (2,655)		$ (1,415)		$ (1,103)		$ (1,873)		$ (7,046)

Basic and diluted weighted average shares outstanding	21,836		21,883		21,900		21,901		21,880

Net (loss) income per share – basic and diluted:
Loss per share from continuing operations	$ (0.12)		$ (0.06)		$ (0.05)		$ (0.09)		$ (0.32)

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