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) |
¨ | 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 |
Item 9.01 | Financial Statements and Exhibits |
Exhibit Number | Description | |
99.1 | Press release issued by Agilysys, Inc. dated May 28, 2015, announcing its results for the fourth quarter and period ended March 31, 2015. |
AGILYSYS, INC. | |||
By: | /s/ Janine K. Seebeck | ||
Janine K. Seebeck | |||
Senior Vice President, Chief Financial Officer, | |||
and Treasurer |
Exhibit Number | Description | |
99.1 | Press release issued by Agilysys, Inc. dated May 28, 2015, announcing its results for the fourth quarter and period ended March 31, 2015. |
• | Total net revenue was $28.7 million, compared to total net revenue of $27.8 million in the comparable prior-year period. |
• | Recurring revenues (which are comprised of support, maintenance and subscription services) were $14.5 million, or 51% of total net revenue, compared to $14.1 million, or 51% of total net revenue, for the same period in fiscal 2014. SaaS revenues for the fourth quarter increased 8% year over year and comprised 14.2% of total recurring revenues compared to 13.5% of total recurring revenues in fiscal 2014. |
• | Gross margin was 51% in the fiscal 2015 fourth quarter, compared to 60% in the prior-year period. Gross margin for the fiscal 2015 fourth quarter was impacted by lower than historical margins on certain hardware sales as well as increased labor costs required to meet a customer commitment, which should not repeat in future periods. |
• | Adjusted operating loss (non-GAAP) from continuing operations (excluding stock-based compensation, amortization of intangibles, asset write-offs and other fair value adjustment charges, restructuring and severance charges) was $(1.4) million, compared to adjusted operating income from continuing operations in the year-ago period of $1.1 million (see reconciliation below). |
• | Adjusted loss (non-GAAP) from continuing operations was $(1.5) million, or $(0.07) per diluted share, compared to adjusted income from continuing operations of $1.8 million, or $0.08 per diluted share, in the same period last year (see reconciliation below). |
• | Net loss in the fiscal 2015 fourth quarter was $(5.4) million, or $(0.24) per diluted share, inclusive of a total of $2.4 million, or $0.11 per share, in asset write-offs and other fair value adjustments and restructuring and severance charges. Net loss in the 2014 fourth quarter was $(2.0) million, or $(0.09) per diluted share, inclusive of a charge of $0.6 million, or $0.03 per share, related to restructuring and severance costs, and a net loss from discontinued operations of $(1.3) million, or $(0.13) per diluted share. |
• | Total net revenue for the year increased $2.2 million, or 2%, to $103.5 million, compared with $101.3 million in the fiscal 2014. |
• | Recurring revenues (which are comprised of support, maintenance and subscription services) were $56.0 million, or 54% of total net revenue, for the period, an increase of 5.3% over recurring revenues of $53.2 million, or 52% of total net revenue, in fiscal 2014. SaaS revenues increased 11% year over year and comprised 8% of total recurring revenues compared to 7% of total recurring revenues in fiscal 2014. |
• | Gross margin of 58% compares to gross margin of 63% in the prior-year period. The fiscal 2015 gross margin reflects the impact of initial amortization expense for developed technology, which totaled $1.3 million in the full year period, as well as the above noted impact to professional service margins in the second half of the year due to increased labor costs required to meet a customer commitment. |
• | Adjusted operating loss (non-GAAP) from continuing operations (excluding stock-based compensation, amortization of intangibles, asset write-offs and other fair value adjustment charges, restructuring and severance charges and other one-time items) for fiscal 2015 was $(2.3) million, compared to adjusted operating income from continuing operations of $4.1 million in fiscal 2014 (see reconciliation below). |
• | Adjusted loss (non-GAAP) from continuing operations was $(2.5) million, or $(0.11) per diluted share, compared with adjusted income of $4.8 million, or $0.22 per diluted share, in fiscal 2014 (see reconciliation below). |
• | Net loss for fiscal 2015 was $(11.5) million, or $(0.51) per diluted share, inclusive of a total of $3.5 million, or $0.16 per share, in asset write-offs and other fair value adjustments and restructuring and severance charges and legal settlement costs. This compares to net income of $17.1 million, or $0.77 per diluted share, in fiscal 2014, inclusive of a charge of $1.7 million, or $0.08 per share, related to restructuring and severance costs and a benefit from discontinued operations of $20.0 million, or $0.90 per diluted share. |
(In thousands, except per share data) | Three Months Ended March 31, | Twelve Months Ended March 31, | |||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net revenue: | |||||||||||||||
Products | $ | 10,898 | $ | 10,410 | $ | 31,846 | $ | 34,629 | |||||||
Support, maintenance and subscription services | 14,499 | 14,130 | 56,013 | 53,169 | |||||||||||
Professional services | 3,311 | 3,210 | 15,655 | 13,463 | |||||||||||
Total net revenue | 28,708 | 27,750 | 103,514 | 101,261 | |||||||||||
Cost of goods sold: | |||||||||||||||
Products, inclusive of developed technology amortization | 7,318 | 5,788 | 18,732 | 17,027 | |||||||||||
Support, maintenance and subscription services | 3,363 | 2,870 | 12,461 | 10,786 | |||||||||||
Professional services | 3,417 | 2,432 | 12,240 | 9,408 | |||||||||||
Total cost of goods sold | 14,098 | 11,090 | 43,433 | 37,221 | |||||||||||
Gross profit | 14,610 | 16,660 | 60,081 | 64,040 | |||||||||||
Gross profit margin | 50.89 | % | 60.04 | % | 58.04 | % | 63.24 | % | |||||||
Operating expenses: | |||||||||||||||
Product development | 6,590 | 6,494 | 25,316 | 25,212 | |||||||||||
Sales and marketing | 4,951 | 3,916 | 16,357 | 14,059 | |||||||||||
General and administrative | 5,299 | 5,270 | 21,668 | 20,750 | |||||||||||
Depreciation of fixed assets | 523 | 503 | 2,225 | 2,074 | |||||||||||
Amortization of intangibles | 467 | 2,461 | 3,461 | 6,414 | |||||||||||
Asset write-offs and other fair value adjustments | 1,836 | — | 1,836 | 327 | |||||||||||
Restructuring, severance and other charges | 569 | 569 | 1,482 | 1,392 | |||||||||||
Legal settlements | — | — | 203 | — | |||||||||||
Operating loss | (5,625 | ) | (2,553 | ) | (12,467 | ) | (6,188 | ) | |||||||
Other (income) expenses: | |||||||||||||||
Interest income | (12 | ) | (71 | ) | (110 | ) | (123 | ) | |||||||
Interest expense | 13 | 33 | 48 | 184 | |||||||||||
Other (income) expenses, net | 78 | (645 | ) | 146 | (863 | ) | |||||||||
Loss before income taxes | (5,704 | ) | (1,870 | ) | (12,551 | ) | (5,386 | ) | |||||||
Income tax (benefit) expense | (277 | ) | (1,207 | ) | (1,054 | ) | (2,491 | ) | |||||||
Loss from continuing operations | (5,427 | ) | (663 | ) | (11,497 | ) | (2,895 | ) | |||||||
(Loss) Income from discontinued operations, net of taxes | — | (1,346 | ) | — | 19,992 | ||||||||||
Net (loss) income | $ | (5,427 | ) | $ | (2,009 | ) | $ | (11,497 | ) | $ | 17,097 | ||||
Weighted average shares outstanding - basic | 22,343 | 22,222 | 22,338 | 22,135 | |||||||||||
Net (loss) income per share – basic: | |||||||||||||||
Loss per share from continuing operations | $ | (0.24 | ) | $ | (0.03 | ) | $ | (0.51 | ) | $ | (0.13 | ) | |||
Income per share from discontinued operations | — | (0.06 | ) | — | 0.90 | ||||||||||
Net (loss) income per share | $ | (0.24 | ) | $ | (0.09 | ) | $ | (0.51 | ) | $ | 0.77 | ||||
Weighted average shares outstanding - diluted | 22,343 | 22,222 | 22,338 | 22,135 | |||||||||||
Net (loss) income per share – diluted: | |||||||||||||||
Loss per share from continuing operations | $ | (0.24 | ) | $ | (0.03 | ) | $ | (0.51 | ) | $ | (0.13 | ) | |||
Income per share from discontinued operations | — | (0.06 | ) | — | 0.90 | ||||||||||
Net (loss) income per share | $ | (0.24 | ) | $ | (0.09 | ) | $ | (0.51 | ) | $ | 0.77 |
(In thousands, except share data) | March 31, 2015 | March 31, 2014 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 75,067 | $ | 99,566 | |||
Accounts receivable, net of allowance for doubtful accounts of $888 and $1,101, respectively | 25,481 | 23,615 | |||||
Inventories | 641 | 481 | |||||
Prepaid expenses | 3,820 | 3,300 | |||||
Other current assets | 8 | 2,892 | |||||
Total current assets | 105,017 | 129,854 | |||||
Property and equipment, net | 11,929 | 12,251 | |||||
Goodwill | 19,622 | 17,158 | |||||
Intangible assets, net | 9,006 | 10,626 | |||||
Software development costs, net | 31,818 | 17,221 | |||||
Other non-current assets | 4,133 | 3,785 | |||||
Total assets | $ | 181,525 | $ | 190,895 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Deferred revenue | |||||||
Accounts payable | $ | 16,586 | $ | 11,073 | |||
Deferred revenue | 23,881 | 22,795 | |||||
Accrued liabilities | 10,001 | 14,232 | |||||
Capital lease obligations, current | 142 | 43 | |||||
Total current liabilities | 50,610 | 48,143 | |||||
Deferred income taxes, non-current | 3,053 | 3,422 | |||||
Capital lease obligations, non-current | 47 | 292 | |||||
Other non-current liabilities | 3,627 | 6,165 | |||||
Shareholders' equity: | |||||||
Common shares, without par value, at $0.30 stated value; 80,000,000 shares authorized; 31,606,831 shares issued; and 22,789,355 and 22,467,970 shares outstanding at March 31, 2015 and 2014, respectively | |||||||
Treasury shares, 8,817,477 and 9,138,861 at March 31, 2015 and 2014, respectively | 9,482 | 9,482 | |||||
Capital in excess of stated value | (2,646 | ) | (2,741 | ) | |||
Retained earnings | (10,675 | ) | (13,409 | ) | |||
Accumulated other comprehensive loss | 128,178 | 139,675 | |||||
Total shareholders' equity | (151 | ) | (134 | ) | |||
Total liabilities and shareholders' equity | $ | 124,188 | $ | 132,873 | |||
$ | 181,525 | $ | 190,895 |
Twelve Months Ended | |||||||
(In thousands) | March 31, | ||||||
2015 | 2014 | ||||||
Operating activities | |||||||
Net (loss) income | $ | (11,497 | ) | $ | 17,097 | ||
Less: Income from discontinued operations | — | 19,992 | |||||
Loss from continuing operations | (11,497 | ) | (2,895 | ) | |||
Adjustments to reconcile loss from continuing operations to net cash used in operating activities: | |||||||
Restructuring, severance and other charges | 1,482 | 1,392 | |||||
Payments for restructuring, severance and other charges | (1,348 | ) | (1,741 | ) | |||
Legal settlements | 203 | — | |||||
Payments for legal settlements | (1,714 | ) | (110 | ) | |||
Asset write-offs | 3,454 | 327 | |||||
Depreciation | 2,225 | 2,074 | |||||
Amortization | 4,755 | 6,726 | |||||
Share-based compensation | 3,140 | 2,119 | |||||
Contingent consideration adjustment | (1,619 | ) | — | ||||
Deferred income taxes | (371 | ) | (178 | ) | |||
Change in cash surrender value of company owned life insurance policies | (57 | ) | (600 | ) | |||
Excess tax benefit from equity awards | (14 | ) | (37 | ) | |||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (1,935 | ) | (7,846 | ) | |||
Inventories | (171 | ) | 380 | ||||
Prepaid expense | (526 | ) | (498 | ) | |||
Accounts payable | 5,528 | 1,073 | |||||
Deferred revenue | 1,146 | 2,784 | |||||
Accrued liabilities | (3,868 | ) | 1,624 | ||||
Income taxes receivable | (823 | ) | (2,702 | ) | |||
Other changes, net | (176 | ) | (508 | ) | |||
Net cash (used in) provided by operating activities from continuing operations | (2,186 | ) | 1,384 | ||||
Net cash (used in) provided by operating activities from discontinued operations | — | (1,311 | ) | ||||
Net cash (used in) provided by operating activities | (2,186 | ) | 73 | ||||
Investing activities | |||||||
Proceeds from sale of business units | 809 | 35,846 | |||||
Cash paid for acquisitions, net | (3,750 | ) | (1,812 | ) | |||
Investment in marketable securities | (10,240 | ) | — | ||||
Proceeds from sale of marketable securities | 10,107 | — | |||||
Capital expenditures | (4,650 | ) | (4,023 | ) | |||
Capitalized software development costs | (15,813 | ) | (12,200 | ) | |||
Additional (investments in) proceeds from corporate-owned life insurance policies | 1,905 | (87 | ) | ||||
Net cash (used in) provided by investing activities from continuing operations | (21,632 | ) | 17,724 | ||||
Net cash used in investing activities from discontinued operations | — | (155 | ) | ||||
Net cash (used in) provided by investing activities | (21,632 | ) | 17,569 | ||||
Financing activities | |||||||
Principal payments under long-term obligations | (144 | ) | (177 | ) | |||
Exercise of employee stock options | 102 | 169 | |||||
Repurchase of common shares to satisfy employee tax withholding and option price | (373 | ) | (912 | ) | |||
Excess tax benefit from equity awards | 14 | 37 | |||||
Net cash used in financing activities from continuing operations | (401 | ) | (883 | ) | |||
Net cash used in financing activities from discontinued operations | — | (80 | ) | ||||
Net cash used in financing activities | (401 | ) | (963 | ) | |||
Effect of exchange rate changes on cash | (280 | ) | (44 | ) | |||
Cash flows (used in) provided by continuing operations | (24,499 | ) | 18,181 | ||||
Cash flows (used in) provided by discontinued operations | — | (1,546 | ) | ||||
Net (decrease) increase in cash and cash equivalents | (24,499 | ) | 16,635 | ||||
Cash and cash equivalents at beginning of period | 99,566 | 82,931 | |||||
Cash and cash equivalents at end of period | $ | 75,067 | $ | 99,566 |
(In thousands, except per share data) | Three Months Ended | Twelve Months Ended | |||||||||||||
March 31, | March 31, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Operating loss | $ | (5,625 | ) | $ | (2,553 | ) | $ | (12,467 | ) | $ | (6,188 | ) | |||
Share-based compensation expense | 1,312 | 595 | 3,140 | 2,119 | |||||||||||
Amortization of intangibles | 467 | 2,461 | 3,461 | 6,414 | |||||||||||
Asset write-offs and other fair value adjustments | 1,836 | — | 1,836 | 327 | |||||||||||
Restructuring, severance and other charges | 569 | 569 | 1,482 | 1,392 | |||||||||||
Legal settlements | — | — | 203 | — | |||||||||||
Adjusted operating (loss) income from continuing operations (a) | (1,441 | ) | 1,072 | (2,345 | ) | 4,064 | |||||||||
Other (income) expenses, net | 79 | (683 | ) | 84 | (802 | ) | |||||||||
Cash income tax expense (b) | 26 | (27 | ) | 65 | 60 | ||||||||||
Adjusted (loss) income from continuing operations (a) | $ | (1,546 | ) | $ | 1,782 | $ | (2,494 | ) | $ | 4,806 | |||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 22,343 | 22,222 | 22,338 | 22,135 | |||||||||||
Diluted | 22,343 | 22,222 | 22,338 | 22,135 | |||||||||||
Adjusted (loss) income per share from continuing operations (a): | |||||||||||||||
Basic | $ | (0.07 | ) | $ | 0.08 | $ | (0.11 | ) | $ | 0.22 | |||||
Diluted | $ | (0.07 | ) | $ | 0.08 | $ | (0.11 | ) | $ | 0.22 | |||||
(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 twelve months ended March 31, 2015 and 2014. | |||||||||||||||
Twelve Months Ended | |||||||
(In thousands) | March 31, | ||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net cash used in operating activities from continuing operations | $ | (2,186 | ) | $ | 1,384 | ||
Non-recurring cash items: | |||||||
Payments for restructuring, severance and other charges | 1,348 | 1,741 | |||||
Payments for legal settlements | 1,714 | 110 | |||||
Adjusted cash provided by continuing operations (a) | $ | 876 | $ | 3,235 | |||
(a) Non-GAAP financial measure |
(In thousands) | Fiscal 2015 | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||
June 30 | September 30 | December 31 | March 31 | 2015 | |||||||||||||||
Net (loss) income | $ | (2,229 | ) | $ | (1,127 | ) | $ | (2,715 | ) | $ | (5,427 | ) | $ | (11,497 | ) | ||||
(Loss) Income from discontinued operations, net of taxes | — | — | — | — | — | ||||||||||||||
Loss from continuing operations | (2,229 | ) | (1,127 | ) | (2,715 | ) | (5,427 | ) | (11,497 | ) | |||||||||
Income tax (benefit) expense | (795 | ) | 81 | (62 | ) | (277 | ) | (1,054 | ) | ||||||||||
Loss before income taxes | (3,024 | ) | (1,046 | ) | (2,777 | ) | (5,704 | ) | (12,551 | ) | |||||||||
Depreciation of fixed assets | 614 | 532 | 556 | 523 | 2,225 | ||||||||||||||
Amortization of intangibles | 1,783 | 594 | 617 | 467 | 3,461 | ||||||||||||||
Amortization of developed technology | 289 | 321 | 335 | 349 | 1,294 | ||||||||||||||
Interest (income) expense | (39 | ) | (7 | ) | (17 | ) | 1 | (62 | ) | ||||||||||
EBITDA (b) | (377 | ) | 394 | (1,286 | ) | (4,364 | ) | (5,633 | ) | ||||||||||
Share-based compensation | 365 | 702 | 761 | 1,312 | 3,140 | ||||||||||||||
Asset write-offs and other fair value adjustments | — | — | — | 1,836 | 1,836 | ||||||||||||||
Restructuring, severance and other charges | 370 | 448 | 95 | 569 | 1,482 | ||||||||||||||
Other non-operating (income) expense | (45 | ) | (1 | ) | 114 | 78 | 146 | ||||||||||||
Legal settlements | 149 | 54 | — | — | 203 | ||||||||||||||
Adjusted EBITDA from continuing operations (a) | $ | 462 | $ | 1,597 | $ | (316 | ) | $ | (569 | ) | $ | 1,174 | |||||||
(a) Adjusted EBITDA from continuing operations, a non-GAAP financial measure, is defined as income from continuing operations before income taxes, interest expense (net of interest income), depreciation and amortization (including amortization of developed technology), and excluding charges relating to i) legal settlements, ii) restructuring, severance, and other charges, iii) asset write-offs and other fair value adjustments, iv) share-based compensation, and v) other non-operating (income) expense | |||||||||||||||||||
(b) EBITDA is defined as net income before income taxes, interest expense, depreciation and amortization | |||||||||||||||||||
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