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 February 3, 2016, announcing its results for the third quarter and period ended December 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 February 3, 2016, announcing its results for the third quarter and period ended December 31, 2015. |
• | Total net revenue was $31.3 million, compared to total net revenue of $24.7 million in the comparable prior-year period. |
• | Recurring revenues (which are comprised of support, maintenance and subscription services) were $14.9 million, or 48% of total net revenue, compared to $13.9 million, or 56% of total net revenue, for the same period in fiscal 2015. SaaS revenues for the third quarter increased 24% year over year and comprised 18% of total recurring revenues, compared to 15% of total recurring revenues in the third quarter of fiscal 2015. |
• | Gross margin was 53% in the fiscal 2016 third quarter, compared to 57% in the prior-year period. |
• | Adjusted EBITDA (non-GAAP) was $0.6 million, compared to an Adjusted EBITDA loss of $(0.3) million in the same period last year (see reconciliation below). |
• | Net loss in the fiscal 2016 third quarter was $(1.7) million, or $(0.07) per diluted share, compared to a net loss of $(2.7) million, or $(0.12) per diluted share, in the prior-year period. |
• | Total net revenue was $88.4 million, compared to total net revenue of $74.8 million in the comparable prior-year period. |
• | Recurring revenues (which are comprised of support, maintenance and subscription services) were $44.5 million, or 50% of total net revenue, compared to $41.5 million, or 55% of total net revenue, in the first nine months of fiscal 2015. SaaS revenues for the first nine months of fiscal 2016 increased 27% year over year and comprised 17% of total recurring revenues, compared to 14% of total recurring revenues in the first nine months of fiscal 2015. |
• | Gross margin was 57% in the first nine months of fiscal 2016, compared to 61% in the comparable year-ago period. |
• | Adjusted EBITDA (non-GAAP) was $3.3 million, compared to Adjusted EBITDA of $1.7 million in the same period last year (see reconciliation below). |
• | Net loss in the first nine months of fiscal 2016 was $(2.2) million, or $(0.10) per diluted share, compared to a net loss of $(6.1) million, or $(0.27) per diluted share, in the first nine months of fiscal 2015. |
• | Full-year revenue of $117 - $119 million, which compares to the prior expectation for full year revenue of $110 - $112 million and to fiscal 2015 revenue of $103.5 million. |
• | Based on the results of the first nine months of fiscal 2016 and the outlook for the revenue mix and gross margin in the fourth quarter, the Company continues to expect that adjusted EBITDA will more than double year over year, compared to 2015 adjusted EBITDA of $1.2 million. |
• | The Company expects that gross margin for fiscal 2016 will be in the mid-50% range. |
• | The Company expects to end fiscal 2016 with over $55 million in cash and cash equivalents. |
(In thousands, except per share data) | Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Net revenue: | |||||||||||||||
Products | $ | 11,924 | $ | 7,247 | $ | 30,678 | $ | 20,948 | |||||||
Support, maintenance and subscription services | 14,896 | 13,920 | 44,460 | 41,514 | |||||||||||
Professional services | 4,487 | 3,575 | 13,304 | 12,344 | |||||||||||
Total net revenue | 31,307 | 24,742 | 88,442 | 74,806 | |||||||||||
Cost of goods sold: | |||||||||||||||
Products | 6,991 | 4,413 | 17,035 | 11,414 | |||||||||||
Support, maintenance and subscription services | 4,076 | 3,006 | 11,413 | 9,098 | |||||||||||
Professional services | 3,732 | 3,194 | 9,496 | 8,823 | |||||||||||
Total cost of goods sold | 14,799 | 10,613 | 37,944 | 29,335 | |||||||||||
Gross profit | 16,508 | 14,129 | 50,498 | 45,471 | |||||||||||
Gross profit margin | 52.7 | % | 57.1 | % | 57.1 | % | 60.8 | % | |||||||
Operating expenses: | |||||||||||||||
Product development | 6,969 | 6,670 | 20,021 | 18,726 | |||||||||||
Sales and marketing | 4,618 | 3,696 | 14,396 | 11,407 | |||||||||||
General and administrative | 5,517 | 5,175 | 15,897 | 16,369 | |||||||||||
Depreciation of fixed assets | 569 | 556 | 1,627 | 1,702 | |||||||||||
Amortization of intangibles | 321 | 617 | 937 | 2,994 | |||||||||||
Restructuring, severance and other charges | 8 | 95 | (53 | ) | 913 | ||||||||||
Asset write-offs and other fair value adjustments | — | — | (175 | ) | — | ||||||||||
Legal settlements | 185 | — | 185 | 203 | |||||||||||
Operating loss | (1,679 | ) | (2,680 | ) | (2,337 | ) | (6,843 | ) | |||||||
Other (income) expense: | |||||||||||||||
Interest income | (21 | ) | (24 | ) | (70 | ) | (98 | ) | |||||||
Interest expense | 8 | 7 | 20 | 35 | |||||||||||
Other expense, net | 63 | 114 | 40 | 68 | |||||||||||
Loss before taxes | (1,729 | ) | (2,777 | ) | (2,327 | ) | (6,848 | ) | |||||||
Income tax benefit | (56 | ) | (62 | ) | (100 | ) | (777 | ) | |||||||
Net loss | $ | (1,673 | ) | $ | (2,715 | ) | $ | (2,227 | ) | $ | (6,071 | ) | |||
Weighted average shares outstanding | 22,493 | 22,343 | 22,479 | 22,336 | |||||||||||
Loss per share - basic and diluted: | |||||||||||||||
Loss per share | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.10 | ) | $ | (0.27 | ) |
(In thousands, except share data) | December 31, 2015 | March 31, 2015 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 65,652 | $ | 75,067 | |||
Accounts receivable, net of allowance for doubtful accounts of $628 and $888, respectively | 20,907 | 25,481 | |||||
Inventories | 2,331 | 641 | |||||
Prepaid expenses and other current assets | 6,587 | 3,828 | |||||
Total current assets | 95,477 | 105,017 | |||||
Property and equipment, net | 13,857 | 11,929 | |||||
Goodwill | 19,622 | 19,622 | |||||
Intangible assets, net | 8,880 | 9,006 | |||||
Software development costs, net | 41,371 | 31,818 | |||||
Other non-current assets | 4,670 | 4,133 | |||||
Total assets | $ | 183,877 | $ | 181,525 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 11,402 | $ | 16,586 | |||
Deferred revenue | 29,371 | 23,881 | |||||
Accrued liabilities | 11,107 | 10,001 | |||||
Capital lease obligations, current | 136 | 142 | |||||
Total current liabilities | 52,016 | 50,610 | |||||
Deferred income taxes, non-current | 3,049 | 3,053 | |||||
Capital lease obligations, non-current | 25 | 47 | |||||
Other non-current liabilities | 4,563 | 3,627 | |||||
Shareholders' equity: | |||||||
Common shares, without par value, at $0.30 stated value; 80,000,000 shares authorized; 31,606,831 shares issued; and 22,949,056 and 22,789,355 shares outstanding at December 31, 2015 and March 31, 2015, respectively | 9,482 | 9,482 | |||||
Treasury shares, 8,657,775 and 8,817,477 at December 31, 2015 and March 31, 2015, respectively | (2,598 | ) | (2,646 | ) | |||
Capital in excess of stated value | (8,433 | ) | (10,675 | ) | |||
Retained earnings | 125,951 | 128,178 | |||||
Accumulated other comprehensive loss | (178 | ) | (151 | ) | |||
Total shareholders' equity | 124,224 | 124,188 | |||||
Total liabilities and shareholders' equity | $ | 183,877 | $ | 181,525 |
Nine Months Ended | |||||||
(In thousands) | December 31, | ||||||
2015 | 2014 | ||||||
Operating activities | |||||||
Net loss | $ | (2,227 | ) | $ | (6,071 | ) | |
Adjustments to reconcile loss from operations to net cash provided by (used in) operating activities | |||||||
Net restructuring, severane and other charges | (643 | ) | (276 | ) | |||
Asset write-offs and other fair value adjustments | (175 | ) | — | ||||
Net legal settlements | 170 | (1,511 | ) | ||||
Loss (gain) on disposal of property & equipment | 262 | 1 | |||||
Depreciation | 1,627 | 1,702 | |||||
Amortization | 1,704 | 3,939 | |||||
Deferred income taxes | — | (86 | ) | ||||
Share-based compensation | 2,318 | 1,828 | |||||
Excess tax benefit from equity awards | — | (14 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 4,527 | 2,342 | |||||
Inventories | (1,696 | ) | (170 | ) | |||
Prepaid expense | (2,769 | ) | 325 | ||||
Accounts payable | (4,399 | ) | (55 | ) | |||
Deferred revenue | 5,516 | (4,535 | ) | ||||
Accrued liabilities | 4,394 | (3,841 | ) | ||||
Income taxes payable | (65 | ) | (817 | ) | |||
Other changes, net | (230 | ) | (230 | ) | |||
Net cash provided by (used in) operating activities | 8,314 | (7,469 | ) | ||||
Investing activities | |||||||
Proceeds from sale of business units | — | 809 | |||||
Cash paid for acquisition, net | — | (3,750 | ) | ||||
Proceeds from sale and maturity of marketable securities | — | 5,107 | |||||
Investments in marketable securities | — | (10,240 | ) | ||||
Capital expenditures | (3,617 | ) | (3,856 | ) | |||
Capitalized software development costs | (13,488 | ) | (12,540 | ) | |||
Additional (investments in) proceeds from corporate-owned life insurance policies | (65 | ) | 1,925 | ||||
Net cash used in investing activities | (17,170 | ) | (22,545 | ) | |||
Financing activities | |||||||
Repurchase of common shares to satisfy employee tax withholding | (435 | ) | (373 | ) | |||
Exercise of employee stock options | — | 102 | |||||
Excess tax benefit from equity awards | — | 14 | |||||
Principal payments under long-term obligations | (29 | ) | (32 | ) | |||
Net cash used in financing activities | (464 | ) | (289 | ) | |||
Effect of exchange rate changes on cash | (95 | ) | (154 | ) | |||
Net decrease in cash and cash equivalents | (9,415 | ) | (30,457 | ) | |||
Cash and cash equivalents at beginning of period | 75,067 | 99,566 | |||||
Cash and cash equivalents at end of period | $ | 65,652 | $ | 69,109 | |||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES: | |||||||
Accrued capital expenditures | $ | 261 | $ | 353 | |||
Accrued capitalized software development costs | 505 | 2,021 | |||||
Leasehold improvements acquired under operating lease arrangement | 997 | — |
(In thousands) | Three Months Ended | Nine Months Ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net loss | $ | (1,673 | ) | $ | (2,715 | ) | $ | (2,227 | ) | $ | (6,071 | ) | ||||
Income tax benefit | (56 | ) | (62 | ) | (100 | ) | (777 | ) | ||||||||
Loss before taxes | (1,729 | ) | (2,777 | ) | (2,327 | ) | (6,848 | ) | ||||||||
Depreciation of fixed assets | 569 | 556 | 1,627 | 1,702 | ||||||||||||
Amortization of intangibles | 321 | 617 | 937 | 2,994 | ||||||||||||
Amortization of developed technology | 255 | 335 | 766 | 945 | ||||||||||||
Interest (income) expense | (13 | ) | (17 | ) | (50 | ) | (63 | ) | ||||||||
EBITDA (b) | (597 | ) | (1,286 | ) | 953 | (1,270 | ) | |||||||||
Share-based compensation | 917 | 761 | 2,317 | 1,828 | ||||||||||||
Restructuring, severance and other charges | 8 | 95 | (53 | ) | 913 | |||||||||||
Asset write-offs and other fair value adjustments | — | — | (175 | ) | — | |||||||||||
Other non-operating expense (income) | 63 | 114 | 40 | 68 | ||||||||||||
Legal settlements | 185 | — | 185 | 203 | ||||||||||||
Adjusted EBITDA (a) | $ | 576 | $ | (316 | ) | $ | 3,267 | $ | 1,742 | |||||||
(a) Adjusted EBITDA, a non-GAAP financial measure, is defined as income 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 | ||||||||||||||||
Nine Months Ended | |||||||
(In thousands) | December 31, | ||||||
2015 | 2014 | ||||||
Operating activities: | |||||||
Net cash provided by (used in) operating activities | $ | 8,314 | $ | (7,469 | ) | ||
Non-recurring cash items: | |||||||
Payments for restructuring, severance and other charges | 590 | 1,189 | |||||
Payments for legal settlements | 15 | 1,714 | |||||
Adjusted cash provided by (used in) operating activities (a) | $ | 8,919 | $ | (4,566 | ) | ||
(a) Non-GAAP financial measure |
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