EX-99.1 2 l37251exv99w1.htm EX-99.1 exv99w1
Exhibit 99.1
(AGILYSYS LOGO)
FOR IMMEDIATE RELEASE
Agilysys Reports Unaudited Fiscal 2010 First-Quarter Results
  •   Demand for IT products, especially hardware, was weaker than expected in first-quarter
 
  •   Fiscal 2009 annualized cost-reduction actions in excess of $35 million realized
 
  •   Cash increased by $14.8 million to $51.0 million; Company is debt-free
CLEVELAND—Aug. 5, 2009—Agilysys, Inc. (Nasdaq: AGYS), a leading provider of innovative IT solutions, today announced unaudited financial results for its fiscal 2010 first quarter ended June 30, 2009.
First-Quarter Unaudited Results of Operations
Consolidated revenue for the fiscal 2010 first quarter declined 27.6% from the year-ago period to $130.2 million. Hardware sales declined 31.6%, services declined 25.7% and software declined 1.1%, compared with the first quarter of fiscal 2009. The lower revenues reflect continued softness in demand in addition to customers delaying purchase commitments.
Gross margin in the quarter was 24.7%, compared with 26.6% in the first quarter of fiscal 2009, largely due to lower services revenues and services margins.
Selling, general and administrative (SG&A) expense was down $11.7 million, or 20.7%, to $44.8 million, compared with $56.6 million in the prior-year first quarter. The decrease was primarily attributable to cost-reduction actions initiated during fiscal 2009 and lower incentive compensation.
The reported loss from continuing operations for the quarter was $12.4 million, or a loss of $0.55 per share, compared with the loss of $60.1 million, or a loss of $2.66 per share, in the prior year quarter. Prior-year results included $56.7 million in charges related to asset impairment and restructuring.
Adjusted EBITDA (operating income plus depreciation and amortization), excluding asset impairment and restructuring charges, was a loss of $6.4 million, versus a loss of $1.9 million in last year’s first quarter. The decline in gross profit from lower sales more than offset the $11.7 million reduction in SG&A expense.
“We were disappointed with the weaker-than-anticipated sales for the quarter. The lingering malaise in IT spending negatively impacted product and service revenue across the board,” said Martin Ellis, president and chief executive officer. “Our cash flow was strong in the quarter and we have begun to realize the benefits of the cost savings initiatives previously executed. However, we continue to evaluate our cost structure to address current market demand.”
Financial Position
At June 30, 2009, cash on hand increased by $14.8 million to $51.0 million from $36.2 million at March 31, 2009. The Company is debt-free and has no outstanding balances on its $50 million credit facility. Additionally, Agilysys terminated and paid off its floor plan finance facility using cash flow from operations in early May 2009.
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

Dividend
The Company also announced today that the Board of Directors voted to eliminate the payment of cash dividends. With the evolution of the Company’s business and the current quarter’s weak operating performance that resulted in the Company not maintaining its fixed charge coverage ratio, the Board voted to eliminate the dividend. The elimination of the dividend will preserve approximately $2.7 million in cash on an annualized basis and will further improve financial flexibility.
Business Outlook
With the ongoing uncertainty into IT demand, visibility remains limited. Due to this uncertainty, the Company continues to suspend revenue guidance and is also suspending its earnings guidance until visibility improves.
Conference Call Information
A conference call will be held at 11:00 a.m. ET today to review fiscal 2010 first-quarter results. A slide deck will be the basis for the review. Both the slide deck and the conference call can be accessed via the Investor Relations section of www.agilysys.com. A replay of the call will be archived on the website.
To be added to Agilysys’ e-mail distribution list, please click on the link below:
http://www.agilysys.com/home/InvestorRelations/
Forward-Looking Language
This release contains certain management expectations, which may constitute forward-looking information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the Private Securities Reform Act of 1995. Forward-looking information speaks only as to the date of this presentation and may be identified by use of words such as “may,” “will,” “believes,” “anticipates,” “plans,” “expects,” “estimates,” “projects,” “targets,” “forecasts,” “continues,” “seeks,” or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information including, without limitation, competitive factors, disruption of supplies, changes in market conditions, pending or future claims or litigation, or technology advances. No assurances can be provided as to the outcome of cost reductions, business strategies, future financial results, unanticipated downturns to our relationships with customers, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, and unanticipated deterioration in economic and financial conditions in the United States and around the world. We do not undertake to update or revise any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, will not be realized.
Other potential risks and uncertainties that may cause actual results to be materially different from those in forward-looking information are described in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC), under Item 1A, “Risk Factors.” Copies are available from the SEC or the Agilysys website.
Use of Non-GAAP Financial Information
To supplement the unaudited condensed consolidated financial statements presented in accordance with U.S. GAAP in this release, certain non-GAAP financial measures as defined by the SEC rules are used. Management believes that such information can enhance investors’ understanding of the Company’s ongoing operations and is a measure used in the Company’s debt agreement. The non-GAAP measures included in this release have been reconciled to the comparable GAAP measures within an accompanying table, shown on the last page of this release.
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

About Agilysys, Inc.
Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The Company uses technology—including hardware, software and services—to help customers resolve their most complicated IT needs. The Company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales offices in the United Kingdom and Asia.
News releases and other information on Agilysys are available on the Internet at: http://www.agilysys.com
# # #
Investor Contact:
Curtis Stout
Vice President and Treasurer
Agilysys, Inc.
440-519-8635
curtis.stout@agilysys.com
Media Contact:
Maureen Morreale
Senior Communications Manager
Agilysys, Inc.
440-519-8161
maureen.morreale@agilysys.com
—FINANCIAL STATEMENTS FOLLOW—
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                 
    Three Months Ended  
    June 30,  
(In thousands, except share and per share data)   2009     2008  
            (As Adjusted)  
Net sales:
                
Products
   $ 104,893     $ 145,703  
Services
     25,297       34,048  
 
            
Total net sales
     130,190       179,751  
Cost of goods sold:
                
Products
     85,561       120,987  
Services
     12,459       10,986  
 
            
Total cost of goods sold
     98,020       131,973  
 
            
Gross margin
     32,170       47,778  
Selling, general and administrative expenses
     44,845       56,559  
Asset impairment charges
     —       33,623  
Restructuring charges
     14       23,063  
 
            
Operating loss
     (12,689 )     (65,467 )
Other (income) expense:
                
Other income, net
     (471 )     (238 )
Interest income
     (33 )     (247 )
Interest expense
     207       254  
 
            
Loss before income taxes
     (12,392 )     (65,236 )
Income tax expense (benefit)
     15       (5,162 )
 
            
Loss from continuing operations
     (12,407 )     (60,074 )
Income from discontinued operations
     11       38  
 
            
Net loss
   $ (12,396 )   $ (60,036 )
 
            
 
                
Loss per share — basic and diluted
                
Loss from continuing operations
   $ (0.55 )   $ (2.66 )
(Loss) income from discontinued operations
     —       —  
 
            
Net loss
   $ (0.55 )   $ (2.66 )
 
            
 
                
Weighted average shares outstanding
                
Basic and diluted
     22,627,338       22,536,508  
 
                
Cash dividends per share
   $ 0.03     $ 0.03  
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION (UNAUDITED)
                 
    Three Months Ended  
    June 30,  
(In thousands)   2009     2008  
Hospitality (HSG)
                
Total revenue
   $ 16,550     $ 24,754  
Elimination of intersegment revenue
     (543 )     (39 )
 
            
Revenue from external customers
   $ 16,007     $ 24,715  
 
            
Gross margin
   $ 9,858     $ 15,166  
 
            
 
     61.6 %     61.4 %
Depreciation and amortization
   $ 1,123     $ 1,331  
Operating loss
     (1,902 )     (5,859 )
 
            
Adjusted EBITDA
   $ (779 )   $ (4,528 )
 
            
Goodwill and intangible asset impairment
   $ —     $ 7,465  
 
                
Retail (RSG)
                
Total revenue
   $ 24,388     $ 38,267  
Elimination of intersegment revenue
     (1 )     (168 )
 
            
Revenue from external customers
   $ 24,387     $ 38,099  
 
            
Gross margin
   $ 5,377     $ 8,400  
 
            
 
     22.0 %     22.0 %
Depreciation and amortization
   $ 50     $ 88  
Operating income (loss)
     1,630       (14,372 )
 
            
Adjusted EBITDA
   $ 1,680     $ (14,284 )
 
            
Goodwill impairment
   $ —     $ 18,361  
 
                
Technology (TSG)
                
Total revenue
   $ 89,824     $ 118,701  
Elimination of intersegment revenue
     (28 )     (1,764 )
 
            
Revenue from external customers
   $ 89,796     $ 116,937  
 
            
Gross margin
   $ 17,729     $ 22,435  
 
            
 
     19.7 %     19.2 %
Depreciation and amortization
   $ 3,951     $ 4,419  
Operating loss
     (2,534 )     (32,045 )
 
            
Adjusted EBITDA
   $ 1,417     $ (27,626 )
 
            
Goodwill impairment
   $ —     $ 7,797  
Restructuring charge
   $ —     $ 23,063  
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION (UNAUDITED)
                 
    Three Months Ended  
(In thousands)   June 30,  
    2009     2008  
Corporate / Other
                
Gross margin
   $ (794 )   $ 1,777  
 
            
Depreciation and amortization (a)
   $ 1,204     $ 1,073  
Operating loss
     (9,883 )     (13,191 )
 
            
Adjusted EBITDA
   $ (8,679 )   $ (12,118 )
 
            
Restructuring charge
   $ 14     $ —  
 
                
Consolidated
                
Total revenue
   $ 130,762     $ 181,722  
Elimination of intersegment revenue
     (572 )     (1,971 )
 
            
Revenue from external customers
   $ 130,190     $ 179,751  
 
            
Gross margin
   $ 32,170     $ 47,778  
 
            
 
     24.7 %     26.6 %
Depreciation and amortization (a)
   $ 6,328     $ 6,911  
Operating loss
     (12,689 )     (65,467 )
 
            
Adjusted EBITDA
   $ (6,361 )   $ (58,556 )
 
            
Goodwill and intangible asset impairment
   $ —     $ 33,623  
Restructuring charge
   $ 14     $ 23,063  
 
(a)   Does not include the amortization of deferred financing fees totaling $88 and $56 for the three months ended June 30, 2009 and 2008, respectively, which related to the Corporate/Other segment.
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                 
(In thousands, except share data)   June 30, 2009     March 31, 2009  
ASSETS
                
Current assets:
                
Cash and cash equivalents
   $ 51,015     $ 36,244  
Accounts receivable, net
     104,992       151,944  
Inventories, net
     20,403       27,216  
Deferred income taxes — current, net
     6,841       6,836  
Prepaid expenses and other current assets
     4,409       4,564  
Income taxes receivable
     3,871       3,871  
Assets of discontinued operations — current
     433       1,075  
 
            
Total current assets
     191,964       231,750  
Goodwill
     50,592       50,382  
Intangible assets, net
     31,210       35,699  
Deferred income taxes — non-current, net
     529       511  
Other non-current assets
     18,501       29,008  
Assets of discontinued operations — non-current
     49       56  
Property and equipment, net
     28,830       27,030  
 
            
Total assets
   $ 321,675     $ 374,436  
 
            
 
                
LIABILITIES AND SHAREHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
   $ 76,293     $ 28,042  
Floor plan financing in default
     —       74,159  
Deferred revenue
     22,483       18,709  
Accrued liabilities
     19,761       37,807  
Long-term debt — current
     330       238  
Liabilities of discontinued operations — current
     722       1,176  
 
            
Total current liabilities
     119,589       160,131  
Other non-current liabilities
     21,141       21,588  
Shareholders’ equity:
                
Common shares, without par value, at $0.30 stated value; authorized 80,000,000 shares; 31,606,829 issued at June 30, 2009
     9,370       9,366  
Treasury stock (8,896,778 shares at June 30, 2009 and March 31, 2009)
     (2,669 )     (2,670 )
Capital in excess of stated value
     (10,467 )     (11,036 )
Retained earnings
     186,870       199,947  
Accumulated other comprehensive loss
     (2,159 )     (2,890 )
 
            
Total shareholders’ equity
     180,945       192,717  
 
            
Total liabilities and shareholders’ equity
   $ 321,675     $ 374,436  
 
            
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 
    Three Months Ended  
    June 30,  
(In thousands)   2009     2008  
            (As Adjusted)  
Operating activities:
                
Net loss
   $ (12,396 )   $ (60,036 )
Less: Income from discontinued operations
     (11 )     (38 )
 
            
Loss from continuing operations
     (12,407 )     (60,074 )
Adjustments to reconcile net loss from continuing operations to net cash provided by (used for) operating activities (net of effects from business acquisitions):
                
 
                
Impairment of goodwill and intangible assets
     —       54,203  
Impairment of investment in cost basis company
     —       (34 )
Depreciation
     933       965  
Amortization
     5,483       6,002  
Deferred income taxes
     (23 )     (5,986 )
Stock based compensation
     540       1,745  
Changes in working capital:
                
Accounts receivable
     46,952       14,800  
Inventories
     6,814       1,540  
Accounts payable
     48,611       (32,559 )
Accrued and other liabilities
     (10,963 )     (37,012 )
Taxes payable
     (3,058 )     (4,883 )
Other changes, net
     (1,474 )     (236 )
Other non-cash adjustments
     (1,682 )     (4,043 )
 
            
Total adjustments
     92,133       (5,498 )
 
            
Net cash provided by (used for) operating activities
     79,726       (65,572 )
 
                
Investing activities:
                
Procees from The Reserve Fund’s Primary Fund
     1,629       —  
Proceeds from borrowings against company-owned life insurance policies
     12,500       —  
Change in cash surrender value of company owned life insurance policies
     (38 )     (36 )
Acquisition of businesses, net of cash acquired
     —       (2,381 )
Purchase of property and equipment
     (3,461 )     (764 )
 
            
Net cash provided by (used for) investing activities
     10,630       (3,181 )
 
                
Financing activities:
                
Floor plan financing agreement, net
     (74,159 )     27,201  
Proceeds from borrowings under credit facility
     5,000       —  
Payments under credit facility
     (5,000 )     —  
Principal payment under long term obligations
     (108 )     (42 )
Issuance of common shares
     33       —  
Debt financing costs
     (1,606 )     —  
Dividends paid
     (681 )     (678 )
 
            
Net cash (used for) provided by financing activities
     (76,521 )     26,481  
 
                
Effect of exchange rate changes on cash
     731       80  
 
            
Cash flows provided by (used for) continuing operations
     14,566       (42,192 )
Cash flows of discontinued operations:
                
Operating cash flows
     205       487  
 
            
Net increase (decrease) in cash
     14,771       (41,705 )
Cash at beginning of period
     36,244       69,935  
 
            
Cash at end of period
   $ 51,015     $ 28,230  
 
            
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM

 

 

AGILYSYS, INC.
RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA (UNAUDITED)
                 
    Three Months Ended  
    June 30,  
(In thousands)   2009     2008  
            (As Adjusted)  
 
                
Net loss
   $ (12,396 )   $ (60,036 )
Plus:
                
Interest expense, net
     174       7  
Other income, net
     (471 )     (238 )
Income tax expense (benefit)
     15       (5,162 )
Depreciation and amortization expense (a)
     6,328       6,911  
Income from discontinued operations, net of tax
     (11 )     (38 )
 
            
Adjusted EBITDA
     (6,361 )     (58,556 )
Asset impairment charges
     —       33,623  
Restructuring charges
     14       23,063  
 
            
Adjusted EBITDA excluding asset impairment and restructuring charges
   $ (6,347 )   $ (1,870 )
 
            
 
(a)   Depreciation and amortization expense excludes amortization of deferred finance costs, totaling $88 and $56 for the three months ended June 30, 2009 and 2008, respectively, as such costs are already included in interest expense, net.
AGILYSYS, INC. • 28925 FOUNTAIN PARKWAY • SOLON, OH 44139 • WWW.AGILYSYS.COM