Agilysys, Inc. News & Events

• 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

To view the full press release and financial statements in a PDF format, click here.

CLEVELAND, Aug. 5 -- 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.

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.

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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.

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