Quarterly Net Income from Continuing Operations Improves Sharply to $2.9 Million, or $0.12 Per Diluted Share, on 9% Lower Revenue
Revenue Increases 20% Sequentially
Debt Free With $48.2 Million Cash on Hand at Sept. 30 vs $36.2 Million at Fiscal Year-End
To view the full press release and financial statements in a PDF format, click here.
CLEVELAND—Nov. 4, 2009—Agilysys, Inc. (Nasdaq: AGYS), a leading provider of innovative IT solutions, today announced unaudited financial results for the fiscal 2010 second quarter and first half ended September 30, 2009.
Second-Quarter Unaudited Results of Operations
Revenue declined 9.0% to $156.0 million, compared with $171.4 million in the second quarter of fiscal 2009. Hardware sales declined 3.5%, services declined 32.6% and software sales increased 14.0%. Consolidated revenues rebounded 19.8% from the $130.2 million reported in the first quarter, due to double-digit growth in hardware, software and services.
Cost-cutting initiatives and lower acquisition-related intangible amortization drove selling, general and administrative (SG&A) expense down $12.4 million, or 23.9%, to $39.6 million. The Company recently executed an additional $9 million in annual savings of which approximately $4 million will be realized in the second half of fiscal 2010.
The Company’s operating income, excluding restructuring and asset impairment charges (“Charges”), improved $6.2 million to $4.3 million from the operating loss of $1.9 million last year. Lower sales and gross profit year-over-year were more than offset by lower SG&A expense. Adjusted EBITDA (operating income plus depreciation and amortization), excluding Charges, increased 44.9% to $7.4 million for the quarter, compared with $5.1 million a year ago.
Agilysys reported net income from continuing operations of $2.9 million, or $0.12 per diluted share, a significant increase from the loss of $105.3 million, or a loss of $4.66 per share, recorded in the previous year.
“We are pleased to report strong sequential growth in sales and positive net earnings for the quarter. The improvement in profitability reflects the tangible benefits realized from our cost-saving efforts,” said Martin Ellis, President and Chief Executive Officer. “In addition to improved bottom-line performance, our order pipeline has started to show modest recovery from the depressed levels of the past several quarters.”
Fiscal 2010 First-Half Unaudited Results of Operations
First-half 2010 revenue was $286.2 million compared with revenue of $351.2 million in the first six months of 2009. Revenue in the first half of fiscal 2010 decreased 18.5% reflecting lower sales in each of the company’s three business segments. Hardware declined 13.6%, services declined 36.3% and software decreased 8.2%.
SG&A expense declined $23.7 million, or 22.0%, to $84.1 million, largely due to cost reductions. Approximately $44 million in annual costs have been eliminated since the first quarter of fiscal year 2009 when the company began aggressively reducing SG&A expenses to align cost structure with deteriorating market demand. Adjusted EBITDA, excluding Charges, was $1.1 million for the six-month period, versus $3.3 million in the comparable period of fiscal 2009.
For the first six months of fiscal 2010, the company reported a net loss from continuing operations of $9.5 million, or a loss of $0.42 per share, compared with a net loss from continuing operations of $165.4 million, or a loss of $7.33 per share, in the first six months of fiscal 2009.
The year-over-year declines in revenue have moderated and while some economic indicators have improved, market conditions still reflect uncertainty regarding the overall business environment and demand for IT products. Ellis commented: “The business is stabilizing, our pipeline has improved, and we expect to see a seasonal increase in sales in our third quarter ending December. As we look to the balance of fiscal 2010, we plan to continue to focus on those items under our control that can help produce tangible improvements in results. Near-term, we are optimistic regarding our outlook for the third quarter of the fiscal year and expect financial performance in second half to improve versus the first half.”
Conference Call Information
A conference call will be held at 11:00 a.m. ET on November 4, 2009 to review unaudited second-quarter and first-half fiscal 2010 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. In addition, a replay of the call will be archived on the Web site. If you are unable to participate during the live webcast, the call will be archived at the Investor Relations section of www.agilysys.com.
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: www.agilysys.com.
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