Alpharetta, GA – May 14, 2014 – Agilysys, Inc. (Nasdaq: AGYS), a leading provider of innovative hospitality software solutions and services, today reported operating results for its fiscal 2014 fourth quarter and full year ended March 31, 2014.
On March 31, 2014, the Company announced the sale of its United Kingdom business entity to U.K.-based Verteda Limited. All financial results presented below reflect the classification of the Company’s former EMEA operations as a discontinued operation. In addition, all financial results presented below reflect the classification of the Company’s former Retail Solutions Group (“RSG”) as a discontinued operation following the sale of this business in July 2013.
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Summary of Fiscal 2014 Fourth Quarter Financial Results
- Total net revenue increased $5.7 million, or 26%, to $27.8 million, compared to total net revenue of $22.1 million in the comparable prior-year period.
- Recurring revenues (which are comprised of support, maintenance and subscription services) for the quarter were $14.1 million, an increase of 11% over the same period in fiscal 2013.
- Gross margin was 60% in the fiscal 2014 fourth quarter, compared to 67% in the prior-year period.
- Adjusted operating income (non-GAAP) from continuing operations (excluding stock-based compensation, amortization of intangibles and other one-time items) increased $1.6 million year over year to $1.1 million from an adjusted operating loss from continuing operations of $(0.5) million in the year-ago period (see reconciliation below).
- Adjusted income (non-GAAP) from continuing operations grew $1.4 million to $1.3 million, or $0.06 per diluted share, compared with an adjusted net loss of $(0.1) million, or $(0.01) per share, last year (see reconciliation below).
- Net loss in the period was $(4.1) million, or $(0.18) per diluted share, inclusive of a net loss from discontinued operations of $(2.9) million, or $(0.13) per diluted share, compared to net income of $0.3 million, or $0.02, in the prior-year period, which included net income from discontinued operations of $2.0 million, or $0.09 per diluted share.
James Dennedy, President and CEO of Agilysys, commented, “The growth in our fiscal 2014 fourth quarter and full year financial results reflect notable business wins as we continue to advance our innovative solutions for the hospitality industry. Our strategy emphasizes strong capital discipline and prioritizes delivering solutions and service that help our customers achieve their goals of enhancing the guest service experience and maximizing customer wallet share across various guest engagement points. We believe aligning our solutions with our customers’ business needs best positions Agilysys to continue generating above market revenue growth with peer leading gross margins.
“Looking forward, our investments in the business are focused on creating value for our customers while we simultaneously focus on further optimizing our capital and operating efficiency. Our next generation platform recently began private beta trials with certain members of our Customer Advisory Board and we believe we remain on track to generate initial revenue from this investment late in our fiscal 2015. With new products that deliver increased value to the markets we serve, an improving outlook for the overall hospitality industry, a streamlined business and our success in deploying capital in areas that generate attractive returns, we have a solid foundation to create new shareholder value.”
Summary of Fiscal 2014 Full Year Financial Results
- Total net revenue for the year increased $7.3 million, or 8%, to $101.3 million, compared with $94.0 million last year.
- Recurring revenues (which are comprised of support, maintenance and subscription services) for the full year were $53.2 million, an increase of 8% over fiscal 2013.
- Gross margin of 63% in fiscal 2014 compares to gross margin of 61% in fiscal 2013.
- Adjusted operating income (non-GAAP) from continuing operations (excluding stock-based compensation, amortization of intangibles and other one-time items) for fiscal 2014 increased year over year by $5.2 million to $4.1 million, from an adjusted operating loss of $(1.1) million in fiscal 2013 (see reconciliation below).
- Adjusted income (non-GAAP) from continuing operations grew to $4.3 million, or $0.19 per diluted share, compared with an adjusted net loss of $(1.2) million, or $(0.06) per share, in fiscal 2013 (see reconciliation below).
- Net income was $15.0 million, or $0.68 per diluted share, in fiscal 2014 inclusive of net income from discontinued operations of $18.4 million, or $0.83 per diluted share, compared with a net loss of $(1.3) million, or $(0.06) per share, in fiscal 2013 inclusive of net income of $4.9 million, or $0.22 per diluted share, from discontinued operations.
Janine Seebeck, Chief Financial Officer, added, “The significant year-over-year improvements in revenue and adjusted operating income generated in the fiscal 2014 fourth quarter were the result of healthy growth in product sales and gains in recurring revenue, combined with our continued prudent management of operating expenses. The continued growth in recurring revenues, which comprised 53% of total fiscal 2014 revenue, and the 11% year-over-over year increase in gross profit for the full year reflect the strength of our business and provide confidence for continued, sustainable long-term growth. Further, with approximately $100 million in cash and no debt, we have the financial flexibility to support our growth initiatives, including investments in the development of our next generation platform, that we believe will help expand our total addressable market.
“We expect to continue to achieve above market revenue growth in fiscal 2015 and to generate break-even to modestly positive adjusted operating income for the full year, even as we accelerate our investments in new product development to achieve our strategic initiatives.”
Unaudited pro forma condensed consolidated statements of operations for the three month periods ended June 30, 2013, September 30, 2013, December 31, 2013 and March 31, 2014, as well as for the fiscal year ended March 31, 2014 are provided at the end of this press release. These statements of operations give effect to the sale of the Company’s EMEA operations and adjustments as if they had occurred on April 1, 2013, and carried forward through the latest period. Unaudited pro forma condensed consolidated statements of operations for the three month periods ended June 30, 2012, September 30, 2012, December 31, 2012 and March 31, 2013, as well as for the fiscal year ended March 31, 2013 are provided at the end of this press release. These statements of operations give effect to the sale of the Company’s EMEA operations and Retail Solutions Group and adjustments as if they had occurred on April 1, 2012, and carried forward through the latest period. The unaudited pro forma condensed consolidated statements of operations should be read in conjunction with the historical audited consolidated financial statements and notes thereto included in the Company’s 2013 Annual Report and in the Company’s 2014 Annual Report when filed.
Agilysys is hosting a conference call and webcast today, May 14, 2014, beginning at 4:30 p.m. ET. Both the call and the webcast are open to the public. The conference call number is 224-357-2393 (domestic or international). Please call five minutes prior to the presentation to ensure that you are connected.
Interested parties may also access the conference call live on the Internet at https://www.agilysys.com/company/investor-relations/events-presentations. Approximately two hours after the call has concluded, an archived version of the webcast will be available for replay at the same location.
This press release and other publicly available documents, including the documents incorporated herein and therein by reference, contain, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods, and include the statements in the second paragraph following the bullets under the heading “Summary of Fiscal 2014 Fourth Quarter Financial Results” and the statements in the second paragraph following the bullets under the heading “Summary of Fiscal 2014 Full Year Financial Results” above. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management’s current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the risk factors set forth in Item 1A of the company’s Annual Report for the fiscal year ended March 31, 2013. Copies are available from the SEC or the Agilysys website. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.
Use of Non-GAAP Financial Information
To supplement the unaudited condensed consolidated financial statements presented in accordance with U.S. GAAP in this press release, certain non-GAAP financial measures as defined by the SEC rules are used. These non-GAAP financial measures include adjusted operating income (loss) from continuing operations, adjusted net income (loss), adjusted net income (loss) per share from continuing operations and adjusted cash flow from continuing operations. Management believes that such information can enhance investors' understanding of the company's ongoing operations. See the accompanying tables below for reconciliations of adjusted operating income (loss) from continuing operations and adjusted net income (loss) from continuing operations, and adjusted cash flow from continuing operations to the comparable GAAP measures.
Agilysys is a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality industry. The company specializes in market-leading point-of-sale, property management, inventory & procurement, workforce management and mobile & wireless solutions that are designed to streamline operations, improve efficiency and enhance the guest experience. Agilysys serves casinos, resorts, hotels, foodservice venues, stadiums and cruise lines. Agilysys operates extensively throughout North America, Europe and Asia, with corporate services located in Alpharetta, GA, and offices in Singapore, Hong Kong and Malaysia. For more information, visit www.agilysys.com.
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