Agilysys Reports Unaudited Fiscal 2013 Second-Quarter Results

Agilysys Reports Unaudited Fiscal 2013 Second-Quarter Results

Continued execution of the strategy results in second-quarter adjusted net income of $0.06 per diluted share and a GAAP loss of $0.02 per share

ATLANTA--(BUSINESS WIRE)-- Agilysys, Inc. , a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality and retail industries, today announced unaudited financial results for the fiscal 2013 second quarter ended September 30, 2012.


Summary Fiscal 2013 Second-Quarter Unaudited Financial Results From Continuing Operations

  • Total net revenue increased 3% to $54.2 million, compared with $52.7 million in last year's second quarter. This increase was led by the Hospitality segment, which was up 9% year over year, while the Retail segment was down 1%.

  • Gross margin improved to 40.7% from 39.9% in the same prior-year period.

  • Adjusted operating income (excluding stock-based compensation, amortization of acquisition-related intangibles and other one-time items) increased to $1.2 million, reversing the prior-year adjusted operating loss of $0.7 million. (See reconciliation below.)

  • Adjusted net income (non-GAAP) from continuing operations grew to $1.3 million, or $0.06 per diluted share, compared with the adjusted net loss of $1.6 million, or ($0.07) per share, last year. (See reconciliation below.)

  • GAAP net loss narrowed to $0.4 million, or ($0.02) per share, from the loss of $3.6 million, or ($0.16) per share, for the same period in the prior fiscal year.

  • Operating results from the former Technology Solutions Group (TSG), including the gain on sale, as well as its assets and liabilities, are reported as components of discontinued operations during fiscal 2012.

"Our teams, customers and markets have responded extremely well to the business strategy we began implementing more than a year ago. The strategy of focusing on higher-margin products and emphasizing recurring revenue contracts continues to result in positive operational results," commented President and CEO James Dennedy. "Equally important is that we have continued to make significant investments in product development while effectively managing our operating expense to drive improving profitability."

Summary Fiscal 2013 First-Half Unaudited Financial Results From Continuing Operations

  • Total net revenue increased modestly to $105.9 million, compared with $105.3 million in last year's first half. The Hospitality segment grew 11% year over year, while the Retail segment declined 7%.

  • Gross profit increased 9% to $42.5 million, compared with $39.1 million, due to gross margin expansion of 300 basis points to 40.1%, from 37.1% in the first half of the prior fiscal year.

  • Adjusted operating income (excluding stock-based compensation, amortization of acquisition-related intangibles and other one-time items) increased sharply to $2.2 million, reversing the prior-year adjusted operating loss of $3.2 million. (See reconciliation below.)

  • Adjusted net income (non-GAAP) from continuing operations grew to $2.0 million, or $0.09 per diluted share, compared with the adjusted net loss of $4.4 million, or ($0.19) per share, in fiscal 2012's first half. (See reconciliation below.)

  • GAAP net loss narrowed to $2.1 million, or ($0.10) per share, from the loss of $10.4 million, or ($0.46) per share, for the same period in the prior fiscal year.

Chief Financial Officer Robb Ellis added, "We are very pleased with our first-half results and the momentum the Company is gaining in the markets we serve. Early last year, we initiated a strategy to re-focus our business, and our financial results validate the pursuit of this strategy. Our confidence and visibility in meeting previously disclosed guidance continues to increase and, as such, we are reaffirming our previously stated guidance."

Outlook

The Company is reaffirming previous guidance for fiscal 2013 as follows:

Full-year consolidated revenue is expected to be between $208 million and $211 million. Adjusted operating income is anticipated to be in a range of $3.5 million to $4.5 million, reversing the $7.9 million adjusted operating loss in fiscal 2012. Full-year adjusted net income per share is anticipated to improve from the $0.39 loss reported for fiscal 2012 to positive adjusted net income per diluted share of between $0.16 and $0.21 in the current year.

Conference Call Information

A conference call will be held today, Oct. 25, 2012, at 8:30 a.m. ET to review unaudited second-quarter fiscal 2013 results. To participate in the live call, dial 877-317-6789 (International: 412-317-6789) 10 minutes before the call begins, or 8:20 a.m. ET. The conference ID is 10019256. 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 website for approximately 30 days.

To be added to Agilysys' email distribution list, please click on the link below:

http://www.agilysys.com/home/InvestorRelations/

Forward-Looking Language

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. 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, 2012. 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 and adjusted cash flow from 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), and adjusted cash flow from operations to the comparable GAAP measures.

Guidance

Guidance figures are based on the company's current estimates and are subject to change by factors outside the company's control. While this guidance is provided to give investors insight into expectations for the period, actual results may vary.

About Agilysys

Agilysys is a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality and retail industries. The company specializes in market-leading point-of-sale, property management, inventory and procurement, and mobile and wireless solutions that are designed to streamline operations, improve efficiency and enhance the consumer's experience. Agilysys serves casinos, resorts, hotels, foodservice venues, stadiums, cruise lines, grocery stores, convenience stores, general and specialty retail businesses and partners. Agilysys operates extensively throughout North America, with additional sales and support offices in the United Kingdom, Singapore and Hong Kong. For more information, visit www.agilysys.com.

AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share data)

Three Months Ended

Six Months Ended

September 30,

September 30,

2012

2011

2012

2011

Net revenue:

Products

$

24,934

$

26,708

$

49,052

$

54,662

Support, maintenance and subscription services

19,506

17,904

37,942

35,429

Professional services

9,806

8,073

18,898

15,185

Total net revenue

54,246

52,685

105,892

105,276

Cost of goods sold:

Products

19,024

20,297

37,883

43,605

Support, maintenance and subscription services

7,069

6,579

13,868

13,047

Professional services

6,072

4,810

11,682

9,537

Total cost of goods sold

32,165

31,686

63,433

66,189

Gross profit

22,081

20,999

42,459

39,087

Operating expenses:

Product development

9,372

7,711

15,657

15,656

Sales and marketing

4,693

5,897

10,614

11,460

General and administrative

6,592

7,494

13,401

16,147

Depreciation of fixed assets

691

1,102

1,391

2,114

Amortization of intangibles

842

937

1,722

1,868

Asset impairment and related charges

-

-

208

-

Restructuring and one-time charges

430

3,688

1,555

6,034

Operating loss

(539

)

(5,830

)

(2,089

)

(14,192

)

Other (income) expenses :

Interest income

(4

)

(17

)

(8

)

(50

)

Interest expense

18

539

169

877

Other expenses (income), net

(161

)

308

(18

)

271

Loss before income taxes

(392

)

(6,660

)

(2,232

)

(15,290

)

Income tax benefit

(41

)

(3,106

)

(88

)

(4,857

)

Loss from continuing operations

(351

)

(3,554

)

(2,144

)

(10,433

)

Income from discontinued operations, net of taxes

-

10,487

11,138

Net (loss) income

$

(351

)

$

6,933

$

(2,144

)

$

705

Net (loss) income per share - basic and diluted:

Loss from continuing operations

$

(0.02

)

$

(0.16

)

$

(0.10

)

$

(0.46

)

Income from discontinued operations

-

0.46

-

0.49

Net (loss) income per share

$

(0.02

)

$

0.30

$

(0.10

)

$

0.03

Weighted average shares outstanding:

Basic and diluted

21,883

22,853

21,860

22,903

AGILYSYS, INC.

BUSINESS SEGMENT INFORMATION (UNAUDITED)

Three Months Ended September 30, 2012

Three Months Ended September 30, 2011

Reportable Segments

Corporate/

Reportable Segments

Corporate/

(In thousands)

HSG

RSG

Other

Consolidated

HSG

RSG

Other

Consolidated

Net revenue:

Products

$

7,281

$

17,653

$

-

$

24,934

$

7,235

$

19,473

$

-

$

26,708

Support, maintenance and subscription services

12,958

6,548

-

19,506

11,411

6,493

-

17,904

Professional services

3,994

5,812

-

9,806

3,630

4,443

-

8,073

Total net revenue

$

24,233

$

30,013

$

-

$

54,246

$

22,276

$

30,409

$

-

$

52,685

Gross profit

$

15,857

$

6,224

$

-

$

22,081

$

14,233

$

6,766

$

-

$

20,999

Gross profit margin

65.4

%

20.7

%

40.7

%

63.9

%

22.2

%

39.9

%

Operating income (loss)

$

3,212

$

2,124

$

(5,875

)

$

(539

)

$

1,189

$

1,921

$

(8,940

)

$

(5,830

)

Interest expense, net

-

-

14

14

-

-

522

522

Other (income) expense, net

-

-

(161

)

(161

)

-