SofTech Announces Q2 Fiscal Year 2013 Operating Results

SofTech Announces Q2 Fiscal Year 2013 Operating Results

Solid Q2 Revenue Performance with Increase of Nearly 4%; Q2'13 EPS of $.25 vs. $.19 Prior Year; YTD'13 EPS of $.43 vs. $.24 Prior Year

LOWELL, Mass.--(BUSINESS WIRE)-- SofTech, Inc. (OTCQB: SOFT),a proven provider of Product Lifecycle Management (PLM) solutions today announced its second quarter fiscal 2013 operating results. Revenue for the three months ended November 30, 2012 was $1.772 million, an increase of 3.9% from the same period in the prior fiscal year. Net income was $252,000 or $.25 per share for the three months ended November 30, 2012, an increase of nearly 35% from the net income of $187,000 or $.19 for the same period in the prior fiscal year.


Revenue for the six months ended November 30, 2012 was $3.342 million, an increase of 2.2% from the same period in the prior fiscal year. Net income increased 77% to $425,000 or $.43 per share for the six months ended November 30, 2012, from net income of $240,000 or $.24 for the same period in the prior fiscal year.

The current quarter revenue included $100,000 of royalties on our previously announced sale of patents. The same period in the prior year included approximately $100,000 of maintenance revenue from a large customer for whom the services were delivered over the previous eleven months but not recognized until Q2 fiscal 2012.

"This was our best quarter since the March 2011 Recapitalization Transaction. Our CADRA product line revenue was 10% higher than the same period last year and represented the best quarterly performance in four years while the pipeline of opportunities for ProductCenter and for our new Connector technology offerings strengthened," said Joe Mullaney, CEO. "We have now completed six full fiscal quarters since the Recapitalization Transaction and during that time period the average quarterly license revenue for our technology was 22% higher than the average quarterly license revenue during the two year period prior to the aforementioned transaction," he added.

"Our cash levels are lowest at the end of the calendar year just before the majority of our annual maintenance contracts renew in the January through May time period. The recently announced sale of 45,000 common shares at $5.00 per share helped strengthen our balance sheet and will provide additional working capital," Mullaney added.

FINANCIAL STATEMENTS

The Statement of Operations for the three and six month periods ended November 30, 2012 compared to the same periods in the prior fiscal years are presented below. A reconciliation of Net income to EBITDA, a non-GAAP financial measure, is also provided.

Statements of Operations

(in thousands, except % and per share data)

For the three months

ended November 30,

Change

2012

2011

$

%

Product revenue

$

478

$

333

$

145

43.5

%

Service revenue

1,194

1,372

(178

)

-13.0

%

Royalties on sale of patents

100

-

100

-

Total revenue

1,772

1,705

67

3.9

%

Cost of sales

347

352

(5

)

-1.4

%

Gross margin

1,425

1,353

72

5.3

%

Gross margin %

80.4

%

79.4

%

R&D

323

337

(14

)

-4.2

%

SG&A

789

718

71

9.9

%

Operating income

313

298

15

5.0

%

Interest expense

69

85

(16

)

-18.8

%

Other (income) expense

(8

)

26

(34

)

-130.8

%

Income from operations before income taxes

252

187

65

34.8

%

Provision for income taxes

-

-

-

-

Net income

252

187

65

34.8

%

Weighted average shares outstanding

995

995

-

-

Basic and diluted net income per share:

$

0.25

$

0.19

$

0.07

34.8

%

Reconciliation of Net income to EBITDA:

Net income

$

252

$

187

$

65

34.8

%

Plus interest expense

69

85

(16

)

-18.8

%

Plus tax expense

-

-

-

-

Plus Depreciation and amortization

56

39

17

43.6

%

EBITDA

$

377

$

311

$

66

21.2

%

Statements of Operations

(in thousands, except % and per share data)

For the six months

ended November 30,

Change

2012

2011

$

%

Product revenue

$

693

$

636

$

57

9.0

%

Service revenue

2,359

2,633

(274

)

-10.4

%

Royalties on sale of patents

290

-

290

-

Total revenue

3,342

3,269

73

2.2

%

Cost of sales

680

700

(20

)

-2.9

%

Gross margin

2,662

2,569

93

3.6

%

Gross margin %

79.7

%

78.6

%

R&D

567

720

(153

)

-21.3

%

SG&A

1,547

1,427

120

8.4

%

Operating income

548

422

126

29.9

%

Interest expense

134

176

(42

)

-23.9

%

Other (income) expense

(11

)

6

(17

)

-283.3

%

Income from operations before income taxes

425

240

185

77.1

%

Provision for income taxes

-

-

-

-

Net income

425

240

185

77.1

%

Weighted average shares outstanding

995

995

-

-

Basic and diluted net income per share:

$

0.43

$

0.24

$

0.19

77.1

%

Reconciliation of Net income to EBITDA

Net income

$

425

$

240

185

77.1

%

Plus interest expense

134

176

(42

)

-17.5

%

Plus tax expense

-

-

-

-

Plus Depreciation and amortization

106

79

27

34.2

%

EBITDA

$

665

$

495

170

34.3

%

The Balance Sheets as of November 30, 2012 and our fiscal year end May 31, 2012 are presented below.

Balance Sheets

(in thousands)

As of

November 30,

May 31,

2012

2012

Cash

$

109

$

595