Accelrys Announces Fourth Quarter and Full Year 2012 Results
Accelrys Announces Fourth Quarter and Full Year 2012 Results
Non-GAAP Revenue up 16% to $47.5 million in the Fourth Quarter
SAN DIEGO--(BUSINESS WIRE)-- Accelrys, Inc. (NAS: ACCL) today reported financial results for the fiscal quarter and year ended December 31, 2012, including a 16% year-over-year increase in Non-GAAP revenue in the fourth quarter.
Non-GAAP revenue for the quarter ended December 31, 2012 increased $6.7 million to $47.5 million from $40.8 million for the same quarter of the previous year, or an increase of 16%. Non-GAAP revenue for the year ended December 31, 2012 increased $19.3 million to $174.3 million from $155.0 million for the year ended December 31, 2011, or an increase of 12%.
Non-GAAP net income was $4.5 million, or $0.08 per diluted share, for the quarter ended December 31, 2012 compared to non-GAAP net income of $4.6 million, or $0.08 per diluted share, for the same quarter of the previous year. Non-GAAP net income was $19.6 million, or $0.35 per diluted share, for the year ended December 31, 2012 compared to non-GAAP net income of $19.0 million, or $0.34 per diluted share, for the year ended December 31, 2011.
GAAP revenue for the quarter ended December 31, 2012 increased $4.4 million to $44.2 million from $39.8 million for the same quarter of the previous year, or an increase of 11%. GAAP revenue for the year ended December 31, 2012 increased $18.2 million to $162.5 million from $144.3 million for the year ended December 31, 2011, or an increase of 13%.
GAAP net loss was $(8.2) million, or $(0.15) per diluted share, for the quarter ended December 31, 2012 compared to GAAP net income of $14.2 million, or $0.25 per diluted share, for the same quarter of the previous year. GAAP net loss was $(10.4) million, or $(0.19) per diluted share, for the year ended December 31, 2012 compared to GAAP net income of $1.8 million, or $0.03 per diluted share, for the same period of the previous year.
"We are pleased with our performance in both 2012 and against the three-year plan we developed for our business following our 2010 merger with Symyx. We achieved both market momentum and acknowledgment of our position as the leading provider of scientific innovation lifecycle management software," said Max Carnecchia, President and CEO. "Performance in the fourth quarter of 2012 was strong as our revenues grew 16% over the prior year. In addition, we completed and are integrating three acquisitions key to our strategy of optimizing the lab-to-market value chain. We remain enthusiastic about the market opportunity in front of us and in our ability to continue to grow orders, revenue and profits both organically and inorganically in 2013."
Recent Business Highlights:
Completed three acquisitions that add important domain expertise and technology capabilities that further our strategy to optimize the innovation lifecycle from research through commercialization.
HEOS, a secure Cloud-based information management workspace for scientific collaboration, accelerates and streamlines collaborative drug-discovery.
Aegis Analytical Corporation (Aegis), the leading provider of process management informatics software, further expands the footprint in downstream operation with solutions that help aggregate, contextualize and analyze manufacturing, quality and product development data.
Vialis AG, a leading systems integrator with deep experience implementing and supporting paperless laboratory solutions, further strengthening Accelrys' position in the laboratory informatics software market.
Delivered new product releases in the core product lines and significantly progressed the integration roadmap for the solutions acquired into the portfolio, including:
New Accelrys Enterprise Platform (AEP), the industry's first scientifically aware, service-oriented architecture (SOA) that enables integration and deployment of broad scientific solutions (Platform)
New biology capabilities from screening through pre-clinical development in the Accelrys Electronic Laboratory Notebook (Enterprise Lab Management)
New Process Management and Compliance suite, a unified approach to product development and process management which combines the capabilities of the Accelrys ELN, Accelrys Lab Execution System (LES), Accelrys Electronic Batch Records (EBR) and the Accelrys Enterprise Platform (Enterprise Lab Management)
New integration between Accelrys Materials Studio and AEP, enabling computational scientists to collaborate across the enterprise; deepened biotherapeutics capabilities in Accelrys Discovery Studio (Modeling and Simulation)
Non-GAAP results for the quarter and year ended December 31, 2012 exclude the impact of business combination activities associated with the acquisitions of Aegis on October 23, 2012 and Contur Industry Holding AB and Contur Software AB (collectively, "Contur") and VelQuest Corporation ("VelQuest"), both in 2011, and the merger with Symyx Technologies, Inc. ("Symyx") in 2010, and other nonrecurring items.
Non-GAAP revenue, non-GAAP operating income, and non-GAAP net income for the quarter and year ended December 31, 2012 include fair value adjustments to deferred revenue ($3.3 million and $11.8 million, respectively). Non-GAAP operating income for such three and twelve-month periods also excludes stock-based compensation expense ($2.5 million and $8.1 million, respectively), business consolidation, transaction and restructuring costs ($6.6 million and $7.8 million, respectively) and purchased intangible asset amortization ($5.2 million and $17.8 million, respectively), offset by an adjustment to include acquisition-related cost of revenue related to VelQuest non-GAAP revenue recognized during such periods ($0.8 million and $1.9 million, respectively). Non-GAAP net income for the quarter and year ended December 31, 2012 also excludes additional purchased intangible asset amortization ($0.4 million and $1.7 million, respectively) offset by removing the impact of the amortization of note receivable discount related to our promissory note receivable from Intermolecular, Inc. ("Intermolecular") ($0.3 million and $0.9 million, respectively). In addition to the aforementioned items, non-GAAP net income for the year ended December 31, 2012 includes fair value adjustments to deferred royalty income of $0.6 million and excludes $2.1 million in other non-operating income resulting from our real estate related activities.
Calendar Year 2013 Outlook
For the year ending December 31, 2013, the Company expects non-GAAP revenue to be between $185 and $190 million, and non-GAAP diluted earnings per share to be between $0.36 and $0.39 per diluted share on fully diluted weighted average shares outstanding of 56.6 million and using an effective tax rate of 40%.
Non-GAAP Financial Measures:
This press release describes financial measures for revenue, operating income, net income, net income per diluted share and free cash flow that exclude deferred revenue fair value adjustments, acquisition-related cost of revenue, business consolidation, transaction and restructuring costs, stock-based compensation expense, purchased intangible asset amortization, royalty income fair value adjustments, amortization of note receivable discount, gain on sale of real estate, gain on sale of equity investments, sale of intangible assets, other non-operating expense and income tax adjustments. These financial measures are not calculated in accordance with generally accepted accounting principles (GAAP) and are not based on any comprehensive set of accounting rules or principles.
Management believes these non-GAAP financial measures provide a useful measure of the Company's operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Company's ongoing operating performance. Further, management and the Board of Directors utilize these measures, in addition to GAAP measures, when evaluating and comparing the Company's operating performance against internal financial forecasts and budgets. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. In addition, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
For additional information on the items excluded by the Company from its non-GAAP financial measures please refer to the Form 8-K regarding this release that was furnished today to the Securities and Exchange Commission.
The following table contains a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures (unaudited, amounts in thousands, except per share amounts, including footnotes):
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
GAAP revenue | $ | 44,194 | $ | 39,762 | $ | 162,526 | $ | 144,339 | ||||||||
Deferred revenue fair value adjustment1 | 3,332 | 1,081 | 11,758 | 10,652 | ||||||||||||
Non-GAAP revenue | $ | 47,526 | $ | 40,843 | $ | 174,284 | $ | 154,991 | ||||||||
GAAP operating loss | (11,203 | ) | (2,926 | ) | (19,054 | ) | (19,701 | ) | ||||||||
Deferred revenue fair value adjustment1 | 3,332 | 1,081 | 11,758 | 10,652 | ||||||||||||
Acquisition-related cost of revenue2 | (762 | ) | — | (1,921 | ) | — | ||||||||||
Business consolidation, transaction and restructuring costs3 | 6,583 | 1,538 | 7,845 | 7,772 | ||||||||||||
Stock-based compensation expense4 | 2,505 | 1,424 | 8,115 | 5,572 | ||||||||||||
Purchased intangible asset amortization5 | 5,199 | 4,638 | 17,782 | 18,239 | ||||||||||||
Non-GAAP operating income | $ | 5,654 | $ | 5,755 | $ | 24,525 | $ | 22,534 | ||||||||
Depreciation expense | 872 | 923 | 3,325 | 3,800 | ||||||||||||
Cash received for interest and royalty income | 2,002 | 2,269 | 9,265 | 9,574 | ||||||||||||
Cash (paid) for income taxes, net of refunds received | (198 | ) | (153 | ) | (2,690 | ) | 1,182 | |||||||||
Capital expenditures | (3,043 | ) | (934 | ) | (6,332 | ) | (3,908 | ) | ||||||||
Non-GAAP free cash flow | 5,287 | 7,860 | 28,093 | 33,182 | ||||||||||||
GAAP net income (loss) | $ | (8,229 | ) | $ | 14,205 | $ | (10,402 | ) | $ | 1,765 | ||||||
Deferred revenue fair value adjustment1 | 3,332 | 1,081 | 11,758 | 10,652 | ||||||||||||
Acquisition-related cost of revenue2 | (762 | ) | — | (1,921 | ) | — | ||||||||||
Business consolidation, transaction and restructuring costs 3 | 6,583 | 1,538 | 7,845 | 7,772 | ||||||||||||
Stock-based compensation expense4 | 2,505 | 1,424 | 8,115 | 5,572 | ||||||||||||
Purchased intangible asset amortization5 | 5,623 | 5,230 | 19,477 | 20,604 | ||||||||||||
Royalty income fair value adjustment6 | — | 200 | 600 | 803 | ||||||||||||
Amortization of note receivable discount7 | (270 | ) | — | (932 | ) | — | ||||||||||
Gain on sale of real estate8 | — | — | (2,744 | ) | — | |||||||||||
Gain on sale of equity method investment9 | — | (18,970 | ) | — | (18,970 | ) | ||||||||||
Sale of intangible assets10 | — | 4,303 | — | 4,303 | ||||||||||||
Other non-operating expense11 | — | — | 670 | — | ||||||||||||
Income tax12 | (4,239 | ) | (4,456 | ) | (12,855 | ) | (13,454 | ) | ||||||||
Non-GAAP net income | $ | 4,543 | $ | 4,555 | $ | 19,611 | $ | 19,047 | ||||||||
GAAP diluted net income (loss) per share | $ | (0.15 | ) | $ | 0.25 | $ | (0.19 | ) | $ | 0.03 | ||||||
Deferred revenue fair value adjustment1 | 0.06 | 0.02 | 0.21 | 0.19 | ||||||||||||
Acquisition-related cost of revenue2 | (0.01 | ) | — | (0.03 | ) | — | ||||||||||
Business consolidation, transaction and restructuring costs3 | 0.12 | 0.03 | 0.14 | 0.14 | ||||||||||||
Stock-based compensation expense4 | 0.04 | 0.03 | 0.14 | 0.10 | ||||||||||||
Purchased intangible asset amortization5 | 0.10 | 0.09 | 0.34 | 0.37 | ||||||||||||
Royalty income fair value adjustment6 | — | — | 0.01 | 0.01 | ||||||||||||
Amortization of note receivable discount7 | — | — | (0.02 | ) | — | |||||||||||
Gain on sale of real estate8 | — | — | (0.05 | ) | — | |||||||||||
Gain on sale of equity method investment9 | — | (0.34 | ) | — | (0.34 | ) | ||||||||||
Sale of intangible assets10 | — | 0.08 | — | 0.08 | ||||||||||||
Other non-operating expense11 | — | — | 0.01 | — | ||||||||||||
Income tax12 | (0.07 | ) | (0.08 | ) | (0.23 | ) | (0.24 | ) | ||||||||
Non-GAAP diluted net income per share13 | $ | 0.08 | $ | 0.08 | $ | 0.35 | $ | 0.34 | ||||||||
Weighted average shares used to compute net income per share: | ||||||||||||||||
Basic | 55,713 | 55,587 | 55,696 | 55,489 | ||||||||||||
Diluted | 56,848 | 55,933 | 56,563 | 56,037 | ||||||||||||
1Deferred revenue fair value adjustment relates to our acquisitions of Aegis, VelQuest and Contur and our merger with Symyx, and adds back the impact of writing down the acquired historical deferred revenue to fair value as required by purchase accounting guidance.
2Acquisition-related cost of revenue relates to our acquisition of VelQuest, and adds back the impact of writing down the acquired deferred cost of revenue as required by purchase accounting guidance.
3Business consolidation, transaction and restructuring costs are included in the business consolidation, transaction and restructuring costs line in our consolidated statements of operations and consist of accounting, legal, litigation and other costs incurred in connection with our acquisition activities, including our merger with Symyx and acquisitions of Contur, VelQuest and Aegis, as well as integration costs incurred in connection with such transactions, including consultant and employee related costs incurred during integration and transition periods. Also included are contingent compensation costs relating to the Contur acquisition as well as lease obligation exit costs, facility closure costs and severance and other related costs incurred in connection with the various restructuring activities commenced by the Company.
4Stock-based compensation expense is included in our consolidated statements of operations as follows:
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Cost of revenue | $ | 262 | $ | 117 | $ | 755 | $ | 333 | |||||||
Product development | 517 | 313 | 1,763 | 1,136 | |||||||||||
Sales and marketing | 853 | 362 | 2,545 | 1,672 | |||||||||||
General and administrative | 867 | 620 | 3,093 | 2,428 | |||||||||||
Business consolidation, transaction and restructuring costs | 6 | 12 | (41 | ) | 3 | ||||||||||
Total stock-based compensation expense | $ | 2,505 | $ | 1,424 | $ | 8,115 | $ | 5,572 | |||||||
5Purchased intangible asset amortization is included in our consolidated statements of operations as follows:
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Amortization of completed technology | $ | 2,580 | $ | 2,135 | $ | 8,843 | $ | 8,393 | |||||||
Purchased intangible asset amortization | 2,619 | 2,503 | 8,939 | 9,846 | |||||||||||
Royalty and other income, net | 424 | 592 | 1,695 | 2,365 | |||||||||||
Total purchased intangible amortization expense | $ | 5,623 | $ | 5,230 | $ | 19,477 | $ | 20,604 | |||||||
6Royalty income fair value adjustment relates to our merger with Symyx, and adds back the impact of writing down deferred royalty income to fair value as required by purchase accounting guidance.
7Amortization of note receivable discount adjusts the amortization of the discount on our promissory note receivable from Intermolecular in connection with the sale of intellectual property in November 2011.
8Gain on sale of real estate relates to the sale of real property, comprised of land and an office building located in Santa Clara, California, which we sold in June 2012. This property was acquired as a result of our merger with Symyx and was not utilized in our ongoing operations.
9Gain on sale of equity investment reflects the gain recognized upon the sale of our investment in Intermolecular in November 2011.
10Sale of intangible asset reflects the write off of our cost basis in the intellectual property sold to Intermolecular in November 2011.
11Other non-operating expense relates to the write off in June 2012 of certain assets in connection with exiting the lease of a restructured facility net of other non-operating income.
12Income tax adjustments relate to adjusting our non-GAAP operating results to reflect an effective tax rate of 40% that would be applied if the Company was in a taxable income position and was not able to utilize its net operating loss carryforwards. The income tax adjustment also excludes any impact of a release of our valuation allowance against deferred tax assets.
13Earnings per share amounts for the three months and year ended December 31, 2012 do not add due to rounding.
Conference Call Details:
At 5:00 p.m. ET, February 26, 2013, Accelrys will conduct a conference call to discuss its financial results. To participate, please dial (866) 309-0459 (+ (937) 999-3232 outside the United States) and enter the access code, 88646167, approximately 15 minutes before the scheduled start of the call. The conference call will also be accessible live on the Investor Relations section of the Accelrys website at www.accelrys.com.
A replay of the conference call will be available online at www.accelrys.com and via telephone by dialing (855) 859-2056 (+1 (404) 537-3406 outside the United States) and entering access code, 88646167, beginning 8:00 p.m. ET on February 26, 2013, through 11:59 p.m. ET on April 26, 2013.
About Accelrys:
Accelrys, Inc. (NAS: ACCL) , a leading provider of scientific innovation lifecycle management software, supports industries and organizations that rely on scientific innovation to differentiate themselves. The industry-leading Accelrys Enterprise Platform provides a broad and flexible scientific solution optimized to integrate the diversity of science, experimental processes and information requirements across the
