[August 03, 2017] |
|
Agilysys Reports Record Quarterly Revenue of $33.9 Million for Fiscal 2018 First Quarter
Agilysys, Inc. (Nasdaq: AGYS), a global provider of
next-generation hospitality software solutions and services, today
reported operating results for its fiscal 2018 first quarter ended June
30, 2017.
Summary of Fiscal 2018 First Quarter Financial Results
-
Total net revenue was an all-time quarterly record $33.9 million,
compared to total net revenue of $31.0 million in the comparable
prior-year period.
-
Recurring revenues (which are comprised of support, maintenance and
subscription services) were $16.7 million, or 49% of total net
revenue, compared to $14.9 million, or 48% of total net revenue, for
the same period in fiscal 2017. SaaS (News - Alert) revenues increased 58% year over
year and comprised 29% of total recurring revenues, compared to 20% of
total recurring revenues in the first quarter of fiscal 2017.
-
Gross margin was 49.2% in the fiscal 2018 first quarter, compared to
52.3% in the prior-year period. The decrease in the Company's fiscal
2018 first quarter gross margin primarily reflects the previously
disclosed impact of the amortization of software development costs for
first generation versions of the Company's rGuest® solutions, which
achieved general availability in the first half of fiscal 2017. Gross
margin in the fiscal 2018 first quarter was also impacted by lower
gross profit margin for professional services revenue reflecting a
re-deployment of internal resources into billable functions under a
restructuring of the Company's professional services workforce into
teams which Agilysys believes will enable more customer-centric
services going forward.
-
Net loss in the fiscal 2018 first quarter was $(3.0) million, or
$(0.13) per diluted share, compared to a net loss of $(2.3) million,
or $(0.10) per diluted share, in the prior-year period.
-
Adjusted EBITDA (non-GAAP) was $1.6 million, compared to Adjusted
EBITDA of $0.4 million in the same period last year (see
reconciliation below).
-
Adjusted earnings from operations (non-GAAP) was $(3.5) million,
compared to Adjusted earnings from operations of $(3.2) million in the
prior-year period (see reconciliation below).
Ramesh Srinivasan, President and CEO of Agilysys, commented, "Fiscal
2018 is off to a good start as we generated our highest ever quarterly
revenue from continuing operations in the first quarter, while also
making solid progress on our growth and cost management initiatives.
Following a challenging end to the previous fiscal year, we are
continuing to successfully implement various strategic initiatives
targeting critical aspects of our business to transition Agilysys into a
customer-centric, engineering-driven, and product innovation focused
profitable company. In this regard, we continue to successfully
implement initiatives that will result in our becoming significantly
more cost effective and efficient in our execution. We also remain
committed to investing prudently in various areas to drive growth in the
business.
"We expect our overall financial performance will significantly improve
towards the latter part of the year as the progress we have made to date
against our operating initiatives strengthens our expectation that we
will achieve positive adjusted earnings from operations during the
fiscal 2018 fourth quarter. I am confident we are on the right path
towards transforming Agilysys into a larger player in the hospitality
software solutions market world-wide in a disciplined and profitable
manner."
Reiterates Fiscal 2018 Outlook
Agilysys today reiterated its guidance for fiscal 2018 full year revenue
of $136 million to $140 million, which represents growth of
approximately 7% to 10%. In addition, the Company continues to expect
that it will generate positive Adjusted Earnings from Operations
(non-GAAP measure) in the fourth quarter of fiscal 2018.
The Company defines adjusted earnings from operations as adjusted
EBITDA, less capital expenditures and capitalized software development
costs, which management believes is a meaningful measure of earnings and
provides insight to investors on the Company's overall profitability and
cash generation from core operations. Adjusted earnings from operations
includes costs for capitalized efforts while minimizing the seasonality
of the Company's cash flows due to timing of billing.
Tony Pritchett, Chief Financial Officer, commented, "Our financial
performance in the first quarter as well as our expectation for full
year revenue growth and ongoing focus on prudent expense management are
important factors that will continue to position Agilysys on a path to
profitability. We made important progress in the first quarter with
initiatives that will result in a lower overall spend rate as a
percentage of revenue and believe that the benefits from these
initiatives will accelerate as the year progresses. Combined with our
strong balance sheet, including over $43 million in cash and cash
equivalents and no debt, our strategies are positioning the Company to
unlock value for our shareholders."
2018 First Quarter Conference Call and Webcast
Agilysys is hosting a conference call and webcast today, August 3, 2017,
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); and the conference ID number is 52193940. 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 Agilysys
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.
Forward-Looking Language
This press release contains "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. Examples of forward-looking statements include, among
others, statements we make regarding guidance relating to revenue and
adjusted earnings from operations, and expected results of strategic and
operating initiatives, such as improvements in cost management and lower
spending rates.
Forward-looking statements are neither historical facts nor assurances
of future performance. Instead, they are based only on our current
beliefs, expectations and assumptions regarding the future of our
business, future plans and strategies, projections, anticipated events
and trends, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject to
inherent uncertainties, risks and changes in circumstances that are
difficult to predict and many of which are outside of our control. Our
actual results and financial condition may differ materially from those
indicated in the forward-looking statements. Therefore, you should not
rely on any of these forward-looking statements. Important factors that
could cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, our ability to achieve operational efficiencies
and meet customer demand for products and services and the risks
described in the Company's filings with the Securities and Exchange
Commission, including the Company's reports on Form 10-K and Form 10-Q.
Any forward-looking statement made by us in this press release is based
only on information currently available to us and speaks only as of the
date on which it is made. We undertake no obligation to publicly update
any forward-looking statement that may be made from time to time,
whether written or oral, whether as a result of new information, future
developments 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 (News - Alert) rules are used. These
non-GAAP financial measures include adjusted EBITDA and adjusted
earnings from operations. Management believes that such information can
enhance investors' understanding of the company's ongoing operations.
See the accompanying table below for a reconciliation of adjusted EBITDA
and adjusted earnings from operations to the most closely related GAAP
measure.
About Agilysys
Agilysys is a leading technology company that provides innovative
point-of-sale, property management, inventory and procurement, workforce
management, analytics, document management and mobile and wireless
solutions and services to the hospitality industry. The company's
solutions and services allow property managers to better connect,
interact and transact with their customers by streamlining operations,
improving efficiency, increasing guest recruitment and wallet share, and
enhancing the guest experience. Agilysys serves four major market
sectors: Gaming, both corporate and tribal; Hotels, Resorts and Cruise;
Foodservice Management; and Restaurants, Universities, Stadia and
Healthcare. Agilysys operates throughout North America, Europe and Asia,
with corporate services located in Alpharetta, GA. For more information,
visit www.agilysys.com.
- Financial tables follow -
|
|
|
|
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
|
|
|
(In thousands, except per share data)
|
|
|
Three Months Ended
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
2017
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
Net revenue:
|
|
|
|
|
|
|
Products
|
|
|
$
|
10,283
|
|
|
|
$
|
9,520
|
|
Support, maintenance and subscription services
|
|
|
|
16,667
|
|
|
|
|
14,948
|
|
Professional services
|
|
|
|
6,915
|
|
|
|
|
6,485
|
|
Total net revenue
|
|
|
|
33,865
|
|
|
|
|
30,953
|
|
Cost of goods sold:
|
|
|
|
|
|
|
Products (inclusive of developed technology amortization)
|
|
|
|
7,624
|
|
|
|
|
6,532
|
|
Support, maintenance and subscription services
|
|
|
|
4,035
|
|
|
|
|
3,856
|
|
Professional services
|
|
|
|
5,536
|
|
|
|
|
4,374
|
|
Total cost of goods sold
|
|
|
|
17,195
|
|
|
|
|
14,762
|
|
Gross profit
|
|
|
|
16,670
|
|
|
|
|
16,191
|
|
Gross profit margin
|
|
|
|
49.2
|
%
|
|
|
|
52.3
|
%
|
Operating expenses:
|
|
|
|
|
|
|
Product development
|
|
|
|
6,626
|
|
|
|
|
6,855
|
|
Sales and marketing
|
|
|
|
5,130
|
|
|
|
|
5,633
|
|
General and administrative
|
|
|
|
6,800
|
|
|
|
|
4,873
|
|
Depreciation of fixed assets
|
|
|
|
611
|
|
|
|
|
598
|
|
Amortization of intangibles
|
|
|
|
485
|
|
|
|
|
336
|
|
Restructuring, severance and other charges
|
|
|
|
37
|
|
|
|
|
89
|
|
Operating loss
|
|
|
|
(3,019
|
)
|
|
|
|
(2,194
|
)
|
Other (income) expense:
|
|
|
|
|
|
|
Interest income
|
|
|
|
(28
|
)
|
|
|
|
(33
|
)
|
Interest expense
|
|
|
|
2
|
|
|
|
|
4
|
|
Other expense, net
|
|
|
|
(113
|
)
|
|
|
|
90
|
|
Loss before taxes
|
|
|
|
(2,880
|
)
|
|
|
|
(2,255
|
)
|
Income tax expense (benefit)
|
|
|
|
78
|
|
|
|
|
42
|
|
Net loss
|
|
|
$
|
(2,958
|
)
|
|
|
$
|
(2,297
|
)
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
22,720
|
|
|
|
|
22,599
|
|
|
|
|
|
|
|
|
Loss per share - basic and diluted:
|
|
|
|
|
|
|
Loss per share
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted
|
|
|
|
22,720
|
|
|
|
|
22,599
|
|
|
|
|
|
|
|
|
Net income (loss) per share - diluted:
|
|
|
|
|
|
|
Net income (loss) per share
|
|
|
$
|
(0.13
|
)
|
|
|
$
|
(0.10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
|
|
|
|
|
|
|
(In thousands, except share data)
|
|
|
June 30,
|
|
|
March 31,
|
|
|
|
|
2017
|
|
|
|
|
2017
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
43,408
|
|
|
|
$
|
49,255
|
|
Accounts receivable, net of allowance for doubtful accounts of
$759 and $509, respectively
|
|
|
|
18,730
|
|
|
|
|
15,598
|
|
Inventories
|
|
|
|
1,915
|
|
|
|
|
2,211
|
|
Prepaid expenses and other current assets
|
|
|
|
5,240
|
|
|
|
|
6,456
|
|
Total current assets
|
|
|
|
69,293
|
|
|
|
|
73,520
|
|
Property and equipment, net
|
|
|
|
16,862
|
|
|
|
|
16,000
|
|
Goodwill
|
|
|
|
19,622
|
|
|
|
|
19,622
|
|
Intangible assets, net
|
|
|
|
8,519
|
|
|
|
|
8,530
|
|
Software development costs, net
|
|
|
|
47,442
|
|
|
|
|
46,999
|
|
Other non-current assets
|
|
|
|
2,507
|
|
|
|
|
2,634
|
|
Total assets
|
|
|
$
|
164,245
|
|
|
|
$
|
167,305
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
8,993
|
|
|
|
$
|
8,702
|
|
Deferred revenue
|
|
|
|
26,944
|
|
|
|
|
29,183
|
|
Accrued liabilities
|
|
|
|
8,978
|
|
|
|
|
8,331
|
|
Capital lease obligations, current
|
|
|
|
116
|
|
|
|
|
121
|
|
Total current liabilities
|
|
|
|
45,031
|
|
|
|
|
46,337
|
|
Deferred income taxes, non-current
|
|
|
|
3,287
|
|
|
|
|
3,181
|
|
Capital lease obligations, non-current
|
|
|
|
90
|
|
|
|
|
116
|
|
Other non-current liabilities
|
|
|
|
3,922
|
|
|
|
|
4,002
|
|
Shareholders' equity:
|
|
|
|
|
|
|
Common shares, without par value, at $0.30 stated value;
80,000,000 shares authorized; 31,606,831 shares issued; and
23,366,461 and 23,210,682 shares outstanding at June 30, 2017
and March 31, 2017, respectively
|
|
|
|
9,482
|
|
|
|
|
9,482
|
|
Treasury shares, 8,240,370 and 8,396,149 at June 30, 2017 and
March 31, 2017, respectively
|
|
|
|
(2,472
|
)
|
|
|
|
(2,519
|
)
|
Capital in excess of stated value
|
|
|
|
(3,928
|
)
|
|
|
|
(5,782
|
)
|
Retained earnings
|
|
|
|
108,993
|
|
|
|
|
112,692
|
|
Accumulated other comprehensive loss
|
|
|
|
(160
|
)
|
|
|
|
(204
|
)
|
Total shareholders' equity
|
|
|
|
111,915
|
|
|
|
|
113,669
|
|
Total liabilities and shareholders' equity
|
|
|
$
|
164,245
|
|
|
|
$
|
167,305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
|
|
|
|
|
|
Three Months Ended
|
(In thousands)
|
|
|
June 30,
|
|
|
|
|
2017
|
|
|
|
|
2016
|
|
Operating activities
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(2,958
|
)
|
|
|
$
|
(2,297
|
)
|
Adjustments to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
Net restructuring, severance and other charges
|
|
|
|
(12
|
)
|
|
|
|
(389
|
)
|
Net legal settlements
|
|
|
|
-
|
|
|
|
|
(100
|
)
|
Depreciation
|
|
|
|
611
|
|
|
|
|
598
|
|
Amortization
|
|
|
|
485
|
|
|
|
|
336
|
|
Amortization of developed technology
|
|
|
|
2,307
|
|
|
|
|
1,266
|
|
Deferred income taxes
|
|
|
|
106
|
|
|
|
|
64
|
|
Share-based compensation
|
|
|
|
1,219
|
|
|
|
|
346
|
|
Change in cash surrender value of company owned life insurance
policies
|
|
|
|
(6
|
)
|
|
|
|
(5
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
|
(3,119
|
)
|
|
|
|
4,700
|
|
Inventories
|
|
|
|
298
|
|
|
|
|
413
|
|
Prepaid expense
|
|
|
|
1,352
|
|
|
|
|
816
|
|
Accounts payable
|
|
|
|
396
|
|
|
|
|
(408
|
)
|
Deferred revenue
|
|
|
|
(2,252
|
)
|
|
|
|
(3,812
|
)
|
Accrued liabilities
|
|
|
|
1,235
|
|
|
|
|
(2,391
|
)
|
Income taxes payable
|
|
|
|
(72
|
)
|
|
|
|
(42
|
)
|
Other changes, net
|
|
|
|
(74
|
)
|
|
|
|
(114
|
)
|
Net cash provided by operating activities
|
|
|
|
(484
|
)
|
|
|
|
(1,019
|
)
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(2,125
|
)
|
|
|
|
(818
|
)
|
Capitalized software development costs
|
|
|
|
(2,990
|
)
|
|
|
|
(2,870
|
)
|
Investments in corporate-owned life insurance policies
|
|
|
|
(2
|
)
|
|
|
|
(1
|
)
|
Net cash used in investing activities
|
|
|
|
(5,117
|
)
|
|
|
|
(3,689
|
)
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
Payments to settle contingent consideration arising from business
acquisition
|
|
|
|
-
|
|
|
|
|
(197
|
)
|
Repurchase of common shares to satisfy employee tax withholding
|
|
|
|
(265
|
)
|
|
|
|
(346
|
)
|
Principal payments under long-term obligations
|
|
|
|
(31
|
)
|
|
|
|
(24
|
)
|
Net cash used in financing activities
|
|
|
|
(296
|
)
|
|
|
|
(567
|
)
|
Effect of exchange rate changes on cash
|
|
|
|
50
|
|
|
|
|
(21
|
)
|
Net decrease in cash and cash equivalents
|
|
|
|
(5,847
|
)
|
|
|
|
(5,296
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
|
49,255
|
|
|
|
|
60,608
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
43,408
|
|
|
|
$
|
55,312
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Accrued capital expenditures
|
|
|
$
|
243
|
|
|
|
$
|
343
|
|
Accrued capitalized software development costs
|
|
|
|
681
|
|
|
|
|
985
|
|
|
|
|
|
|
|
|
|
|
|
|
AGILYSYS, INC.
RECONCILIATION OF NET (News - Alert) LOSS TO ADJUSTED EARNINGS FROM OPERATIONS
(UNAUDITED)
|
|
|
|
|
|
|
|
Three Months Ended
|
(In thousands)
|
|
|
June 30,
|
|
|
|
|
2017
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(2,958
|
)
|
|
|
$
|
(2,297
|
)
|
Income tax expense (benefit)
|
|
|
|
78
|
|
|
|
|
42
|
|
Loss before taxes
|
|
|
|
(2,880
|
)
|
|
|
|
(2,255
|
)
|
Depreciation of fixed assets
|
|
|
|
611
|
|
|
|
|
598
|
|
Amortization of intangibles
|
|
|
|
485
|
|
|
|
|
336
|
|
Amortization of developed technology
|
|
|
|
2,307
|
|
|
|
|
1,266
|
|
Interest (income) expense
|
|
|
|
(26
|
)
|
|
|
|
(29
|
)
|
EBITDA (b)
|
|
|
|
497
|
|
|
|
|
(84
|
)
|
Share-based compensation
|
|
|
|
1,219
|
|
|
|
|
346
|
|
Restructuring, severance and other charges
|
|
|
|
37
|
|
|
|
|
89
|
|
Other non-operating (income) expense
|
|
|
|
(113
|
)
|
|
|
|
90
|
|
Adjusted EBITDA (a)
|
|
|
$
|
1,640
|
|
|
|
$
|
441
|
|
Capital expenditures
|
|
|
|
(2,125
|
)
|
|
|
|
(818
|
)
|
Capitalized software development costs
|
|
|
|
(2,990
|
)
|
|
|
|
(2,870
|
)
|
Adjusted Earnings from Operations (c)
|
|
|
$
|
(3,475
|
)
|
|
|
$
|
(3,247
|
)
|
|
(a) Adjusted EBITDA, a non-GAAP financial measure, is defined as
income before income taxes, interest expense (net of interest
income), depreciation and amortization (including
amortization of developed technology), and excluding charges
relating to i) legal settlements, ii) restructuring,
severance, and other charges, iii) asset write-offs and other fair
value adjustments, iv) share-based compensation, and v) other
non-operating (income) expense
|
|
|
(b) EBITDA is defined as net income before income taxes, interest
expense, depreciation and amortization
|
|
|
(c) Adjusted Earnings from Operations, a non-GAAP financial
measure, is defined as Adjusted EBITDA, less capital
expenditures and capitalized software development costs
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170803006044/en/
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