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Agilysys Reports Unaudited Fiscal 2012 Second-Quarter and First-Half Results
- Second-Quarter Gross Margin Expands More Than 400 Basis Points on 9% Revenue Growth from Continuing Operations
- Company Remains Debt Free, With $94 Million Cash on Hand at September 30
- Interim President and CEO James Dennedy Assumes Full Role
CLEVELAND, Nov. 9, 2011 /PRNewswire/ -- Agilysys, Inc. (Nasdaq: AGYS), 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 2012 second quarter and first half ended September 30, 2011. As previously announced, Agilysys closed the sale of its Technology Solutions ("TSG") business on August 1, 2011, and accordingly, TSG's operating results, including the gain on the sale, as well as its assets and liabilities, are reported as components of discontinued operations.
(Logo: http://photos.prnewswire.com/prnh/20030915/AGLSLOGO )
Fiscal 2012 Second-Quarter Unaudited Results of Continuing Operations
Consolidated revenue increased 8.6% to $53.6 million in the second quarter, compared with $49.3 million in last year's comparable quarter. Revenue from the Company's Hospitality Solutions Group grew by 10.0% over the prior year, and its Retail Solutions Group's revenues increased by 7.7%.
Gross margin increased sharply during the quarter to 40.3%, up from 36.0% in the second quarter of last year, due to higher services and hardware margins and a greater proportion of higher-margin proprietary software revenues.
Commenting on the results, James Dennedy, president and chief executive officer, stated: "Both operating segments generated higher sales and gross margins during the quarter. This reinforces our strategy of deriving a higher proportion of revenue from proprietary services and software solutions."
SG&A expenses declined as a percentage of net sales in the second quarter to 45.6%, compared with 49.4% in the prior-year quarter. SG&A expenses totaled $24.5 million, up from $24.3 million--primarily due to $1.4 million in accelerated depreciation related to assets associated with the facility the Company is vacating in Solon, Ohio--offset by cost reductions initiated in the last several quarters.
Dennedy added: "We are making good progress with the transition of corporate services to Georgia and the realignment of the organization. Upon completion of the restructuring, we expect to reduce annual costs by approximately $14 million to $16 million, and enhance our position to exploit opportunities we see in the hospitality and retail markets."
The Company reported an operating loss for the quarter of $5.2 million, which included $2.4 million in restructuring charges, versus the operating loss of $6.7 million in last year's second quarter. Adjusted EBITDA (defined as operating income plus depreciation and amortization), excluding restructuring and asset impairment charges, was $1.0 million for the quarter, compared with a loss of $4.0 million in the prior-year second quarter. (See reconciliation below.)
Agilysys reported a net loss from continuing operations of $3.2 million, or a loss of $0.14 per share, for the second quarter, compared with a loss from continuing operations of $4.9 million, or $0.22 per share, in the previous year's quarter.
Fiscal 2012 First-Half Unaudited Results from Continuing Operations
Consolidated sales in the first half of fiscal 2012 increased 11.8% to $107.5 million, compared with the $96.1 million reported in the first half of fiscal 2011.
Gross margin was essentially unchanged at 38.3% in the first half, compared with 38.2% in fiscal 2011's first six months.
SG&A expenses increased nominally to $48.6 million, from $47.5 million, due to accelerated depreciation related to assets located at the Company's corporate headquarters and higher stock compensation related expenses driven by the sale of the Company's TSG business.
For the six-month period, the Company reported an operating loss of $12.1 million, compared with an operating loss of $11.2 million in the first half of the prior fiscal year. Year to date, adjusted EBITDA, excluding restructuring and asset impairment charges, was a loss of $1.2 million, versus a loss of $5.5 million in the first half of the prior year. (See reconciliation below.) For the first half of fiscal 2011, the net reported loss from continuing operations was $8.7 million, or a loss of $0.38 per share, versus the previous year's net loss from continuing operations of $13.2 million, or a loss of $0.58 per share.
Liquidity
Cash on hand grew to $93.7 million at September 30, 2011, primarily as a result of the proceeds from the sale of Agilysys' TSG business, which closed on August 1, 2011. The Company remains debt free, except for certain capital leases. In conjunction with the sale of the TSG business, Agilysys authorized the repurchase of up to 1.6 million common shares. During the second quarter, the Company repurchased 800,000 shares at an average price of $8.27 per share for $6.6 million. Subsequent to quarter end and through November 7, 2011, Agilysys repurchased an additional 344,000 shares, and has 456,000 shares remaining under its current repurchase program.
For additional information, please refer to the Company's Form 10-Q, which will be filed later today with the Securities and Exchange Commission.
Interim President and CEO James Dennedy Assumes Full Role
Agilysys also announced the appointment of James Dennedy as president and chief executive officer of the Company. Dennedy, 46, has led Agilysys as interim president and CEO since May 2011, when the Company announced the divesture of TSG.
Commenting on the appointment, Agilysys Chairman Keith Kolerus stated, "We are pleased to welcome Jim in his expanded capacity with the Company. Since joining the Board in 2009, his contributions to our strategic mission have been noteworthy, having not only served on the Board's special committee, but also directly participating in the development and execution of Agilysys' restructuring plan. As we transition to a faster growing and more profitable company, having Jim at the helm on a permanent basis stabilizes our new leadership team."
"We are confident that Jim's past successes at identifying market trends and leading high-growth businesses, along with his clear vision for Agilysys to execute on key strategic initiatives--product integration, capability development, investment prioritization and partner expansion--will continue to positively impact our Company and ultimately benefit shareholders."
Dennedy, who will retain his position as a member of the Agilysys Board, concluded: "My enthusiasm for the opportunities to profitably expand the Company's retail and hospitality capabilities has been a driving factor in my choice to continue in this role. The results we are reporting today further support my decision and I am honored to have the opportunity to lead the Company in the pursuit of our strategy to profitably grow the business."
Conference Call Information
A conference call will be held today, November 9, 2011, at 11 a.m. ET to review unaudited second-quarter and first-half fiscal 2012 results. 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 http://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 release contains certain management expectations, which may constitute forward-looking information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934, and the Private Securities Reform Act of 1995. Forward-looking information speaks only as to the date of this Quarterly Report and may be identified by use of words such as "may," "will," "believes," "anticipates," "plans," "expects," "estimates," "projects," "targets," "forecasts," "continues," "seeks," or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information including, without limitation, competitive factors, disruption of supplies, changes in market conditions, pending or future claims or litigation, or technology advances. No assurances can be provided as to the outcome of cost reductions, expected benefits and outcomes from our recent ERP implementation, business strategies, future financial results, unanticipated downturns to our relationships with customers and macroeconomic demand for IT products and services, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, consequences related to the concentrated ownership of our outstanding shares by MAK Capital, unanticipated deterioration in economic and financial conditions in the United States and around the world, consequences associated with the sale of the Company's TSG business, and uncertainties regarding restructuring actions and/or the relocation of the Company's corporate headquarters. The Company does not undertake to update or revise any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, will not be realized.
Other potential risks and uncertainties that may cause actual results to be materially different from those in forward-looking information are described in "Risk Factors," which is included in Part I, Item 1A of the Company's Annual Report for the fiscal year ended March 31, 2011. Copies are available from the SEC or the Agilysys website.
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. Management believes that such information can enhance investors' understanding of the Company's ongoing operations. The non-GAAP measures included in this press release have been reconciled to the comparable GAAP measures within the accompanying table that can be found below.
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. Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales and support offices in the United Kingdom, Singapore and Hong Kong. For more information, visit http://www.agilysys.com.
Investor Contact:
Curtis Stout
Vice President and Treasurer
Agilysys, Inc.
440-519-8635
curtis.stout@agilysys.com
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In
thousands,
except
share
and
per
share
data) Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2011 2010 2011 2010
---- ---- ---- ----
Net
sales:
Products $27,094 $24,664 $55,879 $48,156
Services 26,494 24,662 51,595 47,957
------ ------ ------ ------
Total
net
sales 53,588 49,326 107,474 96,113
Cost
of
goods
sold:
Products 20,605 19,721 43,966 36,549
Services 11,367 11,843 22,365 22,844
------ ------ ------ ------
Total
cost
of
goods
sold 31,972 31,564 66,331 59,393
------ ------ ------ ------
Gross
margin 21,616 17,762 41,143 36,720
Selling,
general
and
administrative
expenses 24,460 24,347 48,563 47,450
Asset
impairment
charges - 59 - 59
Restructuring
charges 2,370 10 4,716 403
----- --- ----- ---
Operating
loss (5,214) (6,654) (12,136) (11,192)
Other
expenses
(income):
Other
expenses
(income),
net 308 (856) 271 (1,959)
Interest
income (17) (17) (49) (40)
Interest
expense 539 278 877 563
--- --- --- ---
Loss
before
income
taxes (6,044) (6,059) (13,235) (9,756)
Income
tax
(benefit)
expense (2,806) (1,143) (4,557) 3,452
------ ------ ------ -----
Loss
from
continuing
operations (3,238) (4,916) (8,678) (13,208)
Income
from
discontinued
operations,
net
of
taxes 10,487 2,702 11,138 742
------ ----- ------ ---
Net
income
(loss) $7,249 $(2,214) $2,460 $(12,466)
====== ======= ====== ========
Net
loss
(income)
per
share
-
basic
and
diluted:
Loss
from
continuing
operations $(0.14) $(0.22) $(0.38) $(0.58)
Income
from
discontinued
operations 0.46 0.12 0.49 0.03
---- ---- ---- ----
Net
income
(loss) $0.32 $(0.10) $0.11 $(0.55)
===== ====== ===== ======
Weighted
average
shares
outstanding:
Basic
and
diluted 22,853,057 22,750,474 22,902,872 22,750,254
AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION
(UNAUDITED) (In thousands)
Three Months Ended September 30, Three Months Ended September 30,
2011 2010
--------------------------------- ---------------------------------
Reportable Segments Reportable Segments
------------------- -------------------
(In
thousands) HSG RSG Corporate/ Consolidated HSG RSG Corporate/ Consolidated
--- --- ------------ --- --- ------------
Other Other
----- -----
Total
Net
Revenue $22,631 $30,957 $- $53,588 $20,570 $28,756 $- $49,326
Gross
margin $14,523 $7,093 $- $21,616 $12,215 $5,547 $- $17,762
Gross
margin
percentage 64.2% 22.9% 40.3% 59.4% 19.3% 36.0%
Operating
income
(loss) $1,401 $2,168 $(8,783) $(5,214) $214 $1,079 (7,947) $(6,654)
Other
expenses,
net - - (308) (308) - - 856 856
Interest
expense,
net - - (522) (522) - - (261) (261)
--- --- ---- ---- --- --- ---- ----
Income
(loss)
from
continuing
operations
before
income
taxes $1,401 $2,168 $(9,613) $(6,044) $214 $1,079 $(7,352) $(6,059)
====== ====== ======= ======= ==== ====== ======= =======
Other
information:
Capital
expenditures $708 $- $- $708 $391 $104 $1,357 $1,852
Non-cash
charges:
Depreciation
and
Amortization
(1) $1,118 $155 $2,556 $3,829 $1,071 $81 $1,397 $2,549
Asset
impairment
charges $- $- $- $- $59 $- $- $59
Restructuring
charges $619 $231 $1,520 $2,370 $- $- $10 $10
---- ---- ------ ------ --- --- --- ---
Total $1,737 $386 $4,076 $6,199 $1,130 $81 $1,407 $2,618
====== ==== ====== ====== ====== === ====== ======
Six Months Ended September 30, Six Months Ended September 30,
2011 2010
------------------------------- -------------------------------
Reportable Segments Reportable Segments
------------------- -------------------
HSG RSG Corporate/ Consolidated HSG RSG Corporate/ Consolidated
--- --- ------------ --- --- ------------
Other Other
----- -----
Total
Net
Revenue $43,591 $63,883 $- $107,474 $43,619 $52,494 $- $96,113
Gross
margin $27,790 $13,353 $- $41,143 $25,503 $11,217 $- $36,720
Gross
margin
percentage 63.8% 20.9% 38.3% 58.5% 21.4% 38.2%
Operating
income
(loss) $1,916 $4,263 $(18,315) $(12,136) $2,454 $2,847 $(16,493) $(11,192)
Other
income,
net - - (271) (271) - - 1,959 1,959
Interest
expense,
net - - (828) (828) - - (523) (523)
--- --- ---- ---- --- --- ---- ----
Income
(loss)
from
continuing
operations
before
income
taxes $1,916 $4,263 $(19,414) $(13,235) $2,454 $2,847 $(15,057) $(9,756)
====== ====== ======== ======== ====== ====== ======== =======
Other
information:
Capital
expenditures $1,457 $7 $- $1,464 $1,356 $104 $2,083 $3,543
Non-cash
charges:
Depreciation
and
Amortization
(2) $2,176 $306 $3,758 $6,240 $2,162 $161 $2,882 $5,205
$- $- $- $- $59 $- $- $59
Restructuring
charges $806 $365 $3,545 $4,716 $- $- $403 $403
---- ---- ------ ------ --- --- ---- ----
Total $2,982 $671 $7,303 $10,956 $2,221 $161 $3,285 $5,667
====== ==== ====== ======= ====== ==== ====== ======
(1) Does not include the amortization of deferred financing fees totaling
$437 and $131 for the three months ended September 30, 2011 and 2010,
respectively.
(2) Does not include the amortization of deferred financing fees totaling
$568 and $262 for the six months ended September 30, 2011 and 2010,
respectively.
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, March 31,
(In thousands, except share
data) 2011 2011
---- ----
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $93,662 $70,559
Accounts receivable, net 30,114 31,926
Inventories, net 13,649 10,921
Deferred income taxes - current 85 -
Prepaid expenses 2,844 2,829
Income taxes receivable 1,365 1,403
Other current assets 11,333 6,344
Assets of discontinued
operations - current - 105,810
--- -------
Total current assets 153,052 229,792
Goodwill 15,104 15,211
Intangible assets, net 21,962 22,535
Other non-current assets 4,066 11,709
Assets of discontinued
operations - non-current - 8,296
Property and equipment, net 20,938 24,855
Total assets $215,122 $312,398
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $15,910 $17,852
Deferred revenue 14,604 23,995
Accrued and other current
liabilities 27,104 14,594
Income taxes payable 125 265
Deferred income taxes - current - 77
Capital lease obligations -
current 970 999
Liabilities of discontinued
operations - current - 89,005
--- ------
Total current liabilities 58,713 146,787
Deferred income taxes - non-
current 4,093 3,894
Capital lease obligations -
non-current 619 907
Other non-current liabilities 6,453 11,972
Liabilities of discontinued
operations - non-current - 734
Shareholders' equity:
Common shares, without par
value, at $0.30 stated 9,482 9,482
value; authorized 80,000,000
shares; 31,606,831 issued;
and 22,575,300 and 23,022,398
shares outstanding at
September 30, 2011 and March
31, 2011, respectively
Treasury shares (9,031,531
shares at September 30, (2,709) (2,575)
2011 and 8,584,433 at March 31,
2011)
Capital in excess of stated
value (10,325) (5,421)
Retained earnings 149,119 146,659
Accumulated other comprehensive
loss (323) (41)
Total shareholders' equity 145,244 148,104
------- -------
Total liabilities and
shareholders' equity $215,122 $312,398
======== ========
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
(In thousands) September 30,
-------------
Operating activities: 2011 2010
---- ----
Net income (loss) $2,460 $(12,466)
Less: Income from discontinued
operations (11,138) (742)
------- ----
Loss from continuing operations (8,678) (13,208)
Adjustments to reconcile net loss from
continuing operations to net cash used
for operating activities:
Restructuring charges 4,716 403
Gain on redemption of Company-owned
life insurance policies - (2,065)
Gain on redemption of investment in The
Reserve Fund's Primary Fund - (147)
Asset impairment charges - 59
Loss on the sale of securities 166 -
Depreciation 3,432 1,786
Amortization 3,376 3,681
Deferred income taxes 36 4,429
Stock based compensation 1,989 1,437
Change in cash surrender value of
company owned life insurance policies (68) 301
Changes in operating assets and
liabilities:
Accounts receivable 1,751 (7,000)
Inventories (2,729) (3,417)
Accounts payable (1,935) 494
Accrued and other liabilities (5,826) (1,950)
Income taxes receivable (763) 372
Other changes, net (14) (209)
Other non-cash adjustments (561) 69
Total adjustments 3,570 (1,757)
----- ------
Net cash used for operating activities (5,108) (14,965)
Investing activities:
Proceeds from the sale of business 59,470 -
Proceeds from The Reserve Fund's
Primary Fund - 147
Proceeds from redemption of/borrowings
against Co.-owned life insurance
policies - 2,248
Additional investments in Company-
owned life insurance policies (46) (746)
Proceeds from the sale of marketable
securities 2,036 14
Additional investments in marketable
securities (22) -
Purchase of property and equipment (1,464) (3,543)
Net cash provided by (used for)
investing activities 59,974 (1,880)
Financing activities:
Proceeds from borrowings under credit
facility - 15,325
Principal payments under credit
facility - (15,325)
Repurchase of common shares (6,617) -
Repurchases of shares to satisfy
employee tax withholding (972) (188)
Principal payment under long term
obligations (609) (306)
Net cash used for financing activities (8,198) (494)
Effect of exchange rate changes on cash (151) 166
---- ---
Cash flows provided by (used for)
continuing operations 46,517 (17,173)
Cash flows of discontinued operations:
Operating cash flows, net (23,336) (13,096)
Investing cash flows, net - (73)
Financing cash flows, net (78) (2)
Net increase (decrease) in cash 23,103 (30,344)
Cash at beginning of period 70,559 62,801
------ ------
Cash at end of period $93,662 $32,457
======= =======
AGILYSYS, INC.
RECONCILIATION OF LOSS FROM CONTINUING OPERATIONS TO
ADJUSTED EBITDA
(UNAUDITED)
(In
thousands) Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2011 2010 2011 2010
---- ---- ---- ----
Loss from
continuing
operations $(3,238) $(4,916) $(8,678) $(13,208)
Plus:
Interest
expense,
net 522 261 828 523
Income tax
(benefit)
expense (2,806) (1,143) (4,557) 3,452
Depreciation
and
amortization
expense
(a) 3,829 2,549 6,240 5,205
Other
expenses
(income),
net 308 (856) 271 (1,959)
--- ---- --- ------
Adjusted
EBITDA $(1,385) $(4,105) $(5,896) $(5,987)
Asset
impairment
charges - 59 - 59
Restructuring
charges 2,370 10 4,716 403
----- --- ----- ---
Adjusted
EBITDA
excluding
charges $985 $(4,036) $(1,180) $(5,525)
==== ======= ======= =======
(a) Depreciation and amortization expense excludes
amortization of deferred financing fees totaling $437 and
$131 for the
three months ended September 30, 2011 and 2010,
respectively, and $568 and $262 for the six months ended
September 30, 2011 and 2010, respectively, as such costs are
already included in interest expense, net.
SOURCE Agilysys, Inc.
Photo:http://photos.prnewswire.com/prnh/20030915/AGLSLOGO
http://photoarchive.ap.org/
Agilysys, Inc.
Web Site: http://www.agilysys.com
Agilysys Reports Unaudited Fiscal 2012 Second-Quarter and First-Half Results
- Second-Quarter Gross Margin Expands More Than 400 Basis Points on 9% Revenue Growth from Continuing Operations
- Company Remains Debt Free, With $94 Million Cash on Hand at September 30
- Interim President and CEO James Dennedy Assumes Full Role
CLEVELAND, Nov. 9, 2011 /PRNewswire/ -- Agilysys, Inc. (Nasdaq: AGYS), 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 2012 second quarter and first half ended September 30, 2011. As previously announced, Agilysys closed the sale of its Technology Solutions ("TSG") business on August 1, 2011, and accordingly, TSG's operating results, including the gain on the sale, as well as its assets and liabilities, are reported as components of discontinued operations.
(Logo: http://photos.prnewswire.com/prnh/20030915/AGLSLOGO )
Fiscal 2012 Second-Quarter Unaudited Results of Continuing Operations
Consolidated revenue increased 8.6% to $53.6 million in the second quarter, compared with $49.3 million in last year's comparable quarter. Revenue from the Company's Hospitality Solutions Group grew by 10.0% over the prior year, and its Retail Solutions Group's revenues increased by 7.7%.
Gross margin increased sharply during the quarter to 40.3%, up from 36.0% in the second quarter of last year, due to higher services and hardware margins and a greater proportion of higher-margin proprietary software revenues.
Commenting on the results, James Dennedy, president and chief executive officer, stated: "Both operating segments generated higher sales and gross margins during the quarter. This reinforces our strategy of deriving a higher proportion of revenue from proprietary services and software solutions."
SG&A expenses declined as a percentage of net sales in the second quarter to 45.6%, compared with 49.4% in the prior-year quarter. SG&A expenses totaled $24.5 million, up from $24.3 million--primarily due to $1.4 million in accelerated depreciation related to assets associated with the facility the Company is vacating in Solon, Ohio--offset by cost reductions initiated in the last several quarters.
Dennedy added: "We are making good progress with the transition of corporate services to Georgia and the realignment of the organization. Upon completion of the restructuring, we expect to reduce annual costs by approximately $14 million to $16 million, and enhance our position to exploit opportunities we see in the hospitality and retail markets."
The Company reported an operating loss for the quarter of $5.2 million, which included $2.4 million in restructuring charges, versus the operating loss of $6.7 million in last year's second quarter. Adjusted EBITDA (defined as operating income plus depreciation and amortization), excluding restructuring and asset impairment charges, was $1.0 million for the quarter, compared with a loss of $4.0 million in the prior-year second quarter. (See reconciliation below.)
Agilysys reported a net loss from continuing operations of $3.2 million, or a loss of $0.14 per share, for the second quarter, compared with a loss from continuing operations of $4.9 million, or $0.22 per share, in the previous year's quarter.
Fiscal 2012 First-Half Unaudited Results from Continuing Operations
Consolidated sales in the first half of fiscal 2012 increased 11.8% to $107.5 million, compared with the $96.1 million reported in the first half of fiscal 2011.
Gross margin was essentially unchanged at 38.3% in the first half, compared with 38.2% in fiscal 2011's first six months.
SG&A expenses increased nominally to $48.6 million, from $47.5 million, due to accelerated depreciation related to assets located at the Company's corporate headquarters and higher stock compensation related expenses driven by the sale of the Company's TSG business.
For the six-month period, the Company reported an operating loss of $12.1 million, compared with an operating loss of $11.2 million in the first half of the prior fiscal year. Year to date, adjusted EBITDA, excluding restructuring and asset impairment charges, was a loss of $1.2 million, versus a loss of $5.5 million in the first half of the prior year. (See reconciliation below.) For the first half of fiscal 2011, the net reported loss from continuing operations was $8.7 million, or a loss of $0.38 per share, versus the previous year's net loss from continuing operations of $13.2 million, or a loss of $0.58 per share.
Liquidity
Cash on hand grew to $93.7 million at September 30, 2011, primarily as a result of the proceeds from the sale of Agilysys' TSG business, which closed on August 1, 2011. The Company remains debt free, except for certain capital leases. In conjunction with the sale of the TSG business, Agilysys authorized the repurchase of up to 1.6 million common shares. During the second quarter, the Company repurchased 800,000 shares at an average price of $8.27 per share for $6.6 million. Subsequent to quarter end and through November 7, 2011, Agilysys repurchased an additional 344,000 shares, and has 456,000 shares remaining under its current repurchase program.
For additional information, please refer to the Company's Form 10-Q, which will be filed later today with the Securities and Exchange Commission.
Interim President and CEO James Dennedy Assumes Full Role
Agilysys also announced the appointment of James Dennedy as president and chief executive officer of the Company. Dennedy, 46, has led Agilysys as interim president and CEO since May 2011, when the Company announced the divesture of TSG.
Commenting on the appointment, Agilysys Chairman Keith Kolerus stated, "We are pleased to welcome Jim in his expanded capacity with the Company. Since joining the Board in 2009, his contributions to our strategic mission have been noteworthy, having not only served on the Board's special committee, but also directly participating in the development and execution of Agilysys' restructuring plan. As we transition to a faster growing and more profitable company, having Jim at the helm on a permanent basis stabilizes our new leadership team."
"We are confident that Jim's past successes at identifying market trends and leading high-growth businesses, along with his clear vision for Agilysys to execute on key strategic initiatives--product integration, capability development, investment prioritization and partner expansion--will continue to positively impact our Company and ultimately benefit shareholders."
Dennedy, who will retain his position as a member of the Agilysys Board, concluded: "My enthusiasm for the opportunities to profitably expand the Company's retail and hospitality capabilities has been a driving factor in my choice to continue in this role. The results we are reporting today further support my decision and I am honored to have the opportunity to lead the Company in the pursuit of our strategy to profitably grow the business."
Conference Call Information
A conference call will be held today, November 9, 2011, at 11 a.m. ET to review unaudited second-quarter and first-half fiscal 2012 results. 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 http://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 release contains certain management expectations, which may constitute forward-looking information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934, and the Private Securities Reform Act of 1995. Forward-looking information speaks only as to the date of this Quarterly Report and may be identified by use of words such as "may," "will," "believes," "anticipates," "plans," "expects," "estimates," "projects," "targets," "forecasts," "continues," "seeks," or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information including, without limitation, competitive factors, disruption of supplies, changes in market conditions, pending or future claims or litigation, or technology advances. No assurances can be provided as to the outcome of cost reductions, expected benefits and outcomes from our recent ERP implementation, business strategies, future financial results, unanticipated downturns to our relationships with customers and macroeconomic demand for IT products and services, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, consequences related to the concentrated ownership of our outstanding shares by MAK Capital, unanticipated deterioration in economic and financial conditions in the United States and around the world, consequences associated with the sale of the Company's TSG business, and uncertainties regarding restructuring actions and/or the relocation of the Company's corporate headquarters. The Company does not undertake to update or revise any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, will not be realized.
Other potential risks and uncertainties that may cause actual results to be materially different from those in forward-looking information are described in "Risk Factors," which is included in Part I, Item 1A of the Company's Annual Report for the fiscal year ended March 31, 2011. Copies are available from the SEC or the Agilysys website.
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. Management believes that such information can enhance investors' understanding of the Company's ongoing operations. The non-GAAP measures included in this press release have been reconciled to the comparable GAAP measures within the accompanying table that can be found below.
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. Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales and support offices in the United Kingdom, Singapore and Hong Kong. For more information, visit http://www.agilysys.com.
Investor Contact:
Curtis Stout
Vice President and Treasurer
Agilysys, Inc.
440-519-8635
curtis.stout@agilysys.com
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In
thousands,
except
share
and
per
share
data) Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2011 2010 2011 2010
---- ---- ---- ----
Net
sales:
Products $27,094 $24,664 $55,879 $48,156
Services 26,494 24,662 51,595 47,957
------ ------ ------ ------
Total
net
sales 53,588 49,326 107,474 96,113
Cost
of
goods
sold:
Products 20,605 19,721 43,966 36,549
Services 11,367 11,843 22,365 22,844
------ ------ ------ ------
Total
cost
of
goods
sold 31,972 31,564 66,331 59,393
------ ------ ------ ------
Gross
margin 21,616 17,762 41,143 36,720
Selling,
general
and
administrative
expenses 24,460 24,347 48,563 47,450
Asset
impairment
charges - 59 - 59
Restructuring
charges 2,370 10 4,716 403
----- --- ----- ---
Operating
loss (5,214) (6,654) (12,136) (11,192)
Other
expenses
(income):
Other
expenses
(income),
net 308 (856) 271 (1,959)
Interest
income (17) (17) (49) (40)
Interest
expense 539 278 877 563
--- --- --- ---
Loss
before
income
taxes (6,044) (6,059) (13,235) (9,756)
Income
tax
(benefit)
expense (2,806) (1,143) (4,557) 3,452
------ ------ ------ -----
Loss
from
continuing
operations (3,238) (4,916) (8,678) (13,208)
Income
from
discontinued
operations,
net
of
taxes 10,487 2,702 11,138 742
------ ----- ------ ---
Net
income
(loss) $7,249 $(2,214) $2,460 $(12,466)
====== ======= ====== ========
Net
loss
(income)
per
share
-
basic
and
diluted:
Loss
from
continuing
operations $(0.14) $(0.22) $(0.38) $(0.58)
Income
from
discontinued
operations 0.46 0.12 0.49 0.03
---- ---- ---- ----
Net
income
(loss) $0.32 $(0.10) $0.11 $(0.55)
===== ====== ===== ======
Weighted
average
shares
outstanding:
Basic
and
diluted 22,853,057 22,750,474 22,902,872 22,750,254
AGILYSYS, INC.
BUSINESS SEGMENT INFORMATION
(UNAUDITED) (In thousands)
Three Months Ended September 30, Three Months Ended September 30,
2011 2010
--------------------------------- ---------------------------------
Reportable Segments Reportable Segments
------------------- -------------------
(In
thousands) HSG RSG Corporate/ Consolidated HSG RSG Corporate/ Consolidated
--- --- ------------ --- --- ------------
Other Other
----- -----
Total
Net
Revenue $22,631 $30,957 $- $53,588 $20,570 $28,756 $- $49,326
Gross
margin $14,523 $7,093 $- $21,616 $12,215 $5,547 $- $17,762
Gross
margin
percentage 64.2% 22.9% 40.3% 59.4% 19.3% 36.0%
Operating
income
(loss) $1,401 $2,168 $(8,783) $(5,214) $214 $1,079 (7,947) $(6,654)
Other
expenses,
net - - (308) (308) - - 856 856
Interest
expense,
net - - (522) (522) - - (261) (261)
--- --- ---- ---- --- --- ---- ----
Income
(loss)
from
continuing
operations
before
income
taxes $1,401 $2,168 $(9,613) $(6,044) $214 $1,079 $(7,352) $(6,059)
====== ====== ======= ======= ==== ====== ======= =======
Other
information:
Capital
expenditures $708 $- $- $708 $391 $104 $1,357 $1,852
Non-cash
charges:
Depreciation
and
Amortization
(1) $1,118 $155 $2,556 $3,829 $1,071 $81 $1,397 $2,549
Asset
impairment
charges $- $- $- $- $59 $- $- $59
Restructuring
charges $619 $231 $1,520 $2,370 $- $- $10 $10
---- ---- ------ ------ --- --- --- ---
Total $1,737 $386 $4,076 $6,199 $1,130 $81 $1,407 $2,618
====== ==== ====== ====== ====== === ====== ======
Six Months Ended September 30, Six Months Ended September 30,
2011 2010
------------------------------- -------------------------------
Reportable Segments Reportable Segments
------------------- -------------------
HSG RSG Corporate/ Consolidated HSG RSG Corporate/ Consolidated
--- --- ------------ --- --- ------------
Other Other
----- -----
Total
Net
Revenue $43,591 $63,883 $- $107,474 $43,619 $52,494 $- $96,113
Gross
margin $27,790 $13,353 $- $41,143 $25,503 $11,217 $- $36,720
Gross
margin
percentage 63.8% 20.9% 38.3% 58.5% 21.4% 38.2%
Operating
income
(loss) $1,916 $4,263 $(18,315) $(12,136) $2,454 $2,847 $(16,493) $(11,192)
Other
income,
net - - (271) (271) - - 1,959 1,959
Interest
expense,
net - - (828) (828) - - (523) (523)
--- --- ---- ---- --- --- ---- ----
Income
(loss)
from
continuing
operations
before
income
taxes $1,916 $4,263 $(19,414) $(13,235) $2,454 $2,847 $(15,057) $(9,756)
====== ====== ======== ======== ====== ====== ======== =======
Other
information:
Capital
expenditures $1,457 $7 $- $1,464 $1,356 $104 $2,083 $3,543
Non-cash
charges:
Depreciation
and
Amortization
(2) $2,176 $306 $3,758 $6,240 $2,162 $161 $2,882 $5,205
$- $- $- $- $59 $- $- $59
Restructuring
charges $806 $365 $3,545 $4,716 $- $- $403 $403
---- ---- ------ ------ --- --- ---- ----
Total $2,982 $671 $7,303 $10,956 $2,221 $161 $3,285 $5,667
====== ==== ====== ======= ====== ==== ====== ======
(1) Does not include the amortization of deferred financing fees totaling
$437 and $131 for the three months ended September 30, 2011 and 2010,
respectively.
(2) Does not include the amortization of deferred financing fees totaling
$568 and $262 for the six months ended September 30, 2011 and 2010,
respectively.
AGILYSYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, March 31,
(In thousands, except share
data) 2011 2011
---- ----
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $93,662 $70,559
Accounts receivable, net 30,114 31,926
Inventories, net 13,649 10,921
Deferred income taxes - current 85 -
Prepaid expenses 2,844 2,829
Income taxes receivable 1,365 1,403
Other current assets 11,333 6,344
Assets of discontinued
operations - current - 105,810
--- -------
Total current assets 153,052 229,792
Goodwill 15,104 15,211
Intangible assets, net 21,962 22,535
Other non-current assets 4,066 11,709
Assets of discontinued
operations - non-current - 8,296
Property and equipment, net 20,938 24,855
Total assets $215,122 $312,398
======== ========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable $15,910 $17,852
Deferred revenue 14,604 23,995
Accrued and other current
liabilities 27,104 14,594
Income taxes payable 125 265
Deferred income taxes - current - 77
Capital lease obligations -
current 970 999
Liabilities of discontinued
operations - current - 89,005
--- ------
Total current liabilities 58,713 146,787
Deferred income taxes - non-
current 4,093 3,894
Capital lease obligations -
non-current 619 907
Other non-current liabilities 6,453 11,972
Liabilities of discontinued
operations - non-current - 734
Shareholders' equity:
Common shares, without par
value, at $0.30 stated 9,482 9,482
value; authorized 80,000,000
shares; 31,606,831 issued;
and 22,575,300 and 23,022,398
shares outstanding at
September 30, 2011 and March
31, 2011, respectively
Treasury shares (9,031,531
shares at September 30, (2,709) (2,575)
2011 and 8,584,433 at March 31,
2011)
Capital in excess of stated
value (10,325) (5,421)
Retained earnings 149,119 146,659
Accumulated other comprehensive
loss (323) (41)
Total shareholders' equity 145,244 148,104
------- -------
Total liabilities and
shareholders' equity $215,122 $312,398
======== ========
AGILYSYS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
(In thousands) September 30,
-------------
Operating activities: 2011 2010
---- ----
Net income (loss) $2,460 $(12,466)
Less: Income from discontinued
operations (11,138) (742)
------- ----
Loss from continuing operations (8,678) (13,208)
Adjustments to reconcile net loss from
continuing operations to net cash used
for operating activities:
Restructuring charges 4,716 403
Gain on redemption of Company-owned
life insurance policies - (2,065)
Gain on redemption of investment in The
Reserve Fund's Primary Fund - (147)
Asset impairment charges - 59
Loss on the sale of securities 166 -
Depreciation 3,432 1,786
Amortization 3,376 3,681
Deferred income taxes 36 4,429
Stock based compensation 1,989 1,437
Change in cash surrender value of
company owned life insurance policies (68) 301
Changes in operating assets and
liabilities:
Accounts receivable 1,751 (7,000)
Inventories (2,729) (3,417)
Accounts payable (1,935) 494
Accrued and other liabilities (5,826) (1,950)
Income taxes receivable (763) 372
Other changes, net (14) (209)
Other non-cash adjustments (561) 69
Total adjustments 3,570 (1,757)
----- ------
Net cash used for operating activities (5,108) (14,965)
Investing activities:
Proceeds from the sale of business 59,470 -
Proceeds from The Reserve Fund's
Primary Fund - 147
Proceeds from redemption of/borrowings
against Co.-owned life insurance
policies - 2,248
Additional investments in Company-
owned life insurance policies (46) (746)
Proceeds from the sale of marketable
securities 2,036 14
Additional investments in marketable
securities (22) -
Purchase of property and equipment (1,464) (3,543)
Net cash provided by (used for)
investing activities 59,974 (1,880)
Financing activities:
Proceeds from borrowings under credit
facility - 15,325
Principal payments under credit
facility - (15,325)
Repurchase of common shares (6,617) -
Repurchases of shares to satisfy
employee tax withholding (972) (188)
Principal payment under long term
obligations (609) (306)
Net cash used for financing activities (8,198) (494)
Effect of exchange rate changes on cash (151) 166
---- ---
Cash flows provided by (used for)
continuing operations 46,517 (17,173)
Cash flows of discontinued operations:
Operating cash flows, net (23,336) (13,096)
Investing cash flows, net - (73)
Financing cash flows, net (78) (2)
Net increase (decrease) in cash 23,103 (30,344)
Cash at beginning of period 70,559 62,801
------ ------
Cash at end of period $93,662 $32,457
======= =======
AGILYSYS, INC.
RECONCILIATION OF LOSS FROM CONTINUING OPERATIONS TO
ADJUSTED EBITDA
(UNAUDITED)
(In
thousands) Three Months Ended Six Months Ended
September 30, September 30,
------------- -------------
2011 2010 2011 2010
---- ---- ---- ----
Loss from
continuing
operations $(3,238) $(4,916) $(8,678) $(13,208)
Plus:
Interest
expense,
net 522 261 828 523
Income tax
(benefit)
expense (2,806) (1,143) (4,557) 3,452
Depreciation
and
amortization
expense
(a) 3,829 2,549 6,240 5,205
Other
expenses
(income),
net 308 (856) 271 (1,959)
--- ---- --- ------
Adjusted
EBITDA $(1,385) $(4,105) $(5,896) $(5,987)
Asset
impairment
charges - 59 - 59
Restructuring
charges 2,370 10 4,716 403
----- --- ----- ---
Adjusted
EBITDA
excluding
charges $985 $(4,036) $(1,180) $(5,525)
==== ======= ======= =======
(a) Depreciation and amortization expense excludes
amortization of deferred financing fees totaling $437 and
$131 for the
three months ended September 30, 2011 and 2010,
respectively, and $568 and $262 for the six months ended
September 30, 2011 and 2010, respectively, as such costs are
already included in interest expense, net.
SOURCE Agilysys, Inc.
Photo:http://photos.prnewswire.com/prnh/20030915/AGLSLOGO
http://photoarchive.ap.org/
Agilysys, Inc.
Web Site: http://www.agilysys.com