EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1 exhibit_99-1.htm


Exhibit 99.1
 
 

CONTACT: 
Retalix Ltd.
Sarit Sagiv
+972-9-776-6618
investors@retalix.com

Retalix Announces Third Quarter 2012 Results

Record Quarter With 15% Growth in Revenues; 34% Increase in Operating Income
(Non-GAAP); Strong Progress on Executing Strategy; Expanding into Adjacent
Markets via Cornell Mayo Acquisition; Expects to Exceed 2012 Revenue Guidance

RA'ANANA, Israel, November 14, 2012 -- Retalix® Ltd. (Nasdaq:RTLX), a leading global provider of software and services to high volume, high complexity retailers, announced today results for the third quarter and the nine months ended September 30, 2012.

Summarized financial highlights for the third quarter:

 
·
Total Revenues were up 15% to $70.5 million compared with $61.6 million in the third quarter of 2011.
 
 
·
Adjusted Operating Income (Non-GAAP)* was up 34% to $7.3 million compared to $5.5 million in the third quarter of 2011.
 
 
·
Operating Income (GAAP) was up 72% to $5.1 million compared to $3.0 million in the third quarter of 2011.
 
 
·
Adjusted Net Income (Non-GAAP)* was $5.3 million, or $0.21 per diluted share, compared to $7.7 million, or $0.31 per diluted share, in the third quarter of 2011.  The year-over-year comparison in third quarter Net Income reflects a change in financial income and a tax benefit realized in 2011 versus both a financial and tax expense in 2012.
 
 
·
GAAP Net Income was $3.6 million, or $0.14 per diluted share, compared to $5.5 million, or $0.22 per diluted share, in the third quarter of 2011, reflecting the financial income and tax benefit in 2011 mentioned above.
 
 
·
Financial Expenses of $0.1 million were recorded in the third quarter of 2012 including interest income, the net impact of currency fluctuations on the value of non-dollar assets, and currency translation costs.  This compares to financial income of $1.1 million in the third quarter of 2011.
 
 
·
Cash Flow from Operating Activities was $5.3 million.
 
 
·
Balance Sheet included $134.1 million of cash and cash equivalents, deposits, marketable securities and long term investments with no debt as of September 30, 2012, and after the completion of the Cornell Mayo acquisition.
 
 
 

 
Shuky Sheffer, Chief Executive Officer of Retalix, said, "We are continuing to make good progress executing our growth strategy and delivering innovative and unique solutions for retailers. We continue to win new programs and logos for our unique Retalix 10 products, services and software-as-a-service (SaaS) offerings.  This quarter we signed a multi-year strategic partnership with Delhaize Group to become the preferred provider of in-store software for their 3,300 locations worldwide and we are starting work on another Retalix 10 project for a Tier 0 retailer.  We also successfully executed on our strategy to expand into adjacent high volume high complexity markets with the acquisition of Cornell Mayo.  Building on our great products and our product-led services model ensures that Retalix is not only providing the leading platform but that we are positioned to provide consistent value and expertise in the delivery and implementation of our products thus paving the way for long-term, deep partnerships with our customers."

Sarit Sagiv, the Company's Chief Financial Officer, said, "Our growing strength in the market helped us to achieve record quarterly revenues, surpassing the $70 million mark, as well as improved operating margins and strong year-over-year growth in operating income. We achieved these improvements while continuing our investments.  Our headcount grew by 10% over last quarter, reflecting our recruiting efforts designed to ensure successful delivery on our customer wins and the addition of Cornell Mayo.  Our balance sheet is strong.  We continue to generate cash flow from operations and we have no debt.  We have a strong financial platform which will continue to help us in pursuing opportunities in our markets."

Outlook for FY 2012

Sheffer added, "We expect we will exceed our revenue guidance which was for total revenues in the range of $260 to $270 million for 2012.  Cornell Mayo will have a minimal contribution in the remainder of 2012, but we expect it will grow as we move forward.

“In the first nine months of 2012 we also successfully achieved our goal of improving the profitability of operations versus 2011.  We targeted 9 to 10 percent profitability from operations (on a non-GAAP basis) for 2012 and we expect to be at the high end of this range.  As I said last quarter, we expect to continue our investments to deliver on our new wins and further build our traction in the markets while balancing these investments against profitability.”

Conference Call and Webcast Information

Retalix will be holding a conference call to discuss results for the third quarter and nine months of 2012 on Wednesday, November 14th at 9:00 am Eastern Time (4:00 pm Israel Time). This conference can be accessed by all interested parties through the Company's web site at http://www.retalix.com/content/conference-call. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Retalix's web site.

About Retalix

Retalix is a leading global provider of innovative software and services to high volume, high complexity retailers, including supermarkets, convenience stores, fuel stations, drugstores and department stores. The company’s products and services help its customers to manage and optimize their retail operations, differentiate their brand and build consumer loyalty, while providing retailers with the flexibility and scalability to support ongoing business transformation and growth. Retalix offers solutions for point-of-sale (POS), sales channels and in-store management (including mobile and e-commerce), customer management and marketing, merchandising, and logistics. By leveraging a multitude of deployment options, including Software-As-A-Service (SaaS), Retalix serves a large customer base of approximately 70,000 stores across more than 50 countries worldwide. The Company's headquarters are located in Ra'anana, Israel, and its North America headquarters are located in Plano, Texas. Retalix stock trades on the NASDAQ and the Tel Aviv Stock Exchange.

 
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For more information, visit http://www.retalix.com and follow Retalix on Twitter: @Retalix, the contents of which are not part of this press release.

Retalix is a registered trademark of Retalix Ltd. in the United States and in other countries. The names of actual companies, products and services mentioned herein may be the trademarks of their respective owners.

* Note Regarding the Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Retalix uses Non-GAAP measures of operating income, operating margin, net income and earnings per diluted share, which are adjustments from results based on GAAP to exclude non-cash equity based compensation, acquisition related costs and amortization of intangibles related to acquisitions. Retalix's management believes the Non-GAAP financial information provided in this release is useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future. The presentation of this Non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management also uses both GAAP and Non-GAAP information in evaluating and operating its business internally and as such deemed it important to provide this information to investors. Reconciliations between GAAP measures and Non-GAAP measures are contained following the GAAP financial statements in this press release.

Safe Harbor for Forward-Looking Statements: Except for statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and U.S. federal securities laws. For example, the statements regarding our "Outlook for FY 2012" including our expected results, growth, investments, demand, markets and opportunities, all involve forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Retalix, including revenues, income and expenses, to be materially different from any future results, performance or achievements or other guidance or outlooks expressed or implied by such forward-looking statements. Such factors include risks relating to Retalix’s anticipated future financial performance and growth, continued roll-outs with existing customers, continued interest in Retalix’s new platforms, the perception by leading retailers of Retalix’s reputation, the potential benefits to food and fuel retailers and distributors, expansion into new geographic markets, and other factors over which Retalix may have little or no control.  This list is intended to identify only certain of the principal factors that could cause actual results to differ.  Readers are referred to the reports and documents filed by Retalix with the Securities and Exchange Commission, including Retalix’s Annual Report on Form 20-F for the year ended December 31, 2011, for a discussion of these and other important risk factors. Except as required by law, Retalix undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
 
 
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RETALIX LTD.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data) (unaudited)
 
   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
Revenues:
                       
Product sales
  $ 14,632     $ 13,557     $ 42,311     $ 37,637  
Services
    55,905       48,006       162,116       135,899  
Total revenues
    70,537       61,563       204,427       173,536  
Cost of revenues:
                               
Cost of product sales
    8,388       8,147       24,647       23,358  
Cost of services
    32,452       28,120       93,723       77,630  
Total cost of revenues
    40,840       36,267       118,370       100,988  
Gross profit
    29,697       25,296       86,057       72,548  
Operating expenses:
                               
Research and development
    9,356       8,333       27,041       23,397  
Selling and marketing
    7,737       6,841       23,669       18,793  
General and administrative
    7,483       7,152       21,559       20,204  
Total operating expenses
    24,576       22,326       72,269       62,394  
                                 
Operating income
    5,121       2,970       13,788       10,154  
Financial income (expenses), net
    (138 )     1,104       1,163       1,216  
Share in income of an associated company
    -       -       -       38  
Income before income taxes
    4,983       4,074       14,951       11,408  
Income taxes
    (1,219 )     1,539       (3,735 )     (388 )
Net income
    3,764       5,613       11,216       11,020  
Net income attributable to non-controlling interests
    (152 )     (151 )     (399 )     (441 )
Net income attributable to Retalix Ltd.
  $ 3,612     $ 5,462     $ 10,817     $ 10,579  
                                 
Earnings per share:
                               
Basic
  $ 0.15     $ 0.23     $ 0.44     $ 0.44  
Diluted
  $ 0.14     $ 0.22     $ 0.43     $ 0.43  
Weighted average number of shares used in
     computation of earnings per share:
                               
Basic
    24,641       24,254       24,563       24,197  
Diluted
    25,595       24,717       25,450       24,692  

 
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RETALIX LTD.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
 
   
September 30,
   
December 31,
 
   
2012
   
2011
 
   
(Unaudited)
   
(Audited)
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 127,078     $ 38,644  
Short-term deposits and marketable securities
    6,008       96,009  
Trade receivables
    77,125       56,721  
Inventories
    1,459       1,407  
Other receivables
    7,584       5,234  
Prepaid expense and other current assets
    9,922       8,669  
Total current assets
    229,176       206,684  
Non-current assets:
               
Amounts funded in respect of employee rights upon retirement
    9,903       10,329  
Deferred income taxes
    11,256       11,385  
Other non-current assets
    3,514       3,808  
Property, plant and equipment, net
    19,293       17,586  
Goodwill and other intangible assets, net of accumulated amortization
    90,871       82,288  
Total assets
  $ 364,013     $ 332,080  
LIABILITIES AND EQUITY
               
Current liabilities:
               
Trade payables
  $ 9,266     $ 6,855  
Employees and employee institutions
    15,306       10,913  
Other accrued expenses
    19,674       19,145  
Deferred revenues
    24,999       19,071  
Total current liabilities
    69,245       55,984  
Non-current liabilities:
               
Employee rights upon retirement
    15,502       14,220  
Other non-current liabilities
    9,743       7,705  
Total liabilities
    94,490       77,909  
Retalix shareholders’ equity:
               
Share capital -Ordinary shares of NIS 1.00 par value authorized: September 30, 2012, December 31, 2011 - 50,000 shares; issued and outstanding: September 30, 2012 - 24,676 shares; December 31, 2011 - 24,486 shares;
    6,513       6,464  
Additional paid in capital
    221,475       217,715  
Retained earnings 
    35,669       24,852  
Accumulated other comprehensive income 
    708       273  
Total Retalix shareholders’ equity
    264,365       249,304  
Non-controlling interest
    5,158       4,867  
Total equity
    269,523       254,171  
Total liabilities and equity
  $ 364,013     $ 332,080  

 
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RETALIX LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
 
   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Cash flows from operating activities:
                       
Net income
  $ 3,764     $ 5,613     $ 11,216     $ 11,020  
Adjustments required to reconcile net income to net cash provided by operating activities:
                               
Depreciation and amortization
    2,164       1,615       6,103       4,335  
Stock based compensation expenses
    664       607       2,080       1,791  
Changes in accrued liability for employee rights upon retirement
    292       (414 )     (144 )     1,307  
Deferred income taxes - net
    550       (2,231 )     2,408       (931 )
Other
    (54 )     1,250       (2 )     701  
Net changes in operating assets and liabilities:
                               
Trade receivables
    (3,438 )     (2,690 )     (17,642 )     (3,159 )
Trade payables
    (1,903 )     2,200       2,346       1,611  
Deferred revenues
    996       (746 )     5,592       2,893  
Other assets
    2,313       (1,119 )     2,262       440  
Net cash provided by operating activities
    5,348       4,085       14,219       20,008  
                                 
Cash flows from investing activities:
                               
Proceeds from (investment in) short term deposits
    (6,000 )     32,000       90,000       9,000  
Business purchased net of cash acquired
    (10,803 )     (16,930 )     (10,803 )     (16,930 )
Purchase of property, plant and equipment
    (1,569 )     (2,048 )     (4,859 )     (3,841 )
Other investing activities
    110       (388 )     421       558  
Net cash provided by (used in) investing activities
    (18,262 )     12,634       74,759       (11,213 )
                                 
Cash flows from financing activities:
                               
Payment of contingent consideration
    (2,090 )     -       (2,090 )     -  
Proceeds from exercise of options
    690       611       1,728       683  
Repayment of long-term bank loans
    -       -       -       (273 )
Net cash provided by (used in) financing activities
    (1,400 )     611       (362 )     410  
Effect of exchange rate changes on cash
    131       (765 )     (182 )     (274 )
Net change in cash and cash equivalents
    (14,183 )     16,565       88,434       8,931  
Balance of cash and cash equivalents at beginning of period
    141,261       69,432       38,644       77,066  
Balance of cash and cash equivalents at end of period
  $ 127,078     $ 85,997     $ 127,078     $ 85,997  
 
 
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RETALIX LTD.
RECONCILIATION OF GAAP TO NON GAAP FINANCIAL INFORMATION
(in thousands, except per share data) (unaudited)
 
   
Three months ended
September 30,
   
Nine months ended
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
GAAP operating income
  $ 5,121     $ 2,970     $ 13,788     $ 10,154  
GAAP operating  as percentage of revenues
    7.3 %     4.8 %     6.7 %     5.9 %
                                 
Amortization of acquisition-related intangible assets 1
    1,027       874       3,081       2,322  
Stock based compensation expenses 2
    728       607       2,144       1,791  
Acquisition related costs
    463       1,032       1,227       1,032  
Non-GAAP operating income
  $ 7,339     $ 5,483     $ 20,240     $ 15,299  
Non-GAAP operating as a percentage of revenues
    10.4 %     8.9 %     9.9 %     8.8 %
                                 
GAAP net income
  $ 3,612     $ 5,462     $ 10,817     $ 10,579  
Amortization of acquisition-related intangible assets 1
    1,027       874       3,081       2,322  
Stock based compensation expenses 2
    728       607       2,144       1,791  
Acquisition related costs
    463       1,032       1,227       1,032  
Tax effects of the above items
    (552 )     (236 )     (1,791 )     (821 )
Non-GAAP net income
  $ 5,278     $ 7,739     $ 15,478     $ 14,903  
                                 
Net income per diluted share
                               
GAAP net income per diluted share
  $ 0.14     $ 0.22     $ 0.43     $ 0.43  
Amortization of acquisition-related intangible assets
    0.04       0.04       0.12       0.09  
Stock based compensation expenses
    0.03       0.02       0.08       0.07  
Acquisition related costs
    0.02       0.04       0.05       0.04  
Tax effects of the above items
    (0.02 )     (0.01 )     (0.07 )     (0.03 )
Non-GAAP net income per diluted share
  $ 0.21     $ 0.31     $ 0.61     $ 0.60  
                                 
Shares used in computing diluted net income per share
    25,595       24,717       25,450       24,692  
                                 
1)   Classification of amortization of acquisition-related intangible assets:
 
                       
Cost of product sales
  $ 810     $ 605     $ 2,430     $ 1,672  
Cost of services
    215       212       645       587  
General and administrative
    2       57       6       63  
Total
  $ 1,027     $ 874     $ 3,081     $ 2,322  
                                 
2)   Classification of stock-based compensation expense:
     
                                 
Cost of product sales
  $ 23     $ 9     $ 71     $ 24  
Cost of services
    231       90       721       245  
Research and development
    104       36       327       93  
Selling and marketing
    74       106       228       308  
General and administrative
    296       366       797       1,121  
Total
  $ 728     $ 607     $ 2,144     $ 1,791  

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