Ohio | 000-5734 | 34-0907152 | ||
(State or other jurisdiction | (Commission File Number) | (IRS Employer Identification No.) | ||
of incorporation) |
425 Walnut Street, Suite 1800 Cincinnati, Ohio | 45202 | |
(Address of principal executive offices) | (ZIP Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition; and | |
Item 7.01 | Regulation FD Disclosure |
Item 9.01 | Financial Statements and Exhibits |
Exhibit Number | Description | |
99.1 | Press release issued by Agilysys, Inc. dated February 9, 2017, announcing its results for the third quarter and period ended December 31, 2016. |
AGILYSYS, INC. | |||
By: | /s/ Anthony S. Pritchett | ||
Anthony S. Pritchett | |||
Interim Chief Financial Officer | |||
Exhibit Number | Description | |
99.1 | Press release issued by Agilysys, Inc. dated February 9, 2017, announcing its results for the third quarter and period ended December 31, 2016. |
• | Total net revenue was $33.4 million, compared to total net revenue of $31.3 million in the comparable prior-year period. |
• | Recurring revenues (which are comprised of support, maintenance and subscription services) were a quarterly record $16.2 million, or 49% of total net revenue, compared to $14.9 million, or 48% of total net revenue, for the same period in fiscal 2016. SaaS revenues increased 48% year over year and comprised 24% of total recurring revenues, compared to 18% of total recurring revenues in the third quarter of fiscal 2016. |
• | Gross margin was 48.6% in the fiscal 2017 third quarter, compared to 52.7% in the prior-year period. Fiscal 2017 third 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. |
• | Net loss in the fiscal 2017 third quarter was $(1.7) million, or $(0.08) per diluted share, compared to a net loss of $(1.7) million, or $(0.07) per diluted share, in the prior-year period. |
• | Adjusted EBITDA (non-GAAP) was $3.0 million, compared to Adjusted EBITDA of $0.6 million in the same period last year (see reconciliation below). |
• | Total net revenue was $97.1 million, compared to total net revenue of $88.4 million in the comparable prior-year period. |
• | Recurring revenues (which are comprised of support, maintenance and subscription services) were $47.1 million, or 49% of total net revenue, compared to $44.5 million, or 50% of total net revenue, in the first nine months of fiscal 2016. SaaS revenues increased 42% year over year and comprised 23% of total recurring revenues, compared to 17% of total recurring revenues in the first nine months of fiscal 2016. |
• | Gross margin was 49.8% in the first nine months of fiscal 2017, compared to 57.1% in the comparable year-ago period. The Company’s gross margin for the first nine months of fiscal 2017 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. |
• | Net loss in the first nine months of fiscal 2017 was $(6.4) million, or $(0.28) per diluted share, compared to a net loss of $(2.2) million, or $(0.10) per diluted share, in the first nine months of fiscal 2016. |
• | Adjusted EBITDA (non-GAAP) was $4.7 million, compared to Adjusted EBITDA of $3.3 million in the same period last year (see reconciliation below). |
(In thousands, except per share data) | Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net revenue: | |||||||||||||||
Products | $ | 10,006 | $ | 11,924 | $ | 30,257 | $ | 30,678 | |||||||
Support, maintenance and subscription services | 16,234 | 14,896 | 47,087 | 44,460 | |||||||||||
Professional services | 7,208 | 4,487 | 19,732 | 13,304 | |||||||||||
Total net revenue | 33,448 | 31,307 | 97,076 | 88,442 | |||||||||||
Cost of goods sold: | |||||||||||||||
Products (inclusive of developed technology amortization) | 7,530 | 6,991 | 22,217 | 17,035 | |||||||||||
Support, maintenance and subscription services | 4,464 | 4,076 | 12,714 | 11,413 | |||||||||||
Professional services | 5,213 | 3,732 | 13,835 | 9,496 | |||||||||||
Total cost of goods sold | 17,207 | 14,799 | 48,766 | 37,944 | |||||||||||
Gross profit | 16,241 | 16,508 | 48,310 | 50,498 | |||||||||||
Gross profit margin | 48.6 | % | 52.7 | % | 49.8 | % | 57.1 | % | |||||||
Operating expenses: | |||||||||||||||
Product development | 6,847 | 6,969 | 20,647 | 20,021 | |||||||||||
Sales and marketing | 5,000 | 4,618 | 15,746 | 14,396 | |||||||||||
General and administrative | 3,678 | 5,517 | 13,692 | 15,897 | |||||||||||
Depreciation of fixed assets | 598 | 569 | 1,791 | 1,627 | |||||||||||
Amortization of intangibles | 353 | 321 | 1,031 | 937 | |||||||||||
Restructuring, severance and other charges | 1,394 | 8 | 1,484 | (53 | ) | ||||||||||
Asset write-offs and other fair value adjustments | — | — | — | (175 | ) | ||||||||||
Legal settlements | — | 185 | 85 | 185 | |||||||||||
Operating loss | (1,629 | ) | (1,679 | ) | (6,166 | ) | (2,337 | ) | |||||||
Other (income) expense: | |||||||||||||||
Interest income | (86 | ) | (21 | ) | (135 | ) | (70 | ) | |||||||
Interest expense | 3 | 8 | 11 | 20 | |||||||||||
Other expense, net | 62 | 63 | 140 | 40 | |||||||||||
Loss before taxes | (1,608 | ) | (1,729 | ) | (6,182 | ) | (2,327 | ) | |||||||
Income tax expense (benefit) | 129 | (56 | ) | 252 | (100 | ) | |||||||||
Net loss | $ | (1,737 | ) | $ | (1,673 | ) | $ | (6,434 | ) | $ | (2,227 | ) | |||
Weighted average shares outstanding | 22,611 | 22,493 | 22,605 | 22,479 | |||||||||||
Loss per share - basic and diluted: | |||||||||||||||
Loss per share | $ | (0.08 | ) | $ | (0.07 | ) | $ | (0.28 | ) | $ | (0.10 | ) |
(In thousands, except share data) | December 31, 2016 | March 31, 2016 | |||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 52,713 | $ | 60,608 | |||
Accounts receivable, net of allowance for doubtful accounts of $654 and $617, respectively | 15,308 | 22,017 | |||||
Inventories | 2,084 | 2,692 | |||||
Prepaid expenses and other current assets | 8,593 | 10,184 | |||||
Total current assets | 78,698 | 95,501 | |||||
Property and equipment, net | 13,829 | 14,197 | |||||
Goodwill | 19,622 | 19,622 | |||||
Intangible assets, net | 8,542 | 8,576 | |||||
Software development costs, net | 48,537 | 44,215 | |||||
Other non-current assets | 2,477 | 3,046 | |||||
Total assets | $ | 171,705 | $ | 185,157 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 8,623 | $ | 7,761 | |||
Deferred revenue | 27,243 | 33,241 | |||||
Accrued liabilities | 10,622 | 12,980 | |||||
Capital lease obligations, current | 119 | 118 | |||||
Total current liabilities | 46,607 | 54,100 | |||||
Deferred income taxes, non-current | 3,180 | 3,075 | |||||
Capital lease obligations, non-current | 136 | 215 | |||||
Other non-current liabilities | 4,076 | 4,294 | |||||
Shareholders' equity: | |||||||
Common shares, without par value, at $0.30 stated value; 80,000,000 shares authorized; 31,606,831 shares issued; and 23,207,376 and 22,942,586 shares outstanding at December 31, 2016 and March 31, 2016, respectively | 9,482 | 9,482 | |||||
Treasury shares, 8,399,455 and 8,664,245 at December 31, 2016 and March 31, 2016, respectively | (2,521 | ) | (2,600 | ) | |||
Capital in excess of stated value | (7,045 | ) | (7,645 | ) | |||
Retained earnings | 117,979 | 124,413 | |||||
Accumulated other comprehensive loss | (189 | ) | (177 | ) | |||
Total shareholders' equity | 117,706 | 123,473 | |||||
Total liabilities and shareholders' equity | $ | 171,705 | $ | 185,157 |
Nine Months Ended | |||||||
(In thousands) | December 31, | ||||||
2016 | 2015 | ||||||
Operating activities | |||||||
Net loss | $ | (6,434 | ) | $ | (2,227 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities | |||||||
Net restructuring, severance and other charges | 819 | (643 | ) | ||||
Net legal settlements | (100 | ) | 170 | ||||
Asset write-offs and other fair value adjustments | — | (175 | ) | ||||
Loss on disposal of property & equipment | 5 | 262 | |||||
Depreciation | 1,791 | 1,627 | |||||
Amortization | 1,031 | 937 | |||||
Amortization of developed technology | 5,705 | 767 | |||||
Deferred income taxes | 105 | — | |||||
Share-based compensation | 782 | 2,318 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 6,668 | 4,527 | |||||
Inventories | 597 | (1,696 | ) | ||||
Prepaid expense | 1,306 | (2,769 | ) | ||||
Accounts payable | 714 | (4,399 | ) | ||||
Deferred revenue | (4,601 | ) | 5,516 | ||||
Accrued liabilities | (2,558 | ) | 4,394 | ||||
Income taxes payable | 104 | (65 | ) | ||||
Other changes, net | (541 | ) | (230 | ) | |||
Net cash provided by operating activities | 5,393 | 8,314 | |||||
Investing activities | |||||||
Capital expenditures | (2,199 | ) | (3,617 | ) | |||
Capitalized software development costs | (10,302 | ) | (13,488 | ) | |||
Investments in corporate-owned life insurance policies | (1 | ) | (65 | ) | |||
Net cash used in investing activities | (12,502 | ) | (17,170 | ) | |||
Financing activities | |||||||
Payments to settle contingent consideration arising from business acquisition | (197 | ) | — | ||||
Repurchase of common shares to satisfy employee tax withholding | (404 | ) | (435 | ) | |||
Principal payments under long-term obligations | (86 | ) | (29 | ) | |||
Net cash used in financing activities | (687 | ) | (464 | ) | |||
Effect of exchange rate changes on cash | (99 | ) | (95 | ) | |||
Net decrease in cash and cash equivalents | (7,895 | ) | (9,415 | ) | |||
Cash and cash equivalents at beginning of period | 60,608 | 75,067 | |||||
Cash and cash equivalents at end of period | $ | 52,713 | $ | 65,652 | |||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES: | |||||||
Accrued capital expenditures | $ | 293 | $ | 261 | |||
Accrued capitalized software development costs | 684 | 505 | |||||
Leasehold improvements acquired under operating lease arrangement | — | 997 |
(In thousands) | Three Months Ended | Nine Months Ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net loss | $ | (1,737 | ) | $ | (1,673 | ) | $ | (6,434 | ) | $ | (2,227 | ) | ||||
Income tax expense (benefit) | 129 | (56 | ) | 252 | (100 | ) | ||||||||||
Loss before taxes | (1,608 | ) | (1,729 | ) | (6,182 | ) | (2,327 | ) | ||||||||
Depreciation of fixed assets | 598 | 569 | 1,791 | 1,627 | ||||||||||||
Amortization of intangibles | 353 | 321 | 1,031 | 937 | ||||||||||||
Amortization of developed technology | 2,307 | 255 | 5,705 | 766 | ||||||||||||
Interest (income) expense | (83 | ) | (13 | ) | (124 | ) | (50 | ) | ||||||||
EBITDA (b) | 1,567 | (597 | ) | 2,221 | 953 | |||||||||||
Share-based compensation | (58 | ) | 917 | 782 | 2,317 | |||||||||||
Restructuring, severance and other charges | 1,394 | 8 | 1,484 | (53 | ) | |||||||||||
Asset write-offs and other fair value adjustments | — | — | — | (175 | ) | |||||||||||
Other non-operating (income) expense | 62 | 63 | 140 | 40 | ||||||||||||
Legal settlements | — | 185 | 85 | 185 | ||||||||||||
Adjusted EBITDA (a) | $ | 2,965 | $ | 576 | $ | 4,712 | $ | 3,267 | ||||||||
(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 | ||||||||||||||||
Nine Months Ended | |||||||
(In thousands) | December 31, | ||||||
2016 | 2015 | ||||||
Operating activities: | |||||||
Net cash provided by operating activities | $ | 5,393 | $ | 8,314 | |||
Non-recurring cash items: | |||||||
Payments for restructuring, severance and other charges | 665 | 590 | |||||
Payments for legal settlements | 185 | 15 | |||||
Adjusted cash provided by operating activities (a) | $ | 6,243 | $ | 8,919 | |||
(a) Non-GAAP financial measure |
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