Agilysys Reports Unaudited Fiscal 2010 Third-Quarter and Nine-Month Results

Printer-friendly versionPDF version

• Revenue Increases 41% Sequentially as IT Demand Stabilizes

• Quarterly Earnings Increase Significantly to $0.64 Per Diluted Share, Versus Loss of $0.17 Per-Share in Prior-Year’s Quarter

To view the full press release and financial statements in a PDF format,

color="#65c77e">

CLEVELAND—February 3, 2010—Agilysys, Inc. (Nasdaq: AGYS), a leading provider of innovative IT solutions, today announced unaudited financial results for the fiscal 2010 third quarter and nine months ended December 31, 2009.

Fiscal 2010 Third-Quarter Unaudited Results of Operations
Revenue declined 1.7% to $220.4 million from the $224.1 million reported in the third quarter of fiscal 2009. Compared with the prior-year period, hardware sales increased 12.6%, offset by a 39.1% decline in services revenue. Software revenue during the quarter was down slightly compared with last year. Due to a higher proportion of hardware sales and lower service revenue, consolidated gross margin declined to 23.3% of sales during the period, compared with 26.3% in the prior year.

Cost-cutting initiatives and lower acquisition-related intangible amortization drove selling, general and administrative (SG&A) expense down $7.0 million, or 14.7%, to $40.5 million during the quarter. Operating income increased $11.8 million to $9.9 million, a substantial improvement from the operating loss of $1.9 million in last year’s quarter. Last year’s quarterly loss included $13.4 million in restructuring charges, compared with restructuring charges recorded in the current quarter of $0.7 million. Adjusted EBITDA (operating income plus depreciation and amortization) increased to $13.0 million for the quarter, compared with $4.8 million a year ago.

“The solid performance in the quarter reflects a stabilizing demand environment and our focus on managing cost structure,” said Martin Ellis, president and chief executive officer. “We are pleased to report that our turnaround remains on track as we generated strong net earnings during the quarter.”

Agilysys reported third-quarter net income of $14.9 million, or $0.64 per diluted share, a significant increase from the loss of $3.7 million, or $0.17 per diluted share, recorded in the previous year’s quarter. Other income in the quarter included $2.3 million from a litigation settlement and $2.4 million from the gain recognized on a distribution from the Reserve Fund. Combined these items represented $0.18 per diluted share.

Fiscal 2010 Nine-Month Unaudited Results of Operations

Nine-month fiscal 2010 revenue was $506.0 million versus $575.3 million in the comparable period of fiscal 2009, reflecting lower sales in each of the company’s three business segments. Hardware, software and services posted declines of 2.5%, 5.2%, and 39.3% respectively, versus the comparable period a year ago. Gross margin declined to 25.1% from 27.1% in last year’s nine months due to the mix of higher hardware and lower services.

SG&A declined by $30.7 million, or 19.8%, to $124.7 million, largely due to cost-reduction initiatives. Adjusted EBITDA was $14.0 million for the nine-month period, versus a loss of $161.2 million in the fiscal 2009 nine-months, which included asset impairment and restructuring charges of $182.6 million. The company reported net income of $5.3 million, or $0.23 per diluted share, for the fiscal 2010 nine-month period, compared with a net loss of $170.3 million, or $7.54 per share, in the same year-ago period.
 

Business Outlook

“Uncertainty remains regarding the macroeconomic environment and the prospects for growth in demand for IT products and services. However, we are encouraged by the improving demand environment we’ve seen in the past two quarters. Near-term, we are optimistic regarding our outlook for the final quarter of the fiscal year and expect improved year-over-year financial performance. We have successfully restructured the organization to be profitable at lower revenue levels and are now well positioned with the operating leverage to capitalize on any future increase in IT spending,” said Ellis.

Conference Call Information

A conference call will be held at 11:00 a.m. ET today to review unaudited fiscal 2010 third-quarter and nine-month 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

www.agilysys.com

. Additionally, a replay of the call will be archived on the website.

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 presentation 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, 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, and unanticipated deterioration in economic and financial conditions in the United States and around the world or the consequences if the shareholders either approve or fail to approve the proposed Control Share Acquisition by MAK Capital announced on November 20, 2009. We do 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 the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC), under Item 1A, “Risk Factors.” 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 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 and is a measure used in the Company’s debt agreement. The non-GAAP measures included in this release have been reconciled to the comparable GAAP measures within an accompanying table, shown on the last page of this release.

About Agilysys, Inc.

Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The company uses technology — including hardware, software and services — to help customers resolve their most complicated IT needs. The company possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, identity management and business continuity; and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales and support offices in the United Kingdom, Singapore and Hong Kong.

News releases and other information on Agilysys are available on the Internet at:

www.agilysys.com

.

Investor Contact:

Curtis Stout
Vice President and Treasurer
Agilysys, Inc. 
440-519-8635

curtis.stout@agilysys.com

Media Contact:

Maureen Morreale
Senior Communications Manager
Agilysys, Inc.
440-519-8161

maureen.morreale@agilysys.com

News Source : Agilysys Reports Unaudited Fiscal 2010 Third-Quarter and Nine-Month Results