Completes Acquisitions of Granta Design
Limited and Helic, Inc.
ANSYS, Inc. (NASDAQ: ANSS), today reported fourth quarter 2018 GAAP
and non-GAAP revenue growth of 11% and 12%, respectively, or 13%
and 14%, respectively, in constant currency. For FY 2018, GAAP and
non-GAAP revenue growth was 11% and 12%, respectively, or 10% and
11% in constant currency. For the fourth quarter, the Company
reported growth in diluted earnings per share of 70% and 30% on a
GAAP and non-GAAP basis, respectively. For FY 2018, the Company
reported growth in diluted earnings per share of 39% and 32% on a
GAAP and non-GAAP basis, respectively.
Ajei Gopal, ANSYS President and CEO, commented,
“Q4 was an outstanding quarter capping a stellar 2018. We grew
double-digits across all key financial metrics for the quarter and
the year. I am confident we are tracking towards our 2020
objective of sustained, double-digit revenue growth at industry
leading margins.”
In addition, Gopal stated, “I am looking forward
to 2019. Our vision of making simulation pervasive across the
product lifecycle is resonating with customers and partners. With a
product portfolio that is stronger than ever, I am proud that we
can solve many of the challenging problems faced by our customers
as they bring next-generation products to market. With our
continued focus on transforming our go-to-market, and with new
partnerships with leading companies who are licensing ANSYS
technology, we are unlocking future opportunities. I am excited
about our growth prospects in 2019 and beyond.”
Maria Shields, ANSYS CFO, stated, “Our
outstanding financial performance reflects the strength of our core
business and our continued dedication and focus on execution, both
during the fourth quarter and for the entire year. We set new
company records across all key financial metrics including our Q4
and full year 2018 revenue, ACV, earnings and operating cash flows.
To achieve both our near-term and longer-term growth objectives, we
will move forward with investments in our core products,
high-growth adjacent markets and our business infrastructure to
continue building the platform to scale our business.”
Financial Results
ANSYS' fourth quarter and fiscal year 2018 and
2017 financial results are presented below. The 2018 and 2017
non-GAAP results exclude the income statement effects of
acquisition adjustments to deferred revenue, stock-based
compensation, amortization of acquired intangible assets,
acquisition-related transaction costs, restructuring charges and
measurement-period adjustments related to the 2017 Tax Cuts and
Jobs Act.
|
|
|
|
GAAP and non-GAAP
results under ASC 606: |
|
|
|
|
GAAP |
|
Non-GAAP |
(in millions,
except percentages and per share data) |
Q4 2018 |
|
Q4 2018 |
Revenue |
$ |
415.4 |
|
|
$ |
418.0 |
|
Net income |
$ |
153.2 |
|
|
$ |
182.1 |
|
Diluted earnings per
share |
$ |
1.79 |
|
|
$ |
2.13 |
|
Operating profit
margin |
43.3 |
% |
|
51.6 |
% |
|
GAAP |
|
Non-GAAP |
(in millions,
except percentages and per share data) |
FY 2018 |
|
FY 2018 |
Revenue |
$ |
1,293.6 |
|
|
$ |
1,303.1 |
|
Net income |
$ |
419.4 |
|
|
$ |
513.9 |
|
Diluted earnings per
share |
$ |
4.88 |
|
|
$ |
5.98 |
|
Operating profit
margin |
36.8 |
% |
|
47.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP and non-GAAP results under ASC 605:
|
GAAP |
|
Non-GAAP |
(in millions,
except percentages and per share data) |
Q4 2018 |
|
Q4 2017 |
|
% Change |
|
Q4 2018 |
|
Q4 2017 |
|
% Change |
Revenue |
$ |
335.9 |
|
|
$ |
302.3 |
|
|
11 |
% |
|
$ |
340.1 |
|
|
$ |
303.4 |
|
|
12 |
% |
Net income |
$ |
88.6 |
|
|
$ |
52.6 |
|
|
68 |
% |
|
$ |
118.6 |
|
|
$ |
92.8 |
|
|
28 |
% |
Diluted earnings per
share |
$ |
1.04 |
|
|
$ |
0.61 |
|
|
70 |
% |
|
$ |
1.39 |
|
|
$ |
1.07 |
|
|
30 |
% |
Operating profit
margin |
29.9 |
% |
|
33.3 |
% |
|
|
|
40.5 |
% |
|
42.6 |
% |
|
|
|
GAAP |
|
Non-GAAP |
(in millions,
except percentages and per share data) |
FY 2018 |
|
FY 2017 |
|
% Change |
|
FY 2018 |
|
FY 2017 |
|
% Change |
Revenue |
$ |
1,216.5 |
|
|
$ |
1,095.3 |
|
|
11 |
% |
|
$ |
1,232.1 |
|
|
$ |
1,098.1 |
|
|
12 |
% |
Net income |
$ |
356.9 |
|
|
$ |
259.3 |
|
|
38 |
% |
|
$ |
455.7 |
|
|
$ |
347.9 |
|
|
31 |
% |
Diluted earnings per
share |
$ |
4.15 |
|
|
$ |
2.98 |
|
|
39 |
% |
|
$ |
5.30 |
|
|
$ |
4.01 |
|
|
32 |
% |
Operating profit
margin |
32.8 |
% |
|
35.7 |
% |
|
|
|
44.4 |
% |
|
46.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The non-GAAP financial results highlighted
above, and the non-GAAP financial outlook for 2019 discussed below,
represent non-GAAP financial measures. Reconciliations of these
measures to the appropriate GAAP measures, for the three and twelve
months ended December 31, 2018 and 2017, and for the 2019
financial outlook, are included in the condensed financial
information included in this release.
|
Other Financial Metrics |
|
(in millions,
except percentages) |
Q4 2018 |
|
Q4 2017 |
|
% Change |
|
% Change in Constant Currency |
Annual contract value
(ACV) |
$ |
480.5 |
|
|
$ |
380.7 |
|
|
26 |
% |
|
28 |
% |
Operating cash
flows |
$ |
132.9 |
|
|
$ |
103.5 |
|
|
28 |
% |
|
|
(in millions,
except percentages) |
FY 2018 |
|
FY 2017 |
|
% Change |
|
% Change in Constant Currency |
ACV |
$ |
1,325.2 |
|
|
$ |
1,123.9 |
|
|
18 |
% |
|
17 |
% |
Operating cash
flows |
$ |
486.4 |
|
|
$ |
430.4 |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACV, or Annual Contract Value, is a financial
performance metric that we introduced in 2018. We believe this new
measure is an improved metric as compared to the historically
provided bookings metric because it adjusts the sales bookings
metric to reflect only the annual value of a contract and also
adjusts to reflect the sales booking at the date of the contract
inception or renewal. There is no GAAP measure comparable to ACV.
ACV is composed of the following:
- the annualized value of maintenance and lease contracts with
start dates or anniversary dates during the period, plus
- the value of perpetual license contracts with start dates
during the period, plus
- the annualized value of fixed-term services contracts with
start dates or anniversary dates during the period, plus
- the value of work performed during the period on
fixed-deliverable services contracts.
Management's 2019 Financial
Outlook
The Company's first quarter and fiscal year 2019
revenue and diluted earnings per share guidance is provided below.
The revenue and diluted earnings per share guidance are provided on
both a GAAP and a non-GAAP basis, in accordance with ASC 606.
Non-GAAP financial measures exclude the income statement effects of
acquisition adjustments to deferred revenue, stock-based
compensation, amortization of acquired intangible assets and
acquisition-related transaction costs.
The financial guidance below includes the impact
of the Company's acquisitions of Granta and Helic, which closed
during the first quarter of 2019.
First Quarter 2019 Guidance
The Company currently expects the following for
the quarter ending March 31, 2019:
(in millions,
except per share data) |
GAAP |
|
Non-GAAP |
Revenue |
$286.0 - $308.0 |
|
$290.0 - $310.0 |
Diluted earnings per
share |
$0.61 - $0.82 |
|
$0.98 - $1.11 |
|
|
|
|
Fiscal Year 2019 Guidance
The Company currently expects the following for the fiscal year
ending December 31, 2019:
(in millions,
except per share data) |
GAAP |
|
Non-GAAP |
Revenue |
$1,400.0 -
$1,465.0 |
|
$1,410.0 -
$1,470.0 |
Diluted earnings per
share |
$3.98 - $4.61 |
|
$5.55 - $6.00 |
(in
millions) |
Other
Financial Metrics |
ACV |
$1,410.0 -
$1,465.0 |
Operating cash
flows |
$470.0 - $510.0 |
|
|
During Q1 2019, we acquired Granta and Helic for
a combined purchase price of approximately $261.5 million. The
acquisition of Granta, the premier provider of materials
information technology, expands the Company's portfolio into this
important area, giving customers access to material intelligence,
including data that is critical to successful simulations. The
acquisition of Helic, the industry-leading provider of
electromagnetic crosstalk solutions for systems on chips, combined
with our flagship electromagnetic and semiconductor solvers, will
provide a comprehensive solution for on-chip, 3D integrated circuit
and chip-package-system electromagnetics and noise analysis.
Conference Call Information
ANSYS will hold a conference call
at 8:30 a.m. Eastern Time on
February 28, 2019 to discuss fourth quarter and fiscal year
2018 results. The Company will provide its prepared remarks on the
Company’s investor relations homepage and as an exhibit in its Form
8-K in advance of the call to provide shareholders and analysts
with additional time and detail for analyzing its results in
preparation for the conference call. The prepared remarks will not
be read on the call, and only brief remarks will be made prior to
the Q&A session. The Company also posted a complementary
investor presentation titled "4Q 2018 Investor Presentation" that
can be accessed by clicking News & Events, then Presentations
on our website at https://investors.ansys.com.
To participate in the live conference call, dial
855-239-2942 (US) or 412-542-4124 (Canada & Int’l). The call
will be recorded and a replay will be available within two hours
after the call. The replay will be available by dialing (877)
344-7529 (US), (855) 669-9658 (Canada) or (412) 317-0088 (Int’l)
and entering the passcode 10128385. The archived webcast can be
accessed, along with other financial information, on ANSYS' website
at https://investors.ansys.com/news-and-events/events-calendar.
|
|
ANSYS, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance
Sheets |
(Unaudited) |
|
ASC 606 |
|
ASC 605 |
|
ASC 605 |
(in
thousands) |
December 31, 2018 |
|
December 31, 2018 |
|
December 31, 2017 |
ASSETS: |
|
|
|
|
|
Cash & short-term
investments |
$ |
777,364 |
|
|
$ |
777,364 |
|
|
$ |
881,787 |
|
Accounts
receivable, net |
317,700 |
|
|
135,190 |
|
|
124,659 |
|
Goodwill |
1,572,455 |
|
|
1,572,455 |
|
|
1,378,553 |
|
Other
intangibles, net |
211,272 |
|
|
211,272 |
|
|
157,625 |
|
Other
assets |
387,173 |
|
|
522,303 |
|
|
398,999 |
|
Total
assets |
$ |
3,265,964 |
|
|
$ |
3,218,584 |
|
|
$ |
2,941,623 |
|
LIABILITIES
& STOCKHOLDERS' EQUITY: |
|
|
|
|
|
Current
deferred revenue |
$ |
328,584 |
|
|
$ |
526,168 |
|
|
$ |
440,491 |
|
Other
liabilities |
287,833 |
|
|
289,257 |
|
|
255,301 |
|
Stockholders' equity |
2,649,547 |
|
|
2,403,159 |
|
|
2,245,831 |
|
Total
liabilities & stockholders' equity |
$ |
3,265,964 |
|
|
$ |
3,218,584 |
|
|
$ |
2,941,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANSYS, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of
Income |
(Unaudited) |
|
Three Months Ended |
|
Twelve Months Ended |
|
ASC 606 |
|
ASC 605 |
|
ASC 605 |
|
ASC 606 |
|
ASC 605 |
|
ASC 605 |
(in thousands,
except per share data) |
December 31, 2018 |
|
December 31, 2018 |
|
December 31, 2017 |
|
December 31, 2018 |
|
December 31, 2018 |
|
December 31, 2017 |
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
Software licenses |
$ |
226,421 |
|
|
$ |
194,190 |
|
|
$ |
176,596 |
|
|
$ |
576,717 |
|
|
$ |
676,846 |
|
|
$ |
624,964 |
|
Maintenance and service |
189,011 |
|
|
141,728 |
|
|
125,740 |
|
|
716,919 |
|
|
539,623 |
|
|
470,286 |
|
Total revenue |
415,432 |
|
|
335,918 |
|
|
302,336 |
|
|
1,293,636 |
|
|
1,216,469 |
|
|
1,095,250 |
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
|
|
Software licenses |
6,318 |
|
|
11,774 |
|
|
10,224 |
|
|
18,619 |
|
|
36,852 |
|
|
34,421 |
|
Amortization |
3,631 |
|
|
3,631 |
|
|
9,902 |
|
|
27,034 |
|
|
27,034 |
|
|
36,794 |
|
Maintenance and service |
30,140 |
|
|
24,684 |
|
|
20,686 |
|
|
110,232 |
|
|
91,999 |
|
|
78,949 |
|
Total cost of sales |
40,089 |
|
|
40,089 |
|
|
40,812 |
|
|
155,885 |
|
|
155,885 |
|
|
150,164 |
|
Gross profit |
375,343 |
|
|
295,829 |
|
|
261,524 |
|
|
1,137,751 |
|
|
1,060,584 |
|
|
945,086 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative |
133,137 |
|
|
133,137 |
|
|
108,157 |
|
|
413,580 |
|
|
413,580 |
|
|
338,640 |
|
Research and development |
58,896 |
|
|
58,896 |
|
|
49,222 |
|
|
233,802 |
|
|
233,802 |
|
|
202,746 |
|
Amortization |
3,374 |
|
|
3,374 |
|
|
3,466 |
|
|
13,795 |
|
|
13,795 |
|
|
12,972 |
|
Total operating expenses |
195,407 |
|
|
195,407 |
|
|
160,845 |
|
|
661,177 |
|
|
661,177 |
|
|
554,358 |
|
Operating income |
179,936 |
|
|
100,422 |
|
|
100,679 |
|
|
476,574 |
|
|
399,407 |
|
|
390,728 |
|
Interest income |
3,745 |
|
|
3,745 |
|
|
2,135 |
|
|
11,419 |
|
|
11,419 |
|
|
6,962 |
|
Other income (expense), net |
1,381 |
|
|
1,381 |
|
|
(484 |
) |
|
(908 |
) |
|
(908 |
) |
|
(1,996 |
) |
Income before income tax provision |
185,062 |
|
|
105,548 |
|
|
102,330 |
|
|
487,085 |
|
|
409,918 |
|
|
395,694 |
|
Income tax provision |
31,899 |
|
|
16,978 |
|
|
49,745 |
|
|
67,710 |
|
|
53,067 |
|
|
136,443 |
|
Net income |
$ |
153,163 |
|
|
$ |
88,570 |
|
|
$ |
52,585 |
|
|
$ |
419,375 |
|
|
$ |
356,851 |
|
|
$ |
259,251 |
|
Earnings per share – basic: |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
1.83 |
|
|
$ |
1.06 |
|
|
$ |
0.62 |
|
|
$ |
4.99 |
|
|
$ |
4.25 |
|
|
$ |
3.05 |
|
Weighted average shares |
83,699 |
|
|
83,699 |
|
|
84,557 |
|
|
83,973 |
|
|
83,973 |
|
|
84,988 |
|
Earnings per share – diluted: |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
1.79 |
|
|
$ |
1.04 |
|
|
$ |
0.61 |
|
|
$ |
4.88 |
|
|
$ |
4.15 |
|
|
$ |
2.98 |
|
Weighted average shares |
85,472 |
|
|
85,472 |
|
|
86,709 |
|
|
85,913 |
|
|
85,913 |
|
|
86,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANSYS, INC. AND SUBSIDIARIES |
ASC 606 Reconciliation of Non-GAAP
Measures |
(Unaudited) |
|
Three Months Ended |
|
December 31, 2018 |
(in thousands,
except percentages and per share data) |
GAAP Results |
|
Adjustments |
|
Non-GAAP Results |
Total revenue |
$ |
415,432 |
|
|
$ |
2,545 |
|
(1) |
$ |
417,977 |
|
Operating income |
179,936 |
|
|
35,646 |
|
(2) |
215,582 |
|
Operating profit margin |
43.3 |
% |
|
|
|
51.6 |
% |
Net income |
$ |
153,163 |
|
|
$ |
28,919 |
|
(3) |
$ |
182,082 |
|
Earnings per share – diluted: |
|
|
|
|
|
Earnings per share |
$ |
1.79 |
|
|
|
|
$ |
2.13 |
|
Weighted average shares |
85,472 |
|
|
|
|
85,472 |
|
(1) Amount represents the revenue not reported during the period
as a result of the acquisition accounting adjustment associated
with the accounting for deferred revenue in business
combinations.(2) Amount represents $24.5 million of stock-based
compensation expense, $0.5 million of excess payroll taxes related
to stock-based awards, $7.0 million of amortization expense
associated with intangible assets acquired in business
combinations, $1.2 million of transaction expenses related to
business combinations and the $2.5 million adjustment to revenue as
reflected in (1) above.(3) Amount represents the impact of the
adjustments to operating income referred to in (2) above, decreased
for the related income tax impact of $6.9 million and increased for
rabbi trust expense of $0.2 million.
|
|
ANSYS, INC. AND SUBSIDIARIES |
ASC 606 Reconciliation of Non-GAAP
Measures |
(Unaudited) |
|
Twelve Months Ended |
|
December 31, 2018 |
(in thousands,
except percentages and per share data) |
GAAP Results |
|
Adjustments |
|
Non-GAAP Results |
Total revenue |
$ |
1,293,636 |
|
|
$ |
9,442 |
|
(1) |
$ |
1,303,078 |
|
Operating income |
476,574 |
|
|
141,442 |
|
(2) |
618,016 |
|
Operating profit margin |
36.8 |
% |
|
|
|
47.4 |
% |
Net income |
$ |
419,375 |
|
|
$ |
94,510 |
|
(3) |
$ |
513,885 |
|
Earnings per share – diluted: |
|
|
|
|
|
Earnings per share |
$ |
4.88 |
|
|
|
|
$ |
5.98 |
|
Weighted average shares |
85,913 |
|
|
|
|
85,913 |
|
(1) Amount represents the revenue not reported during the period
as a result of the acquisition accounting adjustment associated
with the accounting for deferred revenue in business
combinations.(2) Amount represents $83.3 million of stock-based
compensation expense, $4.3 million of excess payroll taxes related
to stock-based awards, $40.8 million of amortization expense
associated with intangible assets acquired in business
combinations, $3.5 million of transaction expenses related to
business combinations and the $9.4 million adjustment to revenue as
reflected in (1) above.(3) Amount represents the impact of the
adjustments to operating income referred to in (2) above, decreased
for the related income tax impact of $47.9 million and increased
for a measurement-period adjustment related to the Tax Cuts and
Jobs Act of $0.9 million and rabbi trust expense of $0.1
million.
|
|
ANSYS, INC. AND SUBSIDIARIES |
ASC 605 Reconciliation of Non-GAAP
Measures |
(Unaudited) |
|
Three Months Ended |
|
December 31, 2018 |
|
December 31, 2017 |
(in thousands,
except percentages and per share data) |
GAAP Results |
|
Adjustments |
|
Non-GAAP Results |
|
GAAP Results |
|
Adjustments |
|
Non-GAAP Results |
Total revenue |
$ |
335,918 |
|
|
$ |
4,147 |
|
(1) |
$ |
340,065 |
|
|
$ |
302,336 |
|
|
$ |
1,108 |
|
(4) |
$ |
303,444 |
|
Operating income |
100,422 |
|
|
37,248 |
|
(2) |
137,670 |
|
|
100,679 |
|
|
28,582 |
|
(5) |
129,261 |
|
Operating profit margin |
29.9 |
% |
|
|
|
40.5 |
% |
|
33.3 |
% |
|
|
|
42.6 |
% |
Net income |
$ |
88,570 |
|
|
$ |
30,005 |
|
(3) |
$ |
118,575 |
|
|
$ |
52,585 |
|
|
$ |
40,183 |
|
(6) |
$ |
92,768 |
|
Earnings per share – diluted: |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
1.04 |
|
|
|
|
$ |
1.39 |
|
|
$ |
0.61 |
|
|
|
|
$ |
1.07 |
|
Weighted average shares |
85,472 |
|
|
|
|
85,472 |
|
|
86,709 |
|
|
|
|
86,709 |
|
(1) Amount represents the revenue not reported during the period
as a result of the acquisition accounting adjustment associated
with the accounting for deferred revenue in business
combinations.(2) Amount represents $24.5 million of stock-based
compensation expense, $0.5 million of excess payroll taxes related
to stock-based awards, $7.0 million of amortization expense
associated with intangible assets acquired in business
combinations, $1.2 million of transaction expenses related to
business combinations and the $4.1 million adjustment to revenue as
reflected in (1) above.(3) Amount represents the impact of the
adjustments to operating income referred to in (2) above, decreased
for the related income tax impact of $7.4 million and increased for
rabbi trust expense of $0.2 million.(4) Amount represents the
revenue not reported during the period as a result of the
acquisition accounting adjustment associated with the accounting
for deferred revenue in business combinations.(5) Amount represents
$13.7 million of stock-based compensation expense, $13.4 million of
amortization expense associated with intangible assets acquired in
business combinations, $0.4 million of transaction expenses related
to business combinations and the $1.1 million adjustment to revenue
as reflected in (4) above.(6) Amount represents the impact of the
adjustments to operating income referred to in (5) above, decreased
for the related income tax impact of $11.0 million, excluding the
impact of the Tax Cuts and Jobs Act, and rabbi trust income of $0.1
million, and increased for total net impacts of the Tax Cuts and
Jobs Act of $22.7 million.
|
|
ANSYS, INC. AND SUBSIDIARIES |
ASC 605 Reconciliation of Non-GAAP
Measures |
(Unaudited) |
|
Twelve Months Ended |
|
December 31, 2018 |
|
December 31, 2017 |
(in thousands,
except percentages and per share data) |
GAAP Results |
|
Adjustments |
|
Non-GAAP Results |
|
GAAP Results |
|
Adjustments |
|
Non-GAAP Results |
Total revenue |
$ |
1,216,469 |
|
|
$ |
15,583 |
|
(1) |
$ |
1,232,052 |
|
|
$ |
1,095,250 |
|
|
$ |
2,856 |
|
(4) |
$ |
1,098,106 |
|
Operating income |
399,407 |
|
|
147,583 |
|
(2) |
546,990 |
|
|
390,728 |
|
|
118,567 |
|
(5) |
509,295 |
|
Operating profit margin |
32.8 |
% |
|
|
|
44.4 |
% |
|
35.7 |
% |
|
|
|
46.4 |
% |
Net income |
$ |
356,851 |
|
|
$ |
98,832 |
|
(3) |
$ |
455,683 |
|
|
$ |
259,251 |
|
|
$ |
88,663 |
|
(6) |
$ |
347,914 |
|
Earnings per share – diluted: |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
$ |
4.15 |
|
|
|
|
$ |
5.30 |
|
|
$ |
2.98 |
|
|
|
|
$ |
4.01 |
|
Weighted average shares |
85,913 |
|
|
|
|
85,913 |
|
|
86,854 |
|
|
|
|
86,854 |
|
(1) Amount represents the revenue not reported
during the period as a result of the acquisition accounting
adjustment associated with the accounting for deferred revenue in
business combinations.(2) Amount represents $83.3 million of
stock-based compensation expense, $4.3 million of excess payroll
taxes related to stock-based awards, $40.8 million of amortization
expense associated with intangible assets acquired in business
combinations, $3.5 million of transaction expenses related to
business combinations and the $15.6 million adjustment to revenue
as reflected in (1) above.(3) Amount represents the impact of the
adjustments to operating income referred to in (2) above, decreased
for the related income tax impact of $49.7 million and increased
for a measurement-period adjustment related to the Tax Cuts and
Jobs Act of $0.9 million and rabbi trust expense of $0.1
million.(4) Amount represents the revenue not reported during the
period as a result of the acquisition accounting adjustment
associated with the accounting for deferred revenue in business
combinations.(5) Amount represents $53.2 million of stock-based
compensation expense, $49.8 million of amortization expense
associated with intangible assets acquired in business
combinations, $11.7 million of restructuring charges, $1.1 million
of transaction expenses related to business combinations and the
$2.9 million adjustment to revenue as reflected in (4) above.(6)
Amount represents the impact of the adjustments to operating income
referred to in (5) above, decreased for the related income tax
impact of $52.5 million, excluding the impact of the Tax Cuts and
Jobs Act, and rabbi trust income of $0.1 million, and increased for
total net impacts of the Tax Cuts and Jobs Act of $22.7
million.
|
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Forward-Looking
Guidance |
Quarter Ending March 31, 2019 |
|
Earnings Per Share Range - Diluted |
U.S. GAAP
expectation |
$0.61 - $0.82 |
Adjustment to exclude
acquisition adjustments to deferred revenue |
$0.02 - $0.04 |
Adjustment to exclude
acquisition-related amortization |
$0.08 - $0.10 |
Adjustment to exclude
stock-based compensation |
$0.16 - $0.20 |
Adjustment to exclude
acquisition-related transaction expenses |
$0.03 |
Non-GAAP
expectation |
$0.98 - $1.11 |
|
|
ANSYS, INC. AND SUBSIDIARIES |
Reconciliation of Forward-Looking
Guidance |
Year Ending December 31, 2019 |
|
Earnings Per Share Range - Diluted |
U.S. GAAP
expectation |
$3.98 - $4.61 |
Adjustment to exclude
acquisition adjustments to deferred revenue |
$0.05 - $0.09 |
Adjustment to exclude
acquisition-related amortization |
$0.38 - $0.44 |
Adjustment to exclude
stock-based compensation |
$0.93 - $1.01 |
Adjustment to exclude
acquisition-related transaction expenses |
$0.03 |
Non-GAAP
expectation |
$5.55 - $6.00 |
|
|
Use of Non-GAAP Measures
The Company provides non-GAAP revenue, non-GAAP
operating income, non-GAAP operating profit margin, non-GAAP net
income and non-GAAP diluted earnings per share as supplemental
measures to GAAP regarding the Company's operational performance.
These financial measures exclude the impact of certain items and,
therefore, have not been calculated in accordance with GAAP. A
detailed explanation of each of the adjustments to such financial
measures is described below. This press release also contains a
reconciliation of each of these non-GAAP financial measures to its
most comparable GAAP financial measure.
Management uses non-GAAP financial measures
(a) to evaluate the Company's historical and prospective
financial performance as well as its performance relative to its
competitors, (b) to set internal sales targets and spending
budgets, (c) to allocate resources, (d) to measure
operational profitability and the accuracy of forecasting,
(e) to assess financial discipline over operational
expenditures and (f) as an important factor in determining
variable compensation for management and its employees. In
addition, many financial analysts that follow the Company focus on
and publish both historical results and future projections based on
non-GAAP financial measures. The Company believes that it is in the
best interest of its investors to provide this information to
analysts so that they accurately report the non-GAAP financial
information. Moreover, investors have historically requested, and
the Company has historically reported, these non-GAAP financial
measures as a means of providing consistent and comparable
information with past reports of financial results.
While management believes that these non-GAAP
financial measures provide useful supplemental information to
investors, there are limitations associated with the use of these
non-GAAP financial measures. These non-GAAP financial measures are
not prepared in accordance with GAAP, are not reported by all the
Company's competitors and may not be directly comparable to
similarly titled measures of the Company's competitors due to
potential differences in the exact method of calculation. The
Company compensates for these limitations by using these non-GAAP
financial measures as supplements to GAAP financial measures and by
reviewing the reconciliations of the non-GAAP financial measures to
their most comparable GAAP financial measures.
The adjustments to these non-GAAP financial
measures, and the basis for such adjustments, are outlined
below:
Acquisition accounting for deferred
revenue and its related tax impact. Historically, the
Company has consummated acquisitions in order to support its
strategic and other business objectives. In accordance with
the fair value provisions applicable to the accounting for business
combinations, acquired deferred revenue is often recorded on the
opening balance sheet at an amount that is lower than the
historical carrying value. Although this acquisition accounting
requirement has no impact on the Company's business or cash flow,
it adversely impacts the Company's reported GAAP revenue in the
reporting periods following an acquisition. In order to provide
investors with financial information that facilitates comparison of
both historical and future results, the Company provides non-GAAP
financial measures which exclude the impact of the acquisition
accounting adjustment. The Company believes that this non-GAAP
financial adjustment is useful to investors because it allows
investors to (a) evaluate the effectiveness of the methodology
and information used by management in its financial and operational
decision-making, and (b) compare past and future reports of
financial results of the Company as the revenue reduction related
to acquired deferred revenue will not recur when related annual
lease licenses and software maintenance contracts are renewed in
future periods.
Amortization of intangible assets from
acquisitions and its related tax impact. The Company
incurs amortization of intangible assets, included in its GAAP
presentation of amortization expense, related to various
acquisitions it has made. Management excludes these expenses and
their related tax impact for the purpose of calculating non-GAAP
operating income, non-GAAP operating profit margin, non-GAAP net
income and non-GAAP diluted earnings per share when it evaluates
the continuing operational performance of the Company because these
costs are fixed at the time of an acquisition, are then amortized
over a period of several years after the acquisition and generally
cannot be changed or influenced by management after the
acquisition. Accordingly, management does not consider these
expenses for purposes of evaluating the performance of the Company
during the applicable time period after the acquisition, and it
excludes such expenses when making decisions to allocate resources.
The Company believes that these non-GAAP financial measures are
useful to investors because they allow investors to
(a) evaluate the effectiveness of the methodology and
information used by management in its financial and operational
decision-making, and (b) compare past reports of financial
results of the Company as the Company has historically reported
these non-GAAP financial measures.
Stock-based compensation expense and its
related tax impact. The Company incurs expense
related to stock-based compensation included in its GAAP
presentation of cost of software licenses; cost of maintenance and
service; research and development expense; and selling, general and
administrative expense. This non-GAAP adjustment also includes
excess payroll tax expense related to stock-based compensation.
Stock-based compensation expense (benefit) incurred in connection
with the Company's deferred compensation plan held in a rabbi trust
includes an offsetting benefit (charge) recorded in other income
(expense). Although stock-based compensation is an expense of the
Company and viewed as a form of compensation, management excludes
these expenses for the purpose of calculating non-GAAP operating
income, non-GAAP operating profit margin, non-GAAP net income and
non-GAAP diluted earnings per share when it evaluates the
continuing operational performance of the Company. Management
similarly excludes income (expense) related to assets held in a
rabbi trust in connection with the Company's deferred compensation
plan. Specifically, the Company excludes stock-based compensation
and income (expense) related to assets held in the deferred
compensation plan rabbi trust during its annual budgeting process
and its quarterly and annual assessments of the Company's and
management's performance. The annual budgeting process is the
primary mechanism whereby the Company allocates resources to
various initiatives and operational requirements. Additionally, the
annual review by the board of directors during which it compares
the Company's historical business model and profitability to the
planned business model and profitability for the forthcoming year
excludes the impact of stock-based compensation. In evaluating the
performance of senior management and department managers, charges
related to stock-based compensation are excluded from expenditure
and profitability results. In fact, the Company records stock-based
compensation expense into a stand-alone cost center for which no
single operational manager is responsible or accountable. In this
way, management can review, on a period-to-period basis, each
manager's performance and assess financial discipline over
operational expenditures without the effect of stock-based
compensation. The Company believes that these non-GAAP financial
measures are useful to investors because they allow investors to
(a) evaluate the Company's operating results and the
effectiveness of the methodology used by management to review the
Company's operating results, and (b) review historical
comparability in the Company's financial reporting as well as
comparability with competitors' operating results.
Restructuring charges and the related
tax impact. The Company occasionally incurs expenses for
restructuring its workforce included in its GAAP presentation of
cost of software licenses; cost of maintenance and service;
research and development expense; and selling, general and
administrative expense. Management excludes these expenses for the
purpose of calculating non-GAAP operating income, non-GAAP
operating profit margin, non-GAAP net income and non-GAAP diluted
earnings per share when it evaluates the continuing operational
performance of the Company, as it generally does not incur these
expenses as a part of its operations. The Company believes that
these non-GAAP financial measures are useful to investors because
they allow investors to (a) evaluate the Company's operating
results and the effectiveness of the methodology used by management
to review the Company's operating results, and (b) review
historical comparability in the Company's financial reporting as
well as comparability with competitors' operating results.
Transaction costs related to business
combinations. The Company incurs expenses for
professional services rendered in connection with business
combinations, which are included in its GAAP presentation of
selling, general and administrative expense. These expenses are
generally not tax-deductible. Management excludes these
acquisition-related transaction expenses, derived from announced
acquisitions, for the purpose of calculating non-GAAP operating
income, non-GAAP operating profit margin, non-GAAP net income and
non-GAAP diluted earnings per share when it evaluates the
continuing operational performance of the Company, as it generally
would not have otherwise incurred these expenses in the periods
presented as a part of its operations. The Company believes that
these non-GAAP financial measures are useful to investors because
they allow investors to (a) evaluate the Company's operating
results and the effectiveness of the methodology used by management
to review the Company's operating results, and (b) review
historical comparability in the Company's financial reporting as
well as comparability with competitors' operating results.
Tax Cuts and Jobs Act. The
Company recorded charges in its income tax provision related to the
enactment of the Tax Cuts and Jobs Act, specifically for the
transition tax related to unrepatriated cash and the impacts of the
tax rate change on net deferred tax assets. Management excludes
these charges for the purpose of calculating non-GAAP net income
and non-GAAP diluted earnings per share when it evaluates the
continuing operational performance of the Company, as (i) the
charges are not expected to recur as part of its normal operations
and (ii) the charges resulted from the extremely infrequent event
of major U.S. tax reform, the last such reform having occurred in
1986. The Company believes that these non-GAAP financial measures
are useful to investors because they allow investors to
(a) evaluate the Company's operating results and the
effectiveness of the methodology used by management to review the
Company's operating results, and (b) review historical
comparability in the Company's financial reporting.
Non-GAAP financial measures are not in
accordance with, or an alternative for, GAAP. The Company's
non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for comparable GAAP financial measures
and should be read only in conjunction with the Company's
consolidated financial statements prepared in accordance with
GAAP.
The Company has provided a reconciliation of the
non-GAAP financial measures to the most directly comparable GAAP
financial measures as listed below:
GAAP Reporting
Measure |
Non-GAAP
Reporting Measure |
Revenue |
Non-GAAP Revenue |
Operating Income |
Non-GAAP Operating
Income |
Operating Profit
Margin |
Non-GAAP Operating
Profit Margin |
Net Income |
Non-GAAP Net
Income |
Diluted Earnings Per
Share |
Non-GAAP Diluted
Earnings Per Share |
About ANSYS, Inc.
If you've ever seen a rocket launch, flown on an
airplane, driven a car, used a computer, touched a mobile device,
crossed a bridge or put on wearable technology, chances are you've
used a product where ANSYS software played a critical role in its
creation. ANSYS is the global leader in engineering
simulation. Through our strategy of Pervasive Engineering
Simulation, we help the world's most innovative companies deliver
radically better products to their customers. By offering the best
and broadest portfolio of engineering simulation software, we help
them solve the most complex design challenges and create products
limited only by imagination. Founded in 1970, ANSYS is
headquartered south of Pittsburgh, Pennsylvania, U.S.A. Visit
www.ansys.com for more information.
Forward-Looking Information
Certain statements contained in this press
release regarding matters that are not historical facts, including,
but not limited to, statements regarding: trends in customer
development processes and the success of our strategy of Pervasive
Engineering Simulation; our ability to continue to invest in the
business; our projections for the first quarter of 2019 and fiscal
year 2019 (in both GAAP and non-GAAP measures to exclude
acquisition accounting adjustments to deferred revenue,
acquisition-related amortization, stock-based compensation expense
and acquisition-related transaction costs with related tax
impacts); statements regarding management's use of non-GAAP
financial measures and statements regarding investing in the
business are "forward-looking" statements (as defined in the
Private Securities Litigation Reform Act of 1995). The words
“believe,” “continue,” “expect,” and similar expressions are
intended to identify forward-looking statements. Because such
statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by such
forward-looking statements. All forward-looking statements in this
press release are subject to risks and uncertainties, including,
but not limited to: the risk that adverse conditions in the global
and domestic markets will significantly affect ANSYS’ customers’
ability to purchase products from the Company at the same level as
prior periods or to pay for the Company’s products and services;
the risk that declines in ANSYS’ customers’ business may lengthen
customer sales cycles; the risk of declines in the economy of one
or more of ANSYS’ primary geographic regions; the risk that ANSYS’
revenues and operating results will be adversely affected by
changes in currency exchange rates or economic declines in any of
the countries in which ANSYS conducts transactions; the risk that
the assumptions underlying ANSYS' anticipated revenues and
expenditures will change or prove inaccurate; the risk that ANSYS
has overestimated its ability to maintain growth and profitability,
and control costs; uncertainties regarding the demand for ANSYS'
products and services in future periods; uncertainties regarding
customer acceptance of new products; the risk of ANSYS’ products'
future compliance with industry quality standards and its potential
impact on the Company’s financial results; the risk that the
Company may need to change its pricing models due to competition
and its potential impact on the Company’s financial results; the
risk that ANSYS' operating results will be adversely affected by
possible delays in developing, completing or shipping new or
enhanced products; the risk that enhancements to the Company's
products or products acquired in acquisitions may not produce
anticipated sales; the risk that the Company may not be able to
recruit and retain key executives and technical personnel; the risk
that third parties may misappropriate the Company’s proprietary
technology or develop similar technology independently; the risk of
unauthorized access to and distribution of the Company’s source
code; the risk of the Company’s implementation of its new IT
systems; the risk of difficulties in the relationship with ANSYS’
independent regional channel partners; the risk of ANSYS’ reliance
on perpetual licenses and the result that any change in customer
licensing behavior may have on the Company’s financial results; the
risk that ANSYS may not achieve the anticipated benefits of its
acquisitions or that the integration of the acquired technologies
or products with the Company’s existing product lines may not be
successful; the risk of periodic reorganizations and changes within
ANSYS’ sales organization; the risk of industry consolidation and
the impact it may have on customer purchasing decisions; and other
factors that are detailed from time to time in reports filed by
ANSYS, Inc. with the Securities and Exchange Commission, including
ANSYS, Inc.'s 2018 Annual Report on Form 10-K and Quarterly Reports
on Form 10-Q. We undertake no obligation to publicly update or
revise any forward-looking statements, whether changes occur as a
result of new information or future events, after the date they
were made.
ANSYS and any and all ANSYS, Inc. brand,
product, service and feature names, logos and slogans are
registered trademarks or trademarks of ANSYS, Inc. or its
subsidiaries in the United States or other countries. All
other brand, product, service and feature names or trademarks are
the property of their respective owners.
Visit www.investors.ansys.com/ for more
information. The ANSYS IR App is now available for download
on iTunes and Google Play. ANSYS also has a strong
presence on the major social channels. To join the simulation
conversation, please visit www.ansys.com/Social@ANSYS.
ANSS: F
|
|
Contact: |
|
|
|
Investors: |
Annette Arribas, IRC |
|
724.820.3700 |
|
annette.arribas@ansys.com |
Media: |
Amy Pietzak |
|
724.820.4367 |
|
amy.pietzak@ansys.com |
|
|
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