Formula Systems Reports Record-Breaking Revenues of $373 Million for the First Quarter of 2018 with 20% Year over Year Growth...
May 23 2018 - 8:47AM
– Formula Systems (1985) Ltd. (NASDAQ: FORTY), a global information
technology holding company engaged, through its subsidiaries and
affiliates, in providing software consulting services and
computer-based business solutions and developing proprietary
software products, today announced its results for the first
quarter ended March 31, 2018, in accordance with
International Financial Reporting Standards (IFRS).
Financial Highlights for the First
Quarter Ended March 31, 2018
- Consolidated revenues for the first quarter increased by 20.1%
to a record-breaking $373.4 million, compared to
$310.9 million in the same period last year.
- Consolidated operating income for the first quarter, increased
by 59% to $25.8 million, compared to $16.2 million in the
same period last year.
- Consolidated net income attributable to Formula’s shareholders
for the first quarter was $7.2 million, or $0.48 per fully
diluted share, compared to $0.5 million, or $0.04 per fully
diluted share, in the same period last year.
- As of March 31, 2018, Formula held 49.18%, 48.12%, 47.12%,
100%, 50% and 90.09% of the outstanding ordinary shares of Matrix
IT Ltd., Sapiens International Corporation N.V, Magic Software
Enterprises Ltd., Michpal Micro Computers (1983) Ltd., TSG IT
Advanced Systems Ltd. and Insync Staffing Solutions, Inc.,
respectively.
- Consolidated cash, short-term investments in marketable
securities and bank deposits totaled to approximately
$269.0 million as of March 31, 2018.
- Total consolidated equity as of March 31, 2018, was
$782.3 million (representing 48.9% of the total balance
sheet).
- As of March 31, 2018, Formula was in compliance with all of its
financial covenants under the debentures issued by Formula and
under loans granted from other financial institutions.
Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula
Systems, said, “We are very pleased to report a record-breaking
quarter with double-digit growth across all our key financial
indicators.
"In the first quarter of 2018, Matrix achieved
significant growth across all its key financial indicators,
including revenues, gross profit, operating income and net profit.
Matrix reports these increases, in spite of the competition in the
sector in which Matrix operates the frequent changes and the
challenges in recruiting technology experts. Matrix reported
record-breaking revenues of NIS 777.7 million in the first quarter
of 2018, reflecting an increase of 11.6% year over year. Operating
income increased to NIS 52.1 million, reflecting an increase of
7.2% year over year and net income attributable to Matrix
shareholders soared to NIS3 4.2 million, reflecting an increase of
21.9% year over year."
“Matrix has zeroed in on the U.S. market as its
next strategic market and is currently in the process of merging a
number of U.S. companies that it has acquired over the past two
years. At the same time, Matrix continues to acquire companies and
activities in Israel to expand its value propositions to its
customers in the areas of analytics and big data, cyber, cloud
computing, digital and mobile, regulation and compliance, training
and deployment. Matrix continues to be recognized as a leading
company in Israel, including being ranked among the top 50
companies and the first among all the software services companies
in Israel.”
“Magic continued the forward momentum of the
very strong 2017 and reported record-breaking results for the first
quarter of 2018 powered by the continued high demand for its
products and professional services across all of its regions and
markets. Magic’s fiscal year 2018 is off to an excellent start with
revenues at an all-time high of $69.7 million, operating income of
$7.6 million and non-GAAP operating income1 of $9.7 million, up
15%, 19% and 16% respectively year over year, driven almost
exclusively by organic growth."
“In keeping with its successful strategic
direction, Magic remains focused on expanding its customer base as
it continues to evolve its portfolio with powerful and innovative
technologies in the fields of software application development,
mobile, cloud, big data, and especially in integration, which I
believe will account for the majority of an organization’s digital
transformation efforts."
“The results of the first quarter of 2018
reflect that Sapiens is back on track with the execution of its
long-term strategy to be a leading global provider of insurance
software solutions and services. Now that Sapiens has completed the
integration of its recent acquisitions including Stone River,
Adaptik and KnowledgePrice, it is able to realize deal synergies
while maximizing its acquired talent. The first quarter non-GAAP2
operating margin was 12.5% and Sapiens remains on track to improve
operating margins throughout 2018 and reiterate the 2018 non-GAAP
operating margin guidance of 12% to 13% with revenue in the range
of $280-$285 million (on a non-GAAP basis)."
“Lastly, since its launch in January 2018, we are pleased with
the positive adoption rate of Michpal’s new product and new service
line – "Michpal Pension" and "Michpal PensionPlus” – by its
existing customer base. This new business line is the first step in
our business strategy to expand Michpal’s offerings.”
About Formula
Formula Systems (1985) Ltd. is a global
information technology company engaged, through its subsidiaries
and affiliates, in providing software consulting services and
computer-based business solutions and developing proprietary
software products.
For more information, visit
www.formulasystems.com.
Except for any historical information contained
herein, matters discussed in this press release might include
forward-looking statements that involve a number of risks and
uncertainties. Regarding any financial statements, actual results
might vary significantly based upon a number of factors including,
but not limited to, risks in product and technology development,
market acceptance of new products and continuing product
conditions, both locally and abroad, release and sales of new
products by strategic resellers and customers, and other risk
factors detailed in Formula's most recent annual report and other
filings with the Securities and Exchange Commission. These
forward-looking statements are made only as of the date hereof, and
the Company undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information,
future events or otherwise.
_______________
1 Non-GAAP measures as detailed in Magic Software Enterprises’
press release from May 16, 2018
2 Non-GAAP measures as detailed in Sapiens’ press release from
May 7, 2018
FORMULA SYSTEMS (1985)
LTD.CONSOLIDATED CONDENSED STATEMENTS OF PROFIT OR
LOSSU.S. dollars in thousands (except per share
data)
|
|
Three months ended |
|
|
|
March 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
Unaudited |
|
Revenues |
|
|
373,375 |
|
|
|
310,878 |
|
Cost of revenues |
|
|
290,035 |
|
|
|
244,549 |
|
|
|
|
|
|
|
|
|
|
Gross
profit |
|
|
83,340 |
|
|
|
66,329 |
|
Research
and development costs, net |
|
|
10,946 |
|
|
|
7,811 |
|
Selling,
general and administrative expenses |
|
|
46,580 |
|
|
|
42,280 |
|
Operating income |
|
|
25,814 |
|
|
|
16,238 |
|
|
|
|
|
|
|
|
|
|
Financial income (expenses), net |
|
|
(1,971 |
) |
|
|
(7,027 |
)(*) |
|
|
|
|
|
|
|
|
|
Income before taxes on income |
|
|
23,843 |
|
|
|
9,211 |
(*) |
Taxes on
income |
|
|
6,118 |
|
|
|
2,933 |
|
|
|
|
|
|
|
|
|
|
Income after taxes |
|
|
17,725 |
|
|
|
6,278 |
(*) |
Equity
in gains (losses) of affiliated companies, net |
|
|
70 |
|
|
|
212 |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
|
17,795 |
|
|
|
6,490 |
(*) |
Net
income attributable to redeemable non-controlling interests |
|
|
1,529 |
|
|
|
607 |
(*) |
Net
income attributable to non-controlling interests |
|
|
9,027 |
|
|
|
5,338 |
(*) |
|
|
|
|
|
|
|
|
|
Net
income attributable to Formula's shareholders |
|
|
7,239 |
|
|
|
545 |
(*) |
|
|
|
|
|
|
|
|
|
Earnings per share
(basic) |
|
|
0.49 |
|
|
|
0.04 |
(*) |
Earnings per share
(diluted) |
|
|
0.48 |
|
|
|
0.04 |
(*) |
|
|
|
|
|
|
|
|
|
Number
of shares used in computing earnings per share (basic) |
|
|
14,730,032 |
|
|
|
14,303,051 |
|
Number
of shares used in computing earnings per share (diluted) |
|
|
15,558,711 |
|
|
|
14,707,786 |
|
*) Adjustment to comparative data
FORMULA SYSTEMS (1985) LTD.CONSOLIDATED
STATEMENTS OF FINANCIAL POSITIONU.S. dollars in
thousands
|
|
March 31, |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
|
|
Cash
and cash equivalents |
|
|
251,621 |
|
|
|
245,936 |
|
Marketable securities |
|
|
14,043 |
|
|
|
14,138 |
|
Short-term deposits |
|
|
3,352 |
|
|
|
735 |
|
Trade receivables |
|
|
374,457 |
|
|
|
385,778 |
|
Other accounts receivable and prepaid expenses |
|
|
49,834 |
|
|
|
44,915 |
|
Inventories |
|
|
2,977 |
|
|
|
3,299 |
|
Total
current assets |
|
|
696,284 |
|
|
|
694,801 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM ASSETS: |
|
|
|
|
|
|
|
|
Deferred Taxes |
|
|
14,944 |
|
|
|
15,878 |
|
Prepaid expenses and other accounts receivables |
|
|
21,707 |
|
|
|
16,581 |
|
Total long-Term assets |
|
|
36,651 |
|
|
|
32,459 |
|
|
|
|
|
|
|
|
|
|
INVESTMENTS IN COMPANIES ACCOUNTED |
|
|
|
|
|
|
|
|
FOR AT EQUITY METHOD |
|
|
25,393 |
|
|
|
25,315 |
|
|
|
|
|
|
|
|
|
|
PROPERTY, PLANTS AND EQUIPMENT, NET |
|
|
29,741 |
|
|
|
29,807 |
|
|
|
|
|
|
|
|
|
|
NET
INTANGIBLE ASSETS AND GOODWILL |
|
|
810,825 |
|
|
|
781,255 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
1,598,894 |
|
|
|
1,563,637 |
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Liabilities to banks and others |
|
|
77,704 |
|
|
|
70,819 |
|
Debentures |
|
|
54,576 |
|
|
|
4,826 |
|
Trade payables |
|
|
87,103 |
|
|
|
95,339 |
|
Deferred revenue and customer advances |
|
|
68,375 |
|
|
|
58,905 |
|
Employees and payroll accrual |
|
|
104,501 |
|
|
|
111,707 |
|
Other accounts payable |
|
|
48,790 |
|
|
|
53,145 |
|
Liabilities in respect of business combinations |
|
|
3,947 |
|
|
|
6,811 |
|
Redeemable non-controlling interests |
|
|
33,686 |
|
|
|
31,395 |
|
Total
current liabilities |
|
|
478,682 |
|
|
|
432,947 |
|
|
|
|
|
|
|
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
|
|
Liabilities to banks and others |
|
|
116,253 |
|
|
|
135,616 |
|
Other long term liabilities |
|
|
6,476 |
|
|
|
7,244 |
|
Debentures, net of current maturities |
|
|
127,756 |
|
|
|
133,739 |
|
Deferred taxes |
|
|
38,578 |
|
|
|
36,605 |
|
Deferred revenues |
|
|
8,816 |
|
|
|
9,340 |
|
Liabilities in respect of business combinations |
|
|
9,209 |
|
|
|
4,711 |
|
Redeemable non-controlling interests |
|
|
21,793 |
|
|
|
21,481 |
|
Employee benefit liabilities |
|
|
8,992 |
|
|
|
9,032 |
|
Total
long-term liabilities |
|
|
337,873 |
|
|
|
357,768 |
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
Equity attributable to Formula Systems (1985) shareholders’ |
|
|
365,919 |
|
|
|
359,202 |
|
Non-controlling interests |
|
|
416,420 |
|
|
|
413,720 |
|
Total
equity |
|
|
782,339 |
|
|
|
772,922 |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND EQUITY |
|
|
1,598,894 |
|
|
|
1,563,637 |
|
FORMULA SYSTEMS (1985)
LTD.STANDALONE FINANCIAL DATA
HIGHLIGHTSU.S. dollars in thousands
|
|
March 31, |
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Debentures |
|
|
103,371 |
|
|
|
59,503 |
|
|
|
|
|
|
|
|
|
|
Other
financial liabilities |
|
|
25,471 |
|
|
|
38,911 |
|
|
|
|
|
|
|
|
|
|
Formula
shareholders' equity |
|
|
365,919 |
|
|
|
359,202 |
|
|
|
|
|
|
|
|
|
|
Cash,
cash equivalents and short-term marketable securities |
|
|
55,398 |
|
|
|
14,842 |
|
|
|
|
|
|
|
|
|
|
Fair
market value of equity holdings in publicly traded
subsidiaries |
|
|
723,950 |
|
|
|
835,400 |
|
Press Contact:
Formula Systems (1985) Ltd.
+972-3-5389487
ir@formula.co.il
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