Reports Positive Adjusted EBITDA of
$3.4M
Expects Sequential Revenue and Adjusted
EBITDA Increase of 15% and 25% Respectively in Q2 Compared to Q1
Fiscal 2021
Cash Balance Remains Strong at $74.6 Million
as of June 30, 2020
Agilysys, Inc. (Nasdaq: AGYS), a global provider of
next-generation hospitality software solutions and services, today
reported operating results for its fiscal 2021 first quarter and
period ended June 30, 2020.
Summary of Fiscal 2021 First Quarter Financial
Results
- Total net revenue was $29.8 million, compared to total net
revenue of $38.4 million in the comparable prior-year period for a
22.4% decrease in revenue.
- Recurring revenues (which are comprised of support, maintenance
and subscription services) were $20.5 million, or 68.8% of total
net revenue, compared to $20.1 million, or 52.3% of total net
revenue, for the same period in fiscal 2020. Subscription revenues
increased 8.6% year over year and comprised 37.2% of total
recurring revenues, compared to 34.9% of total recurring revenues
in the first quarter of fiscal 2020.
- Gross margin was 62.2% in the fiscal 2021 first quarter,
compared to 52.1% in the comparable prior-year period.
- Net loss available to common shareholders in the fiscal 2021
first quarter was $(1.7) million, or $(0.07) per diluted share
compared to a net loss of $(1.6) million, or $(0.07) per diluted
share, in the comparable prior-year period.
- Adjusted EBITDA (non-GAAP) was $3.4 million, compared to $3.2
million in the comparable prior-year period (see reconciliation
below).
- Adjusted diluted EPS (non-GAAP) was $0.08 per share compared to
$0.08 per share in the comparable prior-year period.
- Free cash flow (non-GAAP) in the fiscal 2021 first quarter was
$(5.2) million, compared to free cash flow of $(2.5) million in the
fiscal 2020 first quarter (see reconciliation below). Ending cash
balance was $74.6 million, compared to ending cash balance of $37.2
million in the comparable prior-year period.
Ramesh Srinivasan, President and CEO of Agilysys, commented,
“This was likely the toughest quarter ever for the hospitality
industry and our business. Given the extremely difficult
circumstances, we are pleased with our top and bottom-line results.
What is notable about the EBITDA level achieved is that we did not
in any way compromise the pace of product innovation and customer
service levels during the quarter. Our current velocity of product
improvements and innovation is the best it has ever been and has
helped create expanded market opportunities. Apart from the tough
business conditions affecting all our revenue areas, recurring
revenue was additionally affected by one-time COVID-19 related
financial relief provided to customers to help them during this
time of need. We expect this one-time COVID-19 relief to also
affect future quarters of this fiscal year, albeit to a lesser
extent. Services revenue this quarter was additionally affected by
sales incentives given to customers to enable adoption of an
innovative new online ordering F&B software application, which
was successful in driving multifold increased use, thereby helping
future SaaS fees growth potential.”
“We continue to be intensely focused on securing the safety and
health of our employees, customers, and the communities we serve
in. We are deeply grateful for all the sacrifices our team-members
worldwide have made to secure the financial health of the company
during the current crisis period.”
“As we work our way through the current business environment,
significant marketplace uncertainties remain. This fiscal year will
be a tale of four quarters for us. We will therefore continue to
provide guidance one quarter at a time for the remainder of this
fiscal year and switch to our normal annual guidance cadence
starting the next fiscal year FY2022. After hitting a bottom in
April, the extent of global sales deals won in value terms has
improved month over month during each of the next three months. Our
cash balance has improved further since June 30th. We remain
cautiously optimistic about our near-term future and bullish about
our long-term growth and profitability improvement prospects. We
have good reasons to believe our competitive advantage and overall
business health will be better on the other side of this crisis
than it was before.”
Fiscal 2021 Outlook Agilysys continues to monitor the
impact of COVID-19 on the hospitality industry with our primary
focus being the safety of our employees and customers as we manage
through these unprecedented times. Given the continued impact of
COVID-19, we are still not releasing full fiscal year 2021 guidance
at this time. We are expecting Q2 fiscal 2021 revenue to increase
15% over Q1 fiscal 2021 results with a corresponding 25% Adjusted
EBITDA increase for the same period.
Dave Wood, Chief Financial Officer, commented, “I am very
pleased with the work our teams have done during the quarter to
manage through the COVID-19 pandemic while the hospitality industry
was significantly impacted. During the first quarter we realized
better than expected top-line results, along with healthy
profitability levels. We remain more confident than ever in our
long term financial strength and ability to execute on our plan to
become a growing, profitable, product lead organization delivering
mission critical solutions to customers and to do whatever it takes
to support their ever changing business needs. The strength of our
cash balance, along with our ability to deliver cost effective
product innovation should allow us to pick back up with the
business momentum we were achieving prior to the pandemic.”
2021 First Quarter Conference Call and Webcast Agilysys
is hosting a conference call and webcast today, July 28, 2020, at
4:30 p.m. ET. Both the call and the webcast are open to the public.
The conference call number is 574-990-1036 (domestic or
international); and the conference ID number is 8999561. Please
call five minutes prior to the presentation to ensure that you are
connected.
Interested parties may also access the conference call live on
the Internet at Agilysys Events & Presentations. Approximately
two hours after the call has concluded, an archived version of the
webcast will be available for replay at the same location.
Forward-Looking Language This press release contains
“forward-looking statements” within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements can be identified by words such
as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,”
“project,” “estimate,” “expect,” “strategy,” “future,” “likely,”
“may,” “should,” “will” and similar references to future periods.
Examples of forward-looking statements include, among others, our
revenue and Adjusted EBITDA guidance for the second quarter,
statements we make regarding our ability to improve our competitive
positioning and improvement of our business momentum and business
health over time once the industry begins to recover.
Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
our current beliefs, expectations and assumptions regarding the
future of our business, future plans and strategies, projections,
anticipated events and trends, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of our control. Our actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements. Important factors that could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, the effect of the COVID-19 pandemic on our
business and the success of any measures we have taken or may take
in the future in response thereto; and the risks described in the
Company’s filings with the Securities and Exchange Commission,
including the Company’s reports on Form 10-K and Form 10-Q.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. We undertake no obligation
to publicly update any forward-looking statement that may be made
from time to time, whether written or oral, whether as a result of
new information, future developments or otherwise.
Use of Non-GAAP Financial Information To supplement the
unaudited consolidated financial statements presented in accordance
with U.S. GAAP in this press release, certain non-GAAP financial
measures as defined by the SEC rules are used. These non-GAAP
financial measures include EBITDA, Adjusted EBITDA, adjusted net
income, adjusted basic earnings per share, adjusted diluted
earnings per share and free cash flow. Management believes that
such information can enhance investors’ understanding of the
Company’s ongoing operations.
The Company has included the following non-GAAP financial
measures in this press release: adjusted net income, adjusted basic
earnings per share and adjusted diluted earnings per share. The
Company believes these non-GAAP financial measures provide valuable
insight into the Company’s overall profitability from core
operations before certain non-cash and non-recurring charges. The
Company defines adjusted net income as net income before
amortization expense (including amortization of developed
technology), share-based compensation, convertible preferred stock
issuance costs, and one-time charges including severance and other
charges, impairments and legal settlements, less the related income
tax effect of these adjustments, as applicable, and defines
adjusted earnings per share as adjusted net income divided by basic
and diluted weighted average shares outstanding.
See the accompanying tables below for the definitions and
reconciliation of these non-GAAP measures to the most closely
related GAAP measures.
About Agilysys Agilysys has been a leader in hospitality
software for more than 40 years, delivering innovative
guest-centric technology solutions for casinos, hotels, resorts,
cruise ships, managed foodservice providers, sports and
entertainment, and healthcare. Agilysys offers the most
comprehensive software solutions in the industry, including
point-of-sale (POS), property management (PMS), inventory and
procurement, payment solutions, and
related hospitality applications, to manage the entire guest
journey. Agilysys is known for its leadership in hospitality, its
broad product offerings and its customer-centric service. Some of
the largest hospitality companies around the world use Agilysys
solutions to help improve guest loyalty, drive revenue growth,
increase operational efficiencies and support social distancing.
Agilysys operates across North America, Europe, the Middle East,
Africa, Asia-Pacific, and India with headquarters located in
Alpharetta, GA. For more information visit Agilysys.com.
- Financial tables follow -
AGILYSYS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
Three Months Ended
June 30,
2020
2019
Net revenue:
Products
$
5,239
$
10,869
Support, maintenance and subscription
services
20,497
20,082
Professional services
4,071
7,438
Total net revenue
29,807
38,389
Cost of goods sold:
Products (inclusive of developed
technology amortization)
3,015
8,623
Support, maintenance and subscription
services
4,306
4,181
Professional services
3,936
5,571
Total cost of goods sold
11,257
18,375
Gross profit
18,550
20,014
Gross profit margin
62.2
%
52.1
%
Operating expenses:
Product development
8,266
10,064
Sales and marketing
2,601
4,498
General and administrative
5,719
5,874
Depreciation of fixed assets
723
213
Amortization of intangibles
461
678
Severance and other charges
1,203
231
Total operating expense
18,973
21,558
Operating loss
(423
)
(1,544
)
Other (income) expense:
Interest income
(21
)
(80
)
Interest expense
1
1
Other expense, net
106
85
Loss before taxes
(509
)
(1,550
)
Income tax expense
8
25
Net loss
$
(517
)
$
(1,575
)
Series A convertible preferred stock
issuance costs
(937
)
-
Series A convertible preferred stock
dividends
(199
)
-
Net loss available to common
shareholders
$
(1,653
)
$
(1,575
)
Weighted average shares outstanding -
basic and diluted
23,405
23,212
Net loss per share - basic and
diluted:
$
(0.07
)
$
(0.07
)
AGILYSYS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
June 30,
March 31,
2020 Unaudited
2020
ASSETS
Current assets:
Cash and cash equivalents
$
74,604
$
46,653
Accounts receivable, net of allowance for
expected credit losses of $1,458 and for doubtful accounts of
$1,634, respectively
30,494
35,869
Contract assets
2,677
2,125
Inventories
2,760
3,887
Prepaid expenses and other current
assets
6,407
4,874
Total current assets
116,942
93,408
Property and equipment, net
11,113
12,230
Operating lease right-of-use assets
13,050
13,829
Goodwill
19,622
19,622
Intangible assets, net
8,400
8,400
Deferred income taxes, non-current
852
764
Other non-current assets
6,124
6,309
Total assets
$
176,103
$
154,562
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
4,439
$
13,403
Contract liabilities
38,149
42,244
Accrued liabilities
8,801
9,033
Operating lease liabilities, current
4,641
4,719
Finance lease obligations, current
24
24
Total current liabilities
56,054
69,423
Deferred income taxes, non-current
884
880
Operating lease liabilities,
non-current
9,810
10,617
Finance lease obligations, non-current
20
25
Other non-current liabilities
2,786
1,860
Series A convertible preferred stock, no
par value
35,199
-
Shareholders' equity:
Common shares, without par value, at $0.30
stated value; 80,000,000 shares authorized; 31,606,831 shares
issued; and 23,612,924 and 23,609,398 shares outstanding at June
30, 2020 and March 31, 2020, respectively
9,482
9,482
Treasury shares, 7,993,907 and 7,997,433
at June 30, 2020 and March 31, 2020, respectively
(2,399
)
(2,401
)
Capital in excess of stated value
6,760
5,491
Retained earnings
57,331
58,984
Accumulated other comprehensive income
176
201
Total shareholders' equity
71,350
71,757
Total liabilities and shareholders'
equity
$
176,103
$
154,562
AGILYSYS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
(In thousands)
June 30,
2020
2019
Operating activities
Net loss
$
(517
)
$
(1,575
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation
723
213
Amortization of intangibles
461
678
Amortization of developed technology
—
3,175
Deferred income taxes
(84
)
5
Share-based compensation
1,426
482
Changes in operating assets and
liabilities:
(6,938
)
(4,891
)
Net cash used in operating activities
(4,929
)
(1,913
)
Investing activities
Capital expenditures
(243
)
(571
)
Additional investments in corporate-owned
life insurance policies
(2
)
(2
)
Net cash used in investing activities
(245
)
(573
)
Financing activities
Repurchase of common shares to satisfy
employee tax withholding
(934
)
(1,026
)
Series A convertible preferred stock
issuance proceeds, net of issuance costs
34,063
—
Principal payments under long-term
obligations
(6
)
(2
)
Net cash provided by (used in) financing
activities
33,123
(1,028
)
Effect of exchange rate changes on
cash
2
(24
)
Net increase (decrease) in cash and cash
equivalents
27,951
(3,538
)
Cash and cash equivalents at beginning of
period
46,653
40,771
Cash and cash equivalents at end of
period
$
74,604
$
37,233
AGILYSYS, INC. RECONCILIATION OF
NET LOSS TO EBITDA AND ADJUSTED EBITDA (UNAUDITED)
Three Months Ended
(In thousands)
June 30,
2020
2019
Net loss
$
(517
)
$
(1,575
)
Income tax expense
8
25
Loss before taxes
(509
)
(1,550
)
Depreciation of fixed assets
723
213
Amortization of intangibles
461
678
Amortization of developed technology
-
3,175
Interest (income), net
(20
)
(79
)
EBITDA (a)
655
2,437
Share-based compensation
1,426
482
Severance and other charges
1,203
231
Other non-operating expense
106
85
Adjusted EBITDA (b)
$
3,390
$
3,235
(a) EBITDA, a non-GAAP financial measure, is defined as net
income (loss) before income taxes, interest expense (net of
interest income), depreciation and amortization
(b) Adjusted EBITDA, a non-GAAP financial measure, is defined as
net income (loss) 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) severance and other charges,
iii) impairments, iv) share-based compensation, and v) other
non-operating (income) expense
AGILYSYS, INC. RECONCILIATION OF
NET LOSS TO ADJUSTED NET INCOME FOR ADJUSTED EARNINGS PER SHARE
(UNAUDITED)
Three Months Ended
(In thousands, except per share data)
June 30,
2020
2019
Net loss available to common
shareholders
$
(1,653
)
$
(1,575
)
Amortization of intangibles
461
678
Amortization of developed technology
-
3,175
Share-based compensation
1,426
482
Series A convertible preferred stock
issuance costs
937
-
Severance and other charges
1,203
231
Income tax adjustments
(456
)
(1,047
)
Adjusted net income (a)
$
1,918
$
1,944
Basic weighted average shares
outstanding
23,405
23,212
Diluted weighted average shares
outstanding
23,820
23,681
Adjusted basic earnings per share
(b)
$
0.08
$
0.08
Adjusted diluted earnings per share
(b)
$
0.08
$
0.08
(a) Adjusted net income, a non-GAAP financial measure, is
defined as net income (loss) attributable to common shareholders
before amortization expense (including amortization of developed
technology), share-based compensation, and one-time charges
including severance and other charges, impairments and legal
settlements, less the related income tax effect of these
adjustments, as applicable, at a 24% tax rate, the Company’s
current combined federal and state income statutory tax rate. No
income tax effect applies to one-time charges when a valuation
allowance offsets their related deferred tax assets
(b) Adjusted earnings per share, a non-GAAP financial measure,
is defined as adjusted net income (loss) divided by basic and
diluted weighted average shares outstanding
AGILYSYS, INC. RECONCILIATION OF
NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
(UNAUDITED)
Three Months Ended
(In thousands)
June 30,
2020
2019
Net cash used in operating
activities
$
(4,929
)
$
(1,913
)
Capital expenditures
(243
)
(571
)
Free cash flow (a)
$
(5,172
)
$
(2,484
)
(a) Free cash flow, a non-GAAP financial measure, is defined as
net cash provided by (used in) operating activities, less capital
expenditures
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200728005979/en/
Investor Contact: Jessica Hennessy Senior Manager
Corporate Strategy and Investor Relations Agilysys, Inc.
770-810-6116 or investorrelations@agilysys.com
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