Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Relations Contact: Dave Spille VP, Investor Relations Deltek, Inc. 703.885.9423 davespille@deltek.com |
Media Relations Contact: Warren Brown VP, Strategic Communications Deltek, Inc. 703.885.9746 warrenbrown@deltek.com |
DELTEK REPORTS THIRD QUARTER 2008 FINANCIAL RESULTS
Q3 Net Income Increases 38% to $8.0 million
HERNDON, Va. – November 6, 2008 – Deltek, Inc. (Nasdaq: PROJ), the leading provider of enterprise applications software for project-focused businesses, today announced financial results for its third quarter ended September 30, 2008.
Total revenue for the third quarter of 2008 was $71.0 million, an increase of 1% from the prior year period. License revenue for Q3 was $18.5 million, a decrease of 13% from the prior year period, while consulting services revenue increased 1% to $23.1 million, and maintenance and support revenue increased 12% to $29.3 million.
GAAP net income for the third quarter of 2008 increased 38% to $8.0 million, or $0.18 per diluted share, compared to $5.8 million, or $0.14 per diluted share, in the third quarter of 2007.
Non-GAAP net income for the third quarter of 2008 increased 35% to $10.2 million, or $0.23 per diluted share, compared to $7.6 million, or $0.19 per diluted share, in the third quarter of 2007. Non-GAAP net income excludes the net-of-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets and restructuring charges. A reconciliation of GAAP to non-GAAP financial measures is provided in the tables at the end of this press release.
“While the escalating financial crisis resulted in delayed purchasing decisions from a number of our A&E customers, we continued to achieve strong results in our government contracting sector,” said Kevin Parker, president and CEO of Deltek. “In an extraordinarily challenging environment, we achieved double-digit license revenue growth from our government contracting customers, added over 100 new customers, improved service margins, delivered strong operating cash flows and maintained a healthy balance sheet.”
Additional Q3 Highlights
• | Q3 operating cash flow was $13 million, compared to negative $1 million in the prior year period, resulting in a cash balance of $28 million at September 30, 2008. |
• | As a result of recently implemented international tax planning initiatives, along with other income tax credits, deductions and adjustments, we realized $2.5 million of tax savings in Q3. |
• | During Q3, Deltek announced the acquisition of the MPM solution and all related assets for $16 million. MPM is an earned value management (EVM) software application used by government contractors and agencies, including 8 of the top 10 aerospace and defense contractors, to meet the complex compliance requirements of the U.S. Federal Government. With the addition of MPM, Deltek extends its leadership position as the largest and most comprehensive provider of earned value management applications in the industry and expands the earned value product options for Deltek customers. |
• | Deltek announced the general availability of GCS Premier Version 5.0, which delivers significant enhancements to the industry’s leading project accounting solution for small- to medium-sized government contractors. GCS Premier also delivers a new user interface and role-based navigation improving efficiency and compliance. In addition, the new Premier Billing feature provides pre-built and customizable templates making invoicing faster and easier. |
• | Deltek recently announced the latest release of GovWin, the only comprehensive business development and capture software solution designed specifically for government contractors. With this release, GovWin manages the complete procurement cycle, from opportunity identification and management, to contract award, contract data management and closeout. The release also allows users to effectively manage and quickly search all procurement documents throughout the project lifecycle. |
Conference Call Information
Deltek will host a conference call at 5:00 p.m. Eastern Time today to discuss the Company’s third quarter results. To access this call, dial 1-877-381-6419 in North America and 1-706-643-9496 outside North America. The conference call also will be available via webcast at http://investor.deltek.com. Those unable to participate in the live call may hear a rebroadcast by dialing 1-800-642-1687 in North America and 1-706-645-9291 outside North America. The confirmation number is 68882972. The rebroadcast and the webcast will be available for replay through November 13, 2008.
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About Deltek
Deltek (NASDAQ: PROJ) is the leading provider of enterprise applications software designed specifically for project-focused businesses. For more than two decades, our software applications have enabled organizations to automate mission-critical business processes around the engagement, execution and delivery of projects. More than 12,000 customers worldwide rely on Deltek to measure business results, optimize performance, streamline operations and win new business. For more information, visit www.deltek.com.
Use of Non-GAAP Financial Measures
This press release and the related conference call described above contain certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income and adjusted EBITDA. The Company defines non-GAAP net income as GAAP net income before the net-of-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. Non-GAAP operating income is defined as GAAP operating income before the pre-tax impact of stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. Adjusted EBITDA is defined as GAAP net income before interest expenses (net of interest income), provision for income taxes, depreciation, amortization, stock-based compensation, retention payments associated with the Company’s 2005 recapitalization, New Mountain Capital fees and restructuring charges.
The Company believes that the presentation of these non-GAAP financial measures provides useful information to its investors and lenders because these measures enhance their overall understanding of the Company’s financial performance and the prospects for the future of the Company’s ongoing business operations. The Company believes that by reporting these measures, it provides insight and consistency in its financial reporting and presents a basis for comparison of its business operations between current, past and future periods. In addition, the measures provide a basis for the Company to compare its financial results to those of other comparable publicly traded companies and are used by its management team to plan and forecast its business.
Adjusted EBITDA is also used as the basis for the Company’s calculations to determine compliance with its debt covenants and to assess its ability to borrow additional funds to finance or expand its operations.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliations of our GAAP to non-GAAP net income and adjusted EBITDA, which are set forth below.
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Forward-Looking Statements
This press release and related conference call contain forward-looking statements that involve substantial risks and uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “will,” “would” or similar words. You should consider these statements carefully because they discuss our plans, targets, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict accurately or control. Our actual results may differ materially from the expectations we describe in our forward-looking statements. Factors or events that could cause our actual results to materially differ may emerge from time to time, and it is not possible for us to accurately predict all of them. Before you invest in our common stock, you should be aware that the occurrence of any such event or of any of the additional events described as risk factors in the Company’s filings with the Securities and Exchange Commission could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this press release or related conference call speaks only as of the date on which we make it. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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DELTEK, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
September 30 | December 31 | |||||||
2008 | 2007 | |||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 28,160 | $ | 17,091 | ||||
Accounts receivable, net of allowance of $2,564 and $2,866 at September 30, 2008 and December 31, 2007, respectively |
47,803 | 55,663 | ||||||
Deferred income taxes |
4,798 | 5,027 | ||||||
Prepaid expenses and other current assets |
5,477 | 7,104 | ||||||
Income taxes receivable |
2,432 | — | ||||||
TOTAL CURRENT ASSETS |
88,670 | 84,885 | ||||||
PROPERTY AND EQUIPMENT, NET |
14,946 | 13,575 | ||||||
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET |
1,685 | 2,399 | ||||||
LONG-TERM DEFERRED INCOME TAXES |
3,918 | 354 | ||||||
INTANGIBLE ASSETS, NET |
18,828 | 13,132 | ||||||
GOODWILL |
57,405 | 50,082 | ||||||
OTHER ASSETS |
2,540 | 3,253 | ||||||
TOTAL ASSETS |
$ | 187,992 | $ | 167,680 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||||||
CURRENT LIABILITIES: |
||||||||
Current portion of long-term debt |
$ | 1,991 | $ | 498 | ||||
Accounts payable and accrued expenses |
29,868 | 33,310 | ||||||
Accrued liability for redemption of stock in recapitalization |
569 | 569 | ||||||
Deferred revenues |
22,083 | 22,046 | ||||||
Income taxes payable |
— | 729 | ||||||
TOTAL CURRENT LIABILITIES |
54,511 | 57,152 | ||||||
LONG-TERM DEBT |
191,322 | 192,815 | ||||||
OTHER TAX LIABILITIES |
925 | 551 | ||||||
OTHER LONG-TERM LIABILITIES |
3,070 | 3,350 | ||||||
TOTAL LIABILITIES |
249,828 | 253,868 | ||||||
STOCKHOLDERS’ DEFICIT: |
||||||||
Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at September 30, 2008 or December 31, 2007 |
— | — | ||||||
Common stock, $0.001 par value—authorized, 200,000,000 shares; issued and outstanding, 43,175,196 and 43,046,523 shares at September 30, 2008 and December 31, 2007, respectively |
43 | 43 | ||||||
Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at September 30, 2008 and December 31, 2007 |
— | — | ||||||
Additional paid-in capital |
174,699 | 167,527 | ||||||
Accumulated deficit |
(235,955 | ) | (253,424 | ) | ||||
Accumulated other comprehensive deficit |
(623 | ) | (334 | ) | ||||
TOTAL STOCKHOLDERS’ DEFICIT |
(61,836 | ) | (86,188 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
$ | 187,992 | $ | 167,680 | ||||
DELTEK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
REVENUES: |
||||||||||||||||
Software license fees |
$ | 18,508 | $ | 21,350 | $ | 57,647 | $ | 59,999 | ||||||||
Consulting services |
23,060 | 22,776 | 69,650 | 61,046 | ||||||||||||
Maintenance and support services |
29,324 | 26,088 | 85,675 | 75,463 | ||||||||||||
Other revenues |
58 | 190 | 4,697 | 4,719 | ||||||||||||
Total revenues |
70,950 | 70,404 | 217,669 | 201,227 | ||||||||||||
COST OF REVENUES: |
||||||||||||||||
Cost of software license fees |
1,672 | 1,773 | 4,939 | 6,003 | ||||||||||||
Cost of consulting services |
18,277 | 19,347 | 57,632 | 52,763 | ||||||||||||
Cost of maintenance and support services |
5,438 | 4,428 | 15,864 | 12,177 | ||||||||||||
Cost of other revenues |
39 | 175 | 5,146 | 5,187 | ||||||||||||
Total cost of revenues |
25,426 | 25,723 | 83,581 | 76,130 | ||||||||||||
GROSS PROFIT |
45,524 | 44,681 | 134,088 | 125,097 | ||||||||||||
Research and development |
11,761 | 10,960 | 34,710 | 31,653 | ||||||||||||
Sales and marketing |
13,637 | 11,604 | 39,353 | 32,201 | ||||||||||||
General and administrative |
8,753 | 7,381 | 24,693 | 21,724 | ||||||||||||
Restructuring (benefit) charge |
(61 | ) | — | 991 | — | |||||||||||
Total operating expenses |
34,090 | 29,945 | 99,747 | 85,578 | ||||||||||||
INCOME FROM OPERATIONS |
11,434 | 14,736 | 34,341 | 39,519 | ||||||||||||
Interest income |
168 | 32 | 618 | 200 | ||||||||||||
Interest expense |
(2,454 | ) | (4,740 | ) | (8,408 | ) | (13,973 | ) | ||||||||
Other (expense) income, net |
(60 | ) | (30 | ) | (261 | ) | 5 | |||||||||
INCOME BEFORE INCOME TAXES |
9,088 | 9,998 | 26,290 | 25,751 | ||||||||||||
Income tax expense |
1,063 | 4,174 | 8,821 | 10,357 | ||||||||||||
NET INCOME |
$ | 8,025 | $ | 5,824 | $ | 17,469 | $ | 15,394 | ||||||||
EARNINGS PER SHARE |
||||||||||||||||
Basic |
$ | 0.19 | $ | 0.15 | $ | 0.41 | $ | 0.39 | ||||||||
Diluted |
$ | 0.18 | $ | 0.14 | $ | 0.39 | $ | 0.37 | ||||||||
COMMON SHARES AND EQUIVALENTS OUTSTANDING |
||||||||||||||||
Basic weighted average shares |
43,135 | 39,450 | 43,099 | 39,433 | ||||||||||||
Diluted weighted average shares |
44,154 | 41,102 | 44,347 | 41,054 | ||||||||||||
DELTEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30, | ||||||||
2008 | 2007 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net income |
$ | 17,469 | $ | 15,394 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Provision for doubtful accounts |
1,000 | 1,251 | ||||||
Depreciation and amortization |
7,143 | 6,959 | ||||||
Amortization of debt issuance costs |
595 | 657 | ||||||
Write down of acquired in process research and development |
290 | — | ||||||
Stock-based compensation expense |
5,925 | 3,876 | ||||||
Employee stock purchase plan expense |
234 | — | ||||||
Restructuring charge, net |
63 | — | ||||||
Loss on disposal of fixed assets |
346 | 214 | ||||||
Deferred income taxes |
(2,454 | ) | (1,624 | ) | ||||
Change in assets and liabilities: |
||||||||
Accounts receivable, net |
6,907 | (5,259 | ) | |||||
Prepaid expenses and other assets |
1,555 | (1,265 | ) | |||||
Accounts payable and accrued expenses |
(2,638 | ) | (946 | ) | ||||
Income taxes payable/receivable |
(3,094 | ) | (1,577 | ) | ||||
Excess tax benefit from stock option exercises |
(71 | ) | — | |||||
Other tax liabilities |
374 | 22 | ||||||
Other long-term liabilities |
(456 | ) | (817 | ) | ||||
Deferred revenues |
(166 | ) | (4,760 | ) | ||||
Net Cash Provided by Operating Activities |
33,022 | 12,125 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Acquisitions, net of cash acquired |
(17,424 | ) | (5,947 | ) | ||||
Purchase of property and equipment |
(5,000 | ) | (6,004 | ) | ||||
Capitalized software development costs |
(260 | ) | (412 | ) | ||||
Net Cash Used in Investing Activities |
(22,684 | ) | (12,363 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Issuance of common stock |
— | 87 | ||||||
Proceeds from exercise of stock options |
230 | — | ||||||
Excess tax benefit from stock option exercises |
71 | — | ||||||
Proceeds from issuance of stock under employee stock purchase plan |
712 | — | ||||||
Offering costs paid for 2007 sale of common stock in initial public offering |
(275 | ) | (2,802 | ) | ||||
Redemption of stock and stockholder payments in recapitalization |
— | (4,780 | ) | |||||
Proceeds from the issuance of debt |
— | 20,000 | ||||||
Repayment of debt |
— | (14,612 | ) | |||||
Net Cash Provided by (Used in) Financing Activities |
738 | (2,107 | ) | |||||
IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS |
(7 | ) | 84 | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
11,069 | (2,261 | ) | |||||
CASH AND CASH EQUIVALENTS—Beginning of period |
17,091 | 6,667 | ||||||
CASH AND CASH EQUIVALENTS—End of period |
$ | 28,160 | $ | 4,406 | ||||
DELTEK, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
Net Income (GAAP Basis) |
$ | 8,025 | $ | 5,824 | $ | 17,469 | $ | 15,394 | |||||
Income Tax Expense |
1,063 | 4,174 | 8,821 | 10,357 | |||||||||
Pre-Tax Income (GAAP Basis) |
$ | 9,088 | $ | 9,998 | $ | 26,290 | $ | 25,751 | |||||
Adjustments: |
|||||||||||||
NMC Advisory and Transaction Fees |
— | — | — | 250 | |||||||||
Stock-based Compensation |
2,232 | 1,620 | 5,925 | 3,876 | |||||||||
Recapitalization Retention Expense |
157 | 193 | 451 | 602 | |||||||||
Amortization of Acquired Intangibles |
1,327 | 1,130 | 3,162 | 3,369 | |||||||||
Restructuring (Benefit) Charge |
(61 | ) | — | 991 | — | ||||||||
Adjusted Pre-Tax Income |
12,743 | 12,941 | 36,819 | 33,848 | |||||||||
Less: Adjusted Income Tax Expense |
2,503 | 5,334 | 12,969 | 13,547 | |||||||||
Non-GAAP Net Income |
$ | 10,240 | $ | 7,607 | $ | 23,850 | $ | 20,301 | |||||
Non-GAAP Earnings Per Share (diluted) |
$ | 0.23 | $ | 0.19 | $ | 0.54 | $ | 0.49 | |||||
Weighted Average Shares |
44,154 | 41,102 | 44,347 | 41,054 | |||||||||
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME
(in thousands)
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
Operating Income - GAAP |
$ | 11,434 | $ | 14,736 | $ | 34,341 | $ | 39,519 | |||||
Plus: Stock-based Compensation and Recapitalization Retention Expense |
2,389 | 1,813 | 6,376 | 4,478 | |||||||||
Plus: Amortization of Acquired Intangibles |
1,327 | 1,130 | 3,162 | 3,369 | |||||||||
Plus: NMC Advisory and Transaction Fees |
— | — | — | 250 | |||||||||
Plus: Restructuring (Benefit) Charge |
(61 | ) | — | 991 | — | ||||||||
Operating Income - Non-GAAP |
$ | 15,089 | $ | 17,679 | $ | 44,870 | $ | 47,616 | |||||
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(in thousands)
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
Net Income (GAAP Basis) |
$ | 8,025 | $ | 5,824 | $ | 17,469 | $ | 15,394 | |||||
NMC Advisory and Transaction Fees |
— | — | — | 250 | |||||||||
Stock-based Compensation |
2,232 | 1,620 | 5,925 | 3,876 | |||||||||
Recapitalization Retention Expense |
157 | 193 | 451 | 602 | |||||||||
Depreciation |
1,191 | 977 | 3,315 | 2,416 | |||||||||
Amortization |
1,662 | 1,514 | 4,135 | 4,543 | |||||||||
Interest Expense, net |
2,286 | 4,708 | 7,790 | 13,773 | |||||||||
Income Tax Provision |
1,063 | 4,174 | 8,821 | 10,357 | |||||||||
Restructuring (Benefit) Charge |
(61 | ) | — | 991 | — | ||||||||
Adjusted EBITDA |
$ | 16,555 | $ | 19,010 | $ | 48,897 | $ | 51,211 | |||||
STOCK-BASED COMPENSATION AND RECAPITALIZATION RETENTION EXPENSES
(in thousands)
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, | ||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||
Cost of Software License Fees |
$ | 1 | $ | — | $ | 3 | $ | 2 | |||||
Cost of Consulting Services |
390 | 365 | 1,133 | 833 | |||||||||
Cost of Maintenance and Support Services |
61 | 58 | (45 | ) | 128 | ||||||||
Research and Development |
520 | 441 | 1,440 | 1,096 | |||||||||
Sales and Marketing |
490 | 343 | 1,356 | 853 | |||||||||
General and Administrative |
927 | 606 | 2,489 | 1,566 | |||||||||
Total |
$ | 2,389 | $ | 1,813 | $ | 6,376 | $ | 4,478 | |||||
AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS
(in thousands)
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||
Cost of Software License Fees |
$ | 307 | $ | 429 | $ | 992 | $ | 1,282 | ||||
Cost of Consulting Services |
20 | 24 | 59 | 40 | ||||||||
Cost of Maintenance and Support Services |
— | — | — | — | ||||||||
Research and Development |
290 | — | 290 | 160 | ||||||||
Sales and Marketing |
692 | 659 | 1,766 | 1,833 | ||||||||
General and Administrative |
18 | 18 | 55 | 54 | ||||||||
Total |
$ | 1,327 | $ | 1,130 | $ | 3,162 | $ | 3,369 | ||||
AMORTIZATION AND DEPRECIATION EXPENSES
(in thousands)
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, | |||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||
Cost of Software License Fees |
$ | 646 | $ | 816 | $ | 1,973 | $ | 2,463 | ||||
Cost of Consulting Services |
593 | 341 | 1,346 | 807 | ||||||||
Cost of Maintenance and Support Services |
274 | 112 | 528 | 263 | ||||||||
Research and Development |
460 | 268 | 980 | 822 | ||||||||
Sales and Marketing |
752 | 830 | 2,246 | 2,260 | ||||||||
General and Administrative |
128 | 124 | 377 | 344 | ||||||||
Total |
$ | 2,853 | $ | 2,491 | $ | 7,450 | $ | 6,959 | ||||