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JDA Investor Relations Contacts: | |||
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Pete Hathaway, JDA Software Group | |||
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Executive Vice President | |||
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and Chief Financial Officer | |||
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JDA Software Group, Inc. NEWS RELEASE |
Tel: (480) 308-3000 |
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Lawrence Delaney, Jr., The Berlin Group | |||
Tel: (714) 734-5000; larry@berlingroup.com | ||||
§ | Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $24.1 million in the third quarter 2009, compared to $27.0 million in third quarter 2008. | ||
§ | Adjusted non-GAAP earnings for third quarter 2009 were $0.40 per share, compared to $0.42 per share in third quarter 2008, and exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and bank charges on a credit facility commitment for a prior year terminated acquisition. Adjusted non-GAAP earnings for third quarter 2009 also exclude $8.6 million of cash consideration paid in excess of carrying value on the repurchase of redeemable preferred stock. | ||
§ | GAAP income applicable to common shareholders for third quarter 2009 was a net loss of $2.3 million or ($0.07) per share, which includes $8.6 million of cash consideration paid in excess of carrying value on the repurchase of redeemable preferred stock, compared to GAAP income applicable to common shareholders of $8.2 million or $0.23 per share in third quarter 2008. |
§ | Service revenues increased 16% to $33.6 million in third quarter 2009 compared to third quarter 2008, and service margins improved year-over-year from 21% in third quarter 2008 to 26% in third quarter 2009. | ||
§ | Cash flow from operations was $20.0 million in third quarter 2009, compared to cash flow of $18.8 million in third quarter 2008. | ||
§ | Cash and cash equivalents were $85.5 million at September 30, 2009, compared to $32.7 million at December 31, 2008, and there was no debt at the end of either period. During third quarter 2009, approximately $30.1 million in cash was used to repurchase redeemable preferred stock. |
• | Regional Sales Performance: JDA closed a total of 57 new software deals during third quarter 2009, including one contract exceeding $1.0 million. The following presents a high level summary of regional performance: |
§ | JDA closed $12.6 million in software deals in its Americas region during third quarter 2009, compared to $17.5 million in third quarter 2008. Customers that signed licenses included: The Sports Authority, Ripley’s Comercial ECCSA S.A. and Grupo Comercial Chedraui, S.A. de C.V. | ||
§ | Software sales in JDA’s Europe, Middle East and Africa (EMEA) region were $4.1 million in third quarter 2009, compared to $3.5 million in third quarter 2008. New software deals in the EMEA region included: Co-operative Group Limited, Aspiag Service Italia, NorgesGruppen ASA and N.V. Trinfover S.A. | ||
§ | JDA’s Asia Pacific region posted software sales of $542,000 in third quarter 2009, compared to $2.0 million in third quarter 2008. Wins in this region included: CitiMart Philippines and Shanxi Meetall United Supermarket Co. Ltd. |
• | Positioned for Growth and Scale: JDA announced changes to its senior management team during the quarter, including Pete Hathaway who joined JDA as Executive Vice President and Chief Financial Officer, and Jason Zintak who assumed the role of Executive Vice President of Sales and Marketing. Mr. Hathaway and Mr. Zintak are seasoned executives who have the talent, experience and leadership abilities to support JDA’s long-term growth plans. | ||
• | China Growth Strategy Underway: Just one quarter after announcing an initiative to drive growth in China through a combination of organic expansion and a wider partner network, JDA has secured its first major win with Shanxi Meetall. This promising start to JDA’s program of growth |
supports the belief that the Chinese market is now ready and willing to buy advanced planning and optimization solutions. |
• | Adjusted EBITDA increased to $69.5 million for the nine months ended September 30, 2009, compared to $69.3 million for the nine months ended September 30, 2008. | ||
• | Adjusted non-GAAP earnings for the nine months ended September 30, 2009 were $1.24 per share, compared to adjusted non-GAAP earnings per share of $1.04 for the nine months ended September 30, 2008, and exclude amortization of acquired software technology and intangibles, restructuring charges, stock-based compensation and banking charges on a credit facility commitment for a prior year terminated acquisition. Adjusted non-GAAP earnings for the nine months ended September 30, 2009 also exclude $8.6 million of cash consideration paid in excess of carrying value on the repurchase of redeemable preferred stock. | ||
• | GAAP income applicable to common shareholders for the nine months ended September 30, 2009 was $9.2 million or $0.26 per share, which includes $8.6 million of cash consideration paid in excess of carrying value on the repurchase of redeemable preferred stock, compared to GAAP income applicable to common shareholders of $16.7 million or $0.47 per share in the nine months ended September 30, 2008. | ||
• | Cash flow from operations in the first nine months of 2009 was $80.5 million, compared to $70.7 million for the nine months ended September 30, 2008. |
§ | Amortization charges for acquired technology are excluded because they result from prior acquisitions, rather than ongoing operations, and absent additional acquisitions, are expected to decline over time. |
§ | Amortization charges for other intangibles are excluded because they are non-cash expenses, and while tangible and intangible assets support our business, we do not believe the related amortization costs are directly attributable to the operating performance of our business. | ||
§ | Restructuring charges and adjustments to acquisition-related reserves are significant non-routine expenses that cannot be predicted and typically relate to a change in our business model or to a change in our estimate of the costs to complete a plan to exit an activity of an acquired company. The exclusion of these charges promotes period-to-period comparisons and transparency. Such charges are primarily related to severance costs and/or the disposition of excess facilities driven by the changes to our business model. | ||
§ | Stock-based compensation is not an expense that typically requires or will require cash settlement by the Company. |
§ | Amortization of acquired technology and intangibles, though not directly affecting our current cash position, represent the loss in value as the technology in our industry evolves, is advanced or is replaced over time. The expense associated with this loss in value is not included in the non-GAAP net income presentation and therefore does not reflect the full economic effect of the ongoing cost of maintaining our current technological position in our competitive industry which is addressed through our research and development program. | ||
§ | The Company may engage in acquisition transactions in the future. In addition, we incur other restructuring charges from time to time when necessary to adjust our business model. Restructuring related charges may therefore continue to be incurred and should not be viewed as non-recurring. | ||
§ | Stock-based compensation is an important component of our incentive compensation arrangements and will be reflected as expenses in our GAAP results for the foreseeable future. | ||
§ | Other companies, including other companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting their usefulness as a comparative measure. |
September 30, | December 31, | |||||||
2009 | 2008 | |||||||
ASSETS |
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Current Assets: |
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Cash and cash equivalents |
$ | 85,477 | $ | 32,696 | ||||
Accounts receivable, net |
60,236 | 79,353 | ||||||
Income tax receivable |
2,298 | 316 | ||||||
Deferred tax asset |
23,221 | 22,919 | ||||||
Prepaid expenses and other current assets |
18,292 | 14,223 | ||||||
Total current assets |
189,524 | 149,507 | ||||||
Non-Current Assets: |
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Property and equipment, net |
41,608 | 43,093 | ||||||
Goodwill |
135,275 | 135,275 | ||||||
Other Intangibles, net: |
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Customer lists |
104,848 | 121,719 | ||||||
Acquired software technology |
21,206 | 24,160 | ||||||
Trademarks |
326 | 1,335 | ||||||
Deferred tax asset |
35,996 | 44,815 | ||||||
Other non-current assets |
7,272 | 4,872 | ||||||
Total non-current assets |
346,531 | 375,269 | ||||||
Total Assets |
$ | 536,055 | $ | 524,776 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable |
$ | 8,574 | $ | 3,273 | ||||
Accrued expenses and other liabilities |
39,381 | 52,090 | ||||||
Deferred revenue |
71,852 | 62,005 | ||||||
Total current liabilities |
119,807 | 117,368 | ||||||
Non-Current Liabilities: |
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Accrued exit and disposal obligations |
7,269 | 8,820 | ||||||
Liability for uncertain tax positions |
7,447 | 7,093 | ||||||
Total non-current liabilities |
14,716 | 15,913 | ||||||
Total Liabilities |
134,523 | 133,281 | ||||||
Redeemable Preferred Stock |
— | 50,000 | ||||||
Stockholders’ Equity: |
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Preferred stock, $.01 par value; authorized 2,000,000 shares; none
issued or outstanding |
— | — | ||||||
Common stock, $.01 par value; authorized, 50,000,000 shares; issued
36,269,083 and 32,458,396 shares, respectively |
363 | 325 | ||||||
Additional paid-in capital |
361,740 | 305,564 | ||||||
Deferred compensation |
(7,681 | ) | (2,915 | ) | ||||
Retained earnings |
65,517 | 56,268 | ||||||
Accumulated other comprehensive income (loss) |
3,589 | (2,017 | ) | |||||
Less treasury stock, at cost, 1,774,006 and 1,307,317 shares, respectively |
(21,996 | ) | (15,730 | ) | ||||
Total stockholders’ equity |
401,532 | 341,495 | ||||||
Total liabilities and stockholders’ equity |
$ | 536,055 | $ | 524,776 | ||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
REVENUES: |
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Software licenses |
$ | 17,250 | $ | 23,011 | $ | 60,160 | $ | 58,593 | ||||||||
Maintenance services |
45,010 | 46,388 | 132,378 | 138,843 | ||||||||||||
Product revenues |
62,260 | 69,399 | 192,538 | 197,436 | ||||||||||||
Consulting services |
30,852 | 26,437 | 78,965 | 78,901 | ||||||||||||
Reimbursed expenses |
2,747 | 2,610 | 7,174 | 7,780 | ||||||||||||
Service revenues |
33,599 | 29,047 | 86,139 | 86,681 | ||||||||||||
Total revenues |
95,859 | 98,446 | 278,677 | 284,117 | ||||||||||||
COST OF REVENUES: |
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Cost of software licenses |
580 | 613 | 2,417 | 2,009 | ||||||||||||
Amortization of acquired software technology |
966 | 1,309 | 2,954 | 4,270 | ||||||||||||
Cost of maintenance services |
10,883 | 11,513 | 32,416 | 34,145 | ||||||||||||
Cost of product revenues |
12,429 | 13,435 | 37,787 | 40,424 | ||||||||||||
Cost of consulting services |
22,219 | 20,315 | 61,732 | 61,084 | ||||||||||||
Reimbursed expenses |
2,747 | 2,610 | 7,174 | 7,780 | ||||||||||||
Cost of service revenues |
24,966 | 22,925 | 68,906 | 68,864 | ||||||||||||
Total cost of revenues |
37,395 | 36,360 | 106,693 | 109,288 | ||||||||||||
GROSS PROFIT |
58,464 | 62,086 | 171,984 | 174,829 | ||||||||||||
OPERATING EXPENSES: |
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Product development |
12,495 | 13,288 | 37,732 | 40,196 | ||||||||||||
Sales and marketing |
15,888 | 15,899 | 46,310 | 47,738 | ||||||||||||
General and administrative |
12,305 | 10,440 | 35,001 | 32,406 | ||||||||||||
Amortization of intangibles |
5,753 | 6,075 | 17,880 | 18,227 | ||||||||||||
Restructuring charges and adjustments to acquisition-
related reserves |
2,543 | 399 | 6,705 | 3,954 | ||||||||||||
Total operating expenses |
48,984 | 46,101 | 143,628 | 142,521 | ||||||||||||
OPERATING INCOME |
9,480 | 15,985 | 28,356 | 32,308 | ||||||||||||
Interest expense and amortization of loan fees |
(346 | ) | (2,353 | ) | (971 | ) | (7,313 | ) | ||||||||
Interest income and other, net |
1,006 | 51 | 886 | 2,127 | ||||||||||||
INCOME BEFORE INCOME TAXES |
10,140 | 13,683 | 28,271 | 27,122 | ||||||||||||
Income tax provision |
3,877 | 5,441 | 10,429 | 10,451 | ||||||||||||
NET INCOME |
$ | 6,263 | $ | 8,242 | $ | 17,842 | $ | 16,671 | ||||||||
Consideration paid in excess of carrying value on the
repurchase of redeemable preferred stock |
(8,593 | ) | — | (8,593 | ) | — | ||||||||||
INCOME APPLICABLE TO COMMON SHAREHOLDERS |
$ | (2,330 | ) | $ | 8,242 | $ | 9,249 | $ | 16,671 | |||||||
EARNINGS PER SHARE APPLICABLE TO COMMON SHAREHOLDERS: |
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Basic earnings per share |
$ | (.07 | ) | $ | .24 | $ | .26 | $ | .49 | |||||||
Diluted earnings per share |
$ | (.07 | ) | $ | .23 | $ | .26 | $ | .47 | |||||||
SHARES USED TO COMPUTE EARNINGS PER SHARE: |
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Basic earnings per share |
33,505 | 34,528 | 35,076 | 34,223 | ||||||||||||
Diluted earnings per share |
33,505 | 35,432 | 35,329 | 35,261 | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
NON-GAAP OPERATING INCOME AND ADJUSTED EBITDA |
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Operating income (GAAP BASIS) |
$ | 9,480 | $ | 15,985 | $ | 28,356 | $ | 32,308 | ||||||||
Adjustments for non-GAAP measures of performance: |
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Add back amortization of acquired software technology |
966 | 1,309 | 2,954 | 4,270 | ||||||||||||
Add back amortization of intangibles |
5,753 | 6,075 | 17,880 | 18,227 | ||||||||||||
Add back restructuring charges |
2,543 | 399 | 6,705 | 3,954 | ||||||||||||
Add back stock-based compensation |
2,845 | 911 | 6,412 | 3,135 | ||||||||||||
Adjusted non-GAAP operating income |
21,587 | 24,679 | 62,307 | 61,894 | ||||||||||||
Add back depreciation |
2,482 | 2,352 | 7,209 | 7,412 | ||||||||||||
Adjusted EBITDA (Earnings before interest, taxes,
depreciation and amortization) |
$ | 24,069 | $ | 27,031 | $ | 69,516 | $ | 69,306 | ||||||||
NON-GAAP OPERATING INCOME AND ADJUSTED EBITDA, as a
percentage of revenue |
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Operating income (GAAP BASIS) |
10 | % | 16 | % | 10 | % | 12 | % | ||||||||
Adjustments for non-GAAP measures of performance: |
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Amortization of acquired software technology |
1 | % | 2 | % | 1 | % | 2 | % | ||||||||
Amortization of intangibles |
6 | % | 6 | % | 6 | % | 6 | % | ||||||||
Restructuring charges |
3 | % | — | % | 3 | % | 1 | % | ||||||||
Stock-based compensation |
3 | % | 1 | % | 2 | % | 1 | % | ||||||||
Adjusted non-GAAP operating income |
23 | % | 25 | % | 22 | % | 22 | % | ||||||||
Depreciation |
2 | % | 2 | % | 3 | % | 2 | % | ||||||||
Adjusted EBITDA (Earnings before interest, taxes,
depreciation and amortization) |
25 | % | 27 | % | 25 | % | 24 | % | ||||||||
NON-GAAP EARNINGS PER SHARE |
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Income before income taxes |
$ | 10,140 | $ | 13,683 | $ | 28,271 | $ | 27,122 | ||||||||
Add back amortization of acquired software technology |
966 | 1,309 | 2,954 | 4,270 | ||||||||||||
Add back amortization of intangibles |
5,753 | 6,075 | 17,880 | 18,227 | ||||||||||||
Add back restructuring charges |
2,543 | 399 | 6,705 | 3,954 | ||||||||||||
Add back stock-based compensation |
2,845 | 911 | 6,412 | 3,135 | ||||||||||||
Add back bank charges on credit facility commitment |
— | 637 | — | 637 | ||||||||||||
Adjusted income before income taxes |
22,247 | 23,014 | 62,222 | 57,345 | ||||||||||||
Adjusted income tax expense |
8,009 | 8,285 | 22,261 | 20,644 | ||||||||||||
Adjusted net income |
$ | 14,238 | $ | 14,729 | $ | 39,961 | $ | 36,701 | ||||||||
Adjusted non-GAAP diluted earnings per share |
$ | 0.40 | $ | 0.42 | $ | 1.24 | $ | 1.04 | ||||||||
Shares used to compute non-GAAP diluted earnings per share |
35,678 | 35,432 | 32,348 | 35,261 | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
CASH FLOW INFORMATION |
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Net cash provided by operating activities |
$ | 20,019 | $ | 18,761 | $ | 80,528 | $ | 70,672 | ||||||||
Net cash used in investing activities: |
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Payment of direct costs related to acquisitions |
$ | (2,945 | ) | $ | (2,911 | ) | $ | (4,431 | ) | $ | (5,434 | ) | ||||
Purchase of other property and equipment |
(4,134 | ) | (1,568 | ) | (5,541 | ) | (6,065 | ) | ||||||||
Proceeds from disposal of property and equipment |
8 | 46 | 62 | 115 | ||||||||||||
$ | (7,071 | ) | $ | (4,433 | ) | $ | (9,910 | ) | $ | (11,384 | ) | |||||
Net cash provided by financing activities: |
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Issuance of common stock under equity plans |
$ | 9,882 | $ | 307 | $ | 14,524 | $ | 6,014 | ||||||||
Redemption of Series B convertible preferred stock |
(28,068 | ) | — | (28,068 | ) | — | ||||||||||
Purchase of treasury stock |
(2,367 | ) | (239 | ) | (6,266 | ) | (1,902 | ) | ||||||||
Principal payments on term-loan agreement |
— | (437 | ) | — | (19,086 | ) | ||||||||||
Loan origination fees |
— | (3,375 | ) | — | (3,375 | ) | ||||||||||
Other, net |
— | — | — | (1,638 | ) | |||||||||||
$ | (20,553 | ) | $ | (3,744 | ) | $ | (19,810 | ) | $ | (19,987 | ) | |||||