Agilysys Reports Unaudited Fiscal 2012 Second-Quarter and First-Half Results

CLEVELAND, Nov. 9, 2011 /PRNewswire/ -- Agilysys, Inc. (Nasdaq: AGYS), a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality and retail industries, today announced unaudited financial results for the fiscal 2012 second quarter and first half ended September 30, 2011. As previously announced, Agilysys closed the sale of its Technology Solutions ("TSG") business on August 1, 2011, and accordingly, TSG's operating results, including the gain on the sale, as well as its assets and liabilities, are reported as components of discontinued operations.

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Fiscal 2012 Second-Quarter Unaudited Results of Continuing Operations

Consolidated revenue increased 8.6% to $53.6 million in the second quarter, compared with $49.3 million in last year's comparable quarter.  Revenue from the Company's Hospitality Solutions Group grew by 10.0% over the prior year, and its Retail Solutions Group's revenues increased by 7.7%.

Gross margin increased sharply during the quarter to 40.3%, up from 36.0% in the second quarter of last year, due to higher services and hardware margins and a greater proportion of higher-margin proprietary software revenues.

Commenting on the results, James Dennedy, president and chief executive officer, stated: "Both operating segments generated higher sales and gross margins during the quarter. This reinforces our strategy of deriving a higher proportion of revenue from proprietary services and software solutions."

SG&A expenses declined as a percentage of net sales in the second quarter to 45.6%, compared with 49.4% in the prior-year quarter. SG&A expenses totaled $24.5 million, up from $24.3 million—primarily  due to $1.4 million in accelerated depreciation related to assets associated with the facility the Company is vacating in Solon, Ohio—offset by cost reductions initiated in the last several quarters.

Dennedy added: "We are making good progress with the transition of corporate services to Georgia and the realignment of the organization. Upon completion of the restructuring, we expect to reduce annual costs by approximately $14 million to $16 million, and enhance our position to exploit opportunities we see in the hospitality and retail markets."

The Company reported an operating loss for the quarter of $5.2 million, which included $2.4 million in restructuring charges, versus the operating loss of $6.7 million in last year's second quarter. Adjusted EBITDA (defined as operating income plus depreciation and amortization), excluding restructuring and asset impairment charges, was $1.0 million for the quarter, compared with a loss of $4.0 million in the prior-year second quarter. (See reconciliation below.)

Agilysys reported a net loss from continuing operations of $3.2 million, or a loss of $0.14 per share, for the second quarter, compared with a loss from continuing operations of $4.9 million, or $0.22 per share, in the previous year's quarter.

Fiscal 2012 First-Half Unaudited Results from Continuing Operations

Consolidated sales in the first half of fiscal 2012 increased 11.8% to $107.5 million, compared with the $96.1 million reported in the first half of fiscal 2011.

Gross margin was essentially unchanged at 38.3% in the first half, compared with 38.2% in fiscal 2011's first six months.

SG&A expenses increased nominally to $48.6 million, from $47.5 million, due to accelerated depreciation related to assets located at the Company's corporate headquarters and higher stock compensation related expenses driven by the sale of the Company's TSG business.

For the six-month period, the Company reported an operating loss of $12.1 million, compared with an operating loss of $11.2 million in the first half of the prior fiscal year. Year to date, adjusted EBITDA, excluding restructuring and asset impairment charges, was a loss of $1.2 million, versus a loss of $5.5 million in the first half of the prior year. (See reconciliation below.) For the first half of fiscal 2011, the net reported loss from continuing operations was $8.7 million, or a loss of $0.38 per share, versus the previous year's net loss from continuing operations of $13.2 million, or a loss of $0.58 per share.

Liquidity

Cash on hand grew to $93.7 million at September 30, 2011, primarily as a result of the proceeds from the sale of Agilysys' TSG business, which closed on August 1, 2011. The Company remains debt free, except for certain capital leases. In conjunction with the sale of the TSG business, Agilysys authorized the repurchase of up to 1.6 million common shares. During the second quarter, the Company repurchased 800,000 shares at an average price of $8.27 per share for $6.6 million. Subsequent to quarter end and through November 7, 2011, Agilysys repurchased an additional 344,000 shares, and has 456,000 shares remaining under its current repurchase program.

For additional information, please refer to the Company's Form 10-Q, which will be filed later today with the Securities and Exchange Commission.

Interim President and CEO James Dennedy Assumes Full Role

Agilysys also announced the appointment of James Dennedy as president and chief executive officer of the Company. Dennedy, 46, has led Agilysys as interim president and CEO since May 2011, when the Company announced the divesture of TSG.

Commenting on the appointment, Agilysys Chairman Keith Kolerus stated, "We are pleased to welcome Jim in his expanded capacity with the Company. Since joining the Board in 2009, his contributions to our strategic mission have been noteworthy, having not only served on the Board's special committee, but also directly participating in the development and execution of Agilysys' restructuring plan. As we transition to a faster growing and more profitable company, having Jim at the helm on a permanent basis stabilizes our new leadership team."

"We are confident that Jim's past successes at identifying market trends and leading high-growth businesses, along with his clear vision for Agilysys to execute on key strategic initiatives—product integration, capability development, investment prioritization and partner expansion—will continue to positively impact our Company and ultimately benefit shareholders."

Dennedy, who will retain his position as a member of the Agilysys Board, concluded: "My enthusiasm for the opportunities to profitably expand the Company's retail and hospitality capabilities has been a driving factor in my choice to continue in this role. The results we are reporting today further support my decision and I am honored to have the opportunity to lead the Company in the pursuit of our strategy to profitably grow the business."

Conference Call Information

A conference call will be held today, November 9, 2011, at 11 a.m. ET to review unaudited second-quarter and first-half fiscal 2012 results. A slide deck will be the basis for the review. Both the slide deck and the conference call can be accessed via the Investor Relations section of www.agilysys.com. In addition, a replay of the call will be archived on the website for approximately 30 days.

To be added to Agilysys' email distribution list, please click on the link below:

http://www.agilysys.com/home/InvestorRelations/

Forward-Looking Language

This release contains certain management expectations, which may constitute forward-looking information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934, and the Private Securities Reform Act of 1995. Forward-looking information speaks only as to the date of this Quarterly Report and may be identified by use of words such as "may," "will," "believes," "anticipates," "plans," "expects," "estimates," "projects," "targets," "forecasts," "continues," "seeks," or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information including, without limitation, competitive factors, disruption of supplies, changes in market conditions, pending or future claims or litigation, or technology advances. No assurances can be provided as to the outcome of cost reductions, expected benefits and outcomes from our recent ERP implementation, business strategies, future financial results, unanticipated downturns to our relationships with customers and macroeconomic demand for IT products and services, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, consequences related to the concentrated ownership of our outstanding shares by MAK Capital, unanticipated deterioration in economic and financial conditions in the United States and around the world, consequences associated with the sale of the Company's TSG business, and uncertainties regarding restructuring actions and/or the relocation of the Company's corporate headquarters. The Company does not undertake to update or revise any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, will not be realized.

Other potential risks and uncertainties that may cause actual results to be materially different from those in forward-looking information are described in "Risk Factors," which is included in Part I, Item 1A of the Company's Annual Report for the fiscal year ended March 31, 2011. Copies are available from the SEC or the Agilysys website.

Use of Non-GAAP Financial Information

To supplement the unaudited condensed 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. Management believes that such information can enhance investors' understanding of the Company's ongoing operations. The non-GAAP measures included in this press release have been reconciled to the comparable GAAP measures within the accompanying table that can be found below.

About Agilysys

Agilysys is a leading developer and marketer of proprietary enterprise software, services and solutions to the hospitality and retail industries.  The Company specializes in market-leading point-of-sale, property management, inventory and procurement, and mobile and wireless solutions that are designed to streamline operations, improve efficiency and enhance the consumer's experience. Agilysys serves casinos, resorts, hotels, foodservice venues, stadiums, cruise lines, grocery stores, convenience stores, general and specialty retail businesses and partners.  Headquartered in Cleveland, Agilysys operates extensively throughout North America, with additional sales and support offices in the United Kingdom, Singapore and Hong Kong. For more information, visit www.agilysys.com.

Investor Contact:

Curtis Stout
Vice President and Treasurer
Agilysys, Inc.
440-519-8635
[email protected]

SOURCE Agilysys, Inc.