Agilysys Reports Unaudited Fiscal 2012 Third-Quarter and Nine-Month Results

ATLANTA, Feb. 9, 2012 /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 third quarter and nine months ended December 31, 2011. As previously announced, Agilysys closed the sale of its Technology Solutions Group ("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.

Summary Fiscal 2012 Third-Quarter Unaudited Financial Results From Continuing Operations

• Total net sales declined 12.6% to $51.6 million, compared with $59.0 million in the same prior-year period. Sales from the Company's Hospitality Solutions Group and its Retail Solutions Group decreased 12.1% and 12.9%, respectively.

• Gross margin expanded 620 basis points to 38.6%, driven by higher quality revenue on hardware and services and the improvement in mix. Gross profit increased 4.1% to $19.9 million, compared with $19.1 million from the previous period.

• The reported operating loss from continuing operations of $7.0 million included $3.2 million in restructuring charges, versus the operating loss of $5.3 million in last year's comparable quarter, which included minimal restructuring charges.

• Adjusted EBITDA (defined as operating income plus depreciation and amortization, excluding charges and one-time items), narrowed to breakeven for the quarter, compared with a loss of $3.1 million a year ago. (See reconciliation below.)

• The net loss from continuing operations for the quarter was $5.8 million, or $0.26 per share, compared with a loss from continuing operations of $2.3 million, or $0.10 per share, last year.

Summary Fiscal 2012 Nine-Month Unaudited Financial Results From Continuing Operations

• Consolidated net sales for the nine-month period increased to $156.9 million from the $155.7 million reported in the first nine months of fiscal 2011.  The nine-month period includes a prior-period adjustment to sales and gross profit that negatively impacted revenue by $1.0 million.  This adjustment relates to periods prior to fiscal year 2012.  Excluding the impact of this adjustment, revenues increased approximately 1.4% year over year.

• Gross profit margin increased 176 basis points to 37.6% from 35.9% year over year. Excluding the previously mentioned prior-period adjustment, gross profit margin for the nine-month period was 38.1%.

• Operating loss from continuing operations was $21.2 million for the nine-month period, compared with an operating loss of $16.5 million in the prior fiscal year.  Excluding the previously mentioned prior-period adjustment, operating loss from continuing operations was $20.1 million.

• Year to date, Adjusted EBITDA was a loss of $2.7 million, versus a loss of $8.8 million in the first nine months of the prior fiscal year. (See reconciliation below.)

• The net reported loss from continuing operations was $16.2 million, or $0.72 per share, versus the previous year's net loss from continuing operations of $15.5 million, or $0.68 per share.  The net reported loss excluding the previously mentioned prior-period adjustments was $15.1 million or $0.67 per share.

President and CEO James Dennedy commented: "The Company recorded four percent more in gross profit on lower overall revenues and $3 million more in adjusted EBITDA in the current quarter versus the same quarter a year ago. In the quarter, Hospitality and Retail experienced lower hardware revenue; while Hospitality experienced growth in proprietary support and Retail experienced growth in proprietary services. For the nine months, hardware remained essentially flat and software revenues were down; however, both proprietary services and proprietary support are up, reflecting an improved revenue mix in Retail and more subscription-based sales in Hospitality. The revenue and gross profit performance reflects the business strategy emphasis on improving overall revenue quality and acquisition of recurring revenue streams. The adjusted EBITDA performance reflects ongoing expense management initiatives, and we remain on plan to achieve the guidance issued earlier this year."

"We have made significant progress in moving our corporate services from Solon, Ohio, to Alpharetta, Georgia," added Robb Ellis, the Company's chief financial officer. "As we have shifted to more of a software-based company over the past year, we have also transformed and dramatically improved our corporate services team to comply with the needs of the business. This will allow us the ability to provide greater insight to the business to assist in our growth initiatives, provide more efficient and streamlined policies and procedures across the Company, and provide our investors with increased visibility into the Company."  

Ellis continued, "During the third quarter, we identified errors in the approach the Company was taking in recognizing revenue for certain software license and service arrangements in prior periods. We concluded these errors were not material to any previously issued financial statements or to this fiscal year and therefore revised previously issued fiscal year 2012 financial statements to correct the effect of these errors and have included errors associated with periods prior to fiscal year 2012 in our first quarter fiscal 2012 financial statements. We have included these adjustments as one-time items in the adjusted EBITDA reconciliation included in this release."

Conference Call Information

A conference call will be held today, Feb. 9, 2012, at 11 a.m. ET to review unaudited third-quarter and nine-month fiscal 2012 results. To participate in the live call, dial (877) 317-6789 (International: (412) 317-6789) 10 minutes before the call begins, or 10:50 a.m. ET. The conference ID is 10009141. 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.  These non-GAAP financial measures include Adjusted EBITDA; and revenues, gross profit margin, operating loss and net loss excluding prior period adjustments.  Management believes that such information can enhance investors' understanding of the Company's ongoing operations. See the accompanying table that can be found below for a reconciliation of Adjusted EBITDA to the comparable GAAP measures.

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 Alpharetta, Georgia, 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:

Robb Ellis
Chief Financial Officer
Agilysys, Inc.
770-810-7970
[email protected]

SOURCE Agilysys