STARLIMS Technologies Ltd.
ITEM 1
STARLIMS Announces First Quarter 2008 Financial Results
Hollywood, Fla., May 15, 2008 – STARLIMS Technologies Ltd. (NASDAQ:LIMS), a leading provider of laboratory information management systems (LIMS), today announced financial results for the first quarter of fiscal 2008 ended March 31, 2008.
Total revenue for the first quarter of 2008 was $7.0 million, up 28.9% from $5.4 million reported in the first quarter of 2007. Product revenues were $4.7 million, up 36.8% from $3.4 million reported in the same period a year ago. Services revenues were $2.3 million, up 15.4% from $2.0 million reported in the same period a year ago.
“We had a solid start to 2008 signing two seven figure deals in the quarter and we are seeing strong demand for our products” said Itschak Friedman, CEO of STARLIMS. “We are very pleased with the initial launch of our integrated scientific document management system or SDMS. It has been well received in the marketplace and is becoming an increasingly important component to our solution as well as a major differentiator for STARLIMS against our competitors.”
STARLIMS’s business model is characterized by fairly large transactions, with a relatively high average selling price. Due to the two large deals we signed this quarter the average selling price (ASP) for the first quarter on direct sales rose to more than $800,000 in comparison to an ASP of $600,000 for 2007. Management believes that a comparison of STARLIMS’s results in a longer term perspective provides better insight into the underlying growth of our business and expects the ASP to return closer to 2007 levels in future quarters.
GAAP operating income for the first quarter of 2008 was $1.1 million or 15.8% of revenues, compared to $1.2 million or 21.6% of revenues for the first quarter of 2007. GAAP net income for the first quarter of 2008 was $1.4 million, or $0.16 per diluted share, compared to GAAP net income of $1.1 million, or $0.17 per diluted share, for the first quarter of 2007.
Non-GAAP operating income for the first quarter of 2008 was $1.2 million or 17.6% of revenues, compared to $1.2 million or 22.5% of revenues for the first quarter of 2007. Non-GAAP net income for the first quarter of 2008 was $1.5 million, or $0.17 per diluted share, compared to non-GAAP net income of $1.1 million, or $0.17 per diluted share, for the first quarter of 2007.
The following tables include a reconciliation of GAAP to non-GAAP income from operations and net income for the first quarter of 2008 and 2007.
Cash, cash equivalents and marketable securities amounted to $33.9 million on March 31, 2008, compared to $35.1 million on December 31, 2007. The decrease in cash was primarily due to the stock repurchase program and cash usage for operating activities.
STARLIMS Launches Informatics Consulting Business
STARLIMS announced on May 12, 2008 the establishment of its Informatics Consulting Business. STARLIMS acquired the assets of Laboratory Expertise Center, Inc. (LEC), a LIMS and laboratory informatics specialized consultancy, to increase the Company’s strategic consulting capabilities. The new unit, which will be headed by LEC Founder and President Randy Hice, will focus on providing strategic informatics consulting on the standardization and harmonization of large, multi-site, complex LIMS implementations. These services are increasingly necessary as global customers plan the strategies to gain the most effectiveness from their large distributed LIMS systems.
STARLIMS Acquires UK Partner
STARLIMS initially announced on February 14, 2008 that it had reached an agreement to the terms to acquire its long-standing UK partner. On May 14, 2008, the Company closed the transaction for an undisclosed amount. Management believes that the acquisition will enhance STARLIMS service capabilities in the United Kingdom and expand the Company’s European operations. STARLIMS has begun the integration process and is expanding the sales force to take advantage of the increasing number of opportunities in Europe.
Update to Stock Repurchase Program
STARLIMS purchased an aggregate of 90,727 common shares in the first quarter of 2008 for $681,000 or an average price of $7.54. The company approved the stock repurchase program on February 13, 2008, and enables STARLIMS to purchase an aggregate of $2 million of the Company’s common stock over a period of 18 months. At March 31, 2008, the Company had approximately $1.3 million remaining on its stock repurchase program.
Guidance
STARLIMS is reiterating its financial guidance for fiscal year 2008 that was provided on February 14, 2008. Management continues to expect total revenues of $27 to $29 million and GAAP EPS of $0.55 to $0.70, which includes approximately $0.05 of stock-based compensation expenses, amortization of intangibles related to acquisitions and other non-recurring expenses. The guidance assumes an annual tax rate of approximately 15% and estimated weighted average shares outstanding of 8.9 million during 2008.
Note on Use of Non-GAAP Financial Information
To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, STARLIMS uses non-GAAP measures of gross margin, net income and earnings per share, which are adjustments from results based on GAAP to exclude non recurring expenses, non-cash equity based compensation in accordance with SFAS 123(R) and amortization of intangibles related to acquisitions. Our management believes that the non-GAAP financial information provided in this release can assist investors in understanding and assessing the Company’s on-going core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Our management also uses both GAAP and non-GAAP information in evaluating and operating business internally and as such deemed it important to provide all this information to investors. Reconciliation between GAAP to non-GAAP statement of income is provided in the table below.
Conference Call and Webcast Information
STARLIMS will host a live webcast of this conference call on Thursday, May 15, at 8:30 a.m. Eastern Standard Time (15:30 Israeli time). The listen-only webcast can be accessed from the Investor Relations page of the Company’s web site athttp://ir.starlims.com. Those interested in participating in the question and answer session should dial (303) 262-2130.
The webcast will be archived on the STARLIMS Technologies Investor Relations page of the Company’s website, athttp://ir.starlims.com starting at 10:00 a.m. on Thursday, May 15, 2008. Alternatively, the conference call replay can be accessed by dialing (800) 405-2236, access code 11112064#.
About STARLIMS
STARLIMS Technologies Ltd. (NASDAQ: LIMS) is a leading provider of laboratory information management systems (LIMS), with over 20 years of LIMS experience. The Company’s flagship product, STARLIMS®, improves the reliability of laboratory sampling processes, supports compliance with domestic and international regulations and industry standards, and provides comprehensive reporting, monitoring and analysis capabilities. STARLIMS software is used for quality assurance and control, testing and monitoring, and research and development in government, manufacturing and life sciences organizations. With operations in the United States, Canada, the United Kingdom, Israel and Hong Kong, the Company serves over 500 organizations in 40 countries. For more information, please seehttp://www.starlims.com.
Safe Harbor for Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which could cause the actual results, performance or achievements of the Company to be materially different from those which may be expressed or implied by such statements, including, among others, changes in general economic and business conditions, changes in demand for products and services, the timing and amount or cancellation of orders, loss of market share and other risks detailed from time to time in STARLIMS’s filings from time to time with the Securities and Exchange Commission. Such filings contain and identify these and other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today.
STARLIMS TECHNOLOGIES LTD.
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share data and per share data)
| December 31,
| March 31,
|
---|
| 2 0 0 7
| 2 0 0 8
|
---|
| Audited
| Unaudited
|
---|
| | |
---|
| | |
---|
ASSETS | | | | | | | | |
Current Assets | | |
Cash and cash equivalents | | | $ | 31,704 | | $ | 29,965 | |
Restricted short-term deposits | | | | 195 | | | 238 | |
Marketable securities - available-for-sale | | | | 1,012 | | | 1,668 | |
Accounts receivable (net of allowance | | |
for doubtful accounts of $192 and $215, respectively) | | | | 9,215 | | | 10,916 | |
Other current assets | | | | 1,667 | | | 1,661 | |
|
| |
| |
Total current assets | | | | 43,793 | | | 44,448 | |
|
| |
| |
| | |
Long-Term Assets | | |
Marketable securities - held-to-maturity | | | | 2,206 | | | 2,053 | |
Other long-term assets | | | | 564 | | | 528 | |
Fixed assets, net | | | | 1,601 | | | 1,587 | |
Goodwill | | | | 1,326 | | | 1,277 | |
Other assets, net | | | | 37 | | | 29 | |
|
| |
| |
Total long-term assets | | | | 5,734 | | | 5,474 | |
|
| |
| |
Total assets | | | $ | 49,527 | | $ | 49,922 | |
|
| |
| |
| | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | |
| | |
Current Liabilities | | |
Trade accounts payable | | | $ | 201 | | $ | 606 | |
Deferred revenues | | | | 2,276 | | | 2,814 | |
Other current liabilities and accrued expenses | | | | 2,291 | | | 1,080 | |
|
| |
| |
Total current liabilities | | | | 4,768 | | | 4,500 | |
|
| |
| |
| | |
Long-Term Liabilities | | |
Long-term deferred revenues | | | | 68 | | | 45 | |
Accrued severance pay | | | | 52 | | | 50 | |
Deferred taxes | | | | 841 | | | 740 | |
|
| |
| |
Total long-term liabilities | | | | 961 | | | 835 | |
|
| |
| |
| | |
Shareholders' Equity | | |
Ordinary shares, NIS 1.00 par value; | | |
authorized 15,000,000 shares; issued 9,994,544 shares; | | |
outstanding 8,724,675 and 8,633,948 shares, respectively | | | | 3,151 | | | 3,151 | |
Additional paid-in capital | | | | 30,893 | | | 31,015 | |
Accumulated other comprehensive income | | | | 260 | | | 267 | |
Retained earnings | | | | 12,267 | | | 13,608 | |
Treasury stock, at cost - 1,269,869 | | |
and 1,360,596 ordinary shares, respectively | | | | (2,773 | ) | | (3,454 | ) |
|
| |
| |
Total shareholders' equity | | | | 43,798 | | | 44,587 | |
|
| |
| |
Total liabilities and shareholders' equity | | | $ | 49,527 | | $ | 49,922 | |
|
| |
| |
STARLIMS TECHNOLOGIES LTD.
CONSOLIDATED STATEMENTS OF INCOME
(U.S. dollars in thousands, except share data and per share data)
| Year ended December 31,
| Three months ended March 31,
|
---|
| 2007
| 2007
| 2008
|
---|
| Audited
| Unaudited
| Unaudited
|
---|
| | | |
---|
| | | |
---|
Revenues | | | | | | | | | | | |
Software licensing | | | $ | 10,656 | | $ | 2,679 | | $ | 3,655 | |
Maintenance | | | | 3,241 | | | 727 | | | 1,005 | |
|
| |
| |
| |
Total product revenues | | | | 13,897 | | | 3,406 | | | 4,660 | |
Services | | | | 9,878 | | | 2,001 | | | 2,309 | |
|
| |
| |
| |
Total revenues | | | | 23,775 | | | 5,407 | | | 6,969 | |
|
| |
| |
| |
| | |
Cost of revenues | | |
Cost of products | | | | 374 | | | 6 | | | 146 | |
Cost of services | | | | 8,095 | | | 1,820 | | | 2,307 | |
|
| |
| |
| |
Total cost of revenues | | | | 8,469 | | | 1,826 | | | 2,453 | |
|
| |
| |
| |
| | |
Gross profit | | | | 15,306 | | | 3,581 | | | 4,516 | |
|
| |
| |
| |
| | |
Operating expenses | | |
Research and development | | | | 2,872 | | | 676 | | | 833 | |
Selling and marketing | | | | 5,792 | | | 1,165 | | | 1,681 | |
General and administrative | | | | 2,799 | | | 573 | | | 904 | |
|
| |
| |
| |
Total operating expenses | | | | 11,463 | | | 2,414 | | | 3,418 | |
|
| |
| |
| |
| | |
Operating income | | | | 3,843 | | | 1,167 | | | 1,098 | |
| | |
Financial income, net | | | | 1,551 | | | 131 | | | 550 | |
|
| |
| |
| |
| | |
Income before income taxes | | | | 5,394 | | | 1,298 | | | 1,648 | |
| | |
Income tax expense | | | | 885 | | | 187 | | | 278 | |
|
| |
| |
| |
Net income | | | $ | 4,509 | | $ | 1,111 | | $ | 1,370 | |
|
| |
| |
| |
| | |
Basic earnings per share | | | $ | 0.58 | | $ | 0.17 | | $ | 0.16 | |
|
| |
| |
| |
Weighted average number of ordinary | | |
shares used in computing basic earnings per share | | | | 7,799,583 | | | 6,490,970 | | | 8,708,546 | |
|
| |
| |
| |
Diluted earnings per share | | | $ | 0.57 | | $ | 0.17 | | $ | 0.16 | |
|
| |
| |
| |
Weighted average number of ordinary shares | | |
used in computing diluted earnings per share | | | | 7,897,036 | | | 6,600,400 | | | 8,830,732 | |
|
| |
| |
| |
STARLIMS TECHNOLOGIES LTD.
NON-GAAP CONSOLIDATED
STATEMENTS OF INCOME
(U.S. dollars in thousands, except share data and per share data)
| Year ended December 31,
| Three months ended March 31,
|
---|
| 2007
| 2007
| 2008
|
---|
| Unaudited
| Unaudited
| Unaudited
|
---|
| | | |
---|
| | | |
---|
Revenues | | | | | | | | | | | |
Software licensing | | | $ | 10,656 | | $ | 2,679 | | $ | 3,655 | |
Maintenance | | | | 3,241 | | | 727 | | | 1,005 | |
|
| |
| |
| |
Total product revenues | | | | 13,897 | | | 3,406 | | | 4,660 | |
Services | | | | 9,878 | | | 2,001 | | | 2,309 | |
|
| |
| |
| |
Total revenues | | | | 23,775 | | | 5,407 | | | 6,969 | |
|
| |
| |
| |
| | |
Cost of revenues | | |
Cost of products | | | | 374 | | | 6 | | | 146 | |
Cost of services | | | | 8,066 | | | 1,817 | | | 2,271 | |
|
| |
| |
| |
Total cost of revenues | | | | 8,440 | | | 1,823 | | | 2,417 | |
|
| |
| |
| |
| | |
Gross profit | | | | 15,335 | | | 3,584 | | | 4,552 | |
|
| |
| |
| |
| | |
Operating expenses | | |
Research and development | | | | 2,849 | | | 673 | | | 819 | |
Selling and marketing | | | | 5,569 | | | 1,134 | | | 1,616 | |
General and administrative | | | | 2,660 | | | 562 | | | 890 | |
|
| |
| |
| |
Total operating expenses | | | | 11,078 | | | 2,369 | | | 3,325 | |
|
| |
| |
| |
| | |
Operating income | | | | 4,257 | | | 1,215 | | | 1,227 | |
| | |
Financial income, net | | | | 1,551 | | | 131 | | | 550 | |
|
| |
| |
| |
| | |
Income before income taxes | | | | 5,808 | | | 1,346 | | | 1,777 | |
| | |
Income tax expense | | | | 976 | | | 199 | | | 299 | |
|
| |
| |
| |
Net income | | | $ | 4,832 | | $ | 1,147 | | $ | 1,478 | |
|
| |
| |
| |
Basic earnings per share | | | $ | 0.62 | | $ | 0.18 | | $ | 0.17 | |
|
| |
| |
| |
Weighted average number of ordinary shares | | |
used in computing basic earnings per share | | | | 7,799,583 | | | 6,490,970 | | | 8,708,546 | |
|
| |
| |
| |
Diluted earnings per share | | | $ | 0.61 | | $ | 0.17 | | $ | 0.17 | |
|
| |
| |
| |
Weighted average number of ordinary shares | | |
used in computing diluted earnings per share | | | | 7,897,036 | | | 6,600,400 | | | 8,830,732 | |
|
| |
| |
| |
STARLIMS TECHNOLOGIES LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP CONSOLIDATED
STATEMENTS OF INCOME
| Year ended December 31,
| Three months ended March 31,
|
---|
| 2007
| 2007
| 2008
|
---|
| Unaudited
| Unaudited
| Unaudited
|
---|
| | | |
---|
| | | |
---|
GAAP total cost of revenues | | | | 8,469 | | | 1,826 | | | 2,453 | |
Stock based compensation expenses | | | | (29 | ) | | (3 | ) | | (36 | ) |
|
| |
| |
| |
| | | | | | | | | | | |
NON-GAAP total cost of revenues | | | | 8,440 | | | 1,823 | | | 2,417 | |
|
| |
| |
| |
| | |
GAAP Research and development expenses | | | | 2,872 | | | 676 | | | 833 | |
Stock based compensation expenses | | | | (23 | ) | | (3 | ) | | (14 | ) |
|
| |
| |
| |
| | | | | | | | | | | |
NON-GAAP Research and development expenses | | | | 2,849 | | | 673 | | | 819 | |
|
| |
| |
| |
| | |
GAAP Selling and marketing expenses | | | | 5,792 | | | 1,165 | | | 1,681 | |
Stock based compensation expenses | | | | (123 | ) | | (31 | ) | | (65 | ) |
Issuance related expenses | | | | (100 | ) | | -- | | | -- | |
|
| |
| |
| |
| | | | | | | | | | | |
NON-GAAP Selling and marketing expenses | | | | 5,569 | | | 1,134 | | | 1,616 | |
|
| |
| |
| |
| | |
GAAP General and administrative expenses | | | | 2,799 | | | 573 | | | 904 | |
Stock based compensation expenses | | | | (9 | ) | | (2 | ) | | (6 | ) |
Issuance related expenses | | | | (99 | ) | | -- | | | -- | |
Amortization of purchased intangible assets | | | | (31 | ) | | (9 | ) | | (8 | ) |
|
| |
| |
| |
| | | | | | | | | | | |
NON-GAAP General and administrative expenses | | | | 2,660 | | | 562 | | | 890 | |
|
| |
| |
| |
| | |
GAAP total tax expenses | | | | 885 | | | 187 | | | 278 | |
Taxes | | | | 91 | | | 12 | | | 21 | |
|
| |
| |
| |
NON-GAAP total tax expenses | | | | 976 | | | 199 | | | 299 | |
|
| |
| |
| |
STARLIMS TECHNOLOGIES LTD.
CONSOLIDATED CASH FLOWS
(U.S. dollars in thousands)
| Year Ended December 31,
| Three months ended March 31,
|
---|
| 2007
| 2007
| 2008
|
---|
| Audited
| Unaudited
| Unaudited
|
---|
| | | |
---|
| | | |
---|
CASH FLOWS - OPERATING ACTIVITIES | | | | | | | | | | | |
Net income | | | $ | 4,509 | | $ | 1,111 | | $ | 1,370 | |
| | |
Adjustments to reconcile net income to cash provided by | | |
(used in) operating activities: | | |
Depreciation and amortization | | | | 510 | | | 97 | | | 144 | |
Stock-based compensation | | | | 177 | | | 40 | | | 122 | |
Gains related to marketable securities | | | | (326 | ) | | (56 | ) | | (137 | ) |
Capital loss from sales of fixed assets | | | | 8 | | | -- | | | -- | |
Increase (decrease) in accrued severance pay | | | | 20 | | | 12 | | | (3 | ) |
Deferred income taxes | | | | (732 | ) | | 6 | | | (71 | ) |
The effect of exchange rate changes | | | | (241 | ) | | (33 | ) | | (145 | ) |
Changes in assets and liabilities: | | |
Decrease (increase) in accounts receivable | | | | (30 | ) | | 1,509 | | | (1,616 | ) |
Increase (decrease) in allowance for doubtful accounts | | | | (99 | ) | | (55 | ) | | 23 | |
Decrease (Increase) in other current assets | | | | 75 | | | (42 | ) | | (23 | ) |
Increase (decrease) in trade accounts payable | | | | (182 | ) | | (26 | ) | | 409 | |
Increase in deferred revenues | | | | 395 | | | 200 | | | 523 | |
Increase (decrease) in other current liabilities | | | | 47 | | | (559 | ) | | (1,197 | ) |
|
| |
| |
| |
| | | | | | | | | | | |
Net cash provided by ( used in) operating activities | | | | 4,131 | | | 2,204 | | | (601 | ) |
|
| |
| |
| |
| | |
CASH FLOWS - INVESTING ACTIVITIES | | |
Investments in available-for-sale | | | | (740 | ) | | (697 | ) | | (133 | ) |
Proceeds from sale of available-for-sale | | | | 1,563 | | | 1,821 | | | 129 | |
Investment in held-to-maturity marketable securities | | | | (1,706 | ) | | (589 | ) | | (385 | ) |
Proceeds from sale of held-to-maturity securities | | | | 1,685 | | | -- | | | -- | |
Investments in deposits, net | | | | (101 | ) | | 65 | | | 33 | |
Loans to employees, net | | | | (64 | ) | | (24 | ) | | 11 | |
Proceeds from sale of property and equipment | | | | 10 | | | -- | | | -- | |
Purchase of fixed assets | | | | (523 | ) | | (215 | ) | | (122 | ) |
|
| |
| |
| |
Net cash used in investing activities | | | | 124 | | | 361 | | | (467 | ) |
|
| |
| |
| |
| | |
CASH FLOWS - FINANCING ACTIVITIES | | |
Proceeds from issuing of shares, net of issuance expenses | | | | 26,785 | | | -- | | | -- | |
Deferred share issuance expenses | | | | -- | | | (238 | ) | | -- | |
Proceeds from sale of treasury stock against exercise of options | | | | 17 | | | 5 | | | -- | |
Purchase of treasury stock by the Company | | | | (93 | ) | | -- | | | (681 | ) |
Dividends paid | | | | (1,914 | ) | | (1,914 | ) | | -- | |
|
| |
| |
| |
Net cash provided by (used in) financing activities | | | | 24,795 | | | (2,147 | ) | | (681 | ) |
|
| |
| |
| |
| | |
THE EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | | | | 115 | | | 2 | | | 10 | |
|
| |
| |
| |
Increase (decrease) in cash and cash equivalents | | | | 29,165 | | | 420 | | | (1,739 | ) |
|
| |
| |
| |
| | | | | | | | | | | |
Cash and cash equivalents at the beginning of the period | | | | 2,539 | | | 2,539 | | | 31,704 | |
|
| |
| |
| |
Cash and cash equivalents at the end of the period | | | $ | 31,704 | | $ | 2,959 | | $ | 29,965 | |
|
| |
| |
| |
STARLIMS TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in thousand)
NOTE 1 – SEGMENTAL DISCLOSURE
A. | Revenues by geographical areas |
| Year ended December 31,
| Three Months Ended March 31,
|
---|
| 2007
| 2007
| 2008
|
---|
| Audited
| Unaudited
| Unaudited
|
---|
| | | |
---|
| | | |
---|
North America | | | $ | 16,094 | | $ | 4,056 | | $ | 5,283 | |
Latin America | | | | 1,987 | | | 289 | | | 208 | |
Europe | | | | 3,235 | | | 654 | | | 708 | |
Asia | | | | 2,110 | | | 387 | | | 740 | |
Israel | | | | 349 | | | 21 | | | 30 | |
|
| |
| |
| |
| | | $ | 23,775 | | $ | 5,407 | | $ | 6,969 | |
|
| |
| |
| |
— | In February 2008, the Company adopted a share repurchase program, allowing it to repurchase up to $2,000 of company's ordinary shares over a period of 18 months in the open market, at times and prices that management considers appropriate, taking into account prevailing market conditions and other corporate considerations. |
— | Up to the March 31, 2008, the company repurchased 90,727 of its ordinary shares under the program at a total purchase price of aproximatelly $ 681,000, or an average price of $7.54 per share. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | STARLIMS Technologies Ltd. (Registrant)
By: /s/ Chaim Friedman —————————————— Chaim Friedman Chief Financial Officer |
Date: May 15, 2008