FOR IMMEDIATE RELEASE | May 12, 2004 |
Group 1 Software Reports Record Fourth Quarter and Fiscal Year Results
Quarterly Revenue and Earnings Well Above Guidance
Lanham, MD — Group 1 Software (Nasdaq: GSOF) today reported results for its fourth fiscal quarter and fiscal year ended March 31, 2004. The Company reported record fourth quarter revenue of $37.9 million, up 30% vs. the prior year’s fourth quarter. Net income available to common stockholders, also a record, increased 14% to $3.9 million from $3.5 million for the prior year’s fourth quarter. Guidance was for revenue of $34 - $36 million and net earnings of $2.5 - $3.5 million. Reducing operating income for the quarter were $0.3 million in merger and acquisition costs. Inclusion of operating costs associated with the newly–acquired Sagent assets also limited the earnings increase, although revenues from Sagent and Centrus products were better than plan during the quarter. Fully diluted earnings per share for the quarter increased to $0.25 per share from $0.22 per share the prior year.
For the entire 2004 fiscal year, the Company also reported record revenue and net income. Revenue totaled $118.7 million, a 14% increase from $104.3 million the prior year. Net income available to common stockholders was $9.5 million, an increase of 9% from $8.7 million reported for the prior year. Reducing operating income for the year were $1.1 million in merger and acquisition costs. Fully diluted earnings per share were $0.60 compared with $0.59 in the prior year.
Total revenue for the quarter from Enterprise Solutions software and services was $28.2 million, a 42% increase over the prior year’s fourth quarter. The Enterprise Solutions results include the software and services from the assets acquired from Sagent in October 2003. Total revenue from DOC1 Customer Communications Management software and services was $9.7 million, up from $9.4 million in the prior year’s fourth quarter.
Fourth quarter license fee revenue for the Company increased 42% to $20.9 million vs. the prior year. License fees in the Enterprise Solutions division were up 53% to $15.7 million. License fees in the DOC1 division increased 18% to $5.2 million.
Group 1’s cash position grew even stronger in the quarter. Cash and short-term investments totaled $60.0 million at March 31, 2004 compared with $58.5 million at December 31, 2003.
“We are very pleased with our performance this quarter, especially in that all of our market areas performed well,” said Bob Bowen, CEO of Group 1 Software. “Both of our operating segments saw significant increases in license revenues compared with the prior year. Our DOC1 division performed strongly in both domestic and international markets, including several initial sales of our next–generation DOC1 Series 5 product released during the quarter. In the Enterprise Solutions division, the products we acquired with
Disclosure Page 4 |
the assets of Sagent Technologies in October 2003, sold strongly. This performance reinforced our conviction that these products and the professionals who develop, distribute and support them are an important part of Group 1’s future. Finally, our traditional direct marketing applications and data quality solutions also were strong with several large enterprise sales.”
On April 13, 2004, Group 1 and Pitney Bowes Inc. of Stamford, CT issued a joint press release describing an agreement under which Pitney Bowes will acquire Group 1, subject to regulatory review, Group 1 shareholder approval and certain other conditions. Please see the Website of either company for further details.
Group 1 Software (Nasdaq: GSOF ) is a leading provider of solutions that help over 3,000 organizations worldwide maximize the value of their customer and other data. Group 1 provides industry-leading technologies that allow businesses to cleanse and enrich their corporate data, generate personalized customer communications and integrate and deliver data across the enterprise. These technologies are essential components of enterprise applications including customer relationship management (CRM), enterprise resource planning (ERP) and business intelligence systems. Founded in 1982 and headquartered in Lanham, Maryland, Group 1 offers solutions utilized by leaders in the financial services, banking, GIS/mapping, retail, telecommunications, utilities, insurance and other industries. The company’s customer base includes such recognized names as Entergy, GEICO, L.L. Bean, MapQuest, QVC, Siemens, Wal-Mart and Wells Fargo. For more information about Group 1, visit the company’s Web site at http://www.g1.com.
The Company will hold a conference call at 4:30 PM EST today to discuss these results. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.g1.com or by dialing 800-374-0565.
Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation reform Act of 1995. Words like “are enthusiastic”, “announced our intent”, “guidance” and “projects” are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Readers are cautioned not to place undue reliance of these forward-looking statements, which address the conditions as they are found on the date of this press release. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances that arise after the date of this press release or to reflect the occurrence of unanticipated events. For additional information regarding these and other risks and uncertainties associated with the Company’s business, reference is made to the Company’s reports filed from time to time with the Securities and Exchange Commission. Group 1 Software and DOC1 are registered trademarks of Group 1 Software, Inc.
Contacts
Mark Funston, CFO, Group 1 Software at 301.918.0381 or mark_funston@g1.com
David Peikin, Corporate Communications Manager, Group 1 Software at 301.918.0818 or pr@g1.com
Charles Messman, MKR Group at 626-395-9500 or cmessman@mkr-group.com
Disclosure Page 5 |
GROUP 1 SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
| For the Three Month Period |
| For the Twelve Month Period |
| ||||||||
|
|
|
| ||||||||||
|
| 2004 |
| 2003 |
| 2004 |
| 2003 |
| ||||
|
|
|
|
|
| ||||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Software license and related revenue |
| $ | 20,965 |
| $ | 14,749 |
| $ | 56,472 |
| $ | 48,480 |
|
Maintenance and services |
|
| 16,965 |
|
| 14,414 |
|
| 62,269 |
|
| 55,772 |
|
|
|
|
|
|
| ||||||||
Total revenue |
|
| 37,930 |
|
| 29,163 |
|
| 118,741 |
|
| 104,252 |
|
|
|
|
|
|
| ||||||||
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Software license expense |
|
| 3,932 |
|
| 4,080 |
|
| 14,956 |
|
| 15,293 |
|
Maintenance and service expense |
|
| 5,066 |
|
| 4,413 |
|
| 18,398 |
|
| 17,094 |
|
|
|
|
|
|
| ||||||||
Total cost of revenue |
|
| 8,998 |
|
| 8,493 |
|
| 33,354 |
|
| 32,387 |
|
|
|
|
|
|
| ||||||||
Gross profit |
|
| 28,932 |
|
| 20,670 |
|
| 85,387 |
|
| 71,865 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
| 5,022 |
|
| 3,214 |
|
| 15,974 |
|
| 11,800 |
|
Sales and marketing |
|
| 12,838 |
|
| 9,235 |
|
| 39,875 |
|
| 32,947 |
|
General and administrative |
|
| 5,053 |
|
| 3,758 |
|
| 16,157 |
|
| 14,626 |
|
|
|
|
|
|
| ||||||||
Total operating expenses |
|
| 22,913 |
|
| 16,207 |
|
| 72,006 |
|
| 59,373 |
|
|
|
|
|
|
| ||||||||
Income from operations |
|
| 6,019 |
|
| 4,463 |
|
| 13,381 |
|
| 12,492 |
|
Non-operating income |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 200 |
|
| 278 |
|
| 1,208 |
|
| 1,157 |
|
Interest expense |
|
| (24 | ) |
| (12 | ) |
| (55 | ) |
| (301 | ) |
Other non-operating income |
|
| 168 |
|
| 236 |
|
| 520 |
|
| 14 |
|
|
|
|
|
|
| ||||||||
Total non-operating income |
|
| 344 |
|
| 502 |
|
| 1,673 |
|
| 870 |
|
|
|
|
|
|
| ||||||||
Income before provision for income taxes |
|
| 6,363 |
|
| 4,965 |
|
| 15,054 |
|
| 13,362 |
|
|
|
|
|
|
| ||||||||
Provision for income taxes |
|
| 2,418 |
|
| 1,490 |
|
| 5,528 |
|
| 4,602 |
|
|
|
|
|
|
| ||||||||
Net income |
|
| 3,945 |
|
| 3,475 |
|
| 9,526 |
|
| 8,760 |
|
|
|
|
|
|
| ||||||||
Preferred stock dividend requirements |
|
| — |
|
| (2 | ) |
| — |
|
| (44 | ) |
|
|
|
|
|
| ||||||||
Net income available to common stockholders |
| $ | 3,945 |
| $ | 3,473 |
| $ | 9,526 |
| $ | 8,716 |
|
|
|
|
|
|
| ||||||||
Basic earnings per share |
| $ | 0.28 |
| $ | 0.26 |
| $ | 0.69 |
| $ | 0.67 |
|
|
|
|
|
|
| ||||||||
Diluted earnings per share |
| $ | 0.25 |
| $ | 0.22 |
| $ | 0.60 |
| $ | 0.59 |
|
|
|
|
|
|
| ||||||||
Basic weighted average shares outstanding |
|
| 13,903 |
|
| 13,543 |
|
| 13,826 |
|
| 13,029 |
|
|
|
|
|
|
| ||||||||
Diluted weighted average shares outstanding |
|
| 15,560 |
|
| 15,586 |
|
| 15,765 |
|
| 14,621 |
|
|
|
|
|
|
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Disclosure Page 6 |
GROUP 1 SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
|
| March 31, |
| March 31, |
| ||
|
|
|
| ||||
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 43,211 |
| $ | 56,475 |
|
Short-term investments, available-for-sale |
|
| 16,777 |
|
| 7,712 |
|
Trade and installment accounts receivable, less allowance of $2,459 and $1,755 |
|
| 35,478 |
|
| 18,834 |
|
Deferred income taxes |
|
| 2,766 |
|
| 2,130 |
|
Prepaid expenses and other current assets |
|
| 4,786 |
|
| 4,067 |
|
|
|
|
| ||||
Total current assets |
|
| 103,018 |
|
| 89,218 |
|
Installment accounts receivable, long-term |
|
| — |
|
| 39 |
|
Property and equipment, net |
|
| 5,824 |
|
| 4,707 |
|
Computer software, net |
|
| 25,736 |
|
| 23,490 |
|
Goodwill |
|
| 24,340 |
|
| 12,716 |
|
Other assets |
|
| 6,151 |
|
| 206 |
|
|
|
|
| ||||
Total assets |
| $ | 165,069 |
| $ | 130,376 |
|
|
|
|
| ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
| $ | 2,007 |
| $ | 1,358 |
|
Current portion of note payable and capital lease obligation |
|
| 527 |
|
| 371 |
|
Accrued expenses |
|
| 13,368 |
|
| 7,033 |
|
Accrued compensation |
|
| 10,129 |
|
| 9,454 |
|
Current deferred revenues |
|
| 42,975 |
|
| 31,241 |
|
|
|
|
| ||||
Total current liabilities |
|
| 69,006 |
|
| 49,457 |
|
Note payable and capital lease obligation, net of current portion |
|
| 42 |
|
| 350 |
|
Deferred revenues, long-term |
|
| 1,534 |
|
| 315 |
|
Deferred income taxes |
|
| 4,587 |
|
| 4,694 |
|
|
|
|
| ||||
Total liabilities |
|
| 75,169 |
|
| 54,816 |
|
|
|
|
| ||||
Commitments and contingencies |
|
| — |
|
| — |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
6% cumulative convertible preferred stock $0.25 par value; 1,200 shares authorized; no shares issued (aggregate involuntary liquidation preference $950) |
|
| — |
|
| — |
|
Common stock $0.50 par value; 200,000 and 50,000 shares authorized; 15,197 and 14,902 shares issued |
|
| 7,598 |
|
| 7,451 |
|
Additional paid in capital |
|
| 37,589 |
|
| 34,951 |
|
Retained earnings |
|
| 47,145 |
|
| 37,619 |
|
Accumulated other comprehensive income (loss) |
|
| 2,661 |
|
| 184 |
|
Less treasury stock, 1,271 and 1,246 shares, at cost |
|
| (5,093 | ) |
| (4,645 | ) |
|
|
|
| ||||
Total stockholders’ equity |
|
| 89,900 |
|
| 75,560 |
|
|
|
|
| ||||
Total liabilities and stockholders’ equity |
| $ | 165,069 |
| $ | 130,376 |
|
|
|
|
| ||||
Disclosure Page 7 |
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 hereunto duly authorized.
Date: May 14, 2004
| GROUP 1 SOFTWARE, INC. |
|
|
|
|
| By: /s/ MARK D. FUNSTON |
|
|
|
|
| |
| Name: Mark D. Funston |
|
|
| Title: Chief Financial Officer |
Disclosure Page 8 |
