Agilysys, Inc. (Nasdaq: AGYS) Fiscal 2011 Unaudited Third Quarter Results February 2, 2011 Exhibit 99.2 |
2 Forward looking statements & non-GAAP financial information Forward-Looking Language This presentation 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 presentation 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 of MAK Capital’s shareholder-approved control share acquisition, and unanticipated deterioration in economic and financial conditions in the United States and around the world or the consequences. 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 the Annual Report filed with the SEC, under Item 1A, “Risk Factors.” Copies are available from the SEC or the Agilysys web site. Use of Non-GAAP Financial Information To supplement the unaudited condensed consolidated financial statements presented in accordance with U.S. GAAP in this presentation, certain non-GAAP financial measures are used. Management believes that such information can enhance investors' understanding of the Company's ongoing operations. The non-GAAP measures included in this presentation have been reconciled to the comparable GAAP measures within an accompanying table, shown on the last page of this presentation. |
3 Highlights Continued focus on accelerating software and services sales Demand environment has improved — fiscal-to-date revenue increased 7% over prior year Q3 revenue increased 1% compared with fiscal year 2010, driven by software and services Gross margin was 21.5% down from 23.2% in prior-year quarter largely due to lower vendor rebates and services margins SG&A increased $4.3M year over year largely due to previously capitalized development costs now being expensed and absence of litigation award recognized in Q3 fiscal year 2010 Executing on $7M in annualized cost savings in Q4 fiscal year 2011 Earnings per diluted share from continuing operations for the quarter was $0.08 compared with earnings per diluted share of $0.59 in Q3 fiscal year 2010 Continued aggressive investment in Guest360™ — Agilysys’ next generation hotel management solution |
4 Q3 review: consolidated results Revenue increased 1%; hardware decreased by 2%, software increased by 7% and services increased by 8% Gross margins decreased 170 basis points due to lower vendor rebates and services margins SG&A, excluding depr. & amort., increased by $4.1M Operating income was $1.9M compared with operating income of $8.6M in Q3 FY10 Other income, net is down $4.6M due to absence of non-recurring gain and litigation settlement included in prior-year quarter Q3 Year-over-Year Commentary Statement of Operations ($Mil., except per share) 2010 2009 % Net sales $217.0 $215.8 0.6% Cost of goods sold ¹ $170.3 $165.8 2.7% Gross profit $46.7 $50.0 (6.5%) 21.5% 23.2% SG&A (excl. depr. & amort.) $41.8 $37.7 11.0% Depreciation & amortization $3.0 $2.8 7.8% Asset impairment charge $0.0 $0.2 (100.0%) Restructuring charge $0.0 $0.7 (100.0%) Operating income $1.9 $8.6 Other (income), net ($0.3) ($4.9) Interest expense, net $0.3 $0.3 Income before income taxes $1.9 $13.2 Income tax (benefit) ($0.1) ($0.4) Income from cont. ops. $2.0 $13.6 Income from disc. ops., net of taxes $0.0 $0.0 Net income $2.0 $13.6 Diluted earnings per share: Continuing operations $0.08 $0.59 Discontinued operations $0.00 $0.00 Net earnings $0.08 $0.59 Adjusted EBITDA excl. charges² $5.4 $12.6 2.5% 5.8% (1) $0.5M and $0.3M of developed technology amortization included in COGS for Q3FY11 and Q3FY10, respectively (2) Excludes Restructuring and asset impairment charges December 31, Three Months Ended |
5 Q3 review: Hospitality (“HSG”) Revenue increased 8% from prior year due to higher software and services sales Gross margin decreased due to lower services margins SG&A, excluding depr. & amort., increased by $1.2M due to Guest360™ costs of $1.1M which were expensed compared with prior-year costs that were capitalized Adjusted EBITDA decreased $2.0M due to lower margins and expensing previously capitalized Guest360 development costs HSG Segment Profit ($Mil.) Q3 Year-over-Year Commentary 2010 2009 % Net sales $24.3 $22.5 8.2% Cost of goods sold ¹ $11.0 $8.2 34.2% Gross profit $13.3 $14.3 (6.7%) 54.8% 63.6% SG&A (excl. depr. & amort.) $10.8 $9.6 12.4% Depreciation & amortization $0.6 $0.8 (24.3%) Asset impairment $0.0 $0.1 (100.0%) Operating income $2.0 $3.8 Depreciation & amortization $1.0 $1.1 Adjusted EBITDA excl. charges² $3.0 $5.0 12.3% 22.3% (1) $0.5M and $0.3M of developed technology amortization included in COGS for Q3FY11 and Q3FY10, respectively (2) Excludes Asset impairment charges Three Months Ended December 31, |
6 Q3 review: Retail (“RSG”) Revenue decreased 8% primarily due to lower hardware sales Gross margin contracted due to lower services margins SG&A, excl. depr. & amort., was flat with prior-year quarter Adjusted EBITDA decreased $1.6M due to lower revenue and gross margin RSG Segment Profit ($Mil.) Q3 Year-over-Year Commentary 2010 2009 % Net sales $34.3 $37.4 (8.2%) Cost of goods sold $28.5 $30.0 (4.8%) Gross profit $5.8 $7.4 (21.9%) 16.9% 19.8% SG&A (excl. depr. & amort.) $4.7 $4.7 (0.3%) Depreciation & amortization $0.1 $0.0 nm Operating income $1.0 $2.7 Depreciation & amortization $0.1 $0.0 Adjusted EBITDA $1.1 $2.7 3.3% 7.3% Three Months Ended December 31, |
7 Q3 review: Technology (“TSG”) Revenue increased 2% due to higher software and services attach rates Gross margin contracted 70 basis points in quarter Gross margin excluding vendor incentives were 90 basis points higher Decline in Sun/Oracle vendor incentives more than offset higher transaction margin SG&A, excl. depr. & amort., was essentially flat Adjusted EBITDA decreased $0.7M due to lower vendor incentives TSG Segment Profit ($Mil.) Q3 Year-over-Year Commentary 2010 2009 % Net sales $158.3 $155.9 1.6% Cost of goods sold $130.8 $127.6 2.5% Gross profit $27.6 $28.3 (2.4%) 17.4% 18.1% SG&A (excl. depr. & amort.) $19.5 $19.5 nm Depreciation & amortization $1.0 $0.8 29.1% Operating income $7.0 $7.9 Depreciation & amortization $1.0 $0.8 Adjusted EBITDA $8.0 $8.7 5.1% 5.6% Three Months Ended December 31, |
8 Q3 review: Corporate SG&A, excl. depr. & amort., increased $2.9M Prior-year quarter included $1.6M one-time credit from litigation settlement Development costs of $0.7M related to implementation of new Oracle ERP system capitalized in prior year quarter Adjusted EBITDA, excluding charges, decreased $2.9M Corporate Segment ($Mil.) Q3 Year-over-Year Commentary 2010 2009 $ SG&A (excl. depr. & amort.) $6.8 $3.9 $2.9 Depreciation & amortization $1.3 $1.2 $0.1 Asset impairment charge $0.0 $0.1 ($0.1) Restructuring charge $0.0 $0.7 ($0.7) Operating loss ($8.1) ($5.9) ($2.2) Depreciation & amortization $1.3 $1.2 $0.1 Adjusted EBITDA ($6.8) ($4.7) ($2.1) Adjusted EBITDA excl. charges¹ ($6.8) ($3.9) ($2.9) (1) Excludes Restructuring and asset impairment charges Three Months Ended December 31, |
9 FY11 fiscal-to-date (“FTD”) review: consolidated results Revenue grew approximately 7% — HSG grew 10%, RSG 2% and TSG 7% Gross margins declined 240 basis points primarily due to lower Sun/Oracle vendor incentives and competitive selling pressure SG&A, excl. depr. & amort., increased $5.7M Previously capitalized Guest360 development increased SG&A by $2.3M Previously capitalized Oracle implementation costs increased SG&A by $2.5M Prior-year SG&A includes credit of $1.6M related to litigation settlement Other income is down $3.7M due to absence of non-recurring gain and litigation settlement included in prior-year fiscal-to-date results Taxes include a $3.8M charge for valuation allowance related to deferred tax assets FTD Year-over-Year Commentary Statement of Operations ($Mil., except per share) 2010 2009 % Net sales $531.7 $498.5 6.7% Cost of goods sold ¹ $410.3 $372.8 10.1% Gross profit $121.4 $125.7 (3.4%) 22.8% 25.2% SG&A (excl. depr. & amort.) $119.4 $113.7 5.1% Depreciation & amortization $9.0 $11.7 (23.0%) Asset impairment charges $0.1 $0.2 (75.0%) Restructuring charges $0.4 $0.7 (46.3%) Operating loss ($7.5) ($0.6) Other (income)/expense, net ($2.3) ($6.0) (61.8%) Interest expense, net $0.8 $0.7 24.1% (Loss) income before income taxes ($6.0) $4.7 Income tax expense $4.4 $0.6 (Loss) income from cont. ops. ($10.5) $4.1 Loss from disc. ops., net of taxes ($0.0) ($0.0) Net (loss) income ($10.5) $4.0 Diluted loss income per share: Continuing operations ($0.46) $0.18 Discontinued operations $0.00 $0.00 Net (loss) income ($0.46) $0.18 Adjusted EBITDA excl. charges² $3.2 $13.0 0.6% 2.6% (1) $1.2M and $1.0M of developed technology amortization included in COGS for FTD Q3FY11 and Q3FY10, respectively (2) Excludes Restructuring and asset impairment charges Fiscal Year December 31, |
10 FY11 Q3 review: summary balance sheet performance Cash at quarter-end was $45.3M — up $6.2M from September 2010 Days sales outstanding increased from 77 days at 9/30/10 to 87 days — impact to cash flow from higher receivables partially offset by higher account payables Capital expenditures were $2.1M for Q3 FY11 compared with $3.8M in Q3 FY10 — majority of Oracle expenditures were expensed in Q3 FY11 Commentary Working Capital ($Mil.) • Working capital is (A/R + Inventory) less (A/P + Deferred Revenue) • Quarterly revenue annualized at historical quarterly skew $182.6 $104.8 $121.9 $157.6 $210.3 $25.1 $14.4 $25.9 $22.6 $22.5 10.1% 4.0% 6.2% 9.0% 6.5% $0 $45 $90 $135 $180 $225 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 0% 3% 6% 9% 12% 15% Receivables Inventory Working capital as % of sales |
11 Rolling twelve-month revenue HSG Revenue ($Mil.) TSG Revenue ($Mil.) $108 $103 $106 $111 $111 $116 $113 $24 $48 $72 $96 $120 Jun '09 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Dec '10 RSG Revenue ($Mil.) AGYS Consolidated Revenue ($Mil.) $91 $91 $86 $83 $90 $88 $90 $20 $40 $60 $80 $100 Jun '09 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Dec '10 $482 $472 $467 $447 $443 $468 $470 $100 $200 $300 $400 $500 Jun '09 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Dec '10 $680 $665 $660 $641 $643 $671 $672 $140 $280 $420 $560 $700 Jun '09 Sep '09 Dec '09 Mar '10 Jun '10 Sep '10 Dec '10 |
12 FY11 Outlook Expect FY11 revenue of $690M to $710M Expect FY11 adjusted EBITDA¹ of $3M to $6M Expect cash on hand as of March 31, 2011 to be $60M to $75M Depreciation and amortization is forecast to be $13.0M to $13.5M Stock compensation expense is expected to be approximately $3.5M, which is expensed in the calculation of adjusted EBITDA Capital expenditures are expected to be $8M to $9M of which $3M relates to capitalization of Guest360™ development costs and $2M relates to Oracle ERP implementation 1. Adjusted EBITDA is operating income plus depreciation and amortization, excluding restructuring and asset impairment charges |
Agilysys, Inc. (Nasdaq: AGYS) Fiscal 2011 Unaudited Third Quarter Results February 2, 2010 |
14 Reconciliation of net income/(loss) to adjusted EBITDA 2010 2009 2010 2009 Net income (loss) 1,998 $ 13,607 $ (10,468) $ 4,047 $ Plus: Interest expense, net 295 259 819 661 Income (benefit) tax expense (110) (410) 4,439 593 Depreciation and amortization expense (a) 3,509 3,142 10,220 12,640 Other income, net (321) (4,893) (2,277) (5,963) (Income) loss from discontinued operations, net of tax - (3) - 38 Adjusted EBITDA from continuing operations 5,371 $ 11,702 $ 2,733 $ 12,016 $ Asset impairment charges - 238 59 238 Restructuring charges 3 677 406 745 Adjusted EBITDA from continuing operations excluding asset impairment and restructuring charges 5,374 $ 12,617 $ 3,198 $ 12,999 $ (a) Depreciation and amortization expense excludes amortization of deferred financing fees totaling $131 and $126 for the three months ended December 31, 2010 and 2009, respectively, and $393 and $346 for the nine months ended December 31, 2010 and 2009, respectively, as such costs are already included in interest expense, net. Nine Months Ended December 31, (In thousands) Three Months Ended December 31, |