QAD Reports Fiscal 2013 Second Quarter Financial Results
SANTA BARBARA, Calif.--August 23, 2012--QAD Inc. (NASDAQ: QADA) (NASDAQ: QADB), a leading provider of enterprise software and services for global manufacturing companies, today reported financial results for the fiscal 2013 second quarter ended July 31, 2012.
Total revenue was $61.0 million for the second quarter of fiscal 2013, compared with $62.0 million for the second quarter of fiscal 2012. The decrease was principally the result of lower license revenue driven primarily by the slowdown in the global manufacturing economy, as well as the impact of foreign exchange on maintenance and professional services revenue.
License revenue was $6.9 million for the fiscal 2013 second quarter, compared with $8.6 million for the same period last year. Maintenance and other revenue totaled $33.9 million, compared with $35.4 million for last year’s second fiscal quarter. Professional services revenue increased to $16.4 million, from $15.7 million for the second quarter of fiscal 2012. Subscription revenue, which includes QAD’s On Demand deployment option, grew to $3.7 million, from $2.3 million for last year’s fiscal second quarter.
Net income for the fiscal 2013 second quarter was $959,000, or $0.06 per diluted Class A share and $0.05 per diluted Class B share. Net income for the fiscal 2013 second quarter was negatively impacted by $588,000, or $0.04 per diluted Class A share and $0.03 per diluted Class B share, due to a mark-to-market adjustment for an interest rate swap related to the refinancing of QAD’s mortgage on its Santa Barbara headquarters. Net income for the fiscal 2012 second quarter was $3.1 million, or $0.19 per diluted Class A share and $0.16 per diluted Class B share.
“While we saw good performance in some territories and in our Precision division, overall performance was negatively impacted by the slowing global manufacturing economy,” said Karl Lopker, CEO of QAD Inc. “In response, we have implemented cost containment initiatives to improve our profitability. At the same time, we still see areas of opportunity and are putting greater emphasis on initiatives that support our customers in this uncertain climate.”
Gross profit for the fiscal 2013 second quarter was $34.0 million, or 56 percent of total revenue, compared with $35.1 million, or 57 percent of total revenue, for the fiscal 2012 second quarter.
Total operating expenses amounted to $32.4 million, or 53 percent of total revenue, for the fiscal 2013 second quarter, versus $30.5 million, or 49 percent of total revenue, for the same period last year.
Operating income for the fiscal 2013 second quarter was $1.6 million, which included $1.4 million in stock compensation expense, compared with $4.6 million, including $1.2 million in stock compensation expense, for the second quarter of the last fiscal year.
For the first six months of fiscal 2013, total revenue rose to $124.7 million, from $121.4 million for the first six months of fiscal 2012. Net income for the fiscal 2013 year-to-date period was $2.8 million, or $0.18 per diluted Class A share and $0.15 per diluted Class B share. Net income for the fiscal 2012 year-to-date period was $4.1 million, or $0.26 per Class A share and $0.21 per Class B share.
QAD’s cash and equivalents balance was $73.8 million at July 31, 2012, compared with $76.9 million at January 31, 2012. Cash provided by operations was $6.4 million for the second quarter of fiscal 2013, versus $7.8 million for the fiscal 2012 second quarter.
During the second quarter of fiscal 2013, QAD purchased 149,000 Class A shares of its common stock at an average price of $13.12 per share, and 12,000 Class B shares at an average price of $12.82 per share, for a total expenditure of approximately $2.1 million. Approximately 328,000 shares remain available under the previously authorized one million share repurchase program.
During the second quarter of fiscal 2013, QAD paid quarterly dividends totaling $1.1 million, of which $893,000 was paid in cash and the remainder in common stock.
2013 Second Quarter Highlights:
- Received orders from 11 customers representing more than $500,000 each in combined license, maintenance, subscription and professional services billings, including four orders in excess of $1.0 million;
- Received license or On Demand orders from companies across QAD’s six vertical markets, including: Biomet Japan, ECE, FCI Automotive Holdings, Gemalto, HeartWare, INOAC Exterior Products, Intertechnique, Lear Automotive India, MedTech Group, Metalsa, Musculoskeletal Transplant, NHK Spring (Thailand), Yamamoto FB Engineering, and Yangfeng Visteon Automotive, among others;
- Hosted Explore 2012 Global Customer Conference in Atlanta;
- Named 2012 “Partner of the Year” by Progress Software in recognition of the company’s collaboration in solving customer business challenges; and
- Acquired DynaSys S.A., a leading provider of supply chain planning software solutions.
For the third quarter of fiscal 2013, QAD expects total revenue of approximately $62 million and earnings of approximately $0.10 per diluted Class A share and $0.08 per diluted Class B share.
Calculation of Earnings Per Share
EPS is reported based on the company’s dual-class share structure, and includes a calculation for both Class A and Class B shares. Since Class A shares have rights to 120% of dividends paid on Class B shares, net income is apportioned so that earnings per share attributable to a Class A share are 120% of earnings per share attributable to a Class B share.
Investor Conference Call
QAD management will host an investor conference call today at 2:00 p.m. PT (5:00 p.m. ET) to review the company’s financial results and operations for the fiscal 2013 second quarter. The conference call will be webcast live and is accessible through the investor relations section of QAD’s web site at www.qad.com, where it will be available for approximately one year. Interested parties may participate in the call by dialing 800-230-1059 (domestic) or 612-234-9959 (international). A replay of the call will be accessible through August 30, 2012 by dialing 800-475-6701 (domestic) or 320-365-3844 (international), passcode 250576.
QAD is a leading provider of enterprise applications for global manufacturing companies specializing in automotive, consumer, electronics, food and beverage, industrial and life sciences products. QAD applications provide critical functionality for managing manufacturing resources and operations within and beyond the enterprise, enabling global manufacturers to collaborate with their customers, suppliers and partners to make and deliver the right product, at the right cost and at the right time. For more information about QAD, telephone +1 805-566-6000, or visit the QAD web site at www.qad.com.
“QAD” is a registered trademark of QAD Inc. All other products or company names herein may be trademarks of their respective owners.
Note to Investors: This press release contains certain forward-looking statements made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Words such as “expects”, “believes”, “anticipates”, “could”, “will likely result”, “estimates”, “intends”, “may”, “projects”, “should”, and variations of these words and similar expressions are intended to identify these forward looking statements. Forward-looking statements are based on the company’s current expectations and assumptions regarding its business, the economy and future conditions. A number of risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements. These risks include, but are not limited to, evolving demand for the company's software products and products that operate with the company's products; the company's ability to sustain license and service demand; the company's ability to leverage changes in technology; the company's ability to sustain customer renewal rates at current levels; the publication of opinions by industry and financial analysts about the company, its products and technology; the reliability of estimates of transaction and integration costs and benefits; the entry of new competitors or new offerings by existing competitors and the associated announcement of new products and technological advances by them; delays in localizing the company's products for new or existing markets; the ability to recruit and retain key personnel; delays in sales as a result of lengthy sales cycles; changes in operating expenses, pricing, timing of new product releases, the method of product distribution or product mix; timely and effective integration of newly acquired businesses; general economic conditions; exchange rate fluctuations; and, the global political environment. In addition, revenue and earnings in the enterprise resource planning (ERP) software industry are subject to fluctuations. Software license revenue, in particular, is subject to variability with a significant proportion of revenue earned in the last month of each quarter. Given the high margins associated with license revenue, modest fluctuations can have a substantial impact on net income. Investors should not use any one quarter's results as a benchmark for future performance. For a more detailed description of the risk factors associated with the company and the industries in which it operates, please refer to the company's Annual Report on Form 10-K for fiscal 2013 ended January 31, 2013, and in particular, the section entitled “Risk Factors” therein, and in other periodic reports the company files with the Securities and Exchange Commission.