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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.

Business Outlook

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.

View FY13 Q2 Results

About QAD

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.