EPS from Continuing Operations $.07 for Q4’12 vs. ($.79) for Q4’11;
EPS from Continuing Operations $.45 for FY’12 vs. ($.84) for FY’11.
LOWELL, Mass. — (BUSINESS WIRE) — August 29, 2012 — SofTech, Inc. (OTCQB: SOFT), a proven provider of Product Lifecycle Management (PLM) solutions today announced its fourth quarter and fiscal year 2012 operating results. Revenue for the three months ended May 31, 2012 was approximately $1.5 million, down about 3% from the same period in the prior fiscal year. Net income from continuing operations was $67,000 or $.07 per share for the three months ended May 31, 2012 compared to a net loss from continuing operations of $(744,000) or ($.79) per share for the same period in the prior fiscal year which included approximately $560,000 of non-recurring transaction related expenses from the recapitalization transaction completed in March 2011.
Revenue for fiscal year 2012 was approximately $6.4 million, down approximately 6% from the same period in the prior fiscal year. The revenue decline was primarily due to the loss of one customer that chose to replace our technology prior to the March 2011 recapitalization transaction. Product revenue increased by $300,000, or nearly 27% over the prior fiscal year. Net income from continuing operations for fiscal year 2012 was $444,000 or $.45 per share as compared to a net loss from continuing operations of $(582,000) or ($.84) per share for the same period in the prior fiscal year. Fiscal year 2011 results included approximately $1 million of expenses related to non-recurring professional fees and transaction related expenses from the aforementioned recapitalization transaction.
“We have made excellent progress over the course of fiscal 2012 in resolving the pre-recapitalization transaction issues, stabilizing the business and identifying new profitable revenue streams,” said Joe Mullaney, CEO since the March 2011 recapitalization transaction. “There is new energy resulting from these actions that we expect will lead to revenue growth in fiscal 2013. The double-digit growth in product revenue year over year is an early sign that we are on the right track.”
FINANCIAL STATEMENTS
The Statements of Operations for the three and twelve month periods ended May 31, 2012 compared to the same periods in the prior fiscal year are presented below. A reconciliation of Net income (loss) to EBITDA from continuing operations, a non-GAAP financial measure, is also provided.
| Quarters ended | |||||||||||||||
| (000's, except per share data) | May 31, | Change | |||||||||||||
| 2012 | 2011 | $ | % | ||||||||||||
| Product revenue | $ | 255 | $ | 162 | $ | 93 | 57.4 | % | |||||||
| Service revenue | 1,252 | 1,389 | (137 | ) | -9.9 | % | |||||||||
| Total revenue | 1,507 | 1,551 | (44 | ) | -2.8 | % | |||||||||
| Cost of sales | 330 | 336 | (6 | ) | -1.8 | % | |||||||||
| Gross margin $ | 1,177 | 1,215 | (38 | ) | -3.1 | % | |||||||||
| Gross margin % | 78.1 | % | 78.3 | % | |||||||||||
| R&D | 285 | 387 | (102 | ) | -26.4 | % | |||||||||
| SG&A | 729 | 1,471 | (742 | ) | -50.4 | % | |||||||||
| Operating income (loss) | 163 | (643 | ) | 806 | 125.3 | % | |||||||||
| Interest expense | 69 | 105 | (36 | ) | -34.3 | % | |||||||||
| Other (income) expense | 24 | (22 | ) | 46 | 209.1 | % | |||||||||
| Income (loss) from continuing operations before income taxes | 70 | (726 | ) | 796 | 109.6 | % | |||||||||
| Provision for income taxes | 3 | 18 | (15 | ) | -83.3 | % | |||||||||
| Income (loss) from continuing operations | 67 | (744 | ) | 811 | 109.0 | % | |||||||||
| Discontinued operations: | |||||||||||||||
| Income from discontinued operations | - | 84 | (84 | ) | - | ||||||||||
| Gain on disposal of discontinued operations, net of tax | - | 151 | (151 | ) | - | ||||||||||
| Net income from discontinued operations | - | 235 | (235 | ) | - | ||||||||||
| Net income (loss) | $ | 67 | $ | (509 | ) | $ | 576 | 113.2 | % | ||||||
| Weighted average shares outstanding | 995 | 949 | |||||||||||||
| Basic and diluted net income (loss) per share: | |||||||||||||||
| From continuing operations | $ | .07 | ($.79 | ) | |||||||||||
| From discontinued operations | - | .25 | |||||||||||||
| Basic and diluted net income (loss) per share | $ | .07 | ($.54 | ) | |||||||||||
| Reconciliation of Net income (loss) to EBITDA from continuing operations: | |||||||||||||||
| Net income (loss) | $ | 67 | $ | (509 | ) | ||||||||||
| Plus: Interest expense | 69 | 105 | |||||||||||||
| Plus: Tax expense | 3 | 18 | |||||||||||||
| Plus: Non-cash expenses | 73 | 668 | |||||||||||||
| Plus: Non-recurring professional fees | - | 19 | |||||||||||||
| Less: Net income from discontinued operations | - | (235 | ) | ||||||||||||
| EBITDA from continuing operations | $ | 212 | $ | 66 | |||||||||||
| Fiscal years ended | |||||||||||||||
| (000's, except per share data) | May 31, | Change | |||||||||||||
| 2012 | 2011 | $ | % | ||||||||||||
| Product revenue | $ | 1,420 | $ | 1,120 | $ | 300 | 26.8 | % | |||||||
| Service revenue | 5,015 | 5,747 | (732 | ) | -12.7 | % | |||||||||
| Total revenue | 6,435 | 6,867 | (432 | ) | -6.3 | % | |||||||||
| Cost of sales | 1,410 | 1,408 | 2 | 0.1 | % | ||||||||||
| Gross margin $ | 5,025 | 5,459 | (434 | ) | -8.0 | % | |||||||||
| Gross margin % | 78.1 | % | 79.5 | % | |||||||||||
| R&D | 1,243 | 1,614 | (371 | ) | -23.0 | % | |||||||||
| SG&A | 2,984 | 3,956 | (972 | ) | -24.6 | % | |||||||||
| Operating income (loss) | 798 | (111 | ) | 909 | 818.9 | % | |||||||||
| Interest expense | 320 | 520 | (200 | ) | -38.5 | % | |||||||||
| Other (income) expense | 31 | (67 | ) | 98 | 146.3 | % | |||||||||
| Income (loss) from continuing operations before income taxes | 447 | (564 | ) | 1,011 | 179.3 | % | |||||||||
| Provision for income taxes | 3 | 18 | (15 | ) | -83.3 | % | |||||||||
| Income (loss) from continuing operations | 444 | (582 | ) | 1,026 | 176.3 | % | |||||||||
| Discontinued operations: | |||||||||||||||
| Income from discontinued operations | - | 209 | (209 | ) | - | ||||||||||
| Gain on disposal of discontinued operations, net of tax | - | 151 | (151 | ) | - | ||||||||||
| Net income from discontinued operations | - | 360 | (360 | ) | - | ||||||||||
| Net income | $ | 444 | $ | (222 | ) | $ | 666 | 300.0 | % | ||||||
| Weighted average shares outstanding | 995 | 698 | |||||||||||||
| Basic and diluted net income (loss) per share: | |||||||||||||||
| From continuing operations | $ | .45 | ($.84 | ) | |||||||||||
| From discontinued operations | - | .52 | |||||||||||||
| Basic and diluted net income (loss) per share | $ | .45 | ($.32 | ) | |||||||||||
| Reconciliation of Net income (loss) to EBITDA from continuing operations: | |||||||||||||||
| Net income (loss) | $ | 444 | $ | (222 | ) | ||||||||||
| Plus: Interest expense | 320 | 520 | |||||||||||||
| Plus: Tax expense | 3 | 18 | |||||||||||||
| Plus: Non-cash expenses | 201 | 651 | |||||||||||||
| Plus: Non-recurring professional fees | 58 | 507 | |||||||||||||
| Less: Net income from discontinued operations | - | (360 | ) | ||||||||||||
| EBITDA from continuing operations | $ | 1,026 | $ | 1,114 | |||||||||||
The Balance Sheets as of May 31, 2012 and 2011 are presented below.
| As of | ||||||
| May 31, | May 31, | |||||
| (000's) | 2012 | 2011 | ||||
| Cash | $ | 595 | $ | 1,586 | ||
| Accounts receivable | 757 | 907 | ||||
| Other current assets | 308 | 521 | ||||
| Total current assets | 1,660 | 3,014 | ||||
| Property and equipment, net | 42 | 58 | ||||
| Goodwill | 4,246 | 4,256 | ||||
| Capitalized software development costs, net | 172 | - | ||||
| Capitalized patent costs | 82 | - | ||||
| Debt issuance costs, net | 210 | 312 | ||||
| Other non-current assets | 136 | 136 | ||||
| Total assets | $ | 6,548 | $ | 7,776 | ||
| Accounts payable | $ | 266 | $ | 239 | ||
| Accrued expenses | 333 | 838 | ||||
| Deferred maintenance revenue | 2,194 | 2,301 | ||||
| Current portion of long term debt | 720 | 720 | ||||
| Other current liabilities | 75 | 173 | ||||
| Total current liabilities | 3,588 | 4,271 | ||||
| Other non-current liabilities | 51 | 144 | ||||
| Long term debt | 1,480 | 2,250 | ||||
| Total liabilities | 5,119 | 6,665 | ||||
| Stockholders' equity | 1,429 | 1,111 | ||||
| Total liabilities and stockholders' equity | $ | 6,548 | $ | 7,776 | ||
About SofTech
SofTech, Inc. (OTCQB: SOFT) is a proven provider of product lifecycle management (PLM) solutions, including its ProductCenter® PLM solution and its computer-aided design product CADRA®.
SofTech’s solutions accelerate productivity and profitability by fostering innovation, extended enterprise collaboration, product quality improvements, and compressed time-to-market cycles. SofTech excels in its sensible approach to delivering enterprise PLM solutions, with comprehensive out-of-the-box capabilities, to meet the needs of manufacturers of all sizes quickly and cost-effectively.
Over 100,000 users benefit from SofTech software solutions, including General Electric Company, Goodrich, Honeywell, AgustaWestland, Sikorsky Aircraft and the U.S. Army. Headquartered in Lowell, Massachusetts, SofTech ( www.softech.com) has locations and distribution partners in North America, Europe, and Asia.
SofTech, CADRA and ProductCenter are registered trademarks of SofTech, Inc. All other products or company references are the property of their respective holders.
Forward Looking Statements
This press release contains forward-looking statements relating to, among other matters, our outlook for fiscal year 2013 and beyond. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events or results. Actual future events and results could differ materially from the events and results indicated in these statements as a result of many factors, including, among others, (1) generate sufficient cash flow from our operations or other sources to fund our working capital needs and growth initiatives; (2) maintain good relationships with our lender; (3) comply with the covenant requirements of the loan agreement; (4) successfully introduce and attain market acceptance of any new products and/or enhancements of existing products; (5) attract and retain qualified personnel; (6) prevent obsolescence of our technologies; (7) maintain agreements with our critical software vendors; (8) secure renewals of existing software maintenance contracts, as well as contracts with new maintenance customers; and (9) secure new business, both from existing and new customers.
These and other additional factors that may cause actual future events and results to differ materially from the events and results indicated in the forward-looking statements above are set forth more fully under “Risk Factors” in the Company’s Form S-1 Registration Statement (No. 333-174818) and the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2012. The Company undertakes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors that may affect such forward-looking statements.
Use of Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this press release also contains non-GAAP financial measures. Specifically, the Company has presented EBITDA from continuing operations, which is defined as Net income plus interest expense, tax expense, non-cash expenses such as depreciation, amortization, non cash loss (gain) and stock based compensation expense, non-recurring professional fees related to the recapitalization transaction less the Net income from discontinued operations. The Company believes that the inclusion of EBITDA from continuing operations helps investors gain a meaningful understanding of the Company’s core operating results and enhance comparing such performance with prior periods, without the distortion of non-operating expenses and non-cash expenditures. Management uses EBITDA from continuing operations, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods. EBITDA from continuing operations is also the most important measure of performance in measuring compliance with the Company’s debt facilities. EBITDA from continuing operations is not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Reconciliations of EBITDA from continuing operations to the most directly comparable GAAP financial measures are set forth in the text of, and the accompanying tables to, this press release.
Contact:
SofTech, Inc.
Joseph P. Mullaney, 978-513-2700
President &
Chief Executive Officer