Attached files

file filename
8-K - FORM 8-K - RADIANT SYSTEMS INCd8k.htm

Exhibit 99.1

Contact:

Karen Leytze

Radiant Systems, Inc

(770) 576-6811

karen.leytze@radiantsystems.com

Radiant Systems, Inc. Reports First Quarter Results

The Company reports first quarter revenue growth with adjusted earnings of $0.23 per diluted share and GAAP earnings of $0.15 per diluted share.

ATLANTA (April 28, 2011) – Radiant Systems, Inc. (Nasdaq: RADS), announced today financial results for the first quarter ended March 31, 2011.

“We are excited about the strong start we are having in 2011 both financially and on our long term growth initiatives,” said John Heyman, CEO of Radiant Systems. “We continue to see strong revenue growth led by our subscription services product line, along with ongoing margin expansion and cash flow generation. Strategically, we have multiple programs in place that are enabling us to expand our markets outside the United States as well as better penetrate our markets inside the United States.”

Q1 2011 Financial Highlights

(compared to the same period in 2010)

 

   

Total revenues of $87.1 million, an increase of 10%

 

   

System revenues of $39.8 million, an increase of 16%

 

   

Maintenance and transaction services revenues of $27.4 million, an increase of 2%

 

   

Subscription services revenues of $11.7 million, an increase of 28%

 

   

Professional services revenues of $8.2 million, a decrease of 12%

 

   

Revenues by segment

 

   

Hospitality-Americas contributed 60%

 

   

Retail & Entertainment-Americas contributed 26%

 

   

International contributed 14%

 

   

Adjusted operating income (non-GAAP) of $12.7 million*, an increase of 52% with 14.6% operating margin

 

   

Adjusted net income (non-GAAP) of $9.5 million*, or $0.23* per diluted share, an increase of $3.7 million, or $0.06 per diluted share

 

   

Net income of $6.0 million, or $0.15 per diluted share, an increase of $3.4 million, or $0.08 per diluted share

 

   

Cash flow from operations of $13.4 million with free cash flow of $10.4 million for the quarter

“Given our performance in the quarter and increased visibility to the year, we are increasing our guidance for both revenue and earnings. The high end of the guidance range equates to more than 10% revenue growth and 20% adjusted operating income growth for the year with subscription services approaching a 30% growth rate,” said Mark Haidet, CFO of Radiant Systems. “We continue to see organic and inorganic growth opportunities that we believe could evolve as the year progresses.”


The Company’s guidance is as follows:

 

Guidance (in millions, except EPS and tax rates)

   Quarter ended
June 30, 2011
    Year ended
Dec. 31, 2011

previous
    Year ended
Dec. 31, 2011

updated
 

Revenue range

   $ 95.0 to $97.0      $ 370.0 to $380.0      $ 375.0 to $383.0   

Adjusted operating income (non-GAAP)

   $ 13.5 to $14.0      $ 53.0 to $55.0      $ 54.0 to $56.0   

Adjusted net income per share (non-GAAP)

   $ 0.24 to $0.25      $ 0.95 to $0.98      $ 0.97 to $1.01   

Cash tax rate

     25     25     25

Effective tax rate

     35     35     34

Diluted shares

     41.5        42.0        41.8   

Amortization expense

   $ 2.2      $ 7.8      $ 7.8   

Stock compensation expense

   $ 1.8      $ 6.6      $ 6.6   

Capital expenditures

   $ 3.5 to $4.5      $ 14.0 to $16.0      $ 14.5 to $16.5   

Guidance figures are based on the Company’s current estimates and are subject to change due to factors outside the Company’s control. While this guidance is provided to give investors insight into expectations for the period, actual results are likely to vary.

* The Company provides adjusted operating income, adjusted net income and adjusted net income per share in this press release as additional information relating to the Company’s operating results. These measures are not in accordance with, or an alternative for, GAAP and may be different from adjusted operating income, adjusted net income and adjusted net income per share measures used by other companies. Adjusted operating income and adjusted net income exclude amortization of acquisition-related intangible assets, non-recurring items and compensation expense related to the issuance of employee stock options and stock grants. The income tax provision is calculated on the Company’s cash tax rate for the year (based on actual cash expected to be paid to domestic and foreign governments). The Company believes that this non-GAAP presentation provides useful information to investors regarding certain additional financial and business trends relating to the Company’s financial condition and results of operations, and valuable insight into the Company’s ongoing operations and earnings power.

Radiant will hold its first quarter 2011 conference call today at approximately 4:30 p.m. Eastern Time. This call is being webcast by Thomson Reuters and can be accessed at Radiant’s web site at http://www.radiantsystems.com/ir. The call will also be available via telephone at 1-877-397-0272 – reference passcode 2396272.

Headquartered in Atlanta, Radiant Systems, Inc. (Nasdaq: RADS) is a global provider of innovative technology to the hospitality and retail industries. For more than two decades, Radiant’s point of sale hardware and software solutions have helped to redefine the consumer experience in more than 100,000 restaurants, retail stores, stadiums, parks, arenas, cinemas, convenience stores, fuel centers and other customer-service venues. Radiant has offices in North America, Europe, Asia and Australia. For more information about Radiant Systems:

 

   

Visit our Web site

 

   

Follow us on Twitter

 

   

Read about us on our Blog


   

Become a fan on Facebook

###

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to financial results and plans for future business development activities, and are thus prospective. Forward-looking statements include all statements that are not statements of historical fact regarding intent, belief or current expectations of the Company, its directors or its officers. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control. Actual results may differ materially from those projected in the forward-looking statements. Among the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties associated with the Company’s business and finances in general, including the ability to continue and manage its growth, competition, global economic conditions and other factors discussed in detail in the Company’s periodic filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements.


RADIANT SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE DATA)

 

     For the three months ended  
     March 31, 2011     March 31, 2010  

Revenues:

    

Systems

   $ 39,848      $ 34,327   

Maintenance and transaction services

     27,449        26,807   

Subscription services

     11,667        9,133   

Professional services

     8,174        9,280   
                

Total revenues

     87,138        79,547   

Cost of revenues:

    

Systems

     20,688        19,781   

Maintenance and transaction services

     14,433        14,639   

Subscription services

     3,816        2,973   

Professional services

     6,679        6,826   
                

Total cost of revenues

     45,616        44,219   
                

Gross profit

     41,522        35,328   

Operating expenses:

    

Product development

     6,940        5,743   

Sales and marketing

     12,625        11,632   

Depreciation of fixed assets

     1,443        1,490   

Amortization of intangible assets

     2,264        2,210   

General and administrative

     9,377        9,222   
                

Total operating expenses

     32,649        30,297   

Income from operations

     8,873        5,031   

Interest and other (income) expense, net

     (20     341   
                

Income before taxes

     8,893        4,690   

Income tax provision

     2,897        2,093   
                

Net income

   $ 5,996      $ 2,597   
                

Net income per share:

    

Basic

   $ 0.15      $ 0.08   
                

Diluted

   $ 0.15      $ 0.07   
                

Weighted average shares outstanding:

    

Basic

     39,666        33,368   
                

Diluted

     40,977        34,737   
                

Reconciliation of GAAP operating income to adjusted non-GAAP operating income:

    

GAAP operating income

   $ 8,873      $ 5,031   
                

Equity-based compensation expense (a)

    

Cost of revenues

     104        77   

Operating expenses

     1,452        1,030   
                

Total equity-based compensation expense

     1,556        1,107   

Amortization of purchased intangibles (b)

     2,264        2,210   

Adjusted non-GAAP operating income

   $ 12,693      $ 8,348   
                

Reconciliation of GAAP net income to adjusted non-GAAP net income:

    

GAAP net income

   $ 5,996      $ 2,597   
                

Equity-based compensation expense (a)

    

Cost of revenues

     104        77   

Operating expenses

     1,452        1,030   
                

Total equity-based compensation expense

     1,556        1,107   

Amortization of purchased intangibles (b)

     2,264        2,210   

Tax effect of adjustment items, difference between the

    

Company’s effective tax rate and cash tax rate (c)

     (281     (69
                

Adjusted non-GAAP net income

   $ 9,535      $ 5,845   
                

Adjusted non-GAAP net income per diluted share

   $ 0.23      $ 0.17   
                


In addition to our GAAP results, Radiant Systems discloses adjusted operating income, adjusted net income and adjusted net income per diluted share, referred to respectively as “adjusted non-GAAP operating income”, “adjusted non-GAAP net income” and “adjusted non-GAAP net income per diluted share”. These items, which are collectively referred to as “non-GAAP measures”, exclude the impact of stock-based compensation, the amortization of acquisition-related intangible assets and charges/gains that are unlikely to occur again in the normal course of business. From time to time, subject to the review and approval of the audit committee of the Board of Directors, we may make other adjustments for expenses and gains that we do not consider reflective of core operating performance in a particular period and may modify the non-GAAP measures by excluding these expenses and gains.

We define our core operating performance to be the revenues recorded in a particular period and the expenses incurred within that period which management has the capability of directly affecting in order to drive operating income. Non-cash stock-based compensation, amortization of acquisition-related intangible assets and charges/gains that are unlikely to occur again in the normal course of business are excluded from our core operating performance because the decisions which gave rise to these expenses were not made to drive revenue in a particular period, but rather were made for our long-term benefit over multiple periods. While strategic decisions, such as the decision to issue stock-based compensation, are made to further our long-term strategic objectives and do impact our income statement under GAAP, such items may affect multiple periods and management is not able to change or affect these items within any particular period. As such, supplementing GAAP disclosure with non-GAAP disclosure using the non-GAAP measures provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in a particular period.

Prior to the adoption of FASB ASC Topic 718, Compensation–Stock Compensation (“ASC 718”) , our practice was to exclude stock-based compensation internally to evaluate performance and we presented investors our financial information in this manner while disclosing the effects of stock-based compensation. With the adoption of ASC 718, we continue to believe that non-GAAP measures can provide relevant disclosure to investors and we have presented non-GAAP measures that exclude and include those items noted above. While these items are recurring and affect GAAP net income, we do not use them to assess our operational performance for any particular period because (a) these items affect multiple periods and are unrelated to business performance in a particular period; (b) we are not able to change these items in any particular period; and (c) these items do not contribute to the operational performance of our business during any particular period.

We also use non-GAAP measures to operate the business because the excluded expenses are not under the control of, and accordingly are not used in evaluating the performance of, operations personnel within their respective areas of responsibility. In the case of stock-based compensation expense, the awarding of stock options is governed by the compensation committee of the Board of Directors and, in the case of acquisition-related intangible assets, acquisitions arise from strategic decisions which are not the responsibility of most levels of operational management. Charges/gains that are unlikely to occur again in the normal course of business and the non-cash portion of our effective tax rate, like our stock-based compensation charges and amortization of acquisition-related intangible assets, are excluded in management’s internal evaluations of our operating results and are not considered for management compensation purposes.

Our strategy is to use stock-based compensation to attract and retain key employees and executives. It is principally aimed at long-term employee retention, rather than to motivate or reward operational performance for any particular period. Thus, stock-based compensation varies for reasons that are generally unrelated to operational performance in any particular period. We use quarterly and annual cash incentive payouts for executives and other employees to motivate and reward the achievement of short-term operational objectives.

We view amortization of acquisition-related intangible assets as items arising from pre-acquisition activities. While these assets are regularly reviewed for impairment, amortization of the costs is a static expense, one that is typically not affected by operations during any particular period and does not contribute to operational performance for any particular period.

Restructuring and impairment charges are excluded in our non-GAAP measures because they are significantly different in magnitude and character from routine personnel and facility adjustments that management makes when monitoring and conducting the Company’s core operations during any particular period.

Our historical non-GAAP effective tax rate differs from our GAAP effective tax rates because of the exclusion of the non-GAAP adjustments previously mentioned and the resulting impact on the realization of the Company’s other tax assets. We exclude the impact of these discrete tax items from our non-GAAP income tax provision because management believes that they are not indicative of the Company’s tax obligations that will be paid in cash.

Because the non-GAAP measures are not calculated in accordance with GAAP, they are used by our management as a supplement to, and not an alternative or superior to, financial measures calculated in accordance with GAAP. There are a number of limitations on the non-GAAP measures, including the following:

a. These non-GAAP measures do not have standardized meanings and may not be comparable to similar non-GAAP measures used or reported by other companies.

b. The non-GAAP measures do not reflect all costs associated with our operations determined in accordance with GAAP.

c. Excluded expenses for stock-based compensation and amortization of acquisition-related intangible assets will continue to recur and impact the Company’s GAAP results. While restructuring costs and other charges/gains are not expected to repeat themselves in the normal course of business, their occasional occurrence will impact GAAP results.

Management compensates for these limitations by relying on these non-GAAP measures only as a supplement to the Company’s GAAP results.

(a) Under the Modified Prospective Method of ASC 718, we expense the fair value of grants made under stock option programs over the vesting period of the options. The adjustments to cost of revenues and operating expenses represent stock-based compensation expense recorded during the period. Total stock-based compensation expense for the three months ended March 31, 2011 and 2010 was $1.6 million and $1.1 million, respectively, on a pre-tax basis.

(b) Adjustments represent amortization of intangible assets from prior acquisitions.

(c) The Company reports its non-GAAP income tax provision on a cash tax rate basis which was approximately 25% and 27% for the three months ended March, 2011 and 2010, respectively.


RADIANT SYSTEMS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE DATA)

ASSETS

 

     March 31,
2011
     December 31,
2010
 

Current assets

     

Cash and cash equivalents

   $ 89,208       $ 75,026   

Accounts receivable, net

     51,046         51,204   

Inventories

     41,172         36,440   

Deferred tax assets

     7,697         7,317   

Other current assets

     3,240         2,325   
                 

Total current assets

     192,363         172,312   

Property and equipment, net

     24,774         24,297   

Software development costs, net

     13,900         13,290   

Deferred tax assets, non-current

     1,346         1,676   

Goodwill

     113,122         111,732   

Intangible assets, net

     33,274         34,762   

Other long-term assets

     9,692         9,634   
                 

Total assets

   $ 388,471       $ 367,703   
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY   

Current liabilities

     

Accounts payable and accrued liabilities

   $ 47,798       $ 47,662   

Customer deposits and unearned revenues

     29,082         21,820   

Current portion of long-term debt and capital lease payments

     6,828         6,424   
                 

Total current liabilities

     83,708         75,906   

Long-term debt and capital lease payments, non-current

     6,865         8,895   

Customer deposits and unearned revenues, non-current

     5,350         6,049   

Deferred tax liabilities, non-current

     4,959         4,540   

Other long-term liabilities

     5,799         5,975   
                 

Total liabilities

     106,681         101,365   
                 

Shareholders’ equity

     

Common stock, no par value; 100,000,000 shares authorized;

     

40,063,557 and 39,461,227 shares issued and outstanding, respectively

     —           —     

Additional paid-in capital

     259,643         253,278   

Retained earnings

     18,738         12,742   

Accumulated other comprehensive income

     3,409         318   
                 

Total shareholders’ equity

     281,790         266,338   
                 

Total liabilities and shareholders’ equity

   $ 388,471       $ 367,703