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| 8-K - 8-K - ACCELRYS, INC. | acclq413earningsrelease8k.htm |
Exhibit 99.1
ACCELRYS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2013 RESULTS
SAN DIEGO, February 25, 2014 - Accelrys, Inc. (NASDAQ: ACCL) today reported financial results for the fiscal quarter ended December 31, 2013. Non-GAAP revenue for the quarter ended December 31, 2013 increased to $47.6 million from $47.5 million for the same quarter of the previous year. Non-GAAP revenue for the year ended December 31, 2013 increased $3.4 million to $177.7 million from $174.3 million for the year ended December 31, 2012 or an increase of 1.9 percent.
Non-GAAP net income was $5.3 million, or $0.09 per diluted share, for the quarter ended December 31, 2013, compared to non-GAAP net income of $4.5 million, or $0.08 per diluted share, for the same quarter of the previous year. Non-GAAP net income was $20.5 million, or $0.36 per diluted share, for the year ended December 31, 2013, compared to non-GAAP net income of $19.6 million, or $0.35 per diluted share, for the year ended December 31, 2012.
GAAP revenue for the quarter ended December 31, 2013 increased $2.3 million to $46.5 million from $44.2 million for the same quarter of the previous year, or an increase of 5 percent. GAAP revenue for the year ended December 31, 2013 increased $6.0 million to $168.5 million from $162.5 million for the year ended December 31, 2012, or an increase of 3.7 percent.
GAAP net loss was $(0.1) million, or $(0.001) per diluted share, for the quarter ended December 31, 2013 compared to GAAP net loss of $(8.2) million, or $(0.15) per diluted share, for the same quarter of the previous year. GAAP net income was $5.7 million, or $0.10 per diluted share, for the year ended December 31, 2013 compared to GAAP net loss of $(10.4) million, or $(0.19) per diluted share, for the year ended December 31, 2012. GAAP net income for year ended December 31, 2013 included a one-time gain of $25.9 million, or $0.45 per diluted share, recognized upon the payoff of the promissory note receivable from Intermolecular, Inc. (“Intermolecular”) in May 2013.
Recent Business Highlights:
• | Launch of Accelrys Materials Studio® 7.0 modeling and simulation environment for chemists, polymer scientists and other materials scientists, with enhancements in quantum mechanics, classical simulation, usability, visualization and collaboration to enable scientists to engineer better performing and more cost-effective materials across a wide range of applications. |
• | Acquisition of Ireland-based QUMAS, a leading global provider of Cloud-based and on-premises enterprise compliance software for regulatory and quality operations in highly regulated industries, for $50 million in cash, extending Accelrys' informatics portfolio with mission-critical, end-to-end document and process management compliance solutions. |
• | Received highest rating in Gartner Inc.’s latest laboratory informatics system report, and was the only vendor to receive a "very high" rating in all five phases of new product development concept, research, development, tech transfer and manufacturing. Accelrys was among four of 23 ELN vendors to offer a Laboratory Information Management System (LIMS) solution. |
• | Introduction of Accelrys Insight offering life scientists an entirely new way to access, visualize and share disparate scientific information in real time. |
• | Launch of Accelrys Predictive Sciences accelerating drug discovery research with software for investigating and testing hypotheses in silico prior to costly experimentation. |
Non-GAAP Financial Measures:
This press release describes financial measures for non-GAAP revenue, operating income, net income, net income per diluted share and free cash flow that exclude deferred revenue fair value adjustments, acquisition-related cost of revenue, business consolidation, restructuring and headquarter-relocation costs, stock-based compensation expense, note receivable impairment, purchased intangible asset amortization, royalty income fair value adjustments, amortization of note receivable discount, gain on sale of real estate, gain on sale of intellectual property, write-off of lease related assets and other non-operating expense. Additionally, our non-GAAP net income reflects an effective pro-forma tax rate of 40 percent. These financial measures are not calculated in accordance with generally accepted accounting principles (GAAP) and are not based on any comprehensive set of accounting rules or principles.
Management believes these non-GAAP financial measures provide a useful measure of the Company's operating results, a meaningful comparison with historical results and with the results of other companies, and insight into the Company's ongoing operating performance. Further, management and the Board of Directors utilize these measures, in addition to GAAP measures, when evaluating and comparing the Company's operating performance against internal financial forecasts and budgets. These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared
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in accordance with GAAP. In addition, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies.
For additional information on the items excluded by the Company from its non-GAAP financial measures please refer to the Form 8-K regarding this release that was furnished today to the Securities and Exchange Commission.
The following table contains a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures (unaudited, amounts in thousands, except per share amounts, including footnotes):
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
GAAP revenue | $ | 46,475 | $ | 44,194 | $ | 168,526 | $ | 162,526 | ||||||||
Deferred revenue fair value adjustment1 | 1,100 | 3,332 | 9,127 | 11,758 | ||||||||||||
Non-GAAP revenue | $ | 47,575 | $ | 47,526 | $ | 177,653 | $ | 174,284 | ||||||||
GAAP operating loss | $ | (5,257 | ) | $ | (11,203 | ) | $ | (28,057 | ) | $ | (19,054 | ) | ||||
Deferred revenue fair value adjustment1 | 1,100 | 3,332 | 9,127 | 11,758 | ||||||||||||
Acquisition-related cost of revenue2 | (762 | ) | (124 | ) | (1,921 | ) | ||||||||||
Business consolidation, restructuring and headquarter-relocation costs3 | 1,447 | 6,583 | 15,415 | 7,845 | ||||||||||||
Stock-based compensation expense4 | 2,198 | 2,505 | 9,019 | 8,115 | ||||||||||||
Note receivable impairment 5 | 1,663 | — | 1,663 | — | ||||||||||||
Purchased intangible asset amortization6 | 5,899 | 5,199 | 19,886 | 17,782 | ||||||||||||
Non-GAAP operating income | $ | 7,050 | $ | 5,654 | $ | 26,929 | $ | 24,525 | ||||||||
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Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Depreciation expense | 1,198 | 872 | 4,183 | 3,325 | ||||||||||||
Cash received for interest and royalty income | 2,004 | 2,002 | 8,643 | 9,265 | ||||||||||||
Cash paid for income taxes, net of refunds received | 74 | (198 | ) | (2,251 | ) | (2,690 | ) | |||||||||
Capital expenditures | (656 | ) | (3,043 | ) | (11,486 | ) | (6,332 | ) | ||||||||
Non-GAAP free cash flow | $ | 9,670 | $ | 5,287 | $ | 26,018 | $ | 28,093 | ||||||||
GAAP net income (loss) | $ | (76 | ) | $ | (8,229 | ) | $ | 5,690 | $ | (10,402 | ) | |||||
Deferred revenue fair value adjustment1 | 1,100 | 3,332 | 9,127 | 11,758 | ||||||||||||
Acquisition-related cost of revenue2 | (762 | ) | (124 | ) | (1,921 | ) | ||||||||||
Business consolidation, restructuring and headquarter-relocation costs3 | 1,447 | 6,583 | 15,415 | 7,845 | ||||||||||||
Stock-based compensation expense4 | 2,198 | 2,505 | 9,019 | 8,115 | ||||||||||||
Note receivable impairment 5 | 1,663 | — | 1,663 | — | ||||||||||||
Purchased intangible asset amortization6 | 6,304 | 5,623 | 21,506 | 19,477 | ||||||||||||
Royalty income fair value adjustment7 | — | — | — | 600 | ||||||||||||
Amortization of note receivable discount8 | — | (270 | ) | (685 | ) | (932 | ) | |||||||||
Gain on sale of real estate9 | — | — | — | (2,744 | ) | |||||||||||
Gain on sale of intellectual property10 | — | — | (25,895 | ) | — | |||||||||||
Write-off of lease related assets11 | — | — | — | 670 | ||||||||||||
Other non-operating expense12 | (150 | ) | — | (117 | ) | — | ||||||||||
Income tax13 | (7,201 | ) | (4,239 | ) | (15,138 | ) | (12,855 | ) | ||||||||
Non-GAAP net income | $ | 5,285 | $ | 4,543 | $ | 20,461 | $ | 19,611 | ||||||||
GAAP diluted net income (loss) per share | $ | (0.001 | ) | $ | (0.15 | ) | $ | 0.10 | $ | (0.19 | ) | |||||
Deferred revenue fair value adjustment1 | 0.02 | 0.06 | 0.16 | 0.21 | ||||||||||||
Acquisition-related cost of revenue2 | — | (0.01 | ) | — | (0.03 | ) | ||||||||||
Business consolidation, restructuring and headquarter-relocation costs3 | 0.03 | 0.12 | 0.27 | 0.14 | ||||||||||||
Stock-based compensation expense4 | 0.04 | 0.04 | 0.16 | 0.14 | ||||||||||||
Note receivable impairment 5 | 0.03 | — | 0.03 | — | ||||||||||||
Purchased intangible asset amortization6 | 0.11 | 0.10 | 0.38 | 0.34 | ||||||||||||
Royalty income fair value adjustment7 | — | — | — | 0.01 | ||||||||||||
Amortization of note receivable discount8 | — | — | (0.01 | ) | (0.02 | ) | ||||||||||
Gain on sale of real estate9 | — | — | — | (0.05 | ) | |||||||||||
Gain on sale of intellectual property10 | — | — | (0.45 | ) | — | |||||||||||
Write-off of lease related assets11 | — | — | — | 0.01 | ||||||||||||
Other non-operating expense12 | — | — | — | — | ||||||||||||
Income tax13 | (0.13 | ) | (0.07 | ) | (0.27 | ) | (0.23 | ) | ||||||||
Non-GAAP diluted net income per share14 | $ | 0.09 | $ | 0.08 | $ | 0.36 | $ | 0.35 | ||||||||
Weighted average shares used to compute net income per share: | ||||||||||||||||
Basic | 55,697 | 55,713 | 55,686 | 55,696 | ||||||||||||
Diluted | 57,027 | 56,848 | 57,061 | 56,563 | ||||||||||||
1Deferred revenue fair value adjustment relates to our acquisitions of Qumas, ChemSW, Vialis, Aegis, VelQuest and Contur and our merger with Symyx, and adds back the impact of writing down the acquired historical deferred revenue to fair value as required by purchase accounting guidance.
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2Acquisition-related cost of revenue relates to our acquisition of VelQuest, and adds back the impact of writing down the acquired deferred cost of revenue as required by purchase accounting guidance.
3Business consolidation, restructuring and headquarter-relocation costs consist of professional services, legal, litigation, employee-related and other costs incurred in connection with our acquisition and related integration activities, as well as lease obligation exit costs, severance and other costs incurred in connection with the various restructuring activities commenced by the Company. Also included are contingent compensation costs relating to the ChemSW, the Vialis and the Contur acquisitions as well as costs associated with our headquarter relocation in July 2013, including professional services and additional rent expense during the transition to the new facility.
4Stock-based compensation expense is included in our consolidated statements of operations as follows:
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||||
Cost of revenue | $ | 238 | $ | 263 | $ | 838 | $ | 755 | ||||||||
Product development | 373 | 517 | 1,813 | 1,763 | ||||||||||||
Sales and marketing | 794 | 854 | 3,086 | 2,545 | ||||||||||||
General and administrative | 761 | 866 | 3,220 | 3,093 | ||||||||||||
Business consolidation, restructuring and headquarter-relocation costs | 32 | 5 | 62 | (41 | ) | |||||||||||
Total stock-based compensation expense | $ | 2,198 | $ | 2,505 | $ | 9,019 | $ | 8,115 | ||||||||
5Note receivable impairment relates to an impairment charge incurred in the three months ended December 31, 2013 related to an unsecured note receivable.
6Purchased intangible asset amortization is included in our consolidated statements of operations as follows:
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(in thousands) | ||||||||||||||||
Amortization of completed technology | $ | 2,848 | $ | 2,580 | $ | 9,576 | $ | 8,843 | ||||||||
Purchased intangible asset amortization | 3,051 | 2,619 | 10,310 | 8,939 | ||||||||||||
Royalty and other income, net | 405 | 424 | 1,620 | 1,695 | ||||||||||||
Total purchased intangible amortization expense | $ | 6,304 | $ | 5,623 | $ | 21,506 | $ | 19,477 | ||||||||
7Royalty income fair value adjustment relates to our merger with Symyx, and adds back the impact of writing down deferred royalty income to fair value as required by purchase accounting guidance.
8Amortization of note receivable discount adjusts the amortization of the discount on our promissory note receivable from Intermolecular in connection with the sale of intellectual property in November 2011.
9Gain on sale of real estate relates to the sale of real property, comprised of land and an office building located in Santa Clara, California, which we sold in June 2012. This property was acquired as a result of our merger with Symyx and was
not utilized in our ongoing operations.
10Gain on sale of intellectual property to Intermolecular reflects the gain recognized upon the payoff of the promissory note receivable from Intermolecular in May 2013.
11Write-off of lease related assets relates to the write off in June 2012 of certain assets in connection with exiting the lease of a restructured facility.
12Other non-operating income for the three months ended December 31, 2013 relates to income as a result of a working capital adjustment received in connection with the Aegis acquisition. Other non-operating income for the year ended December 31, 2013 relates to $0.2 million income as a result of a working capital adjustment received in connection with the Aegis acquisition, offset by a loss on disposal of certain fixed assets as a result of the relocation of our corporate headquarters.
13Income tax adjustments relate to adjusting our non-GAAP operating results to reflect an effective tax rate of 40 percent
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that would be applied if the Company was in a taxable income position and was not able to utilize its net operating loss carryforwards. The income tax adjustment also excludes any impact of a release of our valuation allowance against deferred tax assets.
14Earnings per share amounts for the three months and the years ended December 31, 2013 and December 31, 2012 do not add due to rounding.
About Accelrys:
Accelrys (NASDAQ: ACCL), a leading provider of scientific innovation lifecycle management software, supports industries and organizations that rely on scientific innovation to differentiate themselves. The industry-leading Accelrys Enterprise Platform provides a broad, flexible scientific foundation optimized to integrate the diversity of science, experimental processes and information requirements across the research, development, QA/QC and manufacturing phases of product development. Accelrys offers capabilities in scientific data management, modeling and simulation, research informatics, laboratory informatics, enterprise quality management, environmental health & safety and operations intelligence for customers in science-driven industries. Using Accelrys technology, scientific innovators can access, organize, analyze and share data in unprecedented ways across the research, laboratory and manufacturing continuum, ultimately enhancing innovation, improving productivity and compliance, reducing costs and accelerating product development from research to manufacturing.
Accelrys solutions are used by more than 2,000 customers in the pharmaceutical, biotechnology, energy, chemicals, aerospace, consumer packaged goods and industrial products industries. Headquartered in San Diego, Calif., Accelrys employs approximately 225 full-time PhD scientists. For more information about Accelrys, visit www.accelrys.com.
Forward-Looking Statements:
Statements contained in this press release relating to the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future, including, but not limited to, statements relating to the Company's execution of its strategic business initiatives, are forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties, including, but not limited to, risks that the Company will not successfully execute its strategic business initiatives, in each case due to, among other possibilities, an inability to withstand negative conditions in the global economy or a lack of demand for or market acceptance of the Company's products. Additional risks and uncertainties faced by the Company are contained from time to time in the Company's filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2012, quarterly reports on Form 10-Q and current reports on Form 8-K. Collectively, these risks and uncertainties could cause the Company's actual results to differ materially from those projected in its forward-looking statements, and the Company disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future events or otherwise.
CONTACT:
Accelrys, Inc.
Michael A. Piraino
Executive Vice President &
Chief Financial Officer
858-799-5200
Investor Relations
MKR Group
Todd Kehrli
323-468-2300
accl@mkr-group.com
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ACCELRYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue: | |||||||||||||||
License and subscription revenue | $ | 22,918 | $ | 23,149 | $ | 86,393 | $ | 89,440 | |||||||
Maintenance on perpetual licenses | 10,709 | 10,035 | 40,196 | 38,254 | |||||||||||
Content | 2,505 | 2,991 | 9,864 | 12,485 | |||||||||||
Professional services and other | 10,343 | 8,019 | 32,073 | 22,347 | |||||||||||
Total revenue | 46,475 | 44,194 | 168,526 | 162,526 | |||||||||||
Cost of revenue: | |||||||||||||||
Cost of revenue | 12,642 | 11,961 | 44,791 | 41,695 | |||||||||||
Amortization of completed technology | 2,848 | 2,580 | 9,576 | 8,843 | |||||||||||
Total cost of revenue | 15,490 | 14,541 | 54,367 | 50,538 | |||||||||||
Gross profit | 30,985 | 29,653 | 114,159 | 111,988 | |||||||||||
Operating expenses: | |||||||||||||||
Product development | 8,758 | 9,892 | 37,477 | 38,849 | |||||||||||
Sales and marketing | 16,925 | 17,528 | 60,786 | 57,971 | |||||||||||
General and administrative | 4,366 | 4,229 | 16,503 | 17,480 | |||||||||||
Business consolidation, restructuring and headquarter-relocation costs | 1,479 | 6,588 | 15,477 | 7,803 | |||||||||||
Note receivable impairment | 1,663 | — | 1,663 | — | |||||||||||
Purchased intangible asset amortization | 3,051 | 2,619 | 10,310 | 8,939 | |||||||||||
Total operating expenses | 36,242 | 40,856 | 142,216 | 131,042 | |||||||||||
Operating loss | (5,257 | ) | (11,203 | ) | (28,057 | ) | (19,054 | ) | |||||||
Gain on sale of intellectual property | — | — | 25,895 | — | |||||||||||
Royalty and other income, net | 1,504 | 1,763 | 6,356 | 8,870 | |||||||||||
Income (loss) before income taxes | (3,753 | ) | (9,440 | ) | 4,194 | (10,184 | ) | ||||||||
Income tax expense (benefit) | (3,677 | ) | (1,211 | ) | (1,496 | ) | 218 | ||||||||
Net income (loss) | $ | (76 | ) | $ | (8,229 | ) | $ | 5,690 | $ | (10,402 | ) | ||||
Net income (loss) per share amounts: | |||||||||||||||
Basic | $ | (0.001 | ) | $ | (0.15 | ) | $ | 0.10 | $ | (0.19 | ) | ||||
Diluted | $ | (0.001 | ) | $ | (0.15 | ) | $ | 0.10 | $ | (0.19 | ) | ||||
Weighted average shares used to compute net income (loss) per share | |||||||||||||||
Basic | 55,697 | 55,713 | 55,686 | 55,696 | |||||||||||
Diluted | 55,697 | 55,713 | 57,061 | 55,696 | |||||||||||
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ACCELRYS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, 2013 | December 31, 2012 | |||||||
(unaudited) | (audited) | |||||||
Assets | ||||||||
Cash, cash equivalents, and marketable securities1 | $ | 66,903 | $ | 115,646 | ||||
Trade receivables, net | 45,510 | 47,196 | ||||||
Notes receivable | 7,393 | 34,796 | ||||||
Other assets, net2 | 272,760 | 208,204 | ||||||
Total assets | $ | 392,566 | $ | 405,842 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities, excluding deferred revenue | 32,139 | 37,877 | ||||||
Deferred revenue, including current portion3 | 85,617 | 89,151 | ||||||
Deferred gain on sale of intellectual property | — | 25,895 | ||||||
Non-current liabilities, excluding deferred revenue4 | 26,351 | 10,098 | ||||||
Total stockholders’ equity | 248,459 | 242,821 | ||||||
Total liabilities and stockholders’ equity | $ | 392,566 | $ | 405,842 | ||||
1Cash, cash equivalents, and marketable securities consist of the following line items in our consolidated balance sheet: Cash and cash equivalents; Restricted cash; Marketable securities; Marketable securities, net of current portion; and Restricted cash, net of current portion.
2Other assets, net, consists of the following line items in our consolidated balance sheet: Prepaid expenses, deferred tax assets and other current assets; Property and equipment, net; Goodwill; Purchased intangible assets, net; and Other assets.
3Total deferred revenue consists of the following line items in our consolidated balance sheet: Current portion of deferred revenue; and Deferred revenue, net of current portion.
4Noncurrent liabilities, excluding deferred revenue consists of the following line items in our consolidated balance sheet: Accrued income tax; Accrued restructuring charges, net of current portion and Lease-related liabilities, net of current portion.
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