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| 8-K - CURRENT REPORT - DAEGIS INC. | daegis_8k.htm |
News Release
FOR IMMEDIATE RELEASE
Daegis Inc. Reports Fiscal 2014 Third Quarter Results
- Company aligns business segments to reflect new organizational structure
- Sequentially increased Adjusted EBITDA margin by approximately 30%
- Launched new product: TD Mobile
IRVING, Texas – Feb. 25, 2014 – Daegis Inc. (NASDAQ: DAEG), a global archiving, eDiscovery and software development tools company, today announced financial results for its fiscal 2014 third quarter ended January 31, 2014.
Third Quarter Fiscal 2014 Financial Highlights
- Third quarter total revenue of $7.9 million, compared to $10.4 million year over year.
- Third quarter GAAP net loss of $878,000 or $0.05 per share, compared to GAAP net loss of $65,000 or $0.01 per share for the same period last year.
- Third quarter Adjusted EBITDA of $1.0 million, compared to $1.8 million last year. (1)
- Non-GAAP net income of $374,000 or $0.02 per share, compared to $1.1 million or $0.06 per share last year. (1)
- Cash at January 31, 2014 was $4.0 million, compared to $4.4 million at January 31, 2013.
- Total debt outstanding at January 31, 2014 was $15.3 million, a decrease of $2.9 million from January 31, 2013.
- We have combined our Archive and eDiscovery operations into one reporting segment, and our Database and Migration tools operations will be reported as a separate segment. As a result, we have restated historical results to reflect these new reporting segments.
Nine Months Ended Fiscal 2014 Financial Highlights
- Nine month total revenue of $23.6 million, compared to $30.4 million last year.
- Nine month GAAP net loss of $1.7 million or $0.11 per share, compared to GAAP net income of $344,000 or $0.00 per share for the same period last year.
- Nine month Adjusted EBITDA of $2.7 million, compared to $4.6 million last year. (1)
- Non-GAAP net income of $580,000 or $0.03 per share, compared to Non-GAAP net income of $2.3 million or $0.13 per share last year. (1)
“Our third quarter results met our expectations as we reversed the declining revenue trend and improved our EBITDA margin,” said Tim Bacci, CEO of Daegis Inc. “With the alignment of the archive and eDiscovery business completed, the increasing market opportunity for a one solution approach for information governance and eDiscovery and the introduction of TD Mobile, we remain confident that we’ll demonstrate growth in calendar 2014.”
Third Quarter Comparative Financial Summary
| Q3 | Q3 | % or $ | ||||
| $ In Millions, except per share and % | FY 2014 | FY 2013 | Change (3) | |||
| data | ||||||
| Total Revenue | $7.9 | $10.4 | (24%) | |||
| Total Archive and eDiscovery Revenue | $4.8 | $6.9 | (31%) | |||
| Total Database and Migration Revenue | $3.1 | $3.5 | (12%) | |||
| GAAP Net Loss | ($0.9) | ($0.1) | ($0.8) | |||
| GAAP Net Loss Per Share - Diluted | ($0.05) | ($0.01) | ($0.04) | |||
| Adjusted EBITDA (1) | $1.0 | $1.8 | ($0.8) | |||
| Adjusted EBITDA Margin (1) | 13.1% | 17.3% | (24%) | |||
| Non-GAAP Net Income (1) | $0.4 | $1.1 | ($0.7) | |||
| Non-GAAP Net Income Per Share – | ||||||
| Diluted (1) | $0.02 | $0.06 | ($0.04) | |||
| Cash from Operations | $0.5 | $0.8 | ($0.3) | |||
| Cash (2) | $4.0 | $4.4 | ($0.4) | |||
| Total Debt Outstanding (2) | $15.3 | $18.2 | ($2.9) |
| (1) | See reconciliation table below regarding the presentation of Adjusted EBITDA and Non-GAAP net income. | |
| (2) | Results as of January 31, 2014 and 2013. | |
| (3) | The calculation of percentage or dollar change is based on unrounded numbers. |
Investor Conference Call
Management will host a conference call February 25, 2014, at 4:00 p.m. CT (5:00 p.m. ET) to review the third quarter financial results. The call can be accessed by dialing (877) 941-8416 or (480) 629-9808 for international callers. Additionally, the conference call will be webcast on the Daegis website at www.daegis.com. A replay of the call will be available through March 7, 2014 by dialing (800) 406-7325 or (303) 590-3030 for international callers and using the following passcode: 4667677#.
About Daegis Inc.
Daegis Inc. (NASDAQ: DAEG) is a global archiving, eDiscovery and software development tools company. Daegis delivers leading-edge archive and eDiscovery software through Daegis Edge, an end-to-end platform for managing the eDiscovery life cycle, Daegis Acumen technology assisted review and Daegis AXS-One enterprise information archiving. Daegis also offers specialized services including data collection, analytics consulting, project management and managed document review. The Gupta Technologies and Composer Technologies businesses serve customers around the globe with development tools for mobile and web application development, databases and application migration software. Visit our websites to learn more.
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that these statements involve risks and uncertainties and actual events or results may differ materially. When the words “believes,” “expects,” “plans,” “projects,” “estimates” and similar expressions are used, they identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Examples of forward-looking statements in the press release include the statements made by Mr. Bacci. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are general market and economic conditions, our ability to execute our business strategy and integrate acquired businesses, the effectiveness of our sales team and approach, our ability to target, analyze and forecast the revenue to be derived from a client and the costs associated with providing services to that client, the date during the course of a fiscal year that a new client is acquired, the length of the integration cycle for new clients and the timing of revenues and costs associated therewith, our client concentration given that the Company is currently dependent on a few large client relationships, potential competition in the marketplace, the ability to retain and attract employees, market acceptance of our service programs and pricing options, our ability to maintain our existing technology platform and to deploy new technology, our ability to sign new clients and control expenses, the possibility of the discontinuation of some client relationships, the financial condition of our clients' business and other factors detailed in the Company's filings with the Securities and Exchange Commission.
Contact:
Daegis Investor Relations
Deb Thornton, (916) 218-4779
dthornton@daegis.com
# # #
DAEGIS INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In
thousands)
| January 31, | April 30, | |||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 4,013 | $ | 5,459 | ||||
| Accounts receivable, net | 8,863 | 10,594 | ||||||
| Prepaid expenses and other current assets | 640 | 1,203 | ||||||
| Assets held for sale | — | 926 | ||||||
| Total current assets | 13,516 | 18,182 | ||||||
| Property and equipment, net | 1,244 | 1,934 | ||||||
| Goodwill | 11,706 | 11,706 | ||||||
| Intangibles, net | 5,998 | 7,152 | ||||||
| Other assets | 579 | 733 | ||||||
| Total assets | $ | 33,043 | $ | 39,707 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 438 | $ | 243 | ||||
| Current portion of long-term debt | 1,350 | 2,519 | ||||||
| Accrued compensation and related expenses | 1,635 | 2,697 | ||||||
| Common stock warrant liability | 255 | 204 | ||||||
| Other accrued liabilities | 1,003 | 863 | ||||||
| Deferred revenue | 7,186 | 8,449 | ||||||
| Liabilities held for sale | — | 526 | ||||||
| Total current liabilities | 11,867 | 15,501 | ||||||
| Long-term debt, net of current portion | 13,959 | 15,170 | ||||||
| Deferred tax liabilities, net | 983 | 923 | ||||||
| Other long-term liabilities | 1,207 | 1,429 | ||||||
| Total liabilities | 28,016 | 33,023 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | 2 | ||||||
| Common stock | 17 | 15 | ||||||
| Additional paid-in capital | 100,117 | 100,053 | ||||||
| Accumulated other comprehensive income | 280 | 280 | ||||||
| Accumulated deficit | (95,387 | ) | (93,666 | ) | ||||
| Total stockholders’ equity | 5,027 | 6,684 | ||||||
| Total liabilities and stockholders’ equity | $ | 33,043 | $ | 39,707 | ||||
DAEGIS INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In
thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| January 31, | January 31, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues: | ||||||||||||||||
| Archive and eDiscovery | $ | 4,779 | $ | 6,902 | $ | 14,936 | $ | 19,528 | ||||||||
| Database and migration | 3,109 | 3,538 | 8,652 | 10,895 | ||||||||||||
| Total revenues | 7,888 | 10,440 | 23,588 | 30,423 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Direct costs of Archive and eDiscovery revenue | 1,966 | 2,287 | 6,077 | 7,669 | ||||||||||||
| Direct costs of database and migration revenue | 494 | 826 | 1,357 | 2,252 | ||||||||||||
| Product development | 1,395 | 1,725 | 4,683 | 5,411 | ||||||||||||
| Selling, general and administrative | 4,311 | 5,235 | 11,807 | 14,538 | ||||||||||||
| Sale of intangible trade name | — | — | — | (1,000 | ) | |||||||||||
| Total operating expenses | 8,166 | 10,073 | 23,924 | 28,870 | ||||||||||||
| Income (loss) from operations | (278 | ) | 367 | (336 | ) | 1,553 | ||||||||||
| Other income (expense): | ||||||||||||||||
| Gain (loss) from change in fair value of common stock warrant liability | (163 | ) | 31 | (51 | ) | 303 | ||||||||||
| Interest expense | (312 | ) | (407 | ) | (1,039 | ) | (1,249 | ) | ||||||||
| Other, net | (54 | ) | 19 | (51 | ) | (90 | ) | |||||||||
| Total other income (expense) | (529 | ) | (357 | ) | (1,141 | ) | (1,036 | ) | ||||||||
| Income (loss) before income taxes | (807 | ) | 10 | (1,477 | ) | 517 | ||||||||||
| Provision for income taxes | 71 | 75 | 244 | 173 | ||||||||||||
| Net income (loss) | $ | (878 | ) | $ | (65 | ) | $ | (1,721 | ) | $ | 344 | |||||
| Income (loss) per share: | ||||||||||||||||
| Basic | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.11 | ) | $ | 0.00 | |||||
| Diluted | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.11 | ) | $ | 0.00 | |||||
| Weighted-average shares used in computing income (loss) per share | ||||||||||||||||
| Basic | 16,384 | 14,718 | 16,022 | 14,718 | ||||||||||||
| Diluted | 16,384 | 14,718 | 16,022 | 14,726 | ||||||||||||
DAEGIS INC.
RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED EBITDA
(In thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||
| January 31, | January 31, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||
| GAAP income (loss) from operations | $ | (278 | ) | $ | 367 | $ | (336 | ) | $ | 1,553 | ||||
| Amortization of intangible assets | 384 | 384 | 1,154 | 1,154 | ||||||||||
| Stock based compensation expenses | 38 | 161 | 130 | 492 | ||||||||||
| Depreciation | 225 | 287 | 740 | 842 | ||||||||||
| Charges related to alignment of business units(1) | 667 | 602 | 966 | 602 | ||||||||||
| Total adjustments to GAAP income from operations | 1,314 | 1,434 | 2,990 | 3,090 | ||||||||||
| Adjusted EBITDA | $ | 1,036 | $ | 1,801 | $ | 2,654 | $ | 4,643 | ||||||
RECONCILIATION OF GAAP TO NON-GAAP
NET INCOME
(In thousands, except per share data)
| GAAP net income (loss) | $ | (878 | ) | $ | (65 | ) | $ | (1,721 | ) | $ | 344 | |||||
| Amortization of intangible assets | 384 | 384 | 1,154 | 1,154 | ||||||||||||
| Stock based compensation expenses | 38 | 161 | 130 | 492 | ||||||||||||
| (Gain) loss from change in fair value of common stock warrant liability | 163 | (31 | ) | 51 | (303 | ) | ||||||||||
| Charges related to alignment of business units(1) | 667 | 602 | 966 | 602 | ||||||||||||
| Total adjustments to GAAP net income (loss) | 1,252 | 1,116 | 2,301 | 1,945 | ||||||||||||
| Non-GAAP net income | $ | 374 | $ | 1,051 | $ | 580 | $ | 2,289 | ||||||||
| Non-GAAP diluted income per share | $ | 0.02 | $ | 0.06 | $ | 0.03 | $ | 0.13 | ||||||||
| Weighted average shares used in computing income per share: | ||||||||||||||||
| Dilutive | 16,384 | 14,718 | 16,022 | 14,726 | ||||||||||||
(1) Prior year alignment costs have been reported to conform with the current year presentation.
Use of Non-GAAP Financial Information
Daegis utilizes financial measures not calculated in accordance with generally accepted accounting principles in the United States ("GAAP") to supplement the Company's unaudited condensed consolidated financial statements and provide investors with an alternative method for assessing our operating results. We also believe these Non-GAAP measures provide investors with a more informed baseline for modeling the Company's future financial performance. Management uses the Non-GAAP financial measures to make operational decisions, to evaluate the Company's performance and to forecast. We believe that our investors should have access to, and that we are obligated to provide, the same set of tools that we use in analyzing our results. The presentation of these Non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from Non-GAAP financial measures used by other companies. In addition, these Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP.
Our Non-GAAP measures adjust GAAP income (loss) from operations and GAAP net income (loss) for non-cash stock based compensation expenses, amortization of intangible assets, depreciation and non-recurring charges. For more information on these Non-GAAP financial measures including how they are calculated, please see the tables in this release captioned “Reconciliation of GAAP to Non-GAAP Net Income” and “Reconciliation of GAAP Operating Income to Adjusted EBITDA” which includes a reconciliation of the GAAP results to Non-GAAP and Adjusted EBITDA results.