LOWELL, Mass.--(BUSINESS WIRE)--SofTech, Inc. (OTCQB: SOFT), a proven provider of Product Lifecycle Management (PLM) solutions today announced its first quarter fiscal 2013 operating results. Revenue for the three months ended August 31, 2012 was $1.57 million, essentially unchanged from the same period in the prior fiscal year. Net income was $173,000 or $.17 per share for the three months ended August 31, 2012, a substantial increase from the net income of $53,000 or $.05 for the same period in the prior fiscal year.
“Since the new team took over in March 2011 we have developed and implemented a business plan for profitable growth with a goal of enhancing shareholder value,” said Joe Mullaney, President and CEO. “At the heart of the plan, we sought to leverage our expertise, technology and customer relationships to develop new profitable revenue streams. These initiatives, including the sale of non-strategic product lines, are taking hold and we expect continued improvement over the coming quarters as a result,” he added.
As part of this business plan, in June 2012 the Company completed the sale of a family of patents used in the Company’s computer aided design products to a third party in exchange for 30% of the net proceeds they may derive from the patents from licensing revenue, sale proceeds, settlements and/or any other monies. In September 2012 the agreement was amended to include another family of patents used in the Company’s data management and collaboration products. Under the agreement the Company retained the right to continue to use these inventions in its current and future product offerings. The Company received non-recoverable advance payments, reimbursable only against net proceeds due under the agreement, totaling $300,000 of which $190,000 was recognized as revenue in the current quarter. We do not know how successful the buyer will be in its attempts to monetize these patents and there can be no assurance that any monies in excess of the $300,000 will be received by the Company.
“We are very pleased with our first quarter performance,” continued Mullaney. “We significantly improved on every important measure of profitability in the current quarter as compared to the same period last year. More importantly, our pipeline of forecasted business is more robust than at anytime in the last eighteen months with a half dozen six figure proposals that have been working their way through the approval process. The pipeline includes a mix of existing customers expanding the use of our technology to other divisions as well as new potential customers that we have not done business with previously.”
FINANCIAL STATEMENTS
The Statement of Operations for the three month periods ended August 31, 2012 compared to the same period in the prior fiscal years are presented below. A reconciliation of Net income to EBITDA, a non-GAAP financial measure, is also provided.
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Statements of Operations (in thousands, except % and per share data) |
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| For the three months ended | ||||||||||||||||||||||||
| August 31, | August 31, | Change | ||||||||||||||||||||||
| 2012 | 2011 | $ | % | |||||||||||||||||||||
| Product revenue | $ | 215 | $ | 303 | $ | (88 | ) | -29.0 | % | |||||||||||||||
| Service revenue | 1,165 | 1,261 | (96 | ) | -7.6 | % | ||||||||||||||||||
| Royalties on sale of patents | 190 | - | 190 | - | ||||||||||||||||||||
| Total revenue | 1,570 | 1,564 | 6 | 0.4 | % | |||||||||||||||||||
| Cost of sales | 333 | 348 | (15 | ) | -4.3 | % | ||||||||||||||||||
| Gross margin | 1,237 | 1,216 | 21 | 1.7 | % | |||||||||||||||||||
| Gross margin % | 78.8 | % | 77.7 | % | ||||||||||||||||||||
| R&D | 244 | 383 | (139 | ) | -36.3 | % | ||||||||||||||||||
| SG&A | 758 | 708 | 50 | 7.1 | % | |||||||||||||||||||
| Operating income | 235 | 125 | 110 | 88.0 | % | |||||||||||||||||||
| Interest expense | 65 | 91 | (26 | ) | -28.6 | % | ||||||||||||||||||
| Other income | (3 | ) | (19 | ) | 16 | -84.2 | % | |||||||||||||||||
| Income from operations before income taxes | 173 | 53 | 120 | 226.4 | % | |||||||||||||||||||
| Tax expense | - | - | - | - | ||||||||||||||||||||
| Net income | $ | 173 | $ | 53 | $ | 120 | 226.4 | % | ||||||||||||||||
| Weighted average shares outstanding | 995 | 995 | ||||||||||||||||||||||
| Basic and diluted net income per share: | $ | 0.17 | $ | 0.05 | ||||||||||||||||||||
| Reconciliation of Net income to EBITDA | ||||||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||||||
| August 31, | August 31, | |||||||||||||||||||||||
| 2012 | 2011 | |||||||||||||||||||||||
| Net income | $ | 173 | $ | 53 | ||||||||||||||||||||
| Plus interest expense | 65 | 91 | ||||||||||||||||||||||
| Plus tax expense | - | - | ||||||||||||||||||||||
| Plus: Non-cash expenses | 47 | 23 | ||||||||||||||||||||||
| Plus: Non-recurring professional fees | - | 12 | ||||||||||||||||||||||
| EBITDA | $ | 285 | $ | 179 | ||||||||||||||||||||
The Balance Sheets as of August 31, 2012 and our fiscal year end May 31, 2012 are presented below.
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Balance Sheets (in thousands) |
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| As of | ||||||||||||||||||
| August 31, | May 31, | |||||||||||||||||
| 2012 | 2012 | |||||||||||||||||
| Cash | $ | 100 | $ | 595 | ||||||||||||||
| Accounts receivable | 657 | 757 | ||||||||||||||||
| Other current assets | 282 | 308 | ||||||||||||||||
| Total current assets | 1,039 | 1,660 | ||||||||||||||||
| Property and equipment, net | 35 | 42 | ||||||||||||||||
| Goodwill | 4,246 | 4,246 | ||||||||||||||||
| Capitalized software development costs, net | 270 | 172 | ||||||||||||||||
| Capitalized patent costs | 88 | 82 | ||||||||||||||||
| Debt issuance costs | 186 | 210 | ||||||||||||||||
| Other non-current assets | 136 | 136 | ||||||||||||||||
| Total assets | $ | 6,000 | $ | 6,548 | ||||||||||||||
| Accounts payable | $ | 272 | $ | 266 | ||||||||||||||
| Accrued expenses | 305 | 333 | ||||||||||||||||
| Deferred maintenance revenue | 1,697 | 2,194 | ||||||||||||||||
| Current portion of long term debt | 720 | 720 | ||||||||||||||||
| Other current liabilities | 76 | 75 | ||||||||||||||||
| Total current liabilities | 3,070 | 3,588 | ||||||||||||||||
| Other non-current liabilities | 33 | 51 | ||||||||||||||||
| Long term debt | 1,300 | 1,480 | ||||||||||||||||
| Total liabilities | 4,403 | 5,119 | ||||||||||||||||
| Stockholders' equity | 1,597 | 1,429 | ||||||||||||||||
| Total liabilities and stockholders' equity | $ | 6,000 | $ | 6,548 | ||||||||||||||
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, how successful the buyer of our patents will be in its efforts to monetize them and our ability to: (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, among others.
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.