Press Release
- Date:
- Wednesday, October 29, 2003
- Contact:
- Mark Funston
- Phone:
- (301) 731-2300
- Email:
- mark_funston@g1.com
Group 1 Software Reports Record Second Quarter Net Income
Net Income Up 30% to $2.6 Million; EPS $0.16 vs. $0.14 Per Share
Lanham, MD — Group 1 Software (Nasdaq: GSOF) today reported record results for its second fiscal quarter ended September 30, 2003. The company reported second quarter net income of $2.6 million, a 30% increase over the prior year. Fully diluted earnings per share in the second quarter, also a record, were $0.16 vs. $0.14 the prior year, despite a substantially higher diluted share count.
The company reported record second quarter revenue of $25.2 million, compared with $25.0 million the prior year. Second quarter license fee revenue for the company was $10.8 million, compared with $11.3 million reported the prior year. Total revenue for the quarter from Enterprise Solutions software and services was $17.8 million compared with $16.9 million in the prior year's second quarter. License fees in the Enterprise Solutions division were $8.5 million, up from $7.8 million reported the prior year. The Enterprise Solutions division's performance was solid across its entire range of products.
Total revenue from DOC1 Customer Communications Management software and services was $7.4 million compared with $8.1 million in the prior year's second quarter. License fees in the DOC1 division were $2.3 million compared with $3.5 million reported the prior year. New license fee revenue in the DOC1 division continues to be impacted by the current economic environment. Sales of new DOC1 systems are most often a replacement of existing technologies. Consequently, many companies with tight IT budgets have postponed these purchases.
For the first six months of the fiscal year, the company reported revenue of $49.5 million, up from $48.4 million in the same period of the prior year. Net income for the six months was $4.6 million, an increase of 58% over net income of $2.9 million the prior year. Fully diluted earnings per share were $0.29 vs. $0.21, an increase of 38% over the prior year.
Operating income for the six months totaled $3.4 million, up 10% over the prior year. Non-operating income totaled $512,000, compared with $115,000 the prior year. The increase in non-operating income was primarily due to interest income recognized on the bridge loan to Sagent Technology prior to the asset acquisition by Group 1 on October 1, 2003.
Group 1's cash position remained strong. Cash and short-term investments totaled $57.9 million at September 30, 2003, compared with $57.8 million at June 30, 2003.
"Although sales in the DOC1 division were below our expectations, we were pleased that we were able to achieve record net earnings and revenue for the company," said Bob Bowen, CEO of Group 1 Software. "Looking ahead, we continue to be excited about our business prospects. The market's early response to the Sagent data integration and business geographics capabilities has been positive. With the Sagent acquisition, we are now truly a global company, with distribution capabilities in Japan, South Korea, China and other areas of Southeast Asia, in addition to our existing presence in the Americas and Europe."
"Within the DOC1 division, we are very optimistic about the just-announced DOC1 Series 5," continued Bowen. "This groundbreaking technology represents a dramatic move forward for Group 1 and we believe this major new release can become a catalyst for new business in coming quarters."
"We remain confident in our fiscal year guidance," said Mark Funston, CFO of Group 1 Software. "Our guidance for the six month period ending March 31, 2004 is for revenue growth in the range of 31% to 33% and net earnings growth (excluding non-recurring costs) in the range of 5% to 10% over fiscal year 2003. Our guidance incorporates the anticipated $1.0 million in amortization of purchased intangibles from the Sagent acquisition. Net earnings growth for the six month period before the amortization of purchased intangibles is projected to be in the range of 16% to 21% over fiscal year 2003."
The company will hold a conference call at 4:30 PM EST today to discuss these results. Interested parties are invited to listen to the call, which will be broadcast via the Internet at www.g1.com or by dialing 800-374-0565.
Group 1 Software is a leading provider of solutions that help over 3,000 organizations worldwide maximize the value of their customer and other data. Group 1 provides industry-leading technologies that allow businesses to cleanse and enrich their corporate data, generate personalized customer communications and integrate and deliver data across the enterprise. These technologies are essential components of enterprise applications including customer relationship management (CRM), enterprise resource planning (ERP) and business intelligence systems. Founded in 1982 and headquartered in Lanham, Maryland, Group 1 offers solutions utilized by leaders in the financial services, banking, GIS/mapping, retail, telecommunications, utilities, insurance and other industries. The company's customer base includes such recognized names as Entergy, GEICO, L.L. Bean, MapQuest, QVC, Siemens, Wal-Mart and Wells Fargo. For more information about Group 1, visit the company's Web site at http://www.g1.com.
Certain statements made herein that are not historical are forward-looking within the meaning of the Private Securities Litigation reform Act of 1995. Words like "looking forward," "early response," "very optimistic," "believe," "remain confident" and "guidance" are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties. Readers are cautioned not to place undue reliance of these forward-looking statements, which address the conditions and estimations as they are found on the date of this press release. The Company undertakes no obligation to release publicly the result of any revisions to these forward- looking statements that may be made to reflect events or circumstances that arise after the date of this press release or to reflect the occurrence of unanticipated events. For additional information regarding these and other risks and uncertainties associated with the Company's business, reference is made to the Company's reports filed from time to time with the Securities and Exchange Commission. Group 1 Software and DOC1 are registered trademarks of Group 1 Software, Inc.
GROUP 1 SOFTWARE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
For the Three For the Six
Month Period Month Period
Ended September 30, Ended September 30,
2003 2002 2003 2002
Revenue:
Software license and related
revenue $10,841 $11,329 $21,309 $21,206
Maintenance and services 14,392 13,691 28,180 27,193
Total revenue 25,233 25,020 49,489 48,399
Cost of revenue:
Software license expense 3,187 3,763 6,986 7,834
Maintenance and service expense 4,061 4,105 8,511 8,379
Total cost of revenue 7,248 7,868 15,497 16,213
Gross profit 17,985 17,152 33,992 32,186
Operating expenses:
Research and development 2,955 2,812 5,724 5,554
Sales and marketing 8,350 7,738 15,930 15,248
General and administrative 3,325 3,539 6,525 6,869
Total operating expenses 14,630 14,089 28,179 27,671
Income from operations 3,355 3,063 5,813 4,515
Non-operating income
Interest income 578 322 821 603
Interest expense (13) (61) (25) (192)
Other non-operating income
(expense) (53) (146) 493 (191)
Total non-operating income 512 115 1,289 220
Income before provision for income
taxes 3,867 3,178 7,102 4,735
Provision for income taxes 1,315 1,207 2,497 1,791
Net income 2,552 1,971 4,605 2,944
Preferred stock dividend
requirements --- (14) --- (28)
Net income available to common
stockholders $2,552 $1,957 $4,605 $2,916
Basic earnings per share $0.18 $0.15 $0.33 $0.23
Diluted earnings per share $0.16 $0.14 $0.29 $0.21
Basic weighted average shares
outstanding 13,810 12,774 13,768 12,695
Diluted weighted average shares
outstanding 15,811 14,079 15,839 14,048
GROUP 1 SOFTWARE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
September 30, March 31,
2003 2003
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 40,967 $ 56,475
Short-term investments,
available-for-sale 16,942 7,712
Trade and installment accounts
receivable, less allowance of
$1,471 and $1,755 17,873 18,834
Notes receivable 7,000 ---
Deferred income taxes 1,721 2,130
Prepaid expenses and other current assets 4,655 4,067
Total current assets 89,158 89,218
Installment accounts receivable, long-term 20 39
Property and equipment, net 4,902 4,707
Computer software, net 23,519 23,490
Goodwill 12,726 12,716
Other assets 218 206
Total assets $ 130,543 $ 130,376
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,288 $ 1,358
Current portion of note payable 318 371
Accrued expenses 6,529 7,033
Accrued compensation 5,730 9,454
Current deferred revenues 27,596 31,241
Total current liabilities 41,461 49,457
Note payable, net of current portion 350 350
Deferred revenues, long-term 1,638 315
Deferred income taxes 4,309 4,694
Total liabilities 47,758 54,816
Commitments and contingencies
Stockholders' equity:
6% cumulative convertible preferred
stock $0.25 par value; 1,200 shares
authorized; no shares issued
(aggregate involuntary liquidation
preference $950) --- ---
Common stock $0.50 par value; 200,000
and 50,000 shares authorized; 15,068
and 14,902 shares issued 7,534 7,451
Additional paid in capital 36,491 34,951
Retained earnings 42,224 37,619
Accumulated other comprehensive income 1,181 184
Less treasury stock, 1,246 shares, at cost (4,645) (4,645)
Total stockholders' equity 82,785 75,560
Total liabilities and stockholders'
equity $ 130,543 $ 130,376