Deltek will host a conference call at 5:00 p.m. Eastern Time today to discuss the Company’s first quarter 2012 results. The dial-in number for the conference call is 1-877-381-6419 in North America and 1-706-643-9496 outside North America (passcode: 71804334). The conference call also can be accessed through the Investor Relations section of Deltek’s website ( http://investor.deltek.com). Those unable to participate in the live call may hear a replay through May 3, 2012 by dialing 1-855-859-2056 in North America and 1-404-537-3406 outside North America (passcode: 71804334). The replay also will be available through May 25, 2012 on Deltek’s website.
About Deltek
Deltek (Nasdaq: PROJ) is the leading global provider of enterprise software and information solutions for professional services firms and government contractors. For decades, we have delivered actionable insight that empowers our customers to unlock their business potential. 15,000 organizations and 2 million users in over 80 countries around the world rely on Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and deliver more profitable projects. Deltek – Know more. Do more. ® www.deltek.com
Use of Non-GAAP Financial Measures
This press release and the related conference call described above contain certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income and margin, adjusted EBITDA, and non-GAAP revenue. The Company defines non-GAAP net income as GAAP net income (loss) before the net-of-tax impact of stock-based compensation, amortization of acquired intangible assets, purchase accounting impacts relating to acquisitions, acquisition-related costs, and restructuring charges. Non-GAAP operating income and margin is defined as GAAP operating income (loss) before the pre-tax impact of stock-based compensation, amortization of acquired intangible assets, purchase accounting impacts relating to acquisitions, acquisition-related costs, and restructuring charges. Adjusted EBITDA is defined as GAAP net income (loss) before interest expense (net of interest income), provision for income taxes, depreciation, stock-based compensation, amortization, purchase accounting impacts relating to acquisitions, acquisition-related costs, and restructuring charges. Non-GAAP revenue is defined as revenue before the net impact of acquisition-related fair value adjustments to deferred revenue.
The Company believes that the presentation of these measures provides useful information to its investors and lenders because these measures allow for more accurate comparisons of results from period-to-period, enhance the overall understanding of the Company’s performance and provide greater insight into the prospects for the Company’s ongoing business operations. Moreover, the Company also believes it is appropriate to exclude costs associated with restructuring charges because these charges are excluded from management’s assessment of the Company’s operating performance and are not related to the Company’s ongoing business operations. In addition, the Company excludes the items from EBITDA described above in its calculations to determine compliance with its debt covenants and to assess its ability to borrow additional funds to finance or expand its operations.
The Company believes that by reporting these measures, it provides insight and consistency in its financial reporting and presents a basis for comparison of its business operations between current, past and future periods. In addition, the measures provide a basis for the Company to compare its financial results to those of other comparable publicly traded companies and are used by its management team to plan and forecast its business.
Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliations of our GAAP to non-GAAP net income, operating income and margin, adjusted EBITDA and revenue, which are set forth below.
Forward-Looking Statements
This press release and related conference call contain forward-looking statements that involve substantial risks and uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “would” or similar words. You should consider these statements carefully because they discuss our plans, targets, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict accurately or control. Our actual results may differ materially from the expectations we describe in our forward-looking statements. Factors or events that could cause our actual results to materially differ may emerge from time to time, and it is not possible for us to accurately predict all of them. Before you invest in our common stock, you should be aware that the occurrence of any such event or of any of the additional events described as risk factors in the Company’s filings with the Securities and Exchange Commission could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this press release or related conference call speaks only as of the date on which we make it. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
| DELTEK, INC. | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (in thousands, except per share data) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2012 | 2011 | |||||||||
| REVENUES: | ||||||||||
| Product revenues | $ | 25,055 | $ | 21,590 | ||||||
| Maintenance and support services | 41,227 | 38,173 | ||||||||
| Consulting services and other revenues | 16,438 | 20,215 | ||||||||
| Total revenues | 82,720 | 79,978 | ||||||||
| COST OF REVENUES: | ||||||||||
| Cost of product revenues | 6,823 | 5,675 | ||||||||
| Cost of maintenance and support services | 6,227 | 6,980 | ||||||||
| Cost of consulting services and other revenues | 16,691 | 17,722 | ||||||||
| Total cost of revenues | 29,741 | 30,377 | ||||||||
| GROSS PROFIT | 52,979 | 49,601 | ||||||||
|
OPERATING EXPENSES: |
||||||||||
| Research and development | 15,790 | 17,561 | ||||||||
| Sales and marketing | 21,226 | 22,242 | ||||||||
| General and administrative | 12,007 | 13,659 | ||||||||
| Restructuring charge | 1,525 | 3,205 | ||||||||
| Total operating expenses | 50,548 | 56,667 | ||||||||
| INCOME (LOSS) FROM OPERATIONS | 2,431 | (7,066 | ) | |||||||
| Interest income | 25 | 33 | ||||||||
| Interest expense | (2,654 | ) | (2,985 | ) | ||||||
| Other income (expense), net | 35 | (265 | ) | |||||||
| LOSS BEFORE INCOME TAXES | (163 | ) | (10,283 | ) | ||||||
| Income tax expense (benefit) | 128 | (3,732 | ) | |||||||
| NET LOSS | $ | (291 | ) | $ | (6,551 | ) | ||||
| LOSS PER SHARE | ||||||||||
| Basic | $ | (0.00 | ) | $ | (0.10 | ) | ||||
| Diluted | $ | (0.00 | ) | $ | (0.10 | ) | ||||
| COMMON SHARES AND EQUIVALENTS OUTSTANDING | ||||||||||
| Basic weighted average shares | 64,240 | 65,343 | ||||||||
| Diluted weighted average shares | 64,240 | 65,343 | ||||||||
| DELTEK, INC. | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (in thousands, except share data) | ||||||||||
| (unaudited) | ||||||||||
| March 31, | December 31, | |||||||||
| 2012 | 2011 | |||||||||
| ASSETS | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | $ | 35,629 | $ | 35,243 | ||||||
|
Accounts receivable, net of allowance of $2,000 and $1,714 at March 31, 2012 and December 31, 2011, respectively |
57,431 | 58,899 | ||||||||
| Deferred income taxes | 4,305 | 5,383 | ||||||||
| Prepaid expenses and other current assets | 12,863 | 10,760 | ||||||||
| TOTAL CURRENT ASSETS | 110,228 | 110,285 | ||||||||
| PROPERTY AND EQUIPMENT, NET | 27,076 | 25,620 | ||||||||
| LONG-TERM DEFERRED INCOME TAXES | 11,071 | 9,653 | ||||||||
| INTANGIBLE ASSETS, NET | 51,537 | 54,994 | ||||||||
| GOODWILL | 176,475 | 175,771 | ||||||||
| OTHER ASSETS | 5,807 | 6,156 | ||||||||
| TOTAL ASSETS | $ | 382,194 | $ | 382,479 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| CURRENT LIABILITIES: | ||||||||||
| Current portion of long-term debt | $ | 70 | $ | 528 | ||||||
| Accounts payable and accrued expenses | 44,413 | 45,420 | ||||||||
| Deferred revenues | 119,257 | 104,835 | ||||||||
| Income taxes payable | 392 | 465 | ||||||||
| TOTAL CURRENT LIABILITIES | 164,132 | 151,248 | ||||||||
| LONG-TERM DEBT | 152,468 | 166,894 | ||||||||
| OTHER TAX LIABILITIES | 3,234 | 3,214 | ||||||||
| OTHER LONG-TERM LIABILITIES | 17,842 | 18,180 | ||||||||
| TOTAL LIABILITIES | 337,676 | 339,536 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||||
|
Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at March 31, 2012 and December 31, 2011 |
– | – | ||||||||
|
Common stock, $0.001 par value—authorized, 200,000,000 shares; 71,514,478 issued and 68,940,405 outstanding at March 31, 2012 and 70,398,889 issued and 68,272,271 outstanding at December 31, 2011 |
72 | 70 | ||||||||
|
Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at March 31, 2012 and December 31, 2011 |
– | – | ||||||||
| Additional paid-in capital | 278,003 | 273,496 | ||||||||
| Accumulated deficit | (217,112 | ) | (216,821 | ) | ||||||
| Accumulated other comprehensive income | 4,135 | 2,188 | ||||||||
|
Treasury stock, at cost — 2,574,073 and 2,126,618 shares at March 31, 2012 and December 31, 2011, respectively |
(20,580 | ) | (15,990 | ) | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 44,518 | 42,943 | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 382,194 | $ | 382,479 | ||||||
| DELTEK, INC. | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (in thousands) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended March 31, | ||||||||||
| 2012 | 2011 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
| Net loss | $ | (291 | ) | $ | (6,551 | ) | ||||
| Adjustments: | ||||||||||
| Allowance for doubtful accounts | 579 | 314 | ||||||||
| Depreciation and amortization | 5,934 | 6,315 | ||||||||
| Amortization of debt issuance costs and original issue discount | 309 | 232 | ||||||||
| Stock-based compensation expense | 3,502 | 3,386 | ||||||||
| Employee stock purchase plan expense | 83 | 51 | ||||||||
| Restructuring charge, net | 583 | 2,254 | ||||||||
| (Gain) Loss on disposal of fixed assets | (3 | ) | 12 | |||||||
| Other noncash activity | 43 | 74 | ||||||||
| Deferred income taxes | (596 | ) | (5,097 | ) | ||||||
| Changes in assets and liabilities, net of effect from acquisitions: | ||||||||||
| Accounts receivable, net | 1,304 | 3,413 | ||||||||
| Prepaid expenses and other assets | (1,795 | ) | (3,282 | ) | ||||||
| Accounts payable and accrued expenses | (1,300 | ) | 6 | |||||||
| Income taxes receivable/payable | 332 | 892 | ||||||||
| Excess tax benefit from stock awards | (468 | ) | (208 | ) | ||||||
| Other tax liabilities | 18 | 156 | ||||||||
| Other long-term liabilities | (99 | ) | 770 | |||||||
| Deferred revenues | 14,160 | 17,833 | ||||||||
| Net Cash Provided by Operating Activities | 22,295 | 20,570 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Acquisition of WMG, Inc., net of cash acquired | (729 | ) | (25,664 | ) | ||||||
| Acquisition of Maconomy A/S | - | (168 | ) | |||||||
| Purchase of property and equipment | (3,094 | ) | (1,841 | ) | ||||||
| Capitalized software development costs | (140 | ) | - | |||||||
| Net Cash Used in Investing Activities | (3,963 | ) | (27,673 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Proceeds from exercise of stock options | 1,537 | 94 | ||||||||
| Excess tax benefit from stock awards | 468 | 208 | ||||||||
| Proceeds from issuance of stock under employee stock purchase plan | 474 | 358 | ||||||||
| Shares withheld for minimum tax withholding on vested restricted stock awards | (1,391 | ) | (1,050 | ) | ||||||
| Purchase of treasury stock | (4,590 | ) | – | |||||||
| Repayment of debt | (15,021 | ) | (516 | ) | ||||||
| Net Cash Used in Financing Activities | (18,523 | ) | (906 | ) | ||||||
| IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | 577 | 1,249 | ||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 386 | (6,760 | ) | |||||||
| CASH AND CASH EQUIVALENTS––Beginning of period | 35,243 | 76,619 | ||||||||
| CASH AND CASH EQUIVALENTS––End of period | $ | 35,629 | $ | 69,859 | ||||||
| DELTEK, INC. | ||||||||||
| RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME | ||||||||||
| (in thousands, except per share data) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2012 | 2011 | |||||||||
| Net Loss, (GAAP Basis) | $ | (291 | ) | $ | (6,551 | ) | ||||
| Income Tax Expense (Benefit) | 128 | (3,732 | ) | |||||||
| Pre-Tax Loss, (GAAP Basis) | $ | (163 | ) | $ | (10,283 | ) | ||||
| Adjustments: | ||||||||||
| Amortization of Acquired Intangibles | 4,145 | 4,377 | ||||||||
| Stock-based Compensation | 3,585 | 3,437 | ||||||||
|
Restructuring Charge (Including Stock-based Compensation of $313 for the three months ended March 31, 2011) |
1,525 | 3,205 | ||||||||
|
Net Impact of Acquisition-Related Deferred Revenue before Fair Value Adjustment |
93 | 1,965 | ||||||||
| Acquisition-Related Costs | - | 702 | ||||||||
|
Net Impact of Acquisition-Related Deferred Commissions before Fair Value Adjustment |
- | (369 | ) | |||||||
| Adjusted Pre-Tax Income | 9,185 | 3,034 | ||||||||
| Less: Adjusted Income Tax Expense | 3,400 | 1,408 | ||||||||
| Non-GAAP Net Income | $ | 5,785 | $ | 1,626 | ||||||
| Non-GAAP Earnings Per Share (diluted) | $ | 0.09 | $ | 0.02 | ||||||
| Weighted Average Shares | 66,478 | 66,508 | ||||||||
| RECONCILIATION OF GAAP OPERATING INCOME (LOSS) AND OPERATING MARGIN (DEFICIT) TO NON-GAAP OPERATING INCOME AND OPERATING MARGIN | |||||||||||||||
| (in thousands) | |||||||||||||||
| (unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| March 31, | |||||||||||||||
| 2012 | 2011 | ||||||||||||||
| Operating Income (Loss) and Margin (Deficit) - GAAP | $ | 2,431 | 3 | % | $ | (7,066 | ) | -9 | % | ||||||
| Amortization of Acquired Intangibles | 4,145 | 4,377 | |||||||||||||
| Stock-based Compensation | 3,585 | 3,437 | |||||||||||||
|
Restructuring Charge (Including Stock-based Compensation of $313 for the three months ended March 31, 2011) |
1,525 | 3,205 | |||||||||||||
|
Net impact of Acquisition-Related Deferred Revenue before Fair Value Adjustment |
93 | 1,965 | |||||||||||||
| Acquisition-Related Costs | - | 702 | |||||||||||||
|
Net Impact of Acquisition-Related Deferred Commissions before Fair Value Adjustment |
- | (369 | ) | ||||||||||||
| Operating Income and Margin - Non-GAAP | $ | 11,779 | 14 | % | $ | 6,251 | 8 | % | |||||||
| Total Revenues | $ | 82,720 | $ | 79,978 | |||||||||||
| Total Revenues (Non-GAAP) | $ | 82,813 | $ | 81,943 | |||||||||||
| RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA | ||||||||||
| (in thousands) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2012 | 2011 | |||||||||
| Net Loss (GAAP Basis) | $ | (291 | ) | $ | (6,551 | ) | ||||
| Amortization | 4,228 | 4,434 | ||||||||
| Income Tax Expense (Benefit) | 128 | (3,732 | ) | |||||||
| Stock-based Compensation | 3,585 | 3,437 | ||||||||
|
Restructuring Charge (Including Stock-based Compensation of $313 for the three months ended March 31, 2011) |
1,525 | 3,205 | ||||||||
| Interest Expense, net | 2,629 | 2,952 | ||||||||
|
Net Impact of Acquisition-Related Deferred Revenue before Fair Value Adjustment |
93 | 1,965 | ||||||||
| Depreciation | 1,706 | 1,881 | ||||||||
| Acquisition-Related Costs | – | 702 | ||||||||
|
Net Impact of Acquisition-Related Deferred Commissions before Fair Value Adjustment |
– | (369 | ) | |||||||
| Adjusted EBITDA | $ | 13,603 | $ | 7,924 | ||||||
| REVENUES | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Total Revenues (GAAP) | $ | 82,720 | $ | 79,978 | ||||
| Net Impact of Maconomy Acquisition-Related | ||||||||
| Deferred Revenue before Fair Value Adjustment | – | 296 | ||||||
| Net Impact of INPUT Acquisition-Related | ||||||||
| Deferred Revenue before Fair Value Adjustment | 66 | 1,669 | ||||||
| Net Impact of WMG Acquisition-Related | ||||||||
| Deferred Revenue before Fair Value Adjustment | 27 | - | ||||||
| Total Revenues (Non-GAAP) | $ | 82,813 | $ | 81,943 | ||||
| STOCK-BASED COMPENSATION EXPENSE | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Cost of Product Revenues | $ | 98 | $ | 51 | ||||
| Cost of Maintenance and Support Services | 331 | 272 | ||||||
| Cost of Consulting Services and Other Revenues | 359 | 439 | ||||||
| Research and Development | 592 | 728 | ||||||
| Sales and Marketing | 739 | 806 | ||||||
| General and Administrative | 1,466 | 1,141 | ||||||
| Restructuring Charge | - | 313 | ||||||
| Total | $ | 3,585 | $ | 3,750 | ||||
| AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Cost of Product Revenues | $ | 1,764 | $ | 1,871 | ||||
| Cost of Consulting Services and Other Revenues | 19 | 20 | ||||||
| Sales and Marketing | 2,362 | 2,483 | ||||||
| General and Administrative | - | 3 | ||||||
| Total | $ | 4,145 | $ | 4,377 | ||||
| AMORTIZATION AND DEPRECIATION EXPENSES | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Cost of Product Revenues | $ | 1,938 | $ | 1,948 | ||||
| Cost of Maintenance and Support Services | 196 | 380 | ||||||
| Cost of Consulting Services and Other Revenues | 416 | 279 | ||||||
| Research and Development | 413 | 508 | ||||||
| Sales and Marketing | 2,614 | 2,870 | ||||||
| General and Administrative | 357 | 330 | ||||||
| Total | $ | 5,934 | $ | 6,315 | ||||
