Epicor
License Revenue Grows Sequentially by 33% Over 2009 First Quarter, Driving Free Cash Flow of $10.6 Million, Non-GAAP EPS of $0.11 Per Share
IRVINE, Calif. (July 28, 2009) – Epicor Software Corporation (NASDAQ: EPIC), a
leading provider of enterprise business software solutions for the midmarket and divisions of
Global 1000 companies, today reported financial results for its second quarter ended June 30,
2009. All results should be considered preliminary pending the Company’s filing of its quarterly
report on Form 10-Q.
Total revenue for the 2009 second quarter was $100.4 million, with a GAAP net loss of
$6.7 million, or loss of $0.11 per diluted share. This compares to 2008 second quarter revenue
of $127.9 million, and GAAP net income of $0.3 million, or $0.00 per diluted share.
Non-GAAP1 net income for the 2009 second quarter was $6.7 million, or $0.11 per
diluted share, compared to non-GAAP net income of $10.3 million, or $0.17 per diluted share in
the 2008 second quarter.
2009 Second Quarter Revenue by Segment: 2009 second quarter license revenue
was $17.5 million, up sequentially by 33% from 2009 first quarter license revenue of $13.2
million, and down year over year when compared to license revenue of $24.4 million in the 2008
second quarter. Consulting revenue was $32.1 million in the 2009 second quarter, up marginally
when compared to the 2009 first quarter consulting revenue of $31.5 million, and down when
compared to consulting revenue of $41.0 million in the 2008 second quarter. Maintenance
revenue for the 2009 second quarter was $47.3 million, flat when compared to the 2009 first
quarter, and down when compared to maintenance revenue of $48.7 million in the same period
in the prior year. Hardware and other revenue for the 2009 second quarter was $3.5 million,
down sequentially when compared to hardware and other revenue of $7.2 million in the 2009 Morefirst
quarter, and down compared to hardware and other revenue of $13.9 million in the prior
year’s second quarter.
Epicor Chairman, President and CEO George Klaus commented, “Epicor’s technology
leadership was highlighted throughout the second quarter, as license sales exceeded our
internal forecasts and we experienced relatively strong license revenues across all of the
vertical markets and geographies we serve. We continued to provide excellent support and
service to our 20,000-plus customers worldwide, which included the release of more than 75
product updates and enhancements in the first half of this year alone. During the second quarter
we capitalized on new market opportunities presented by Epicor 9 with solid international sales,
which included Epicor 9 sales into eight new countries. Additionally,” Klaus said, “the new
global financials and greater distribution capabilities of Epicor 9 led to winning deals where we
would not have been able to compete in the past. In addition to the successes in our ERP
business, our retail business also had a very solid quarter with retail license sales coming in
ahead of plan. We closed some large deals ahead of schedule, as retailers seemed to be a bit
more comfortable allocating resources to IT investments.
“We are pleased with our second quarter results and our execution to our stated
objectives for the first half of the year in the face of a difficult selling environment,” Klaus added.
“We continue to manage our expenses to our expected revenues and believe our most recent
results are a confirmation that Epicor is operating from a sound foundation, led by a highly
experienced and tenured senior management team that has successfully navigated the
Company through challenging times in the past. While our software sales outpaced our internal
expectations in the second quarter,” Klaus continued, “we do not yet have enough data points to
call this a trend, especially entering the third quarter, which has historically been a seasonally
weak quarter due to prolonged holidays in many international regions, as well as in the
Americas. As such, while we remain focused on improving our profitability per revenue dollar,
we are also continuing to take a prudently cautious outlook towards our short-term financial
expectations.”
Business Outlook: Due to the uncertainty and limited visibility in the global economy,
IT spending and exchange rate fluctuations, the Company will continue to provide forward
looking guidance one quarter at a time.
2009 third quarter total revenue is expected to be $96 to $100 million, with non-GAAP
earnings per diluted share2 for the 2009 third quarter expected to be $0.09 to $0.10.
Balance Sheet Summary: The Company’s balance sheet at June 30, 2009, included
cash and cash equivalents of $86.0 million. The balance sheet benefited from free cash flow3 of
$10.6 million during the 2009 second quarter, which helped support approximately $7.5 million
in pay downs on the Company’s credit facility during the quarter. The Company’s total debt
balance as of June 30, 2009, consists primarily of the $230 million obligation to holders of the
Company’s 2.375% senior convertible notes (less the debt discount described below of $46.2
million) and $79 million of borrowings under the Company’s credit facility, currently priced at
LIBOR plus 2.0%.
At the end of the 2009 second quarter, net accounts receivable was approximately $85.9
million. The Company had solid cash collections of approximately $105 million during the 2009
second quarter. Days sales outstanding (DSOs) in the 2009 second quarter were up to 78,
compared to 72 in the first quarter of 2009. Deferred revenue at the end of the 2009 second
quarter was $93.9 million.
Effective January 1, 2009, the Company adopted FSP APB 14-1, “Accounting for
Convertible Debt”, and retroactively applied this change to all periods presented herein. This
standard requires the Company to change the previous accounting method for its $230 million
convertible notes. Accordingly, the Company recorded a $61.8 million debt discount as
Additional Paid in Capital, as of the notes’ issuance date of May 15, 2007. At June 30, 2009, the
debt discount was $46.2 million.
The Company is amortizing the debt discount through the date at which the Company
can begin to redeem the notes, which is May 15, 2014. The Company recognized interest
expense of $3.3 million and $3.2 million related to the convertible debt for the three months
ended June 30, 2009 and 2008, respectively, of which $1.4 million is a cash expense in each
period.
Earnings Conference Call
The Company will hold an investor and analyst conference call today at 5:00 p.m.
Eastern Time/2:00 p.m. Pacific Time.
When: Tuesday, July 28, 2009
Time: 2:00 p.m. PT
Dial in: +1 (877) 397-0235 or outside the U.S. +1 (719) 325-4851
Conf ID: Epicor 2009 Second Quarter Earnings Call
Webcast: http://ir.epicor.com
On the call, Chairman, President and CEO George Klaus and Executive Vice President
and CFO Michael Pietrini will review 2009 second quarter earnings. Investors and analysts are
invited to participate on the call. Please dial in approximately ten minutes prior to start time. A
live audio-only webcast of the call will be made available to the public on the Company’s Web
site at http://ir.epicor.com and will be archived for thirty days following the call on the Company’s
Web site.
Source: Epicor
