MSC.Software Reports 103 Percent Annual Earnings Growth; Announces Eighth Consecutive Quarter of Double-Digit Revenue Growth
Business Editors & High-Tech WritersCOSTA MESA, Calif.--Feb. 28, 2001--MSC.Software Corp. , an established information technology software and services provider helping companies worldwide develop better products faster, today announced financial results for the fourth quarter and fiscal year ended Dec. 31, 2000.
Fiscal-year highlights include:
| -- | FY 2000 revenues grew to $178 million, up 19 percent from FY 1999; |
| -- | FY 2000 net income, excluding goodwill amortization, of $16.7 million, up 103 percent over FY 1999; and |
| -- | FY 2000 EPS, including goodwill amortization, of $0.76, an increase of 105 percent over EPS of $0.37 in FY 1999. |
Fourth-quarter highlights include:
-- Revenues of $52.2 million, an increase of 13 percent over last
year's fourth quarter;
-- Net income, excluding goodwill amortization, of $6.9 million
compared with $6.9 million in the fourth quarter last year;
-- Diluted EPS, including goodwill amortization, of $0.34,
compared with $0.38 per diluted share in the fourth quarter
last year;
-- Operating margin, excluding goodwill amortization, of
21 percent;
-- 344 new customer account wins in the quarter; and
-- Continued solid progress in Linux and Web-based initiatives.
"The current economic climate plays to MSC's sweet spot, with our simulation software and services providing a quantifiable and meaningful ROI for our customers," said Frank Perna Jr., chairman and CEO, MSC.Software. "The pressure on companies across all industries, from aerospace to consumer products, to deliver better products faster and cheaper, has never been more intense.
"Despite predictions of a slowdown in corporate IT spending, MSC's products and expertise continue to be highly valued, as evidenced by the company's record 344 customer wins during the quarter. We continue to invest heavily in our products and people, to ensure continuing growth for MSC and its clients in the years ahead."
For the fourth quarter ended Dec. 31, 2000, MSC.Software reported revenue of $52.2 million, an increase of 13 percent over reported revenue of $46.2 million for the fourth quarter last year. Net income, excluding goodwill amortization, was $6.9 million, or $0.42 per diluted share, compared with $6.9 million, or $0.43 per diluted share, in the fourth quarter last year.
Reported net income, including goodwill amortization, was $5.4 million, or $0.34 per diluted share, compared with $6.0 million, or $0.38 per diluted share, in the fourth quarter last year.
For the fiscal year ended Dec. 31, 2000, MSC.Software reported revenue of $178.0 million compared to $149.2 million of reported revenue in fiscal 1999, an increase of 19 percent. Net income, excluding goodwill amortization, for the fiscal year 2000 was $16.7 million, or $1.07 per diluted share, an increase of 103 percent over the $8.2 million, or $0.59 per diluted share, in the prior year.
Outlook
Based on current visibility, the company expects to be able to achieve 15-20 percent annual revenue growth in FY 2001. The company also expects to be able to achieve 25-30 percent annual earnings growth in FY 2001.
Americas
The Americas enjoyed solid growth with revenue increasing 6 percent to $21.3 million compared with the fourth quarter last year, and the total number of new accounts increasing by 97 new customers. MSC.Software reported major new contract wins at Ford, General Motors, Exxon, Sandia, Westinghouse and Visteon.
A significant growth driver was the company's successful scaling of its consulting services, with major consulting contracts being inked for many of its key clients, including Boeing and NASA.
Europe
MSC.Software's European operations enjoyed solid growth across all key industries with revenues increasing 43 percent in local currencies, and dollar revenues growing at 21 percent to $17.0 million compared with the fourth quarter last year. The total number of new accounts increased by 168 and MSC.Software also enjoyed account growth from many existing customers.
The service element of the business continued to be particularly active, with significant increases in service revenue across Europe, especially engineering analysis in France and Italy. During Q4, the company also recorded its first European Linux successes with major customer wins in Germany and Switzerland.
Asia-Pacific
The Asia-Pacific region continued to grow as an important market for MSC.Software, with revenues increasing 19 percent in local currencies and 15 percent in reported revenues in dollars to $13.9 million compared with the fourth quarter last year. The total number of new customer accounts increased by 79.
Japan continues to show exciting growth for the company, with the signing of deals totaling $1.8 million with customers in the electric and tire industries. Korea and China also performed strongly with numerous significant lease renewals and contract wins. MSC.Software further solidified its position in Australia and Korea with the addition of 23 and 29 local staff, respectively, in each country, following the acquisition of key channel partners during the year.
Web Initiatives
MSC.Engineering-e.com continues to build its engineering community, with the total number of registered users passing the 11,000 mark during the fourth quarter. MSC and partner-related software and services from more than 300 affiliated merchants are available at the site.
By the end of 2000, nearly 600 consultants and more than 150 client companies had registered for the service. The value of jobs posted reached nearly $500,000 during the quarter. MSC also hosted a series of Webinars in conjunction with IBM, "Engineering on the Internet," which to date has attracted several hundred registered participants.
MSC.Software's other key Web initiative, the Simulation Center, has continued to grow its product and service offerings and is accelerating the introduction of Web-enabled software running over the Internet. MSC.Nastran, one of MSC.Software's key simulation products, is now available on the engineering-e.com Simulation Center.
In February 2001, MSC.Software announced the launch of MSC.SuperForge, which simulates the industrial forging process. With MSC.SuperForge, the company has leveraged its deep domain expertise in the steel manufacturing processes, where more than 90 percent of manufacturing investments are made, and now this expertise is available to users worldwide over the Internet.
MSC.Linux
Demand for Linux-based software continues to grow and MSC.Software's core offerings of Linux-based products and services continue to be well received by the market. An early MSC.Linux success was the company's delivery of a Linux cluster system to Dana Corp.'s Spicer Light Vehicle Axle Group.
The MSC.Software turnkey solution was based on Intel processors in Hewlett-Packard systems and included the company's simulation software. In January 2001, the company co-exhibited at LinuxWorld with Hewlett-Packard, garnering significant attention. In December, MSC also announced the availability of MSC.Linux (available as a CD or download over the Web), which combines PCs into clusters, enabling them to address engineering problems once only solved by expensive supercomputers.
MSC.Software's conference call to discuss the fourth-quarter and year-end results will be Web cast live today at 11:30 a.m. Eastern via CCBN on the company's Web site, located at http://www.mscsoftware.com. An archived version of the conference call will also be available for replay at the corporate Web site.
About MSC.Software
MSC.Software is the information technology software and services provider helping companies worldwide develop better products faster. MSC.Software's software and services are used to enhance and automate the product design and manufacturing process. The ability to model and test software prototypes has cost-effectively enabled manufacturers to design and build everything from sophisticated aircraft and automobiles to electronic products.
Simulating product performance reduces development expenses, time to market and warranty costs, positively impacting customer profitability. MSC.Software is capitalizing on the advantages of the Linux operating system for high-performance computing and the Web in all of its forms.
For additional information about MSC.visualNastran, the company's ASP or Linux initiatives, visit the Web sites at www.engineering-e.com or www.mscsoftware.com.
Except for the historical information contained herein, certain matters discussed in this news release constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Other factors that could cause such results to differ materially from those described in the forward-looking statements include delays in developing, completing, or shipping new or enhanced products; the ability to assimilate acquisitions into MSC's operations; foreign currency translations; and other risks and uncertainties that are detailed in the company's annual report on Form 10-K and other reports filed by the company with the Securities and Exchange Commission.
MSC.SOFTWARE CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Amounts)
Three Months Ended Year Ended
December 31, December 31,
2000 1999 2000 1999
(Unaudited) (Unaudited)
REVENUE:
Software Licenses $ 33,004 $ 30,569 $108,665 $100,869
Software Support and Services 19,191 15,646 69,359 48,366
Total Revenue 52,195 46,215 178,024 149,235
COST OF REVENUE:
Software Licenses 6,683 4,760 22,648 19,171
Software Support and Services 5,790 5,685 22,205 19,090
Total Cost of Revenue 12,473 10,445 44,853 38,261
GROSS PROFIT 39,722 35,770 133,171 110,974
OPERATING EXPENSE:
Research and Development 3,668 4,723 16,656 19,511
Selling, General
and Administrative 23,693 19,855 82,325 72,152
Amortization of Goodwill
and Other Intangibles 2,822 2,296 11,049 7,111
Restructuring Charges -- -- -- 5,497
Write-Off of Acquired
In-Process Technology -- -- -- 4,067
Total Operating Expense 30,183 26,874 110,030 108,338
OPERATING INCOME 9,539 8,896 23,141 2,636
OTHER EXPENSE (INCOME):
Interest Expense 1,646 1,643 6,679 5,788
Gain on Sale of Investment -- -- -- (10,773)
Other Expense (Income), Net 427 (1,366) 294 (1,414)
Total Other Expense
(Income), Net 2,073 277 6,973 (6,399)
INCOME BEFORE PROVISION FOR
INCOME TAXES AND
MINORITY INTEREST 7,466 8,619 16,168 9,035
Provision for Income Taxes 2,041 2,596 5,435 3,938
Minority Interest in Net
Loss of Subsidiaries (36) -- (400) --
NET INCOME $ 5,461 $ 6,023 $ 11,133 $ 5,097
BASIC EARNINGS PER SHARE $ 0.39 $ 0.44 $ 0.79 $ 0.37
DILUTED EARNINGS PER SHARE $ 0.34 $ 0.38 $ 0.76 $ 0.37
Basic Weighted Average
Shares Outstanding 14,129 13,842 14,025 13,800
Diluted Weighted Average
Shares Outstanding 18,380 18,159 14,614 13,905
PRO FORMA RESULTS
(EXCLUDING AMORTIZATION OF GOODWILL)
OPERATING INCOME $ 10,987 $ 9,817 $ 28,687 $ 5,498
NET INCOME $ 6,909 $ 6,944 $ 16,679 $ 8,209
BASIC EARNINGS PER SHARE $ 0.49 $ 0.50 $ 1.19 $ 0.59
DILUTED EARNINGS PER SHARE $ 0.42 $ 0.43 $ 1.07 $ 0.59
MSC.SOFTWARE CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
December 31,
2000 1999
(Unaudited)
ASSETS
Cash and Investments $ 30,659 $ 21,918
Trade Accounts Receivable, Net 45,950 37,995
Other Current Assets 29,504 22,576
Total Current Assets 106,113 82,489
Property and Equipment, Net 12,106 8,585
Goodwill and Other Intangible Assets, Net 64,015 72,280
Capitalized Software Costs, Net 23,703 20,117
Other Assets 2,927 3,749
Total Assets $208,864 $187,220
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 5,575 $ 4,692
Restructuring Reserve 1,340 2,875
Deferred Revenue 38,671 34,013
Other Current Liabilities 36,986 29,253
Total Current Liabilities 82,572 70,833
Deferred Income Taxes 18,093 16,957
Note Payable, Less Current Portion 1,333 4,533
Convertible Subordinated Debentures, Net 58,345 58,287
Subordinated Notes Payable, Less Current Portion 8,874 11,804
Total Liabilities 169,217 162,414
Minority Interest 492 --
Total Shareholders' Equity 39,155 24,806
Total Liabilities and
Shareholders' Equity $208,864 $187,220