Reynolds and Reynolds Reports Strong Second Quarter
Live Webcast of 11:00 a.m. EDT Conference Call
Available Through http://www.streetfusion.com
Conference Call Replay Number (402) 998-0894
DAYTON, Ohio, April 25 The Reynolds and Reynolds Company today reported revenues of
$241.3 million for the quarter ended March 31, 2001, an increase of 9 percent
over the prior year. Net income for the quarter of $23.8 million or 32 cents
per share was in line with consensus estimates. During the quarter, the
company recorded a 3-cent charge associated with a work stoppage on a software
development contract, and a 2-cent gain related to discontinued operations.
Without these two items, earnings per share from continuing operations were 33
cents, 14 percent above the prior year.
"We achieved a strong performance in an uncertain economic environment. We
expect the weaker market conditions to continue, negatively impacting
consulting revenues and new systems sales. We are keeping our cost structure
in line with our revenues," President and CEO Lloyd "Buzz" Waterhouse said.
"We continue to increase our market share lead with our ERA3 system -- the
most widely used retail management system in North America. We are on schedule
with the integration of our customer relationship management solutions with
the ERA3 system. We continue to aggressively strengthen our broad suite of
solutions as well."
Highlights of the quarter include:
* Strong operating margins in Retail Management Solutions driven by
high recurring service revenues.
* Improved operating margins in Documents driven by manufacturing
consolidation and other cost improvements.
* Continued growth in Automark, the company's Web services arm, which
was selected by Sonic Automotive Inc. and Asbury Group as their Web
site developer for over 200 dealership locations.
* The launch of ReySource(TM), an Internet solution that provides a
unique procurement option to automotive retailers to help manage
their purchase of business forms, office supplies and other products
and services in their dealership.
* The selection by BMW Canada Inc. as its exclusive provider of retail
management systems and related products and services for all their
dealers.
* Continued recognition for high achievement in customer support as
evidenced by Reynolds' Technical Assistance Center (TAC) winning the
Help Desk Institute's 2001Team Excellence Award -- the gold medal of
the customer support profession.
"While we don't expect to achieve double-digit sales growth goals in this
business environment, we are encouraged by our performance through the first
six months and we remain confident in our ability to meet consensus earnings
estimates for the fiscal year," Waterhouse said.
For the 2001 fiscal year the company currently expects:
* Earnings per share to be in line with the consensus estimate of
$1.31, compared to $1.19 from continuing operations in fiscal year
2000 (excluding restructuring charges).
* Return on equity to approach 20 percent.
* Capital expenditures and capitalized software to total approximately
$70 million.
* Depreciation and amortization expense is expected to total
approximately $50 million.
* R&D expenses to be approximately $75 million.
* Dividends to remain at the rate of 11 cents per common share
per quarter.
The Reynolds and Reynolds Company
Segment Report (Unaudited)
(In thousands except per share data)
Second Quarter Six Months
For The Periods Ended
March 31 2001 2000 Change 2001 2000 Change
Consolidated
Net Sales and Revenues $241,321 $220,740 9% $484,807 $441,823 10%
Gross Profit $129,652 $118,143 10% $265,171 $238,269 11%
Operating Income $37,647 $40,719 -8% $78,139 $85,124 -8%
Operating Margin 15.6% 18.4% 16.1% 19.3%
Income From Continuing
Operations $22,199 $23,548 -6% $46,078 $48,607 -5%
Discontinued
Operations $1,623 $9,420 -83% $1,623 $15,661 -90%
Net Income $23,822 $32,968 -28% $47,701 $64,268 -26%
Earnings Per Common
Share (Diluted)
Income From
Continuing
Operations $0.30 $0.29 3% $0.61 $0.61 0%
Discontinued
Operations $0.02 $0.12 -83% $0.02 $0.20 -90%
Net Income $0.32 $0.41 -22% $0.64 $0.81 -21%
Average Shares
Outstanding 74,740 80,246 74,933 79,515
Retail Management
Solutions
Net Sales and Revenues $141,549 $136,550 4% $282,205 $276,992 2%
Gross Profit $83,297 $77,167 8% $168,932 $158,092 7%
Gross Margin 58.8% 56.5% 59.9% 57.1%
Operating Income $25,497 $24,817 3% $51,221 $53,752 -5%
Operating Margin 18.0% 18.2% 18.2% 19.4%
Transformation
Solutions
Net Sales and Revenues $45,500 $26,237 73% $95,192 $51,788 84%
Gross Profit $18,545 $10,850 71% $41,680 $21,462 94%
Gross Margin 40.8% 41.4% 43.8% 41.4%
Operating Income
(Loss) ($4,139) ($674) ($2,962) $233
Operating Margin -9.1% -2.6% -3.1% 0.4%
Documents
Net Sales and Revenues $43,801 $47,438 -8% $86,721 $92,764 -7%
Gross Profit $27,810 $30,126 -8% $54,559 $58,715 -7%
Gross Margin 63.5% 63.5% 62.9% 63.3%
Operating Income $10,377 $10,707 -3% $18,144 $20,355 -11%
Operating Margin 23.7% 22.6% 20.9% 21.9%
Financial Services
Net Sales and Revenues $10,471 $10,515 0% $20,689 $20,279 2%
Operating Income $5,912 $5,869 1% $11,736 $10,784 9%
Operating Margin 56.5% 55.8% 56.7% 53.2%
