MSC.Software Reports 36% Growth in Earnings; Announces Ninth Consecutive Quarter of Double-Digit Revenue Growth
COSTA MESA, Calif.--April 25, 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 first quarter ended March 31, 2001.First quarter highlights:
| -- | Revenues of $44.7 million, an increase of 13.5 percent over last year's first quarter; |
| -- | Report net income of $1.4 million compared with $1.0 million in the first quarter last year, an increase of 36%; |
| -- | Basic EPS of $0.10, compared with $0.07 in the first quarter last year; |
| -- | Basic EPS, excluding goodwill amortization, of $0.19 compared with $0.17 last year; |
| -- | Announced the formation of an alliance with Dassault Systemes that involves both technology and distribution. |
"MSC.Software's offering continues to resonate with companies throughout the world, as evidenced by the company's record ninth consecutive quarter of double-digit revenue growth, made all the more impressive given today's challenging business conditions," said Frank Perna, chairman and CEO of MSC.Software Corp.
"Through close partnership with our customers, MSC.Software has a direct and positive impact on a company's bottom line, delivering a quantifiable ROI through our ability to make design, testing and manufacturing processes better, faster, and cheaper. It's clear that the market now more fully understands MSC.Software's value proposition.
"The strategic alliance with Dassault Systemes will increase MSC.Software's growth potential by enhancing our product offerings and expanding our channel opportunities," added Perna. "This important event clearly serves to strengthen our business portfolio and broaden our reach into new markets. It is with much confidence that we look to the future."
For the first quarter ended March 31, 2001, MSC.Software reported revenue of $44.7 million, an increase of 13.5 percent over reported revenue of $39.3 million for the first quarter last year. Net income, excluding goodwill amortization, was $2.7 million or $0.18 per diluted share compared with $2.3 million or $0.15 per diluted share in the first quarter last year.
Reported net income, including goodwill amortization, was $1.4 million or $0.09 per diluted share compared with $1.0 million or $0.07 per diluted share, an increase of 36% over the first quarter last 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
Revenue increased 13 percent to $19.5 million in the Americas with new accounts increasing by 46 customers. Major renewals were signed with NASA, General Electric and Lockheed Martin. Significant services activities in the Americas included Phase III implementation of the Predictive Tire Modeling System for Cooper Tire and Phase II of the Software Specification Project for the American Bureau of Shipping. During the first quarter, 38 transactions over $100,000 were signed in the Americas.
Europe
MSC.Software's European operations enjoyed solid growth with revenues increasing 15 percent in local currencies and 8 percent in U.S. dollars to $12.4 million compared with $11.5 million in the first quarter last year. The total number of new accounts increased by 90 names. Strong interest continued in professional service activities, with Audi, FIAT, VW and Dornier Fairchild increasing their service engagements. Software revenue growth continued on plan, and key renewals were signed in the quarter with British Aerospace, Rolls Royce and Alenia. The largest new business transaction was in Russia, where Sukhoi Design Bureau selected a full suite of enterprise products. During the first quarter, 34 transactions over $100,000 were signed in Europe.
Asia-Pacific
In the first quarter, Asia-Pacific revenues increased 32 percent in local currencies and 21 percent in U.S. dollars to $12.8 million compared with $10.6 million in the first quarter last year. Forty-two new account names were added in the quarter. Major software and service engagements were signed with Hitachi, Daihatsu, Denso, Samsung, GM Holden and China Helicopter. During the first quarter, 23 transactions over $100,000 were signed in the Asia-Pacific region.
Other Service Initiatives
Engineering-e.com continued to attract new users and members, with 2,300 new members added during the first quarter, bringing the total number of registered members to 13,000. Significant enhancements to collaborative, privacy and security functions were added to the Engineering Exchange as well as new levels of client and consultant support services. The Simulation Center added three new products; MSC.SuperForge, MSC.Patran 2001 and MSC.WorkingModel 2D. During the first quarter, a strategic partnership was signed with Autodesk, to link the Engineering-e.com site, including the Simulation Center and Engineering Exchange, to Autodesk's PointA engineering portal.
MSC.Linux continued to gain momentum in the global operating systems market. MSC.Linux 2001 was released in April and is based on the Linux Kernel 2.4, and includes the "OSCAR" tools. The pipeline for Linux engagements continues to grow and the average deal size in the pipeline has grown to $125,000.
MSC.Software's conference call to discuss the first quarter results will be webcast live today at 8:30 a.m. Pacific via CCBN on the company's Web site at http://www.mscsoftware.com. An archived version of the conference call will also be available for replay at the company's Web site.
About MSC.Software
MSC.Software is an established 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, its ASP or Linux initiatives, visit the company 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 which 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 CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in Thousands, Except Per Share Amounts)
Three Months Ended
March 31,
2001 2000
(Unaudited)
REVENUE:
Software Licenses $ 26,065 $ 23,684
Software Support and Services 18,592 15,663
Total Revenue 44,657 39,347
COST OF REVENUE:
Software Licenses 5,156 5,381
Software Support and Services 6,764 5,686
Total Cost of Revenue 11,920 11,067
GROSS PROFIT 32,737 28,280
OPERATING EXPENSE:
Research and Development 5,372 4,222
Selling, General and Administrative 20,983 18,424
Amortization of Goodwill and
Other Intangibles 2,688 2,675
Total Operating Expense 29,043 25,321
OPERATING INCOME 3,694 2,959
OTHER EXPENSE (INCOME):
Interest Expense 1,613 1,695
Other Expense (Income), Net (164) (272)
Total Other Expense, Net 1,449 1,423
INCOME BEFORE PROVISION FOR
INCOME TAXES 2,245 1,536
Provision for Income Taxes 885 538
NET INCOME $ 1,360 $ 998
BASIC EARNINGS PER SHARE $ 0.10 $ 0.07
DILUTED EARNINGS PER SHARE $ 0.09 $ 0.07
Basic Weighted-Average
Shares Outstanding 14,182 13,905
Diluted Weighted-Average
Shares Outstanding 14,667 15,158
PRO FORMA RESULTS
(EXCLUDING AMORTIZATION OF GOODWILL)
OPERATING INCOME $ 5,005 $ 4,259
NET INCOME $ 2,671 $ 2,298
BASIC EARNINGS PER SHARE $ 0.19 $ 0.17
DILUTED EARNINGS PER SHARE $ 0.18 $ 0.15
MSC.SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Thousands)
March 31, December 31,
2001 2000
(Unaudited)
ASSETS
Cash and Investments $ 25,519 $ 30,659
Trade Accounts Receivable, Net 53,162 45,950
Other Current Assets 26,408 25,855
Total Current Assets 105,089 102,464
Property and Equipment, Net 20,043 15,040
Goodwill and Other Intangible
Assets, Net 60,623 63,431
Capitalized Software Costs, Net 25,001 23,704
Other Assets 3,236 4,015
Total Assets $ 213,992 $ 208,654
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 5,970 $ 5,575
Restructuring Reserve 1,317 1,340
Deferred Revenue 49,673 38,671
Other Current Liabilities 34,268 38,190
Total Current Liabilities 91,228 83,776
Deferred Income Taxes 16,023 16,344
Note Payable, Less Current Portion 533 1,333
Convertible Subordinated
Debentures, Net 58,360 58,345
Subordinated Notes Payable, Less
Current Portion 8,953 8,874
Total Liabilities 175,097 168,672
Total Shareholders' Equity 38,895 39,982
Total Liabilities and
Shareholders' Equity $ 213,992 $ 208,654