Reynolds and Reynolds Reports First Quarter Results; 35 Cent EPS Exceeds Analysts' Estimates
The Reynolds and Reynolds Company today reported net income of $25.4 million or 35 cents per share for the first fiscal quarter ended December 31, 2001. Earnings per share exceeded consensus analysts' estimates and were 9 percent ahead of last year's 32 cents per share. Revenues of $240.1 million were 5 percent below last year's $251.7 million.
"In a very cautious economy, Reynolds and Reynolds continues to deliver solid earnings performance," CEO, chairman and president Lloyd "Buzz" Waterhouse said. "The change in the Microsoft CarPoint model and fewer consulting engagements had a negative impact on revenues during the quarter.
"The introduction of Reynolds Generations Series is creating considerable excitement in the market. We've already sold the solution to over a dozen automotive retailers ranging from relatively small operations to larger enterprises. We're eager to demonstrate this exciting suite of solutions and services at the National Automobile Dealers Association convention, which begins this weekend. The Reynolds Generations Series will enable Reynolds and Reynolds to further expand our leadership position, strengthen our customer relationships, and create shareholder value."
Reynolds unveiled its new family of solutions at last week's Automotive News World Congress. Reynolds Generations Series(TM) encompasses more than 100 applications and services relating to all aspects of automotive retailing operations including Web services, contact management, sales management, finance and insurance, service and parts operations, and business and employee management.
The new family of solutions is built on an open architecture platform utilizing Microsoft .NET technology. Its first release, available in April, incorporates advanced customer relationship management solutions and reporting tools that provide new customer insights and information when and where automotive retailers and car companies need it. Based on application service provider-based modules, these solutions are supported by a full complement of Reynolds' award-winning professional services, support and education.
Earlier in the week, Thrifty Car Sales Inc. named Reynolds its preferred provider of dealer management systems and training for Thrifty's nationally franchised used car sales network. "The partnership with Thrifty is confirmation of our ability to create value to market segments adjacent to traditional franchised new-vehicle retailers," Waterhouse said. "The flexibility of our solutions, our deep knowledge of automotive retailing, and our robust set of services enable us to help our customers improve their business results."
Highlights from the quarter:
| -- | The company's Technical Assistance Center was awarded the Software Technical Assistance Recognition Award for the third consecutive year by the Software Support Professionals Association. |
| -- | Reynolds announced it would provide member dealers of the Ford Motor Minority Dealers Association with ReySource(TM), the company's Internet-based automotive retailing procurement solution. |
| -- | Reynolds launched CarsDirect Connect(TM), a new buying process that offers consumers more choices in the way they shop for and purchase vehicles online, with CarsDirect.com. |
| -- | The company introduced BrandProtect(TM) and PitStop content management tools to enhance its Automark Web Services offerings. |
| -- | Reynolds was selected by General Motors as one of its preferred services marketing providers to GM dealers. |
| -- | The company announced it would provide members of the General Motors Minority Dealers Association with ReySource. |
| -- | Reynolds was ranked in the top 25 percent of eWeek's FastTrack 500 listing of top e-business innovators in the United States. |
| -- | The company announced the integration of its CreditMaster(R) credit reporting service with Credit Online's CreditConnection(R) service. |
Share repurchase. The company repurchased 1.5 million shares in the first quarter for $34.9 million ($23.25 per share). There are 3.2 million additional shares authorized for repurchase.
For the second quarter of fiscal 2002, the company expects earnings per share to be in line with the analyst consensus estimate of 37 cents per share.
For the 2002 fiscal year the company currently expects:
-- Earnings per share to be in line with current analyst
consensus estimates of $1.58.
-- Return on equity of approximately 20 percent.
-- Operating margins to be approximately 19 percent.
-- Net capital expenditures and capitalized software to total
approximately $53 million.
-- Depreciation and amortization expense to total approximately
$35 million.
-- Research and development expenses to be approximately $75
million.
-- To continue to repurchase shares throughout the year.
Reynolds and Reynolds, headquartered in Dayton, Ohio, is the leading provider of integrated information management solutions to the automotive retailing marketplace. The company's services include a full range of retail and enterprise management systems, networking and support, e-business applications, Web services, learning and consulting services, customer relationship management solutions, document management and leasing services. To find out more about the company, its vision, products and services, visit www.reyrey.com.
Certain statements in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on current expectations, estimates, forecasts and projections of future company or industry performance based on management's judgment, beliefs, current trends and market conditions. Forward-looking statements made or to be made by or on behalf of the company may be identified by the use of words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, forecasted or implied in the forward-looking statements. See also the discussion of factors that may affect future results contained in the company's Current Report on Form 8-K filed with the SEC on August 11, 2000, which we incorporate herein by reference. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
(Editors' Note: Segment Report Attached)
The Reynolds and Reynolds Company
Segment Report (Unaudited)
(In thousands except per share data)
First Quarter
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For The Periods
Ended December 31 2001 2000(a) Change
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Consolidated
Net Sales and Revenues $240,109 $251,734 -5%
Gross Profit $140,603 $142,000 -1%
Gross Margin 58.6% 56.4%
Operating Income $43,547 $40,492 8%
Operating Margin 18.1% 16.1%
Net Income $25,400 $23,879 6%
Earnings Per
Common Share (Diluted) $0.35 $0.32 9%
Average Shares Outstanding 73,109 75,111
Software Solutions
Net Sales and Revenues $150,957 $149,838 1%
Gross Profit $95,598 $90,565 6%
Gross Margin 63.3% 60.4%
Operating Income $30,208 $27,078 12%
Operating Margin 20.0% 18.1%
Transformation Solutions
Net Sales and Revenues $34,562 $45,023 -23%
Gross Profit $11,446 $18,205 -37%
Gross Margin 33.1% 40.4%
Operating Income (Loss) ($1,670) ($177)
Operating Margin -4.8% -0.4%
Documents
Net Sales and Revenues $44,237 $46,655 -5%
Gross Profit $25,980 $26,749 -3%
Gross Margin 58.7% 57.3%
Operating Income $9,414 $7,767 21%
Operating Margin 21.3% 16.6%
Financial Services
Net Sales and Revenues $10,353 $10,218 1%
Gross Profit $7,579 $6,481 17%
Gross Margin 73.2% 63.4%
Operating Income $5,595 $5,824 -4%
Operating Margin 54.0% 57.0%
(a) Certain reclassifications have been made to last year's financial
statements to conform with the presentation used in the current
year.