Reynolds and Reynolds Reports First Quarter Results
DAYTON, Ohio, Jan. 22, 2003; The Reynolds and Reynolds Company
today reported net income of $28 million or 40 cents per share for the first fiscal quarter ended December 31, 2002. Earnings per share were 14 percent ahead of last year's 35 cents per share before the effect of an accounting change adopted last year, and in line with analyst estimates. Revenues of $247 million were 3 percent higher than a year ago.
The company's core Software Solutions segment grew revenues 10 percent during the quarter. "We continue to convert our own customers, and users of competitive systems to the Reynolds Generations Series(TM) platform -- enabling them to easily and cost-effectively adopt our newest solutions," Lloyd "Buzz" Waterhouse, CEO, chairman and president, said. "We are pleased with the market's growing acceptance of our new offerings. Automotive retailers are impressed with our value propositions and the associated return on investment for the Reynolds Generations Series family of solutions."
The company's Transformation Solutions segment had a decline in revenues due primarily to continued softness in consulting services affected by tight spending on Information Technology in virtually every sector. Revenues in the company's Documents segment, while down in the first quarter, are expected to improve during the year.
"Order backlogs continue to be strong. And, the announcement today of our acquisition of MSN Autos Dealerpoint, the leading automotive lead management service in the industry, is really exciting. It allows us to add a basic Internet lead management tool to our growing suite of Customer Relationship Management (CRM) solutions," Waterhouse said. "Dealerpoint is the industry's most widely used automotive lead management tool.
"At the upcoming National Automobile Dealers Association convention, we'll showcase the improved business results we are delivering to our customers with the new Reynolds Generations Series(TM) family of solutions," Waterhouse said. "Our new solutions are rich with integrated CRM tools that help automotive retailers create repeat customers."
During the quarter, Reynolds:
-- Acquired Networkcar, Inc., adding the industry's most advanced
telematics solution to its growing arsenal of Customer Relationship
Management tools for automotive retailing.
-- Formed the New Markets Group, a nimble, aggressive and efficient
business unit to drive business and alliance initiatives in markets
adjacent to automotive retailing.
-- Entered into a long-term strategic alliance with Karmak, Inc., a
leading provider of systems to the heavy truck market. Reynolds will
provide Karmak and its customers with integrated solutions for Web
services, on site network and hardware support, and business forms.
-- Teamed with Yahoo! Inc. to enable Reynolds' automobile retailing
customers to list their used vehicles more prominently on Yahoo! Autos,
a popular online destination for buying and selling new and used
vehicles.
-- Launched the Reynolds Generations Series (TM) Electronic Document
Management System, a solution that gives automotive retailers
integration and time efficiencies to help them reduce costs throughout
their business with advanced storage, retrieval, printing, e-mail and
outbound fax capabilities for their electronically-stored documents.
-- Received its fourth consecutive Software Technical Assistance
Recognition Award in the high volume category, from the Service &
Support Professionals Association. The award recognizes companies that
maintain a commitment to delivering measurable, quantifiable business
results to their customers.
"We continue to execute our strategy to strengthen our portfolio of solutions, create value for our customers and shareholders, and position the company for improved top line growth in the quarters ahead," Waterhouse said.
"During the quarter, the company repurchased 1.6 million shares for $41 million, at an average price of $25.89. Approximately 3.3 million shares remain authorized for repurchase," Dale Medford, executive vice president and chief financial officer, said. "For the year, we expect operating cash flows to be strong. We will continue to focus on managing our costs effectively, aggressively investing in our business, and continuing our share repurchase programs."
For the 2003 fiscal year the company currently expects:
-- Second quarter earnings per share (EPS) to be approximately 40 cents.
-- Full fiscal year EPS to be approximately $1.70.
-- Return on equity of approximately 20 percent.
-- Operating margins to be approximately 19 percent.
-- Capital expenditures and capitalized software to total approximately
$35 million.
-- Depreciation and amortization expense to total approximately
$40 million.
-- Research and development expenses to be approximately $70 million.
-- To continue its share repurchase plan throughout the year.
-- Fully diluted shares used to calculate EPS to be approximately
71 million shares
Reynolds and Reynolds (www.reyrey.com) is the leading provider of integrated solutions that help automotive retailers manage change and improve their profitability. With 75 years of experience serving automotive retailing, Reynolds enables car companies and retailers to work together to build the lifetime value of their customers. The company's award-winning product, service and training solutions 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 (CRM) solutions, data management and integration, and leasing services. Reynolds serves more than 20,000 customers. They comprise 90 percent of the automotive retailers and virtually all car companies doing business in North America. Its CRM consulting practices span more than 20 countries around the world.
(Editors' Note: Segment Report Attached)
The Reynolds and Reynolds Company
Segment Report (Unaudited)
(In thousands except per share data)
First Quarter
For The Periods Ended December 31 2002 2001 (a) Change
Consolidated
Net Sales and Revenues $246,648 $240,109 3%
Gross Profit $139,311 $140,603 -1%
Gross Margin 56.50% 58.60%
Operating Income $45,761 $43,547 5%
Operating Margin 18.60% 18.10%
Income Before Income Taxes $46,107 $41,477 11%
Provision for Income Taxes $17,859 $16,077
Income Before Cumulative Effect of
Accounting Change $28,248 $25,400 11%
Cumulative Effect of Accounting
Change (b) $0 ($36,563)
Net Income $28,248 ($11,163)
Earnings Per Common Share (Diluted)
Income Before Cumulative Effect
of Accounting Change $0.40 $0.35 14%
Cumulative Effect of Accounting
Change (b) $0.00 ($0.50)
Net Income $0.40 ($0.15)
Average Shares Outstanding 71,104 73,109
Software Solutions
Net Sales and Revenues $162,351 $148,028 10%
Gross Profit $98,908 $94,703 4%
Gross Margin 60.90% 64.00%
Operating Income $38,579 $30,316 27%
Operating Margin 23.80% 20.50%
Transformation Solutions
Net Sales and Revenues $34,029 $37,491 -9%
Gross Profit $10,427 $12,341 -16%
Gross Margin 30.60% 32.90%
Operating Loss ($6,296) ($1,778)
Operating Margin -18.50% -4.70%
Documents
Net Sales and Revenues $40,628 $44,237 -8%
Gross Profit $22,870 $25,980 -12%
Gross Margin 56.30% 58.70%
Operating Income $7,571 $9,414 -20%
Operating Margin 18.60% 21.30%
Financial Services
Net Sales and Revenues $9,640 $10,353 -7%
Gross Profit $7,106 $7,579 -6%
Gross Margin 73.70% 73.20%
Operating Income $5,907 $5,595 6%
Operating Margin 61.30% 54.00%
(a) Certain reclassifications were made to last year's financial
statements to conform with the presentation used in the current year.
(b) During the second quarter of fiscal year 2002, the company completed
the adoption of Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets." The company recorded a $36,563
after-tax charge representing the cumulative effect of the accounting
change and restated financial statements for the first quarter of
fiscal year 2002 as required by the pronouncement.
