Reynolds and Reynolds Reports Record First Quarter Results
20 January 2000
Reynolds and Reynolds Reports Record First Quarter Results
- Live webcast of 11:00 a.m. EST conference call available through
http://www.streetfusion.com Conference call replay number 402-998-1397 -
DAYTON, Ohio, Jan. 20 -- The Reynolds and Reynolds Company
today reported record revenues of $418 million for the quarter
ended December 31, 1999, an increase of 18 percent over the prior year. Net
income of $31 million and earnings per share of 40 cents were up 8 percent and
11 percent, respectively.
"Accelerating revenue growth is a key business objective for fiscal 2000,"
said David R. Holmes, chairman and CEO. "The first quarter's results show
double digit revenue growth in each of our businesses and we're focused on
continuing that trend throughout the year."
Automotive Group. Automotive revenues increased 20 percent over the prior
year to $210 million. Operating margins remained strong at 22 percent.
Systems and services revenues grew at double-digit rates during the quarter
with document revenues slightly higher than the prior year.
The Automotive Group was selected by Saturn as a key technology team
member to provide Saturn's next generation retail system. An estimated
15,000 Saturn retail team members who work in over 400 retail facilities
nationwide will use the system. The web-enabled architecture being developed
by Reynolds will streamline communication to customers, enable retailers to
view vehicle inventory anywhere within the Saturn network, improve customer
contact and e-mail integration to service appointments and scheduling, and
provide real-time access to the complete history of any vehicle.
"We're pleased to be selected by Saturn in what was an intense,
industrywide competition," said Holmes.
"Reynolds' selection as a key technology provider in this long-term
partnership is a strong confirmation of our market leadership position and the
quality of our products and services," said Holmes. "Our web-enabled,
integrated solutions and our intense focus on customer satisfaction continue
to set the standard for the automotive retailing market."
Information Solutions Group. Information Solutions revenues grew 16
percent during the quarter to $198 million. Revenues included the impact of
the Sterling Direct acquisition, which was completed in October 1999.
Excluding the impact of the acquisition, revenues increased 12 percent.
Operating income increased 15 percent to $11 million and operating margins
were 5.5 percent. "Information Solutions' double digit internal revenue
growth during the quarter was the group's best performance ever," said Holmes.
E-business. The company's various e-business and e-CRM initiatives
totaled $34 million in revenues during the quarter, compared to $19 million
the prior year, an increase of 79 percent. The company's e-initiatives are on
a fast track to deliver Reynolds' vision of becoming the e-business leader in
the markets it serves. In the past two weeks, the company has announced:
-- OneTouch eParts network, a new online wholesale OEM parts procurement
hub. The new hub will significantly help streamline wholesale OEM
parts procurement processes and help car companies and their over
22,000 franchised dealer parts departments optimize the OEM service
parts chain.
-- The "e-powerment" of its ERA2 retail management system -- providing
automotive retailers with secure, real-time access for information
while leveraging the power of the Internet.
-- A partnership with PricewaterhouseCoopers to develop and deploy an
industry-leading eCustomer Relationship Management engine that will
expand the company's established and growing CRM businesses by
revolutionizing and personalizing the relationship-building process
between automotive retailers and their customers.
-- An expansion of the company's Customer Relationship Management (CRM)
services with Print-to-Win(TM), an e-business solution aimed at
increasing customer revenues through one-to-one marketing.
"We've made a companywide commitment to be at the forefront of the
Internet revolution. We will be the leader in providing e-business solutions
to the markets we serve. We plan to be aggressive in our Internet development
efforts, to provide value to our customers, our company and our stockholders,"
Holmes said.
Research and Development Expenses. Research and development expenses
increased 39 percent during the quarter to $17 million or 12 cents per share,
compared to $12 million or 9 cents per share in the prior year.
Share repurchases. The company repurchased 1 million shares during the
first quarter at an average price of $19.88 per share. Approximately
1.7 million shares remain authorized for repurchase.
Cash Flows. Operating cash flows remained strong totaling $34 million
during the quarter. Cash balances declined to $68 million during the quarter,
primarily as a result of the first quarter acquisition of Sterling Direct for
$26 million. Debt to total capitalization, excluding Financial Services, was
26.7 percent.
Outlook. "We expect revenue growth to continue at or near double-digit
rates throughout the remainder of the year with earnings exceeding the prior
year and return on equity above 20 percent," said Holmes. "In addition, we
expect increased research and development and related expenses that expand our
e-business and e-CRM capabilities."
Reynolds and Reynolds, headquartered in Dayton, Ohio, is a leading
provider of integrated information management systems and related value-added
services to automotive and general business markets. The company reported
revenues of $1.63 billion for the 12 months ended December 31, 1999. For
more information on Reynolds and Reynolds, visit the company's Web site at
http://www.reyrey.com, or call the Information Hotline at 888-4REYREY.
The Reynolds and Reynolds Company
Segment Report (Unaudited)
(In thousands except per share data)
First Quarter
For The Periods Ended
December 31 1999 1998 Change
Consolidated
Net Sales and Revenues $418,016 $355,550 18%
Gross Profit $190,072 $155,577 22%
Operating Income $55,411 $41,653 33%
Income From Continuing
Operations $31,300 $23,081 36%
Discontinued Operations (2) -- $5,785
Net Income $31,300 $28,866 8%
Earnings Per
Common Share (Diluted) $0.40 $0.36 11%
Average Shares Outstanding 78,783 80,499
Automotive
Net Sales and Revenues
Retail Management Solutions $149,705 $121,446 23%
Information Solutions
(Documents) $43,999 $43,617 1%
eBusiness and eCRM $16,288 $10,210 60%
Total Net Sales and Revenues $209,992 $175,273 20%
Gross Profit $120,100 $93,652 28%
Gross Margin 57.2% 53.4%
Operating Income $46,544 $31,390 48%
Operating Margin 22.2% 17.9%
Information Solutions
Net Sales and Revenues
Information Solutions $180,631 $162,129 11%
eBusiness and eCRM $17,629 $8,778 101%
Total Net Sales and Revenues $198,260 $170,907 16%
Gross Profit $69,972 $61,925 13%
Gross Margin 35.3% 36.2%
Operating Income $10,821 $9,402 15%
Operating Margin 5.5% 5.5%
Financial Services
Net Sales and Revenues $9,764 $9,370 4%
Operating Income $4,915 $4,835 2%
Operating Margin 50.3% 51.6%
Corporate Expenses ($6,869) ($3,974)
(1)Reflects the company's adoption of AICPA Statement of Position 97-2,
Software Revenue Recognition which reduced Automotive's revenues
$15,736, gross profit $10,480 and operating income $9,992 ($.07 per
share)
(2)Represents a gain of $.07 per share on the sale of the company's
Healthcare Systems segment.