Reynolds and Reynolds Reports Record Second Quarter Results
20 April 2000
Reynolds and Reynolds Reports Record Second Quarter Results
Live Webcast of 11:00 A.M. EDT Conference Call Available Through
http://www.streetfusion.com; Conference Call Replay Number 402-220-0192
DAYTON, Ohio, April 20 The Reynolds and Reynolds Company
(NYSE: REY) today reported record revenues of $428 million for the quarter
ended March 31, 2000, a 9 percent increase over the prior year. Net income of
$33 million and earnings per share of 41 cents were each up 8 percent.
For the six-month period, revenues increased 13 percent to $846 million,
with net income of $64 million and earnings per share of 81 cents, up
8 percent and 9 percent, respectively.
"We're pleased to report another strong quarter of revenue and earnings
growth. Most important, we're taking bold steps to reposition Reynolds to
lead the transformation of automotive retailing and capture more aggressive
growth," said David R. Holmes, chairman and CEO.
The company recently announced:
* Plans to sell or spin off its Information Solutions Group, a $730
million document services business, while focusing the remaining $830
automotive business on leading the transformation of automotive
retailing;
* The launch of an independent automotive on-line parts exchange;
* The selection by Saturn Corporation to develop its next-generation
retail system with Computer Sciences Corporation (NYSE: CSC) and Siebel
Systems, (Nasdaq: SEBL);
* The web-enablement of its ERA2 industry-leading automotive retail
management system with eActivate! Services and;
* The acquisition HAC Group LLC, the world's leading automotive retailing
CRM and Web services firm.
Automotive Group.
Automotive revenues increased 6 percent over the prior year to $209
million. Operating margins remained strong at 21 percent. "Reynolds has been
regularly and consistently driving forward with plans to lead the
transformation of automotive retailing. We will be making a number of other
announcements in the weeks and months ahead as we continue to introduce new
solutions, create alliances and acquire capabilities to move our company
forward," Holmes said.
Information Solutions Group.
Information Solutions revenues grew 12 percent during the quarter to
$208 million. Operating income increased 19 percent to $17 million and
operating margins showed significant improvement reaching 8 percent in the
quarter.
"ISG reported another strong quarter with solid revenue and profit growth.
We've built a very strong franchise that is outperforming its peers in the
document services business," Holmes said.
Research and Development Expenses.
Research and development expenses increased 37 percent during the quarter
to $18 million or 13 cents per share, compared to $13 million or 10 cents per
share in the prior year.
Cash Flows.
Operating cash flows were strong totaling $59 million during the quarter.
Debt to total capitalization, excluding Financial Services, was 25 percent.
Cash balances totaled $103 million at the end of the quarter.
Outlook.
"Our outlook for the future is very upbeat. As we integrate the HAC Group
with our own Professional Services business to form Reynolds Transformation
Services, we'll significantly strengthen an important dimension of our
e-business services initiatives. These expanding services, in CRM and
e-Markets will be hugely important to us as we accelerate our growth beyond
our core retail management systems. Our strong cash position will allow us to
invest in strategic growth initiatives going forward. We are intent on
leading the transformation of automotive retailing," Holmes said.
Reynolds and Reynolds, headquartered in Dayton, Ohio, is intent on leading
the transformation of worldwide automotive retailing with information
management, e-CRM and Internet solutions. The company reported revenues of
$1.56 billion for the fiscal year ended Sept. 30, 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 1-888-4REYREY.
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 which 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 February 9, 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.
The Reynolds and Reynolds Company
Segment Report (Unaudited)
(In thousands except per share data)
Second Quarter Six Months
For The Periods Ended
March 31 2000 1999(1) Change 2000 1999(1) Change
Consolidated
Net Sales
and Revenues $427,708 $392,094 9% $845,724 $747,644 13%
Gross Profit $192,320 $176,768 9% $382,392 $332,345 15%
Operating
Income $57,421 $54,251 6% $112,832 $95,904 18%
Income From
Continuing
Operations $32,968 $30,429 8% $64,268 $53,510 20%
Discontinued
Operations (2) $0 $0 $0 $5,785
Net Income $32,968 $30,429 8% $64,268 $59,295 8%
Earnings Per
Common Share
(Diluted) $0.41 $0.38 8% $0.81 $0.74 9%
Average Shares
Outstanding 80,246 80,170 79,515 80,331
Automotive
Net Sales and Revenues
Retail Management
Solutions $147,092 $139,260 6% $296,797 $260,706 14%
Information Solutions
(Documents) $46,006 $45,935 0% $90,005 $89,552 1%
eBusiness and
eCRM $15,695 $11,177 40% $31,983 $21,387 50%
Total Net Sales
and Revenues $208,793 $196,372 6% $418,785 $371,645 13%
Gross Profit $118,041 $107,901 9% $238,141 $201,553 18%
Gross Margin 56.5% 54.9% 56.9% 54.2%
Operating Income $43,778 $41,813 5% $90,322 $73,203 23%
Operating Margin 21.0% 21.3% 21.6% 19.7%
Information Solutions
Net Sales and Revenues
Information
Solutions $187,228 $177,209 6% $367,859 $339,338 8%
eBusiness and
eCRM $21,172 $8,781 141% $38,801 $17,559 121%
Total Net Sales
and Revenues $208,400 $185,990 12% $406,660 $356,897 14%
Gross Profit $74,279 $68,867 8% $144,251 $130,792 10%
Gross Margin 35.6% 37.0% 35.5% 36.6%
Operating Income $16,878 $14,197 19% $27,699 $23,599 17%
Operating Margin 8.1% 7.6% 6.8% 6.6%
Financial Services
Net Sales and
Revenues $10,515 $9,732 8% $20,279 $19,102 6%
Operating Income $5,869 $5,339 10% $10,784 $10,174 6%
Operating Margin 55.8% 54.9% 53.2% 53.3%
Corporate Expenses($9,104) ($7,098)
($15,973) ($11,072)
(1)Reflects the company's adoption of AICPA Statement of Position 97-2,
"Software Revenue Recognition" which reduced Automotive's revenues $2,200,
gross profit $725 and operating income $632 ($.01 per share) in the second
quarter and revenues $17,936, gross profit $11,205, operating income $10,624
($.08 per share) for the six months.
(2)Represents a gain of $.07 per share on the sale of the company's
Healthcare Systems segment.