SofTech Announces Q2 Fiscal Year 2013 Operating Results

SofTech Announces Q2 Fiscal Year 2013 Operating Results

Solid Q2 Revenue Performance with Increase of Nearly 4%; Q2'13 EPS of $.25 vs. $.19 Prior Year; YTD'13 EPS of $.43 vs. $.24 Prior Year

LOWELL, Mass.--(BUSINESS WIRE)-- SofTech, Inc. (OTCQB: SOFT),a proven provider of Product Lifecycle Management (PLM) solutions today announced its second quarter fiscal 2013 operating results. Revenue for the three months ended November 30, 2012 was $1.772 million, an increase of 3.9% from the same period in the prior fiscal year. Net income was $252,000 or $.25 per share for the three months ended November 30, 2012, an increase of nearly 35% from the net income of $187,000 or $.19 for the same period in the prior fiscal year.


Revenue for the six months ended November 30, 2012 was $3.342 million, an increase of 2.2% from the same period in the prior fiscal year. Net income increased 77% to $425,000 or $.43 per share for the six months ended November 30, 2012, from net income of $240,000 or $.24 for the same period in the prior fiscal year.

The current quarter revenue included $100,000 of royalties on our previously announced sale of patents. The same period in the prior year included approximately $100,000 of maintenance revenue from a large customer for whom the services were delivered over the previous eleven months but not recognized until Q2 fiscal 2012.

"This was our best quarter since the March 2011 Recapitalization Transaction. Our CADRA product line revenue was 10% higher than the same period last year and represented the best quarterly performance in four years while the pipeline of opportunities for ProductCenter and for our new Connector technology offerings strengthened," said Joe Mullaney, CEO. "We have now completed six full fiscal quarters since the Recapitalization Transaction and during that time period the average quarterly license revenue for our technology was 22% higher than the average quarterly license revenue during the two year period prior to the aforementioned transaction," he added.

"Our cash levels are lowest at the end of the calendar year just before the majority of our annual maintenance contracts renew in the January through May time period. The recently announced sale of 45,000 common shares at $5.00 per share helped strengthen our balance sheet and will provide additional working capital," Mullaney added.

FINANCIAL STATEMENTS

The Statement of Operations for the three and six month periods ended November 30, 2012 compared to the same periods in the prior fiscal years are presented below. A reconciliation of Net income to EBITDA, a non-GAAP financial measure, is also provided.

Statements of Operations
(in thousands, except % and per share data)
                 
For the three months
ended November 30,     Change
2012     2011     $     %
Product revenue $ 478 $ 333 $ 145 43.5 %
Service revenue 1,194 1,372 (178 ) -13.0 %
Royalties on sale of patents   100         -         100       -  
Total revenue   1,772         1,705         67       3.9 %
 
Cost of sales   347         352         (5 )     -1.4 %
Gross margin 1,425 1,353 72 5.3 %
Gross margin % 80.4 % 79.4 %
 
R&D 323 337 (14 ) -4.2 %
SG&A   789         718         71       9.9 %
 
Operating income 313 298 15 5.0 %
Interest expense 69 85 (16 ) -18.8 %
Other (income) expense   (8 )       26         (34 )     -130.8 %
Income from operations before income taxes 252 187 65 34.8 %
Provision for income taxes   -         -         -       -  
Net income   252         187         65       34.8 %
 
Weighted average shares outstanding   995         995         -       -  
Basic and diluted net income per share: $ 0.25       $ 0.19       $ 0.07       34.8 %
 
Reconciliation of Net income to EBITDA:

 

Net income $ 252 $ 187 $ 65 34.8 %
Plus interest expense 69 85 (16 ) -18.8 %
Plus tax expense - - - -
Plus Depreciation and amortization   56         39         17       43.6 %
EBITDA $ 377       $ 311       $ 66       21.2 %
 
 
Statements of Operations
(in thousands, except % and per share data)
                 
For the six months
ended November 30,     Change
2012     2011     $     %
Product revenue $ 693 $ 636 $ 57 9.0 %
Service revenue 2,359 2,633 (274 ) -10.4 %
Royalties on sale of patents   290         -         290       -  
Total revenue   3,342         3,269         73       2.2 %
 
Cost of sales   680         700         (20 )     -2.9 %
Gross margin 2,662 2,569 93 3.6 %
Gross margin % 79.7 % 78.6 %
 
R&D 567 720 (153 ) -21.3 %
SG&A   1,547         1,427         120       8.4 %
 
Operating income 548 422 126 29.9 %
Interest expense 134 176 (42 ) -23.9 %
Other (income) expense   (11 )       6         (17 )     -283.3 %
Income from operations before income taxes 425 240 185 77.1 %
Provision for income taxes   -         -         -       -  
Net income   425         240         185       77.1 %
 
Weighted average shares outstanding   995         995         -       -  
Basic and diluted net income per share: $ 0.43       $ 0.24       $ 0.19       77.1 %
 
Reconciliation of Net income to EBITDA
 
Net income $ 425 $ 240 185 77.1 %
Plus interest expense 134 176 (42 ) -17.5 %
Plus tax expense - - - -
Plus Depreciation and amortization   106         79         27       34.2 %
EBITDA $ 665       $ 495         170       34.3 %
 
 

The Balance Sheets as of November 30, 2012 and our fiscal year end May 31, 2012 are presented below.

Balance Sheets
(in thousands)
         
As of
November 30, May 31,
2012     2012
Cash $ 109 $ 595

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