Deltek Reports Product Revenue of $25.1 Million, up 16% from Prior Year

Conference Call Information

Deltek will host a conference call at 5:00 p.m. Eastern Time today to discuss the Company’s first quarter 2012 results. The dial-in number for the conference call is 1-877-381-6419 in North America and 1-706-643-9496 outside North America (passcode: 71804334). The conference call also can be accessed through the Investor Relations section of Deltek’s website ( http://investor.deltek.com). Those unable to participate in the live call may hear a replay through May 3, 2012 by dialing 1-855-859-2056 in North America and 1-404-537-3406 outside North America (passcode: 71804334). The replay also will be available through May 25, 2012 on Deltek’s website.

About Deltek

Deltek (Nasdaq: PROJ) is the leading global provider of enterprise software and information solutions for professional services firms and government contractors. For decades, we have delivered actionable insight that empowers our customers to unlock their business potential. 15,000 organizations and 2 million users in over 80 countries around the world rely on Deltek to research and identify opportunities, win new business, optimize resources, streamline operations, and deliver more profitable projects. Deltek – Know more. Do more. ® www.deltek.com

Use of Non-GAAP Financial Measures

This press release and the related conference call described above contain certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income and margin, adjusted EBITDA, and non-GAAP revenue. The Company defines non-GAAP net income as GAAP net income (loss) before the net-of-tax impact of stock-based compensation, amortization of acquired intangible assets, purchase accounting impacts relating to acquisitions, acquisition-related costs, and restructuring charges. Non-GAAP operating income and margin is defined as GAAP operating income (loss) before the pre-tax impact of stock-based compensation, amortization of acquired intangible assets, purchase accounting impacts relating to acquisitions, acquisition-related costs, and restructuring charges. Adjusted EBITDA is defined as GAAP net income (loss) before interest expense (net of interest income), provision for income taxes, depreciation, stock-based compensation, amortization, purchase accounting impacts relating to acquisitions, acquisition-related costs, and restructuring charges. Non-GAAP revenue is defined as revenue before the net impact of acquisition-related fair value adjustments to deferred revenue.

The Company believes that the presentation of these measures provides useful information to its investors and lenders because these measures allow for more accurate comparisons of results from period-to-period, enhance the overall understanding of the Company’s performance and provide greater insight into the prospects for the Company’s ongoing business operations. Moreover, the Company also believes it is appropriate to exclude costs associated with restructuring charges because these charges are excluded from management’s assessment of the Company’s operating performance and are not related to the Company’s ongoing business operations. In addition, the Company excludes the items from EBITDA described above in its calculations to determine compliance with its debt covenants and to assess its ability to borrow additional funds to finance or expand its operations.

The Company believes that by reporting these measures, it provides insight and consistency in its financial reporting and presents a basis for comparison of its business operations between current, past and future periods. In addition, the measures provide a basis for the Company to compare its financial results to those of other comparable publicly traded companies and are used by its management team to plan and forecast its business.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliations of our GAAP to non-GAAP net income, operating income and margin, adjusted EBITDA and revenue, which are set forth below.

Forward-Looking Statements

This press release and related conference call contain forward-looking statements that involve substantial risks and uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “would” or similar words. You should consider these statements carefully because they discuss our plans, targets, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict accurately or control. Our actual results may differ materially from the expectations we describe in our forward-looking statements. Factors or events that could cause our actual results to materially differ may emerge from time to time, and it is not possible for us to accurately predict all of them. Before you invest in our common stock, you should be aware that the occurrence of any such event or of any of the additional events described as risk factors in the Company’s filings with the Securities and Exchange Commission could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this press release or related conference call speaks only as of the date on which we make it. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 
DELTEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
 
 
    Three Months Ended March 31,
2012     2011
REVENUES:
Product revenues $ 25,055 $ 21,590
Maintenance and support services 41,227 38,173
Consulting services and other revenues   16,438     20,215  
Total revenues   82,720     79,978  
COST OF REVENUES:
Cost of product revenues 6,823 5,675
Cost of maintenance and support services 6,227 6,980
Cost of consulting services and other revenues   16,691     17,722  
Total cost of revenues   29,741     30,377  
GROSS PROFIT   52,979     49,601  

OPERATING EXPENSES:

Research and development 15,790 17,561
Sales and marketing 21,226 22,242
General and administrative 12,007 13,659
Restructuring charge   1,525     3,205  
Total operating expenses   50,548     56,667  
 
INCOME (LOSS) FROM OPERATIONS 2,431 (7,066 )
Interest income 25 33
Interest expense (2,654 ) (2,985 )
Other income (expense), net   35     (265 )
 
LOSS BEFORE INCOME TAXES (163 ) (10,283 )
Income tax expense (benefit)   128     (3,732 )
 
NET LOSS $ (291 ) $ (6,551 )
 
LOSS PER SHARE
Basic $ (0.00 ) $ (0.10 )
Diluted $ (0.00 ) $ (0.10 )
 
COMMON SHARES AND EQUIVALENTS OUTSTANDING
Basic weighted average shares   64,240     65,343  
Diluted weighted average shares   64,240     65,343  
 
 
DELTEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
 
 
    March 31,     December 31,
2012 2011
 
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 35,629 $ 35,243

Accounts receivable, net of allowance of $2,000 and $1,714 at March 31, 2012 and December 31, 2011, respectively

57,431 58,899
Deferred income taxes 4,305 5,383
Prepaid expenses and other current assets   12,863     10,760  
TOTAL CURRENT ASSETS 110,228 110,285
 
PROPERTY AND EQUIPMENT, NET 27,076 25,620
LONG-TERM DEFERRED INCOME TAXES 11,071 9,653
INTANGIBLE ASSETS, NET 51,537 54,994
GOODWILL 176,475 175,771
OTHER ASSETS   5,807     6,156  
TOTAL ASSETS $ 382,194   $ 382,479  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 70 $ 528
Accounts payable and accrued expenses 44,413 45,420
Deferred revenues 119,257 104,835
Income taxes payable   392     465  
TOTAL CURRENT LIABILITIES 164,132 151,248
 
 
 
 
LONG-TERM DEBT 152,468 166,894
OTHER TAX LIABILITIES 3,234 3,214
OTHER LONG-TERM LIABILITIES   17,842     18,180  
TOTAL LIABILITIES 337,676 339,536
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS’ EQUITY:

Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at March 31, 2012 and December 31, 2011

Common stock, $0.001 par value—authorized, 200,000,000 shares; 71,514,478 issued and 68,940,405 outstanding at March 31, 2012 and 70,398,889 issued and 68,272,271 outstanding at December 31, 2011

72 70

Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at March 31, 2012 and December 31, 2011

Additional paid-in capital 278,003 273,496
Accumulated deficit (217,112 ) (216,821 )
Accumulated other comprehensive income 4,135 2,188

Treasury stock, at cost — 2,574,073 and 2,126,618 shares at March 31, 2012 and December 31, 2011, respectively

  (20,580 )   (15,990 )
TOTAL STOCKHOLDERS' EQUITY 44,518 42,943
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 382,194   $ 382,479  
 
 
DELTEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
       
 
Three Months Ended March 31,
2012 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (291 ) $ (6,551 )
Adjustments:
Allowance for doubtful accounts 579 314
Depreciation and amortization 5,934 6,315
Amortization of debt issuance costs and original issue discount 309 232
Stock-based compensation expense 3,502 3,386
Employee stock purchase plan expense 83 51
Restructuring charge, net 583 2,254
(Gain) Loss on disposal of fixed assets (3 ) 12
Other noncash activity 43 74
Deferred income taxes (596 ) (5,097 )
 
Changes in assets and liabilities, net of effect from acquisitions:
Accounts receivable, net 1,304 3,413
Prepaid expenses and other assets (1,795 ) (3,282 )
Accounts payable and accrued expenses (1,300 ) 6
Income taxes receivable/payable 332 892
Excess tax benefit from stock awards (468 ) (208 )
Other tax liabilities 18 156
Other long-term liabilities (99 ) 770
Deferred revenues   14,160     17,833  
Net Cash Provided by Operating Activities   22,295     20,570  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of WMG, Inc., net of cash acquired (729 ) (25,664 )
Acquisition of Maconomy A/S - (168 )
Purchase of property and equipment (3,094 ) (1,841 )
Capitalized software development costs   (140 )   -  
Net Cash Used in Investing Activities   (3,963 )   (27,673 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 1,537 94
Excess tax benefit from stock awards 468 208
Proceeds from issuance of stock under employee stock purchase plan 474 358
Shares withheld for minimum tax withholding on vested restricted stock awards (1,391 ) (1,050 )
Purchase of treasury stock (4,590 )
Repayment of debt   (15,021 )   (516 )
Net Cash Used in Financing Activities   (18,523 )   (906 )
 
IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS   577     1,249  
 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 386 (6,760 )
 
CASH AND CASH EQUIVALENTS––Beginning of period   35,243     76,619  
 
CASH AND CASH EQUIVALENTS––End of period $ 35,629   $ 69,859  
 
 
DELTEK, INC.
RECONCILIATION OF GAAP NET LOSS TO NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
 
 
    Three Months Ended
March 31,
2012     2011
 
Net Loss, (GAAP Basis) $ (291 ) $ (6,551 )
Income Tax Expense (Benefit)   128     (3,732 )
Pre-Tax Loss, (GAAP Basis) $ (163 ) $ (10,283 )
Adjustments:
Amortization of Acquired Intangibles 4,145 4,377
Stock-based Compensation 3,585 3,437

Restructuring Charge (Including Stock-based Compensation of $313 for the three months ended March 31, 2011)

1,525 3,205

Net Impact of Acquisition-Related Deferred Revenue before Fair Value Adjustment

93 1,965
Acquisition-Related Costs - 702

Net Impact of Acquisition-Related Deferred Commissions before Fair Value Adjustment

- (369 )
           
Adjusted Pre-Tax Income 9,185 3,034
 
Less: Adjusted Income Tax Expense 3,400 1,408
           
Non-GAAP Net Income $ 5,785   $ 1,626  
 
Non-GAAP Earnings Per Share (diluted) $ 0.09   $ 0.02  
Weighted Average Shares   66,478     66,508  
 
           
RECONCILIATION OF GAAP OPERATING INCOME (LOSS) AND OPERATING MARGIN (DEFICIT) TO NON-GAAP OPERATING INCOME AND OPERATING MARGIN
(in thousands)
(unaudited)
 
 
Three Months Ended
March 31,
2012 2011
 
Operating Income (Loss) and Margin (Deficit) - GAAP $ 2,431 3 % $ (7,066 ) -9 %
Amortization of Acquired Intangibles 4,145 4,377
Stock-based Compensation 3,585 3,437

Restructuring Charge (Including Stock-based Compensation of $313 for the three months ended March 31, 2011)

1,525 3,205

Net impact of Acquisition-Related Deferred Revenue before Fair Value Adjustment

93 1,965
Acquisition-Related Costs - 702

Net Impact of Acquisition-Related Deferred Commissions before Fair Value Adjustment

- (369 )
         
Operating Income and Margin - Non-GAAP $ 11,779 14 % $ 6,251   8 %
 
Total Revenues $ 82,720 $ 79,978  
 
Total Revenues (Non-GAAP) $ 82,813 $ 81,943  
 
       
RECONCILIATION OF GAAP NET LOSS TO ADJUSTED EBITDA
(in thousands)
(unaudited)
 
 
Three Months Ended
March 31,
2012 2011
 
Net Loss (GAAP Basis) $ (291 ) $ (6,551 )
Amortization 4,228 4,434
Income Tax Expense (Benefit) 128 (3,732 )
Stock-based Compensation 3,585 3,437

Restructuring Charge (Including Stock-based Compensation of $313 for the three months ended March 31, 2011)

1,525 3,205
Interest Expense, net 2,629 2,952

Net Impact of Acquisition-Related Deferred Revenue before Fair Value Adjustment

93 1,965
Depreciation 1,706 1,881
Acquisition-Related Costs 702

Net Impact of Acquisition-Related Deferred Commissions before Fair Value Adjustment

(369 )
           
Adjusted EBITDA $ 13,603   $ 7,924  
 
       
REVENUES
(in thousands)
(unaudited)
 
Three Months Ended
March 31,
2012 2011
 
Total Revenues (GAAP) $ 82,720 $ 79,978
Net Impact of Maconomy Acquisition-Related
Deferred Revenue before Fair Value Adjustment 296
Net Impact of INPUT Acquisition-Related
Deferred Revenue before Fair Value Adjustment 66 1,669
Net Impact of WMG Acquisition-Related
Deferred Revenue before Fair Value Adjustment 27 -
       
Total Revenues (Non-GAAP) $ 82,813 $ 81,943
 
 
STOCK-BASED COMPENSATION EXPENSE
(in thousands)
(unaudited)
 
 
    Three Months Ended
March 31,
2012     2011
 
Cost of Product Revenues $ 98 $ 51
Cost of Maintenance and Support Services 331 272
Cost of Consulting Services and Other Revenues 359 439
Research and Development 592 728
Sales and Marketing 739 806
General and Administrative 1,466 1,141
Restructuring Charge   -   313
Total $ 3,585 $ 3,750
 
 
AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS
(in thousands)
(unaudited)
 
 
    Three Months Ended
March 31,
2012     2011
 
Cost of Product Revenues $ 1,764 $ 1,871
Cost of Consulting Services and Other Revenues 19 20
Sales and Marketing 2,362 2,483
General and Administrative   -   3
Total $ 4,145 $ 4,377
 
       
AMORTIZATION AND DEPRECIATION EXPENSES
(in thousands)
(unaudited)
 
 
Three Months Ended
March 31,
2012 2011
 
Cost of Product Revenues $ 1,938 $ 1,948
Cost of Maintenance and Support Services 196 380
Cost of Consulting Services and Other Revenues 416 279
Research and Development 413 508
Sales and Marketing 2,614 2,870
General and Administrative   357   330
Total $ 5,934 $ 6,315
 

 




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