Q4’13 Revenue Increase of 3.4% vs. Q4’12;
Q4’13 EBITDA Increase of Nearly 38% vs. Q4’12; &
FY’13 EBITDA Increase of 9.4% vs. FY’12
LOWELL, Mass. — (BUSINESS WIRE) — August 28, 2013 — SofTech, Inc. (OTCQB: SOFT), a proven provider of Product Lifecycle Management (PLM) solutions today announced its fourth quarter and fiscal year 2013 operating results. Revenue for the three months ended May 31, 2013 was approximately $1.56 million, an increase of more than 3% from the same period in the prior fiscal year. This was the first fiscal quarter since August 31, 2007 in which the Company experienced an increase in its quarterly revenue when compared to the same period in the prior fiscal year, excluding the revenue increase resulting from the sale of patents in Q1 and Q2 of fiscal year 2013. Net income(loss) for the current quarter was about ($51,000) or ($.05) per share compared to net income of $67,000 or $.07 per share for the same period in the prior fiscal year. Included in the current quarter operating results were the following non-recurring charges related to our Q4’13 debt refinancing:
a) Included in SG&A, a non-cash charge of $108,000 of unamortized debt issuance costs from our previous debt facility that was fully repaid during the quarter; and
b) Included in Interest expense, an accrual of $75,000 as an estimate of payments due our former lender equal to 1.5% of quarterly revenue for each of the first three fiscal quarters of 2014.
EBITDA for current quarter was about $292,000 as compared to about $212,000 for the same period in fiscal year 2012, an increase of 37.7%.
Revenue for fiscal year 2013 was approximately $6.36 million, down approximately 1.2% from the prior fiscal year. Net income for fiscal year 2013 was $360,000 or $.35 per share as compared to a net income of $444,000 or $.45 per share for the prior fiscal year. Fiscal year 2013 results included the above detailed non-recurring expenses totaling $183,000 related to the refinancing of our debt facility. EBITDA for fiscal year 2013 was approximately $1.12 million as compared to about $1.03 million for fiscal year 2012, an increase of about 9.4%.
Commenting on current year performance, Joe Mullaney, SofTech CEO since the March 2011 Recapitalization Transaction (described in the Form 10-K), said: “Fiscal 2013, our second full fiscal year since the Recapitalization Transaction, represented significant improvement on multiple fronts in our business including the following:
- Experienced the first revenue increase in a current year quarter compared to prior year quarter from products and services since the quarter ended August 31, 2007;
- Continued our investment in new products;
- Won four new customers for our subscription based, Connector technology;
- Increased EBITDA by more than 9%, cash flow from operations improved by a multiple of 10 times;
- Secured a multi-million dollar, long term debt facility with reduced borrowing rates and principal repayments for two years;
- Repurchased 16% of our outstanding shares in June 2013 (unregistered restricted shares held by largest shareholder); and
- Aggressively pursued other alternatives for enhancing shareholder value while improving profitability.
In summary, we achieved organic revenue growth in Q4’13, strengthened our partnership agreement, improved our balance sheet while significantly increasing operating cash flows. Overall, a solid fiscal year and one that we believe we can continue to improve upon.”
FINANCIAL STATEMENTS
The
Statements of Operations for the three and twelve month periods ended
May 31, 2013 compared to the same periods in the prior fiscal year are
presented below. A reconciliation of Net income(loss) 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 | ||||||||||||||||||||||
| May 31, | May 31, | Change | ||||||||||||||||||||
| 2013 | 2012 | $ | % | |||||||||||||||||||
| Product revenue | $ | 347 | $ | 255 | $ | 92 | 36.1 | % | ||||||||||||||
| Service revenue | 1,211 | 1,252 | (41 | ) | -3.3 | % | ||||||||||||||||
| Royalties on sale of patents | - | - | - | - | ||||||||||||||||||
| Total revenue | 1,558 | 1,507 | 51 | 3.4 | % | |||||||||||||||||
| Cost of sales | 363 | 330 | 33 | 10.0 | % | |||||||||||||||||
| Gross margin | 1,195 | 1,177 | 18 | 1.5 | % | |||||||||||||||||
| Gross margin % | 76.7 | % | 78.1 | % | ||||||||||||||||||
| R&D | 288 | 285 | 3 | 1.1 | % | |||||||||||||||||
| SG&A | 795 | 729 | 66 | 9.1 | % | |||||||||||||||||
| Operating income | 112 | 163 | (51 | ) | -31.3 | % | ||||||||||||||||
| Interest expense | 144 | 69 | 75 | 108.7 | % | |||||||||||||||||
| Other (income) expense | 4 | 24 | (20 | ) | -83.3 | % | ||||||||||||||||
| Income(loss) from operations before income taxes | (36 | ) | 70 | (106 | ) | -151.4 | % | |||||||||||||||
| Provision for income taxes | 15 | 3 | 12 | 400.0 | % | |||||||||||||||||
| Net income(loss) | (51 | ) | 67 | (118 | ) | -176.1 | % | |||||||||||||||
| Weighted average shares outstanding | 1,045 | 995 | 50 | 5.0 | % | |||||||||||||||||
| Basic and diluted net income per share: | $ | (0.05 | ) | $ | 0.07 | $ | (0.12 | ) | -172.5 | % | ||||||||||||
| Reconciliation of Net income to EBITDA: | ||||||||||||||||||||||
| Net income(loss) | $ | (51 | ) | $ | 67 | $ | (118 | ) | -176.1 | % | ||||||||||||
| Plus interest expense | 144 | 69 | 75 | 108.7 | % | |||||||||||||||||
| Plus tax expense | 15 | 3 | 12 | 400.0 | % | |||||||||||||||||
| Plus non-cash expenses | 184 | 73 | 111 | 152.1 | % | |||||||||||||||||
| Plus non-recurring professional fees | - | - | - | - | ||||||||||||||||||
| EBITDA | $ | 292 | $ | 212 | $ | 80 | 37.7 | % | ||||||||||||||
| Statements of Operations | |||||||||||||||||||||||||||
| (in thousands, except % and per share data) | |||||||||||||||||||||||||||
| For the fiscal years ended | |||||||||||||||||||||||||||
| May 31, | May 31, | Change | |||||||||||||||||||||||||
| 2013 | 2012 | $ | % | ||||||||||||||||||||||||
| Product revenue | $ | 1,284 | $ | 1,420 | $ | (136 | ) | -9.6 | % | ||||||||||||||||||
| Service revenue | 4,784 | 5,015 | (231 | ) | -4.6 | % | |||||||||||||||||||||
| Royalties on sale of patents | 290 | - | 290 | - | |||||||||||||||||||||||
| Total revenue | 6,358 | 6,435 | (77 | ) | -1.2 | % | |||||||||||||||||||||
| Cost of sales | 1,375 | 1,410 | (35 | ) | -2.5 | % | |||||||||||||||||||||
| Gross margin | 4,983 | 5,025 | (42 | ) | -0.8 | % | |||||||||||||||||||||
| Gross margin % | 78.4 | % | 78.1 | % | |||||||||||||||||||||||
| R&D | 1,087 | 1,243 | (156 | ) | -12.6 | % | |||||||||||||||||||||
| SG&A | 3,186 | 2,984 | 202 | 6.8 | % | ||||||||||||||||||||||
| Operating income | 710 | 798 | (88 | ) | -11.0 | % | |||||||||||||||||||||
| Interest expense | 342 | 320 | 22 | 6.9 | % | ||||||||||||||||||||||
| Other (income) expense | (7 | ) | 31 | (38 | ) | -122.6 | % | ||||||||||||||||||||
| Income from operations before income taxes | 375 | 447 | (72 | ) | -16.1 | % | |||||||||||||||||||||
| Provision for income taxes | 15 | 3 | 12 | 400.0 | % | ||||||||||||||||||||||
| Net income | 360 | 444 | (84 | ) | -18.9 | % | |||||||||||||||||||||
| Weighted average shares outstanding | 1,019 | 995 | 24 | 2.4 | % | ||||||||||||||||||||||
| Basic and diluted net income per share: | $ | 0.35 | $ | 0.45 | $ | (0.09 | ) | -20.8 | % | ||||||||||||||||||
| Reconciliation of Net income to EBITDA | |||||||||||||||||||||||||||
| Net income | $ | 360 | $ | 444 | (84 | ) | -18.9 | % | |||||||||||||||||||
| Plus interest expense | 342 | 320 | 22 | 6.9 | % | ||||||||||||||||||||||
| Plus tax expense | 15 | 3 | 12 | 400.0 | % | ||||||||||||||||||||||
| Plus non cash expenses | 334 | 201 | 133 | 66.2 | % | ||||||||||||||||||||||
| Plus non-recurring professional fees | 71 | 58 | 13 | 22.4 | % | ||||||||||||||||||||||
| EBITDA | $ | 1,122 | $ | 1,026 | $ | 96 | 9.4 | % | |||||||||||||||||||
| Balance Sheets | |||||||||||||||
| (in thousands) | |||||||||||||||
| As of | |||||||||||||||
| May 31, | May 31, | ||||||||||||||
| 2013 | 2012 | ||||||||||||||
| Cash | $ | 1,188 | $ | 595 | |||||||||||
| Restricted cash | 100 | - | |||||||||||||
| Accounts receivable | 895 | 757 | |||||||||||||
| Other current assets | 299 | 308 | |||||||||||||
| Total current assets | 2,482 | 1,660 | |||||||||||||
| Property and equipment, net | 61 | 42 | |||||||||||||
| Goodwill | 4,249 | 4,246 | |||||||||||||
| Other non-current assets | 922 | 600 | |||||||||||||
| Total assets | $ | 7,714 | $ | 6,548 | |||||||||||
| Accounts payable | $ | 137 | $ | 266 | |||||||||||
| Accrued expenses | 602 | 333 | |||||||||||||
| Deferred maintenance revenue | 2,088 | 2,194 | |||||||||||||
| Current portion of long term debt | - | 720 | |||||||||||||
| Other current liabilities | 102 | 75 | |||||||||||||
| Total current liabilities | 2,929 | 3,588 | |||||||||||||
| Other non-current liabilities | 98 | 51 | |||||||||||||
| Long term debt | 2,700 | 1,480 | |||||||||||||
| Total liabilities | 5,727 | 5,119 | |||||||||||||
| Redeemable common stock | 275 | - | |||||||||||||
| Stockholders' equity | 1,712 | 1,429 | |||||||||||||
|
Total liabilities, redeemable common stock and stockholders' equity |
$ | 7,714 | $ | 6,548 | |||||||||||
