Fourth Quarter 2007 Results
License revenue for the fourth quarter was $27.1 million, an increase of 15% from the fourth quarter of 2006, a new Company record. For the quarter, consulting services revenue increased 8% to $22.3 million, and maintenance and support revenue increased 21% to $27.4 million from the prior year period. Total revenue for the fourth quarter increased 15% from the fourth quarter of 2006 to $77.0 million, also a new Company record.
Non-GAAP net income for the fourth quarter increased 22% to $9.2 million, or $0.21 per diluted share, compared to $7.6 million, or $0.19 per diluted share, in the fourth quarter of 2006. Non-GAAP net income excludes the net-of-tax impact of stock-based compensation, retention payments associated with the Company's 2005 recapitalization, amortization of acquired intangible assets and New Mountain Capital fees.
GAAP net income for the fourth quarter of 2007 increased 12% to $7.1 million, compared to $6.4 million in the fourth quarter of 2006. Diluted earnings per share was $0.16 in the fourth quarter of both 2007 and 2006, primarily as a result of additional shares issued in the Company's November 2007 initial public offering offset by the increase in GAAP net income during the quarter.
Full-Year 2007 Results
License revenue for 2007 was $87.1 million, an increase of 16% over 2006. 2007 consulting services revenue increased 25% to $83.4 million, and maintenance and support revenue increased 24% to $102.9 million over 2006. Total revenue for 2007 increased 22% from 2006 to $278.2 million.
Non-GAAP net income for 2007 increased 43% to $29.5 million, or $0.71 per diluted share, compared to $20.6 million, or $0.51 per diluted share, in 2006.
Full-year 2007 GAAP net income increased 47% to $22.5 million, or $0.54 per diluted share, compared to $15.3 million, or $0.38 per diluted share, in 2006.
For details regarding the reconciliation of GAAP to non-GAAP financial measures, please refer to the reconciliation tables included in this press release.
"Our strong Q4 performance was driven by growing demand for our comprehensive suite of solutions for project-based organizations," said Kevin Parker, president and CEO of Deltek. "Looking back over 2007, it was a very successful year for Deltek. We saw 22% growth in our total revenue driven by 16% growth in our full year license revenue, delivered new versions of our solutions and significantly expanded our presence internationally. The market response to our strategy, coupled with our focus on our strategic initiatives, makes us confident in our outlook for 2008."
Key Developments
-- Deltek recently launched Vision 5.1 - the latest version of its industry-leading software solution for project-focused professional services firms. Utilizing the innovative business intelligence capabilities of Microsoft SQL Server, Vision 5.1 takes analytical reporting to a whole new level by consolidating project and general ledger data into flexible views that can be tailored to a user's needs. With the adoption of Vision 5.1, professional services firms can drive increased operational efficiency and gain greater insight into the financial health of their organizations.
-- Deltek recently expanded its senior leadership team by hiring Taylor Macdonald as the Vice President of Worldwide Channels and Sales Alliances. In this new position, Macdonald will be responsible for driving the further expansion of Deltek's global channel and alliance operations. Macdonald brings over 19 years of experience to Deltek and, among many accolades he has received, has been named one of the "Top 100 Most Influential People" in the accounting profession by Accounting Today.
-- To further accelerate the Company's international presence, Deltek recently announced a reseller agreement with Wilde FEA Ltd., a leading U.K.-based engineering consulting company. Wilde will be a key business partner responsible for selling and supporting Deltek's Vision enterprise software solution into the architectural and engineering markets. This move follows Wilde's own successful implementation of Vision and is consistent with Deltek's commitment to extend its partner network and offerings into the U.K. and other European markets.
-- Deltek continues to build a strong presence in the Canadian market. Challenger Geomatics Ltd., based in Edmonton, Canada, recently moved to Deltek Vision to dramatically streamline its accounting and planning processes. Challenger Geomatics provides innovative professional land surveying services throughout Canada and the world to a wide range of industries including oil and gas, construction and local government entities.
-- Deltek received CustomerSat's 2007 Achievement in Customer Excellence (ACE)(TM) Award for "Customer Support Satisfaction." Deltek received this award for demonstrating industry-leading customer service throughout 2007.
Conference Call Information
Deltek will host a conference call at 5:00 p.m. Eastern Standard Time today to discuss the Company's fourth quarter and full-year results. To access this call, dial 1-877-381-6419 in North America and 1-706-643-9496 outside North America. The conference call also will be available via webcast at investor.deltek.com A replay of this call will be available through February 27, 2008. To access this replay, dial 1-800-642-1687 in North America and 1-706-645-9291 outside North America. The confirmation number is 30713090.
About Deltek
Deltek (NASDAQ: PROJ) is the leading provider of enterprise applications software designed specifically for project-focused businesses. For more than two decades, our software applications have enabled organizations to automate mission-critical business processes around the engagement, execution and delivery of projects. More than 12,000 customers worldwide rely on Deltek to measure business results, optimize performance, streamline operations and win new business. For more information, visit 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. Information about other non-GAAP financial measures that are referred to in the related conference call may be accessed on the Company's website at investor.deltek.com The Company defines non-GAAP net income as GAAP net income before the net-of-tax impact of stock-based compensation, retention payments associated with the Company's 2005 recapitalization, amortization of acquired intangible assets and New Mountain Capital fees.
The Company believes that the presentation of these non-GAAP financial measures provides useful information to its investors and lenders because these measures enhance their overall understanding of the Company's financial performance and the prospects for the future of the Company's ongoing business 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 financial measures, which are set forth below and on our website.
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," "will," "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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
REVENUES:
Software license fees $ 27,119 $ 23,543 $ 87,118 $ 74,958
Consulting services 22,307 20,727 83,353 66,573
Maintenance and support
services 27,440 22,623 102,903 83,172
Other revenues 153 239 4,872 3,565
---------- ---------- ---------- ----------
Total revenues 77,019 67,132 278,246 228,268
---------- ---------- ---------- ----------
COST OF REVENUES:
Cost of software license
fees 1,852 1,922 7,855 6,867
Cost of consulting
services 19,796 16,128 72,559 54,676
Cost of maintenance and
support services 5,210 4,151 17,387 15,483
Cost of other revenues 89 214 5,276 4,634
---------- ---------- ---------- ----------
Total cost of revenues 26,947 22,415 103,077 81,660
---------- ---------- ---------- ----------
GROSS PROFIT 50,072 44,717 175,169 146,608
---------- ---------- ---------- ----------
Research and development 11,272 10,457 42,925 37,293
Sales and marketing 13,098 11,436 45,299 37,807
General and administrative 8,895 7,787 30,619 26,622
---------- ---------- ---------- ----------
Operating expenses 33,265 29,680 118,843 101,722
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 16,807 15,037 56,326 44,886
Interest income 95 54 295 397
Interest expense (4,520) (4,647) (18,493) (20,098)
Other (expense) income,
net (137) 57 (132) 82
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 12,245 10,501 37,996 25,267
Income tax expense 5,120 4,134 15,477 9,969
---------- ---------- ---------- ----------
NET INCOME $ 7,125 $ 6,367 $ 22,519 $ 15,298
========== ========== ========== ==========
EARNINGS PER SHARE
Basic $ 0.17 $ 0.16 $ 0.56 $ 0.39
========== ========== ========== ==========
Diluted $ 0.16 $ 0.16 $ 0.54 $ 0.38
========== ========== ========== ==========
COMMON SHARES AND
EQUIVALENTS OUTSTANDING
Basic weighted average
shares 41,828 39,430 40,037 39,332
========== ========== ========== ==========
Diluted weighted
average shares 43,281 40,382 41,617 40,262
========== ========== ========== ==========
DELTEK, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
December 31,
---------------------
2007 2006
---------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,091 $ 6,667
Accounts receivable, net of allowance of
$2,866 and $1,960 at December 31, 2007 and
December 31, 2006, respectively 55,663 39,987
Deferred income taxes 5,027 6,961
Prepaid expenses and other current assets 5,604 4,771
---------- ----------
TOTAL CURRENT ASSETS 83,385 58,386
PROPERTY AND EQUIPMENT, NET 13,575 8,576
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET 2,399 3,480
LONG-TERM DEFERRED INCOME TAXES 354 -
INTANGIBLE ASSETS, NET 13,132 16,169
GOODWILL 50,082 44,519
OTHER ASSETS 3,253 3,358
---------- ----------
TOTAL ASSETS $ 166,180 $ 134,488
========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt $ 498 $ 20,150
Accounts payable and accrued expenses 31,810 28,671
Accrued liability for redemption of stock in
recapitalization 569 5,349
Deferred revenues 22,046 26,612
Income taxes payable 729 166
---------- ----------
TOTAL CURRENT LIABILITIES 55,652 80,948
LONG-TERM DEBT 192,815 210,375
LONG-TERM DEFERRED INCOME TAXES - 3,760
OTHER TAX LIABILITIES 551 -
OTHER LONG-TERM LIABILITIES 3,350 3,470
---------- ----------
TOTAL LIABILITIES 252,368 298,553
SHAREHOLDERS' DEFICIT:
Preferred stock, $0.001 par value--
authorized, 5,000,000 shares; issued and
outstanding, 0 and 100 shares at December
31, 2007 and December 31, 2006, respectively - -
Common stock, $0.001 par value--authorized,
200,000,000 shares; issued and outstanding,
43,046,523 and 39,405,993 shares at December
31, 2007 and December 31, 2006, respectively 43 39
Class A common stock, $0.001 par value--
authorized, 100 shares; issued and
outstanding, 100 and 0 shares at December
31, 2007 and December 31, 2006, respectively - -
Additional paid-in capital 167,527 112,350
Accumulated deficit (253,424) (275,943)
Accumulated other comprehensive income (334) (511)
---------- ----------
TOTAL SHAREHOLDERS' DEFICIT (86,188) (164,065)
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 166,180 $ 134,488
========== ==========
DELTEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Twelve Months Ended
December 31,
---------------------
2007 2006
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,519 $ 15,298
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for doubtful accounts 2,419 2,052
Depreciation and amortization 9,241 8,097
Amortization of debt issuance costs 1,096 3,048
Stock-based compensation expense 6,134 1,686
Employee stock purchase plan expense 35 -
Stock issued in lieu of director's fees - 20
Loss on disposal of fixed assets 214 28
Deferred income taxes (2,464) 1,874
Change in assets and liabilities:
Accounts receivable, net (17,586) (17,708)
Prepaid expenses and other assets (1,794) 2,980
Accounts payable and accrued expenses 3,343 8,662
Interest payable on shareholder notes - (5,467)
Income taxes payable 2,544 294
Excess tax benefit from stock option
exercises (1,759) -
Other tax liabilities 21 -
Other long-term liabilities (120) 661
Deferred revenues (4,748) (3,083)
---------- ----------
Net Cash Provided by Operating
Activities 19,095 18,442
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired (6,101) (32,769)
Purchase of property and equipment (9,055) (4,671)
Capitalized software development costs (412) (856)
---------- ----------
Net Cash Used in Investing
Activities (15,568) (38,296)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 87 1,051
Sale of common stock in initial public
offering, net of offering costs 42,991 -
Proceeds from exercise of stock options 3,950 12
Excess tax benefit from stock option
exercises 1,759 7
Redemption of stock and shareholder payments
in recapitalization (4,780) (7,038)
Proceeds from the issuance of debt 22,500 125,000
Debt issuance costs - (1,312)
Repayment of debt (59,712) (108,900)
---------- ----------
Net Cash Provided by Financing
Activities 6,795 8,820
---------- ----------
IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND
CASH EQUIVALENTS 102 22
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 10,424 (11,012)
CASH AND CASH EQUIVALENTS--Beginning of year 6,667 17,679
---------- ----------
CASH AND CASH EQUIVALENTS--End of year $ 17,091 $ 6,667
========== ==========
DELTEK, INC.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net Income (GAAP Basis) $ 7,125 $ 6,367 $ 22,519 $ 15,298
NMC Advisory and
Transaction Fees - 125 250 2,500
Stock-based Compensation 2,258 579 6,134 1,686
Recapitalization Retention
Expense 122 158 724 807
Depreciation 855 708 3,271 2,484
Amortization 1,427 1,481 5,970 5,613
Interest Expense, net 4,425 4,593 18,198 19,701
Income Tax Expense 5,120 4,134 15,477 9,969
---------- ---------- ---------- ----------
Adjusted EBITDA $ 21,332 $ 18,145 $ 72,543 $ 58,058
========== ========== ========== ==========
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(in thousands, except per share amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Net Income (GAAP Basis) $ 7,125 $ 6,367 $ 22,519 $ 15,298
Income Tax Expense 5,120 4,134 15,477 9,969
---------- ---------- ---------- ----------
Pre-Tax Income (GAAP
Basis) $ 12,245 $ 10,501 $ 37,996 $ 25,267
Adjustments:
NMC Advisory and
Transaction Fees - 125 250 2,500
Stock-based
Compensation 2,258 579 6,134 1,686
Recapitalization
Retention Expense 122 158 724 807
Amortization of
Acquired Intangibles 1,108 1,096 4,477 3,793
---------- ---------- ---------- ----------
Adjusted Pre-Tax Income 15,733 12,459 49,581 34,053
Less: Adjusted Income Tax
Expense 6,494 4,905 20,041 13,431
---------- ---------- ---------- ----------
Non-GAAP Net Income $ 9,239 $ 7,554 $ 29,540 $ 20,622
========== ========== ========== ==========
Non-GAAP Earnings Per
Share (diluted) $ 0.21 $ 0.19 $ 0.71 $ 0.51
========== ========== ========== ==========
Weighted Average Shares 43,281 40,382 41,617 40,262
========== ========== ========== ==========
STOCK-BASED COMPENSATION AND RECAPITALIZATION RETENTION EXPENSES
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Cost of Software License
Fees $ 1 $ - $ 3 $ 2
Cost of Consulting
Services 406 131 1,239 395
Cost of Maintenance and
Support Services 268 28 396 114
Research and Development 447 190 1,543 697
Sales and Marketing 416 148 1,269 474
General and Administrative 842 240 2,408 811
---------- ---------- ---------- ----------
Total $ 2,380 $ 737 $ 6,858 $ 2,493
========== ========== ========== ==========
AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Cost of Software License
Fees $ 430 $ 426 $ 1,712 $ 1,144
Cost of Consulting
Services 19 - 59 -
Research and Development - - 160 300
Sales and Marketing 640 652 2,473 2,317
General and Administrative 19 18 73 32
---------- ---------- ---------- ----------
Total $ 1,108 $ 1,096 $ 4,477 $ 3,793
========== ========== ========== ==========
AMORTIZATION AND DEPRECIATION EXPENSES
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
--------------------- ---------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Cost of Software License
Fees $ 751 $ 811 $ 3,214 $ 2,964
Cost of Consulting
Services 301 240 1,108 844
Cost of Maintenance and
Support Services 105 78 368 273
Research and Development 217 206 1,039 1,020
Sales and Marketing 799 773 3,059 2,741
General and Administrative 109 81 453 255
---------- ---------- ---------- ----------
Total $ 2,282 $ 2,189 $ 9,241 $ 8,097
========== ========== ========== ==========
Contact:
Deltek, Inc.
Investor Relations Contact:
Dave Spille,
VP, Investor Relations
703-885-9423
Email Contact
or
Media
Relations Contact:
Warren Brown, VP, Strategic Communications
703-885-9746
Email Contact