Deltek Reports Q2 License Revenue of $15.8 Million, Total Revenue of $69.4 Million
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Deltek Reports Q2 License Revenue of $15.8 Million, Total Revenue of $69.4 Million

HERNDON, Va. — (BUSINESS WIRE) — July 30, 2009 Deltek, Inc. (Nasdaq: PROJ), the leading provider of enterprise applications software for project-focused businesses, today announced financial results for its second quarter ended June 30, 2009.

 

Total revenue for Q2 was $69.4 million, an increase of 12% from Q1. Q2 license revenue increased 40% from Q1 to $15.8 million. Maintenance and support revenue in Q2 was $31.0 million, an increase of 1% from Q1. Consulting services revenue decreased 4% from Q1 to $19.2 million. Other revenues in Q2 increased to $3.4 million from $0.1 million in Q1.

Q2 GAAP net income increased 85% to $4.9 million, or $0.09 per diluted share, from $2.7 million, or $0.06 per diluted share, in Q1. Q2 non-GAAP net income increased 35% to $7.6 million, or $0.14 per diluted share, from $5.6 million, or $0.13 per diluted share, in Q1.

Excluding the additional shares issued in conjunction with the Company’s common stock rights offering, Deltek’s Q2 2009 non-GAAP and GAAP EPS would have been $0.17 and $0.11, respectively.

“We had a strong quarter and delivered financial results that significantly exceeded expectations,” said Kevin Parker, president and CEO of Deltek. “Our revenue and profitability were driven by improved execution across multiple facets of our business, a continuing focus on operational efficiency and cost reductions, and our customers’ increasing confidence in their future business prospects.”

“We remain focused on executing effectively and committed to delivering a strong bottom line and healthy cash flows. Looking forward, our sales pipeline continues to be strong and the numerous new products we’ve launched this year are being well received by our customers. Our strong competitive position provides a solid foundation for growth when the economy eventually recovers.”

When compared to prior year results, total revenue in Q2 was $69.4 million, compared to $77.4 million last year. License revenue for Q2 was $15.8 million, compared to $22.1 million in Q2 2008. Maintenance and support revenue in the second quarter was $31.0 million, an increase from $28.3 million in Q2 2008. Consulting services revenue for Q2 was $19.2 million, compared to $22.3 million in the prior year. Other revenues in Q2 were $3.4 million, compared to $4.6 million in the prior year.

GAAP net income for the second quarter was $4.9 million, or $0.09 per diluted share, compared to $5.4 million, or $0.11 per diluted share, last year. Non-GAAP net income for the second quarter of 2009 was $7.6 million, or $0.14 per diluted share, compared to $7.5 million, or $0.16 per diluted share, in Q2 2008.

Non-GAAP net income excludes the net-of-tax impact of stock-based compensation, expenses associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets and restructuring charges.

Q2 Highlights

Impact of Common Stock Rights Offering on Historical Shares Outstanding

In accordance with SFAS 128-Earnings Per Share, for purposes of computing the basic and diluted weighted average shares, results for both 2009 and 2008 have been adjusted prior to June 1, 2009 to reflect the bonus element associated with the Company’s recently completed common stock rights offering. A summary of these retroactive changes is available on the Investor Relations section of Deltek’s website.

Conference Call Information

Deltek will host a conference call at 5:00 p.m. Eastern Time today to discuss the Company’s second quarter results. To access this call, dial 1-877-381-6419 in North America and 1-706-643-9496 outside North America. No password is required to join the call. 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 August 5, 2009 by dialing 1-800-642-1687 in North America and 1-706-645-9291 outside North America (pass code: 19459768). The replay also will be available through August 5, 2009 on Deltek’s website.

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, non-GAAP operating income and margin and adjusted EBITDA.

The Company defines non-GAAP net income as GAAP net income before the net-of-tax impact of stock-based compensation, expenses associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets and restructuring charges. Non-GAAP operating income and margin is defined as GAAP operating income before the pre-tax impact of stock-based compensation, expenses associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets and restructuring charges. Adjusted EBITDA is defined as GAAP net income before interest expenses (net of interest income), provision for income taxes, depreciation, amortization, stock-based compensation, expenses associated with the Company’s 2005 recapitalization and restructuring charges.

The Company believes that the presentation of these non-GAAP financial measures provides useful information to its investors and lenders because these measures allow for more accurate comparisons of operating results from period-to-period, enhance the overall understanding of the Company’s financial 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 management 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 and adjusted EBITDA, 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," "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 may 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)
                   
      Three Months Ended June 30,   Six Months Ended June 30,
      2009   2008   2009   2008
      (unaudited)   (unaudited)   (unaudited)   (unaudited)
REVENUES:                  
Software license fees     $ 15,758     $ 22,132     $ 26,984     $ 39,139  
Consulting services       19,216       22,324       39,282       46,590  
Maintenance and support services       30,987       28,286       61,584       56,351  
Other revenues       3,408       4,623       3,512       4,639  

Total revenues

      69,369       77,365       131,362       146,719  
                   
COST OF REVENUES:                  
Cost of software license fees       1,835       1,687       3,223       3,267  
Cost of consulting services       16,140       19,192       33,457       39,355  
Cost of maintenance and support services       5,529       4,799       11,269       10,426  
Cost of other revenues       4,605       4,875       4,648       5,107  
Total cost of revenues       28,109       30,553       52,597       58,155  
GROSS PROFIT       41,260       46,812       78,765       88,564  
                   
Research and development       10,773       11,558       21,644       22,949  
Sales and marketing       10,653       13,413       22,172       25,716  
General and administrative       9,412       8,379       17,317       15,940  
Restructuring charge       1,135       1,052       2,548       1,052  
Total operating expenses       31,973       34,402       63,681       65,657  
                   
INCOME FROM OPERATIONS       9,287       12,410       15,084       22,907  
                   
Interest income       11       193       22       450  

Interest expense

      (1,473 )     (2,480 )     (2,982 )     (5,954 )
Other income (expense), net       24       (164 )     21       (201 )
INCOME BEFORE INCOME TAXES       7,849       9,959       12,145       17,202  
Income tax expense       2,948       4,536       4,590       7,758  
                   
NET INCOME     $ 4,901     $ 5,423     $ 7,555     $ 9,444  
                   
                   
EARNINGS PER SHARE                  
Basic     $ 0.09     $ 0.12     $ 0.15     $ 0.20  
                   
Diluted     $ 0.09     $ 0.11     $ 0.15     $ 0.20  
                   
COMMON SHARES AND EQUIVALENTS OUTSTANDING                  
Basic weighted average shares       52,394       46,552       49,560       46,527  
                   
Diluted weighted average shares       52,914       47,692       49,940       47,812  
                                   
           
DELTEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
           
      June 30,  

December 31,

      2009   2008
      (unaudited)   (unaudited)
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents     $ 113,457     $ 35,788  

Accounts receivable, net of allowance of $3,632 and $2,195 at June 30, 2009 and December 31, 2008, respectively

      47,196       47,747  
Deferred income taxes       4,640       4,635  
Prepaid expenses and other current assets       6,466       6,874  
Income taxes receivable       857       846  

TOTAL CURRENT ASSETS

      172,616       95,890  
           
PROPERTY AND EQUIPMENT, NET       12,861       14,639  
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET       1,034       1,438  
LONG-TERM DEFERRED INCOME TAXES       5,820       4,125  
INTANGIBLE ASSETS, NET       14,982       17,396  
GOODWILL       57,763       57,654  
OTHER ASSETS       1,593       2,130  
TOTAL ASSETS     $ 266,669     $ 193,272  
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
CURRENT LIABILITIES:          
Current portion of long-term debt     $ -     $ 10,154  
Accounts payable and accrued expenses       28,122       28,734  
Accrued liability for redemption of stock in recapitalization       317       317  
Deferred revenues       37,032       21,296  
TOTAL CURRENT LIABILITIES       65,471       60,501  
           
LONG-TERM DEBT       179,604       182,661  
OTHER TAX LIABILITIES       1,130       1,003  
OTHER LONG-TERM LIABILITIES       3,024       2,917  
TOTAL LIABILITIES       249,229       247,082  
           
COMMITMENTS AND CONTINGENCIES          
           
STOCKHOLDERS’ EQUITY (DEFICIT):          

Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at June 30, 2009 or December 31, 2008

             

Common stock, $0.001 par value—authorized, 200,000,000 shares; issued and outstanding, 64,268,327 and 43,474,220 shares at June 30, 2009 and December 31, 2008, respectively

      64       43  

Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at June 30, 2009 and December 31, 2008

             
Additional paid-in capital       240,450       177,249  
Accumulated deficit       (222,350 )     (229,905 )
Accumulated other comprehensive deficit       (724 )     (1,197 )
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)       17,440       (53,810 )
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)     $ 266,669     $ 193,272  
                   
           
DELTEK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
       
      Six Months Ended June 30,
      2009   2008
      (unaudited)   (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income     $ 7,555     $ 9,444  
Adjustments to reconcile net income to net cash provided by operating activities:          
Provision for doubtful accounts       2,472       489  
Depreciation and amortization       5,529       4,597  
Amortization of debt issuance costs       481       396  
Stock-based compensation expense       4,179       3,693  
Employee stock purchase plan expense       162       130  
Restructuring charge, net       918       495  
Loss on disposal of fixed assets       23       321  
Deferred income taxes       (1,909 )     (1,564 )
           
Change in assets and liabilities:          
Accounts receivable, net       (1,675 )     4,888  
Prepaid expenses and other assets       501       1,509  
Accounts payable and accrued expenses       (1,480 )     (1,379 )
Income taxes receivable       (120 )     (3,768 )
Excess tax benefit (deficiency) benefit from exercise of stock options       108       (59 )
Other tax liabilities       127       202  
Other long-term liabilities       (289 )     (303 )
Deferred revenues       16,065       804  

Net Cash Provided by Operating Activities

      32,647       19,895  
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment       (931 )     (4,295 )
Capitalized software development costs       (150 )     (261 )
Net Cash Used in Investing Activities       (1,081 )     (4,556 )
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Issuance of common stock in connection with rights offering, net of issuance costs       58,228        
Proceeds from exercise of stock options       677       192  
Excess tax (deficiency) benefit from exercise of stock options       (108 )     59  
Proceeds from issuance of stock under employee stock purchase plan       310       305  
Offering costs paid for 2007 sale of common stock in initial public offering             (275 )
Repayment of debt       (13,211 )      
Net Cash Provided by Financing Activities       45,896       281  
           
IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS       207       148  
           
NET INCREASE IN CASH AND CASH EQUIVALENTS       77,669       15,768  
           
CASH AND CASH EQUIVALENTS––Beginning of period       35,788       17,091  
           
CASH AND CASH EQUIVALENTS––End of period     $ 113,457     $ 32,859  
           
                                   
DELTEK, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
                                   
      Three Months Ended       Six Months Ended    
      June 30,       June 30,    
      2009       2008       2009       2008    
                                   
Net Income (GAAP Basis)     $ 4,901       $ 5,423         $ 7,555       $ 9,444      
Income Tax Expense       2,948         4,536           4,590         7,758      
Pre-Tax Income (GAAP Basis)     $ 7,849       $ 9,959         $ 12,145       $ 17,202      
Adjustments:                                  
Stock-based Compensation       2,221         1,459           4,341         3,823      
Recapitalization Retention Expense       7         125           152         294      
Amortization of Acquired Intangibles       1,173         831           2,437         1,835      
Restructuring Charge       1,135         1,052           2,548         1,052      
                                   
Adjusted Pre-Tax Income       12,385         13,426           21,623         24,206      
                                   
Less: Adjusted Income Tax Expense       4,735         5,902           8,324         10,518      
                                   
Non-GAAP Net Income     $ 7,650       $ 7,524         $ 13,299       $ 13,688      
                                   
Non-GAAP Earnings Per Share (diluted)     $ 0.14       $ 0.16         $ 0.27       $ 0.29      
Weighted Average Shares       52,914         47,692           49,940         47,812      
                                   
                                   
                                   
                                   
RECONCILIATION OF GAAP OPERATING INCOME AND OPERATING MARGIN TO NON-GAAP OPERATING INCOME AND OPERATING MARGIN
(in thousands)
(unaudited)
                                   
      Three Months Ended       Six Months Ended    
      June 30,       June 30,    
      2009       2008       2009       2008    
                                   
Operating Income and Margin - GAAP     $ 9,287   13 %   $ 12,410     16 %   $ 15,084   11 %   $ 22,907     16 %
Plus: Stock-based Compensation and Recapitalization Retention Expense       2,228         1,584           4,493         4,117      
Plus: Amortization of Acquired Intangibles       1,173         831           2,437         1,835      
Plus: Restructuring Charge       1,135         1,052           2,548         1,052      
                                   
Operating Income and Margin - Non-GAAP     $ 13,823   20 %   $ 15,877     21 %   $ 24,562   19 %   $ 29,911     20 %
                                   
Total Revenues     $ 69,369       $ 77,365         $ 131,362       $ 146,719      
                                   
                                   
                                   
                                   
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(in thousands)
(unaudited)
                                   
      Three Months Ended       Six Months Ended    
      June 30,       June 30,    
      2009       2008       2009       2008    
                                   
Net Income (GAAP Basis)     $ 4,901       $ 5,423         $ 7,555       $ 9,444      
Stock-based Compensation       2,221         1,459           4,341         3,823      
Recapitalization Retention Expense       7         125           152         294      
Depreciation       1,294         1,104           2,541         2,124      
Amortization       1,381         1,150           2,992         2,473      
Interest Expense, net       1,462         2,287           2,960         5,504      
Income Tax Provision       2,948         4,536           4,590         7,758      
Restructuring Charge       1,135         1,052           2,548         1,052      
                                   
Adjusted EBITDA     $ 15,349       $ 17,136         $ 27,679       $ 32,472      
                                   
                                   
                                   
                                   
STOCK-BASED COMPENSATION AND RECAPITALIZATION RETENTION EXPENSES
(in thousands)
(unaudited)
                                   
      Three Months Ended       Six Months Ended    
      June 30,       June 30,    
      2009       2008       2009       2008    
                                   
Cost of Software License Fees     $ -       $ 1         $ -       $ 2      
Cost of Consulting Services       401         363           846         789      
Cost of Maintenance and Support Services       102         (360 )         205         (91 )    
Research and Development       421         401           996         951      
Sales and Marketing       416         415           801         892      
General and Administrative       888         764           1,645         1,574      
Total     $ 2,228       $ 1,584         $ 4,493       $ 4,117      
                                   
                                   
                                   
                                   
AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS
(in thousands)
(unaudited)
                                   
      Three Months Ended       Six Months Ended    
      June 30,       June 30,    
      2009       2008       2009       2008    
                                   
Cost of Software License Fees     $ 263       $ 255         $ 618       $ 685      
Cost of Consulting Services       19         20           39         39      
Sales and Marketing       872         537           1,743         1,074      
General and Administrative       19         19           37         37      
Total     $ 1,173       $ 831         $ 2,437       $ 1,835      
                                   
                                   
                                   
                                   
AMORTIZATION AND DEPRECIATION EXPENSES
(in thousands)
(unaudited)
                                   
      Three Months Ended       Six Months Ended    
      June 30,       June 30,    
      2009       2008       2009       2008    
                                   
Cost of Software License Fees     $ 475       $ 576         $ 1,181       $ 1,327      
Cost of Consulting Services       433         395           851         753      
Cost of Maintenance and Support Services       213         125           425         254      
Research and Development       292         264           575         520      
Sales and Marketing       1,093         763           2,188         1,494      
General and Administrative       169         131           313         249      
Total     $ 2,675       $ 2,254         $ 5,533       $ 4,597      
                                   
                                   
                                   
                                   
RECONCILIATION OF GAAP EPS TO EPS EXCLUDING THE RIGHTS OFFERING
(in thousands, except per share data)
(unaudited)
                                   
      Three Months Ended       Six Months Ended    
      June 30,       June 30,    
      2009       2008       2009       2008    
                                   
Net Income (GAAP Basis)     $ 4,901       $ 5,423         $ 7,555       $ 9,444      
                                   
GAAP Earnings Per Share (diluted)     $ 0.09       $ 0.11         $ 0.15       $ 0.20      
Rights Offering     $ 0.02       $ 0.01         $ 0.02       $ 0.01      
Earnings Per Share Excluding the Rights Offering (diluted)     $ 0.11       $ 0.12         $ 0.17       $ 0.21      
                                   
Weighted Average Shares       52,914         47,692           49,940         47,812      
Rights Offering       8,926         3,448           6,217         3,446      
Weighted Average Shares (Excluding the Rights Offering)       43,988         44,244           43,723         44,366      
                                   
                                   
                                   
                                   
RECONCILIATION OF NON-GAAP EPS TO NON-GAAP EPS EXCLUDING THE RIGHTS OFFERING
(in thousands, except per share data)
(unaudited)
                                   
      Three Months Ended       Six Months Ended    
      June 30,       June 30,    
      2009       2008       2009       2008    
                                   
Net Income (Non-GAAP Basis)     $ 7,650       $ 7,524         $ 13,299       $ 13,688      
                                   
Non-GAAP Earnings Per Share (diluted)     $ 0.14       $ 0.16         $ 0.27       $ 0.29      
Rights Offering     $ 0.03       $ 0.01         $ 0.03       $ 0.02      
Non-GAAP Earnings Per Share Excluding the Rights Offering (diluted)     $ 0.17       $ 0.17         $ 0.30       $ 0.31      
                                   
Weighted Average Shares       52,914         47,692           49,940         47,812      
Rights Offering       8,926         3,448           6,217         3,446      
Weighted Average Shares (Excluding the Rights Offering)       43,988         44,244           43,723         44,366      
                                   

 



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