Accelrys, Inc. (NASDAQ:ACCL) today reported financial results
for the fiscal quarter ended March 31, 2012. Non-GAAP revenue for
the quarter ended March 31, 2012 increased $2.3 million to $41.8
million from $39.5 million for the same quarter of the previous
year, or an increase of 6%.
Non-GAAP net income was $4.6 million, or $0.08 per diluted
share, for the quarter ended March 31, 2012 compared to non-GAAP
net income of $4.7 million, or $0.08 per diluted share, for the
same quarter of the previous year. Non-GAAP free cash flow was $7.7
million for the quarter ended March 31, 2012 compared to non-GAAP
free cash flow of $9.1 million for the same quarter of the previous
year.
The GAAP results for the quarter ended March 31, 2012 were
impacted by the business combination accounting associated with the
acquisitions of Contur Industry Holding AB and Contur Software AB
(collectively, “Contur”) and VelQuest Corporation (“VelQuest”),
both in 2011, and the merger with Symyx Technologies in 2010, and
by other nonrecurring acquisition-related and restructuring costs.
GAAP revenue, GAAP operating loss, GAAP royalty and other income
and GAAP net loss for the quarter ended March 31, 2012 were
negatively impacted by fair value adjustments to both deferred
revenue ($2.4 million) and deferred royalty income ($0.2 million).
GAAP operating loss was also negatively impacted by business
consolidation, transaction and restructuring costs ($0.6 million),
stock-based compensation expense ($1.8 million), and purchased
intangible asset amortization ($4.2 million), offset by an
adjustment to include acquisition-related cost of revenue related
to VelQuest non-GAAP revenue recognized during the quarter ended
March 31, 2012 ($0.2 million). GAAP net loss for the same period
was negatively impacted by additional purchased intangible asset
amortization ($0.4 million), offset by removing the impact ($0.1
million) of the amortization of note receivable discount related to
our promissory note receivable from Intermolecular, Inc.
(“Intermolecular”).
GAAP revenue for the quarter ended March 31, 2012 increased $4.8
million to $39.4 million from $34.6 million for the same quarter of
the previous year, or an increase of 14%. GAAP net loss was $(2.3)
million or $(0.04) per diluted share, for the current quarter
compared to GAAP net loss of $(5.7) million, or $(0.10) per diluted
share, for the same quarter of the previous year.
“We had a solid start to the year and I am pleased with our
financial performance in the first quarter,” said Max Carnecchia,
President and Chief Executive Officer of Accelrys. “I am especially
excited about our combination with VelQuest and the rapid progress
we’ve made bringing our teams together. Our collective R&D
organizations have completed a combined product roadmap and our
joint sales teams have been trained on our full product portfolio.
These efforts put us in a strong position to take advantage of the
significant opportunity we see in helping our customers optimize
their downstream analytical, development and quality areas.”
Recent Business Highlights:
- Made significant progress on the
integration of the VelQuest business, combining our people,
processes and systems, and developing an integrated product roadmap
that takes advantage of our combined portfolio, further executing
on our strategy of moving downstream from research into
Development, Quality Control and Quality Assurance.
- Announced the Accelrys Enterprise
Platform, the first scientifically aware, service-oriented
architecture, delivering access to experimental information,
automating key processes across the lab-to-market value chain and
helping science-driven companies close the innovation productivity
gap that is slowing time-to-market, hampering competitiveness and
increasing compliance risk. The Accelrys Enterprise Platform is
part of a category of software focused on delivering technology
infrastructure that support science-driven product development
which we term “Scientific Innovation Lifecycle Management”, or
SILM.
Calendar Year 2012 Outlook
For the year ending December 31, 2012, the Company expects
non-GAAP revenue to be between $165 and $170 million, and non-GAAP
diluted earnings per share to be between $0.32 and $0.34 per
diluted share on fully diluted weighted average shares outstanding
of 56 million and using an effective tax rate of 40%.
Non-GAAP Financial Measures:
This press release describes financial measures for revenue,
operating income, net income, net income per diluted share and free
cash flow that exclude deferred revenue fair value adjustments,
acquisition-related cost of revenue, business consolidation,
transaction and restructuring costs, stock-based compensation
expense, purchased intangible asset amortization, royalty income
fair value adjustments , amortization of note receivable discount,
and income tax adjustments. These financial measures are not
calculated in accordance with generally accepted accounting
principles (GAAP) and are not based on any comprehensive set of
accounting rules or principles.
Management believes these non-GAAP financial measures provide a
useful measure of the Company’s operating results, a meaningful
comparison with historical results and with the results of other
companies, and insight into the Company’s ongoing operating
performance. Further, management and the Board of Directors utilize
these measures, in addition to GAAP measures, when evaluating and
comparing the Company’s operating performance against internal
financial forecasts and budgets. These non-GAAP financial measures
should not be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
In addition, these non-GAAP financial measures may be different
from non-GAAP financial measures used by other companies.
For additional information on the items excluded by the Company
from its non-GAAP financial measures please refer to the
Form 8-K regarding this release that was furnished today to
the Securities and Exchange Commission.
The following table contains a reconciliation of the non-GAAP
financial measures to the most directly comparable GAAP financial
measures (unaudited, amounts in thousands, except per share
amounts, including footnotes):
Three Months EndedMarch 31, 2012
2011 GAAP Revenue $ 39,439 $ 34,600
Deferred revenue fair value adjustment1 2,357
4,871 Non-GAAP Revenue $ 41,796 $ 39,471
GAAP Operating loss $ (3,188 ) $ (7,487 ) Deferred
revenue fair value adjustment1 2,357 4,871 Acquisition-related cost
of revenue2 (223 ) ― Business consolidation, transaction and
restructuring costs 3 639 1,645 Stock-based compensation expense4
1,791 1,280 Purchased intangible asset amortization5 4,176
4,431 Non-GAAP Operating income $ 5,552
$ 4,740 Non-GAAP Operating income $ 5,552 $ 4,740
Depreciation expense 804 929 Cash received for interest and royalty
income 3,290 2,662 Cash (paid) for income taxes, net of refunds
received (1,164 ) 1,591 Capital expenditures (771 )
(857 ) Non-GAAP Free cash flow 7,711 9,065
GAAP Net loss $ (2,254 ) $ (5,714 ) Deferred revenue
fair value adjustment1 2,357 4,871 Acquisition-related cost of
revenue2 (223 ) ― Business consolidation, transaction and
restructuring costs 3 639 1,645 Stock-based compensation expense4
1,791 1,280 Purchased intangible asset amortization5 4,599 5,022
Royalty income fair value adjustment6 200 203 Amortization of note
receivable discount8 (120 ) ― Income tax7 (2,377 )
(2,619 ) Non-GAAP Net income $ 4,612 $ 4,688
GAAP Diluted net loss per share $ (0.04 ) $ (0.10 ) Deferred
revenue fair value adjustment1 0.04 0.09 Acquisition-related cost
of revenue2 ― ― Business consolidation, transaction and
restructuring costs 3 0.01 0.03 Stock-based compensation expense4
0.03 0.02 Purchased intangible asset amortization5 0.08 0.09
Royalty income fair value adjustment6 ― ― Amortization of note
receivable discount8 ― ― Income tax7 (0.04 ) (0.05 )
Non-GAAP Diluted net income per share $ 0.08 $ 0.08
Weighted average shares used to compute net income
(loss) per share Basic 55,783 55,525 Diluted 56,512 56,488
1 Deferred revenue fair value adjustment relates to our merger
with Symyx and acquisitions of Contur and VelQuest, and adds back
the impact of writing down the acquired historical deferred revenue
to fair value as required by purchase accounting guidance.
2 Acquisition-related cost of revenue relates to our acquisition
of VelQuest, and adds back the impact of writing down the acquired
deferred cost of revenue as required by purchase accounting
guidance.
3 Business consolidation, transaction and restructuring costs
are included in the business consolidation, transaction and
restructuring costs line in our consolidated statements of
operations and consist of accounting, legal, and other fees
incurred in connection with our acquisition activities, including
our merger with Symyx and acquisitions of Contur and VelQuest, as
well as integration costs incurred in connection with such
transactions, including consultant and employee related costs
incurred during integration and transition periods. Also included
are contingent compensation costs relating to the Contur
acquisition as well as lease obligation exit costs, facility
closure costs and severance and other related costs incurred in
connection with the various restructuring activities commenced by
the Company.
4 Stock-based compensation expense is included in our
consolidated statements of operations as follows:
Three Months EndedMarch 31, 2012
2011 Cost of revenue $ 142 $ 84
Product development 382 233 Sales and marketing 589 420 General and
administrative 687 586 Business consolidation, transaction and
restructuring costs (9 ) (43 ) Total stock-based
compensation expense $ 1,791 $ 1,280
5 Purchased intangible asset amortization is included in our
consolidated statements of operations as follows:
Three Months EndedMarch 31, 2012
2011 Amortization of completed technology $
2,081 $ 2,037 Purchased intangible asset amortization 2,095 2,394
Royalty and other income, net 423 591 Total purchased
intangible amortization expense $ 4,599 $ 5,022
6 Royalty income fair value adjustment relates to our merger
with Symyx, and adds back the impact of writing down deferred
royalty income to fair value as required by purchase accounting
guidance.
7 Income tax adjustments relate to adjusting our non-GAAP
operating results to reflect an effective tax rate of 40% that
would be applied if the Company was in a taxable income position
and was not able to utilize its net operating loss carryforwards.
The income tax adjustment also excludes any impact of a release of
our valuation allowance against deferred tax assets.
8 Amortization of note receivable discount adjusts the
amortization of the discount on our promissory note receivable from
Intermolecular in connection with the sale of intellectual property
in November 2011.
Conference Call Details:
At 5:00 p.m. ET, May 3, 2012, Accelrys will conduct a conference
call to discuss its financial results. To participate, please dial
(866) 309-0459 (+ (937) 999-3232 outside the United States) and
enter the access code, 75657647, approximately 15 minutes before
the scheduled start of the call. The conference call will also be
accessible live on the Investor Relations section of the Accelrys
website at www.accelrys.com.
A replay of the conference call will be available online at
www.accelrys.com and via telephone by dialing (855) 859-2056 (+1
(404) 537-3406 outside the United States) and entering access code,
75657647, beginning 8:00 p.m. ET on May 3, 2012 through 11:59 p.m.
ET on July 3, 2012.
About Accelrys:
Accelrys (NASDAQ:ACCL), a leading scientific enterprise R&D
software and services company, supports industries and
organizations that rely on scientific innovation to differentiate
themselves. The industry-leading Accelrys Enterprise Platform
provides a broad, flexible scientific solution optimized to
integrate the diversity of science, experimental processes and
information requirements across the research, analytical,
development, and quality phases of product development. By
incorporating capabilities in applications for modeling and
simulation, enterprise lab management, workflow and automation, and
workflow and automation, Accelrys enables scientific innovators to
access, organize, analyze and share data in unprecedented ways,
ultimately enhancing innovation, improving productivity and
compliance, reducing costs and speeding time from lab to
market.
Headquartered in San Diego, Calif., Accelrys solutions are used
by more than 1,300 customers in the pharmaceutical, biotechnology,
energy, chemicals, aerospace, consumer packaged goods and
industrial products industries and employs more than 200 full-time
Ph.D. scientists. For more information about Accelrys, visit
www.accelrys.com.
Forward-Looking Statements:
Statements contained in this press release relating to the
Company’s or management’s intentions, hopes, beliefs, expectations
or predictions of the future, including, but not limited to,
statements relating to the Company’s expected non-GAAP revenue and
diluted earnings per share for the year ending December 31, 2012
and statements relating to the Company’s long-term prospects and
execution of its strategic growth and acquisition-related
initiatives, are forward-looking statements. Such forward-looking
statements are subject to a number of risks and uncertainties,
including, but not limited to, risks that the Company will not
achieve its expected non-GAAP revenue or diluted earnings per share
for the year ending December 31, 2012 and/or that the Company will
not successfully execute its strategic growth and
acquisition-related initiatives, in each case due to, among other
possibilities, an inability to withstand negative conditions in the
global economy or a lack of demand for or market acceptance of the
Company’s products. Additional risks and uncertainties faced by the
Company are contained from time to time in the Company’s filings
with the U.S. Securities and Exchange Commission, including, but
not limited to, the Company’s Annual Report on Form 10-K for the
year ended December 31, 2011, quarterly reports on Form 10-Q and
current reports on Form 8-K. Collectively, these risks and
uncertainties could cause the Company’s actual results to differ
materially from those projected in its forward-looking statements,
and the Company disclaims any intention or obligation to revise any
forward-looking statements whether as a result of new information,
future events or otherwise.
ACCELRYS, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
amounts)
(unaudited)
Three Months Ended March 31,
2012 2011 Revenue: License and
subscription revenue $ 21,697 $ 19,480 Maintenance on perpetual
licenses 9,491 7,814 Content 3,543 4,048 Professional services and
other 4,708 3,258 Total revenue
39,439 34,600 Cost of revenue: Cost of revenue
9,878 9,649 Amortization of completed technology 2,081
2,037 Total cost of revenue
11,959 11,686 Gross profit 27,480
22,914 Operating expenses: Product development 9,552 8,535 Sales
and marketing 13,865 13,489 General and administrative 4,526 4,381
Business consolidation, transaction and restructuring costs 630
1,602 Purchased intangible asset amortization 2,095
2,394 Total operating expenses 30,668
30,401 Operating loss (3,188 ) (7,487 )
Royalty and other income, net 1,631 2,280
Loss before taxes (1,557 ) (5,207 ) Income tax
expense 697 507 Net loss $
(2,254 ) $ (5,714 ) Basic and diluted net loss per
share $ (0.04 ) $ (0.10 ) Weighted average shares used to
compute net loss per share 55,783 55,525
ACCELRYS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
March 31,
2012
December 31,2011
Assets
(unaudited) (audited) Cash, cash equivalents, and
marketable securities1 $ 165,767 $ 143,624 Trade receivables, net
28,387 40,706 Long-term investments 1,010 1,010 Notes receivable
34,759 34,720 Other assets, net2 182,860 187,826
Total assets $ 412,783 $ 407,886
Liabilities and stockholders’ equity Current liabilities,
excluding deferred revenue 26,703 36,582 Deferred revenue,
including current portion3 100,392 86,012 Deferred gain, including
current portion4 25,974 25,974 Noncurrent liabilities, excluding
deferred revenue and deferred gain5 11,122 10,634 Total
stockholders’ equity 248,592 248,684 Total
liabilities and stockholders’ equity $ 412,783 $ 407,886
1Cash, cash equivalents, and marketable securities consist of
the following line items in our consolidated balance sheet: Cash
and cash equivalents; Marketable securities; Marketable securities,
net of current portion; and Restricted cash.
2Other assets, net, consists of the following line items in our
consolidated balance sheet: Prepaid expenses, deferred tax assets
and other current assets; Property and equipment, net; Goodwill;
Purchased intangible assets, net; and Other assets.
3Total deferred revenue consists of the following line items in
our consolidated balance sheet: Current portion of deferred
revenue; and Deferred revenue, net of current portion.
4Total deferred gain consists of the following line items in our
consolidated balance sheet: Current portion of deferred gain on
sale of intellectual property; and Deferred gain on sale of
intellectual property, net of current portion.
5Noncurrent liabilities, excluding deferred revenue and deferred
gain consists of the following line items in our consolidated
balance sheet: Accrued income tax; Accrued restructuring charges,
net of current portion and Lease-related liabilities, net of
current portion.
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