|By Marketwired .||
|November 16, 2012 08:00 AM EST||
CHELMSFORD, MA -- (Marketwire) -- 11/16/12 --
- Revenue Increased 4% Sequentially
- Net Income Improved $18.3 Million Sequentially
- Pro Forma EBITDA Increased 35% Sequentially
- Covenant Amendment Provides Greater Flexibility to Execute Strategy
Aspect Software - Aspect Software today announced final results for the third quarter ended September 30, 2012, the closing of its credit facility amendment and the timing of its third quarter earnings call. Aspect's final results for the third quarter of 2012 were consistent with the preliminary results released on October 22, 2012.
Stewart Bloom, CEO of Aspect Software, commented, "Closing our credit facility amendment this week was an enormous step for Aspect as the amended covenants provide the appropriate level of flexibility needed to execute our transformational strategy and absorb the current volatility inherent in our business. Looking at the third quarter key performance measures, we remain encouraged about improvements attained during the quarter. We returned to revenue growth and improved our margins and pro forma EBITDA for the third quarter of 2012 when compared to the prior quarter."
Revenue for the three months ended September 30, 2012 was approximately $111.5 million, compared to $133.2 million in the third quarter of 2011. This is an increase of approximately 4% sequentially from $106.9 million for the three months ended June 30, 2012.
As expected, year over year, Q3 total revenue was down, driven heavily by unfavorable license revenue which was down 42% year over year, substantially due to extraordinarily large one time dialer migration deals in the prior year. Subscription maintenance revenues were down 8% for the third quarter over the prior year.
Net income for the three months ended September 30, 2012 was $7.8 million, compared to net income of $10.3 million in the prior year's third quarter and a net loss of $10.5 million for the three months ended June 30, 2012.
Pro forma EBITDA for the three months ended September 30, 2012 was $33.6 million, compared to $48.3 million in the prior year's third quarter and $24.8 million for the three months ended June 30, 2012.
Robert Krakauer, Executive Vice President and CFO of Aspect Software, said, "We are pleased with how the third quarter developed. We achieved sequential improvements in revenue, gross margin, operating margin and net income. We generated positive cash flow during the quarter, ending with cash of $146.2 million on good progress in working capital management. In addition, we amended our credit facility on Tuesday to provide us the flexibility to expand our investments in new product offerings that meet the evolving needs of our customers."
In exchange for the covenant amendments, Aspect paid consent fees that totaled approximately $2.3 million with an increase in the credit facility interest rate of 75 basis points on a prospective basis. In addition, the Company paid down $50 million of principal as part of this amendment.
Investor Conference Call / Webcast Details
Aspect will host a conference call with lenders and analysts to discuss its third quarter 2012 results and the credit facility amendment today at 11:00 a.m. Eastern standard time. To listen to the conference call via telephone, please call 866-940-5308 (domestic) or 630-343-1248 (international), confirmation code: 5998.
Safe Harbor for Forward-Looking Statements:
This press release includes forward-looking statements within the meaning of U.S. federal securities laws. These forward-looking statements are based on management's current expectations, estimates, forecasts and projections and are subject to risks and uncertainties that could cause actual results and events to differ materially from those stated in the forward-looking statements. Forward-looking statements made in this press release are made only as of the date hereof and the company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Risks and uncertainties that could cause actual results to differ from those set forth in any forward-looking statements are discussed in more detail under the caption Risk Factors in Aspect's quarterly report on Form 10-Q for the quarter ended September 30, 2012.
This press release contains references to non-GAAP financial measures, which exclude stock-based compensation expense, acquisition-related costs, depreciation, amortization, restructuring charges, employee separation costs, and certain other items that are allowed under the terms of Aspect's credit agreement. For a reconciliation of non-GAAP to GAAP financial measures, please refer to the supplemental schedules below.
Aspect builds customer-company relationships through a combination of customer contact software and workforce optimization for the enterprise. For more information, visit www.aspect.com.
Aspect Software Group Holdings, Ltd. Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended September 30, (in thousands) 2012 --------------------- Net revenues: Product revenue $ 19,466 Maintenance revenue 69,819 Services revenue 22,197 --------------------- Total net revenues 111,482 Cost of revenues: Cost of product revenue 5,032 Cost of maintenance revenue 18,486 Cost of services revenue 17,529 Amortization expense for acquired intangible assets 1,301 --------------------- Total cost of revenues 42,348 --------------------- Gross profit 69,134 Operating expenses: Research and development 10,416 Selling, general and administrative 32,281 Amortization expense for acquired intangible assets 7,645 Restructuring (credits) (15) --------------------- Total operating expenses 50,327 --------------------- Income from operations 18,807 Interest and other expense, net (16,661) --------------------- Income before income taxes 2,146 (Benefit from) income taxes (5,701) --------------------- Net income $ 7,847 ===================== Reconciliation of Income from Operations to Pro Forma EBITDA (Unaudited) Three Months Ended September 30, 2012 --------------------- Income from operations $ 18.8 Depreciation and amortization 10.4 Stock based compensation (0.2) Sponsor management fees 0.5 Other (1) 4.1 --------------------- Pro Forma EBITDA $ 33.6 ===================== (1) These costs represent amounts that are allowed to be added back for calculation of compliance with our debt agreement covenants including acquisition related adjustments to revenue, strategic investment costs, legal entity rationalization, IRS audit, debt issuance, Sarbanes-Oxley compliance, foreign withholding taxes, and non-recurring charges.
Earnings before interest, depreciation and amortization, as adjusted ("Pro Forma EBITDA") is used in our debt agreements to determine compliance with financial covenants and our ability to engage in certain activities, such as making certain payments. In addition to covenant compliance, our management also uses Pro Forma EBITDA along with certain other pro forma adjustments to assess our operating performance and to calculate performance-based cash bonuses which are tied to Pro Forma EBITDA targets. Pro Forma EBITDA contains other charges and gains, for which we believe adjustment is permitted under our senior secured credit agreement. Pro Forma EBITDA is not a measure of our liquidity or financial performance under GAAP and should not be considered as an alternative to net income, income from operations or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of Pro Forma EBITDA instead of income from operations has limitations as an analytical tool, including the failure to reflect changes in cash requirements, including cash requirements necessary to service principal or interest payments on our debt, or changes in our working capital needs. Management compensates for these limitations by relying primarily on our GAAP results and by using Pro Forma EBITDA on a supplemental basis. Other companies in our industry may calculate this measure differently than we do, limiting its usefulness as a comparative measure.
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