CIMdata PLM Industry Summary Online Archive
3 November 2005
Financial News
MRO Software Reports Fourth Quarter and Fiscal 2005 Results
MRO Software, Inc. announced revenues of $55.4 million for the Company's fourth quarter and $199.2 million for the fiscal year ended September 30, 2005.
Total revenues for the fourth quarter were $55.4 million compared with $49.9 million for the fourth quarter last year, an increase of 11 percent. Revenues for the fiscal year ended September 30, 2005 were $199.2 million, compared with $185.7 million for the prior year, an increase of 7 percent.
On a GAAP basis, the Company reported net income for the fourth quarter of $5.8 million or $0.22 per diluted share, compared with net income of $4.1 million or $0.16 per diluted share for the same quarter last year, an increase in EPS of 38 percent. On a GAAP basis for the fiscal year ended September 30, 2005, the Company reported net income of $13.6 million or $0.52 per diluted share compared with a net income of $10.3 million, or $0.41 per diluted share for the prior year, an increase in EPS of 27 percent.
In the fourth quarter of fiscal 2005, the Company recognized a tax benefit of $3.4 million from the resolution of an IRS examination. Without this tax benefit, the effective tax rate for the year would have been 35.5 percent. In addition, in order to achieve the primary goal of software revenue growth, the Company invested heavily in sales and marketing initiatives that resulted in higher-than-expected sales expenses. The Company also recorded several one-time, unusual charges, the most significant being expenses related to the accelerated vesting of employee stock options, and expenses related to the review and audit of internal controls as required under Section 404 of the Sarbanes-Oxley Act of 2002.
The Company also reports net income on a non-GAAP basis (see Schedule A). Non-GAAP results are adjusted for the amortization of acquired technology and other intangibles and the related tax effects. Non-GAAP net income for the fourth quarter was $6.1 million, or $0.23 per diluted share compared with non-GAAP net income of $4.6 million or $0.18 per diluted share for same quarter last year, an increase in EPS of 28 percent. For the fiscal year ended September 30, 2005, the Company reported non-GAAP net income of $15.2 million, or $0.58 per diluted share compared with non-GAAP net income of $12.6 million, or $0.50 per diluted share for the prior year, an increase in EPS of 16 percent. Beginning in the first quarter of fiscal year 2006, the Company will no longer report its results on a non-GAAP basis.
For the fourth quarter, software license revenues were $20.9 million, compared with $15.9 million for the same quarter last year, an increase of 31 percent. Support and services revenues were $34.5 million for the fourth quarter, compared with $33.9 million for the same quarter last year, an increase of 2 percent.
For fiscal year ended September 30, 2005, software license revenues were $65.1 million compared with $52.6 million for the prior year, an increase of 24 percent. Support and services revenues for the fiscal year ended September 30, 2005, were $134.1 million compared with $133.1 million for the prior year, an increase of 1 percent.
During the fourth quarter, the Company sold 265 software licenses into a broad range of industries. The Company sold more than 30 MXES licenses, including several customers that purchased the entire Maximo Enterprise Suite of functionality. Customers that purchased MRO Software solutions during the quarter included: Alcatel Portugal, BP Oil International Ltd, China National Offshore Oil Company (CNOOC), Chiron Corp, Computer Sciences Corporation (CSC), Getronics, Guangzhou Hengyun Power Generation, Honeywell International, Kellog Brown & Root, Kuwait Drilling Company, NYC Department of Transportation, Sacramento Regional Wastewater, Shanghai Zhabei Power Plant, Southwest Airlines, Tampa Port Authority, The Bureau of Engraving and Printing, University of Alabama, U.S. Air Force, U. S. Department of Energy, U. S. Department of State, and the U.S. Navy.
The balance sheet as of September 30, 2005 contained $133.2 million in cash and marketable securities and no long-term debt. This compares with $108.4 million in cash and marketable securities as of September 30, 2004, and represents a 23 percent increase year-over-year. For the fourth quarter, deferred revenue was $32.3 million, and days sales outstanding (DSO) was 66.
"Looking back on fiscal 2005, we achieved a number of significant milestones for the Company," said Chip Drapeau, president and CEO, MRO Software. "In the second quarter we successfully launched Maximo Enterprise Suite, the largest product development project in our history. We executed our industry specific solution strategy for targeted markets producing robust sales results. And finally, total revenues for the fourth quarter were the highest in our history which in turn delivered our highest total revenues for a fiscal year."
"Our focus on software sales growth returned strong top-line results and allowed us to increase earnings and cash," said Peter Rice, executive vice president and CFO, MRO Software. "Looking ahead to fiscal 2006, we are confident that operating margins will improve as sales expenses normalize after our initial MXES roll-out, and the one-time unusual charges, taken in the fourth quarter, are eliminated."
For fiscal year 2006, the Company maintains the guidance provided last quarter, and expects overall revenue growth to be in the range of 5 to 10 percent above fiscal 2005 results. Software revenues are expected to grow in the range of 10 to 20 percent. As a result, the Company expects GAAP EPS to grow in the range of 15 to 25 percent over fiscal 2005 results. The Company expects software revenues for the first half of fiscal 2006 to be in the range of $28 million to $32 million.
The Company will conduct its regularly scheduled fiscal fourth quarter and year end 2005 conference call on Thursday, November 3 at 4:30 p.m. EST. A digital recording of the call will be available beginning two hours after the call and will be available through November 13, 2005. To access the replay within the U.S. and Canada, dial (800) 642-1687, international callers should dial (706) 645-9291; all participants should use conference ID: 1466377.
A webcast of the call is available at: http://www.mro.com/investor . A transcript of the call will be promptly archived on the Investor Relations portion of the Company's website, and may be found at: http://www.mro.com/investor .
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