CIMdata PLM Industry Summary Online Archive
3 November 2005
Financial News
RAND Worldwide® Announces Financial Results for the Third Quarter of 2005
RAND A Technology Corporation operating as RAND Worldwide ® ("RAND" or the "Company") announced its financial results for the three- and nine-month periods ended September 30, 2005.
2005 Third Quarter Highlights
.Revenue was $23.8 million, an increase of 8% compared to Q3'04
.IMAGINiT revenue was $16.5 million, an increase of 57% compared to Q3'04
.Improvement in gross profit margin to 55.5%, from 47.5% in Q3'04
.EBITDA was $0.5 million, compared to negative EBITDA of ($1.8) million in Q3'04
.Net income from continuing operations was $11K, or $0.00 per share, compared to a net loss from continuing operations of ($7.9) million, or ($0.47) per share in Q3'04
"We are very pleased with our continuing improved results for the quarter and the nine months and the continued positive movement of our sales and services strategy. The third quarter results were driven by the continued growth of our IMAGINiT division which is being propelled by strong end-user demand for its core Autodesk products, a steady pipeline of opportunities in the AEC market and the addition of SageCAD, now IMAGINiT Northeast, acquired in Q1 of this year," said Frank Baldessara, President and CEO of RAND Worldwide. "Both software and services revenue grew significantly during the quarter and we continue to invest in the IMAGINiT operations with our October 2005 acquisition with the purchase of certain assets of Continental Imaging Products which expands our presence in Alberta and provides us with an established platform to pursue opportunities in the oil and gas industry."
"Our PLM, or Dassault-related division, continued to focus on sales of higher margin software and services products. We are building a solid base of customers in this division and will look to expand those relationships in future quarters by working to introduce our broad base of services to those clients," added Mr. Baldessara. "With the majority of our total revenue now generated in North America we will continue to seek organic and acquisitive opportunities to expand our presence in this market while also maintaining an eye to further develop our operations overseas, primarily in rapidly growing Asia Pacific region."
Financial Review
Following the previously announced 2004 year end sale of its five European subsidiaries to Dassault Systèmes ("Dassault") that resulted in the elimination of 100% of the Company's debt, combined with the closure and exit of unprofitable operations in France, Italy, Ireland Shared Services and Poland, the
Total revenue in the third quarter was $23.8 million, an increase of 8% compared to the same period in 2004. RAND generates approximately 70% of its revenue in U.S. dollars and as a result, the year-over-year decline of the U.S. dollar relative to the Canadian dollar negatively impacted revenue by $1.3 million for the quarter.
RAND IMAGINiT accounted for $16.5 million (69.3%) of this total, while RAND PLM accounted for $7.3 million (30.7%). RAND IMAGINiT revenue consisted of: $10.9 million in software revenue; $5.5 million in services revenue; and, $149,000 in hardware revenue. RAND PLM revenue consisted of: $1.8 million in software; $5.4 million in services; and, $122,000 in hardware.
RAND's gross profit margin improved in Q3'05 to 55.5%, compared with 47.5% for the same period last year. This improvement in gross margin is a result of enhancing the revenue mix with an increase in higher margin software and services, and a reduction of low margin hardware sales, as well as improved productivity in the overall services business.
Operating expenses were $12.8 million, or 54% of revenue, in Q3'05, compared to $12.3 million, or 56% of revenue in Q3'04. Expenses remained relatively steady primarily due to ongoing efforts to contain costs. The Company recorded EBITDA of $0.5 million in the third quarter of 2005, versus an EBITDA loss of ($1.8) million in the third quarter of 2004. EBITDA increased year-over-year due to a greater percentage of revenue being generated from higher margin products and services as well as ongoing efforts to minimize costs.
Net income from continuing operations was breakeven at $11K, or $0.00 per share, compared to a net loss from continuing operations of $7.9 million, or ($0.47) per share in the same period last year. The net loss in the third quarter of 2004 included a one-time $5.5 million restructuring charge related to the closing of several unprofitable business locations in Europe.
RAND maintains a strong balance sheet from which to pursue its growth initiatives. At September 30, 2005, the Company had cash and short-term investments totaling $15.1 million, compared with $6.4 million at September 30, 2004 and $8.4 million at December 31, 2004. During the third quarter RAND completed an equity private placement of 3,000,000 common shares at $2.75 per share, generating net proceeds of $7.6 million to the Company. The funds will be used to support RAND's organic and acquisitive growth initiatives. To further strengthen its balance sheet, during the quarter RAND established a new global banking relationship and a $5.0 million credit facility with HSBC Group ("HSBC"). To date, RAND has not drawn on this credit facility and the Company remains debt-free.
"The third quarter saw the achievement of two important financial milestones related to strengthening our financial position to support our growth activities," said Kriss Bush, Chief Financial Officer of RAND Worldwide. "With our private placement we raised $7.6 million, engaged a syndicate of four investment dealers, expanded our base of institutional investors and helped to increase the liquidity of our shares. Meanwhile, establishing a credit facility with HSBC is a strong testament to the positive strides we have made over the past year to improve our financial situation and to position our business for accelerated.3 growth. A global bank like HSBC is ideal for RAND as we now have operations in 14 countries and we will continue to prudently pursue opportunities to further expand the geographical reach for our products and services."
More complete financials are available at http://www.rand.com/na/pdf/news/3Q05_Nov3_05_FINAL.pdf .
Become a member of the CIMdata PLM Community to receive your daily PLM news and much more.
Tell us what you think of the CIMdata Newsletter. Send your feedback.
CIMdata is committed to your privacy. Your personal information will never be sold or shared outside of CIMdata without your express permission.