CIMdata PLM Industry Summary Online Archive
14 August 2007
Financial News
RAND Worldwide T Announces Second Quarter 2007 Financial Results
Rand A Technology Corporation, operating as RAND WorldwideT ("Rand" or the "Company") announced financial results for the three and six-month period ended June 30, 2007.
Q2 2007 Highlights
• Revenue increased to $26.0 million, up 7.4% from $24.2 million in Q2 2006
• Revenue from the IMAGINiT business was $20.9 million, up 11.5% from Q2 2006
• Negative EBITDA1 was $2.1 million, compared to positive EBITDA of $0.6 million in Q2 2006
• Net loss from continuing operations was $0.11 per share, compared to net income from continuing operations of $0.02 per share in Q2 2006
• Completed sale of European PLM operations in Finland and Denmark
• Completed CADVisions acquisition, subsequent to quarter end
• Agreement to acquire the Company by Ampersand Ventures for $2.10 per share (see separate press release dated August 14, 2007)
Consolidated Financial Highlights see http://www.rand.com/1/pdfs/news/RND_Q2_2007_FINAL.pdf
Financial Review
Revenue for Q2 2007 was $26.0 million, a 7.4% increase from $24.2 million in Q2 2006. This increase was driven primarily by additional revenue from IMAGINiT. Revenue from IMAGINiT was $20.9 million, an increase of 11.5% from Q2 2006, while revenue from RAND PLM was $5.1 million, a decrease of 6.9% from Q2 2006. IMAGINiT generated 80.3% of revenue in Q2 2007, up from 77.3% of revenue in Q2 2006. Rand generates approximately 80% of its revenue in foreign currencies and as a result of the year-over-year impact of those currencies relative to the Canadian dollar, revenues were negatively impacted by approximately $0.3 million for the quarter.
Driven by 20.0% growth at IMAGINiT, revenue for the year-to-date ("YTD") period ended June 30, 2007 was $59.1 million, up 14.4% compared to the same period last year. For the first half of 2007, the year-over-year impact of foreign currencies relative to the Canadian dollar positively impacted revenue by $0.3 million.
Rand's gross margin was 47.1% in Q2 2007, compared to 56.3%, in Q2 2006. The primary cause for the decline can be attributed to the margin drop within IMAGINiT North America as a result of incentive changes implemented by Autodesk earlier in the year. During the quarter, gross margin for IMAGINiT was 39.3%, and for PLM was 78.7%. Sales of lower margin 2D products continue to put near-term pressure on IMAGINiT's overall gross margin percentage. 3D products earn a higher gross margin percentage for the Company than 2D products, and also attract incremental services revenue.
Rand's gross margin for the first half of 2007 was 46.7% compared to 52.8% for the first half of fiscal 2006. Gross margin for the YTD period was impacted by the same factors described in the prior paragraph.
Q2 2007 operating expenses were $13.5 million or 52.0% of revenue, compared to $12.7 million, or 52.4% of revenue in Q2 2006. The increase is primarily due to corporate costs associated with the Ampersand transaction, as well as increases in employee benefits and occupancy.
Total YTD operating expenses were $27.8 million, or 46.9% of revenue compared to $24.3 million, or 47.0% of revenue for the same period last year.
Rand recorded negative EBITDA of $2.1 million in Q2 2007, versus positive EBITDA of $0.6 million in Q2 2006. EBITDA was impacted primarily by the changes within IMAGINiT described above, combined with higher overall operating expenses. For the first half of the year, Rand recorded negative EBITDA of $1.4 million versus positive EBITDA of $2.3 million last year.
Net loss from continuing operations in Q2 2007 was $2.3 million, or a net loss per share of $0.11 for the quarter, compared to net income from continuing operations of $0.5 million, or net earnings per share of $0.02 in the second quarter of the previous year. The decrease was primarily driven by the items mentioned above. YTD, net loss from continuing operations totalled $1.7 million, or a net loss per share of $0.08, compared to net income from continuing operations of $1.9 million, or net earnings per share of $0.09 per share, in the same period last year.
Net loss for Q2 2007 was $2.6 million resulting in a net (basic) loss per common share of $0.13, compared to net income of $0.06 million, or net earnings per share of $0.00 in the second quarter of the previous year. Net loss for Q2 2007 included the items noted above, as well as a loss from discontinued operations of $0.3 million. Net earnings for Q2 2006 included a loss from discontinued operations of $0.4 million. YTD, net loss totalled $2.2 million, or a net loss per share of $0.11, compared to net earnings of $1.2 million, or net earnings per share of $0.06, in the same period last year.
At June 30, 2007, the Company had cash and cash equivalents totalling $10.6 million compared with $13.4 million at December 31, 2006.
Acquisition, Divestiture, and Additional Event Updates
On May 15, 2007, RAND Worldwide completed the sale of its wholly-owned subsidiaries in Finland and Denmark, which represented the majority of the Company's European PLM operations. The divestiture is expected to result in annual cost savings of approximately $1.0 million. RAND has retained a presence in Europe by continuing to manage its remaining divisions.
On July 5, 2007, RAND Worldwide completed the acquisition of CADVisions, Inc., a Dallas Texas based leading provider of Autodesk software and associated training, consulting and support services.
On August 14, 2007, the Company entered into a definitive agreement with funds managed by Ampersand Ventures ("Ampersand"), a leading private equity firm whose limited partners include some of the leading financial investors in private equity, whereby a new subsidiary of Ampersand would acquire all of the outstanding shares of the Company at a price of $2.10 per share pursuant to a plan of arrangement under the Ontario Business Corporations Act. The transaction is subject to the customary conditions, including shareholder approval at a special meeting of the shareholders expected to be held in October 2007 and approval of the Superior Court of Justice of Ontario. The transaction is expected to close in the fourth quarter. However, there can be no assurances that the proposed transaction will be completed at that time or at all. Prior to completion of the transaction, the Company will conduct its business in the ordinary course consistent with past practice.
Management's discussion and analysis, consolidated financial statements and notes thereto for Q2 2007 can be obtained today from RAND's corporate website at http://www.rand.com/ . The documents will also be available at http://www.sedar.com/ .
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.