CIMdata PLM Industry Summary Online Archive

16 April 2012

Financial News

SofTech Announces Q3 Fiscal Year 2012 Operating Results

Q3’12 Product Revenue Up 49% from Q3’11; Third Sequential Quarter of Double-Digit Product Revenue Growth;

Quarterly EPS from Continuing $.14 vs. $.04; YTD EPS from Continuing $.38 vs. $.28.

SofTech, Inc. announced its third quarter fiscal 2012 operating results. Revenue for the three months ended February 29, 2012 was $1.7 million, down 4% from the same period in the prior fiscal year. Net income from continuing operations was $137,000 or $.14 per share for the three months ended February 29, 2012, an increase of 471% from the net income from continuing operations of $24,000 or $.04 per share for the same period in the prior fiscal year.

Revenue for the nine months ended February 29, 2012 was $4.9 million as compared to $5.3 million for the same period in the prior fiscal year, a decrease of 7%. Net income from continuing operations for the nine months ended February 29, 2012 was $377,000 or $.38 per share as compared to $170,000 or $.28 per share for the same period in the prior fiscal year, an increase of 122%.

The weighted average shares outstanding on which the earnings per share was calculated increased from 611,000 shares for the three and the nine months ended February 28, 2011 to 995,000 shares for the comparative periods in fiscal 2012 as a result of the 384,000 shares purchased by the new investors (primarily the new management team and directors) in the March 2011 recapitalization transaction.

Gross margins declined in both the three and nine month periods ended February 29, 2012 compared to the same periods in fiscal 2011 due to declines experienced in service revenue as described below. The cost of sales is composed primarily of payroll and related expenses of the customer services group that provides support services and the professional services group that performs implementation, customization and training services. These costs were essentially unchanged from fiscal 2011 to 2012.

“Our operating performance continued to show steady improvement compared to the same periods in the prior year especially for product revenue and profitability,” said Joe Mullaney, President and CEO. “However, our service revenue was negatively impacted primarily by one large maintenance customer that moved to a competitor’s offering and did not renew their maintenance contract at the end of January 2011 (before the March 2011 recapitalization transaction). A contributing factor to the service revenue decline was a decrease in consulting revenue in fiscal 2012 compared to the prior year due to the completion of a large project that has not yet been fully replaced,” he added.

“Developing profitable new revenue streams that leverage our expertise and technology has been a key focus of the new management team. Over the last year we have been working on a number of new product offerings. I am happy to report that one such initiative we started in June 2011 has been completed subsequent to the end of our third quarter and the first order satisfied in March 2012. We plan on having several announcements over the coming months to describe these new product offerings,” Mullaney added.

FINANCIAL STATEMENTS

The Statements of Operations for the three and nine month periods ended February 29, 2012 compared to the same periods in the prior fiscal years are available by accessing the unabridged press release. A reconciliation of Net income to EBITDA, a non-GAAP financial measure, is also provided.

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