Agilysys Earnings 2020-12-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

agys-10q_20201231.htm

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.

Commission file number 0-5734

AGILYSYS, INC.

(Exact name of registrant as specified in its charter)

Ohio		34-0907152
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1000 Windward Concourse, Suite 250, Alpharetta, Georgia		30005
(Address of principal executive offices)		(ZIP Code)

(770) 810-7800

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, without par value	AGYS	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed be sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

The number of Common Shares of the registrant outstanding as of January 22, 2021 was 23,637,552.

Table of Contents

AGILYSYS, INC.

Index


Part I. Financial Information
	Item 1	Financial Statements (Unaudited)	3

		Condensed Consolidated Balance Sheets – December 31, 2020 (Unaudited) and March 31, 2020	3

		Condensed Consolidated Statements of Operations (Unaudited) - Three and Nine Months Ended December 31, 2020 and December 31, 2019	4

		Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - Three and Nine Months Ended December 31, 2020 and December 31, 2019	5

		Condensed Consolidated Statements of Cash Flows (Unaudited) – Nine Months Ended December 31, 2020 and December 31, 2019	6

		Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - Three and Nine Months Ended December 31, 2020 and December 31, 2019	7

		Notes to Condensed Consolidated Financial Statements (Unaudited)	8

	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

	Item 3	Quantitative and Qualitative Disclosures About Market Risk	28

	Item 4	Controls and Procedures	28

Part II. Other Information

	Item 1	Legal Proceedings	29

	Item 1A	Risk Factors	29

	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	29

	Item 3	Defaults Upon Senior Securities	29

	Item 4	Mine Safety Disclosures	29

	Item 5	Other Information	29

	Item 6	Exhibits	30

Signatures			31

Table of Contents

AGILYSYS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)	December 31, 2020 Unaudited			March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	92,608		$	46,653
Accounts receivable, net of allowance for expected credit losses of $1,334 and for doubtful accounts of $1,634, respectively		30,940			35,869
Contract assets		2,744			2,125
Inventories		1,322			3,887
Prepaid expenses and other current assets		4,338			4,874
Total current assets		131,952			93,408
Property and equipment, net		9,519			12,230
Operating lease right-of-use assets		12,600			13,829
Goodwill		19,622			19,622
Intangible assets, net		8,400			8,400
Deferred income taxes, non-current		1,234			764
Other non-current assets		5,874			6,309
Total assets	$	189,201		$	154,562
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,435		$	13,403
Contract liabilities		39,360			42,244
Accrued liabilities		8,853			9,033
Operating lease liabilities, current		4,755			4,719
Finance lease obligations, current		22			24
Total current liabilities		58,425			69,423
Deferred income taxes, non-current		894			880
Operating lease liabilities, non-current		9,353			10,617
Finance lease obligations, non-current		10			25
Other non-current liabilities		3,740			1,860
Commitments and contingencies (see Note 8)
Series A convertible preferred stock, no par value		35,000			—
Shareholders' equity:
Common shares, without par value, at $0.30 stated value; 80,000,000 shares authorized; 31,606,831 shares issued; and 23,637,552 and 23,609,398 shares outstanding at December 31, 2020 and March 31, 2020, respectively		9,482			9,482
Treasury shares, 7,969,279 and 7,997,433 at December 31, 2020 and March 31, 2020, respectively		(2,391	)		(2,401	)
Capital in excess of stated value		14,584			5,491
Retained earnings		60,116			58,984
Accumulated other comprehensive (loss) income		(12	)		201
Total shareholders' equity		81,779			71,757
Total liabilities and shareholders' equity	$	189,201		$	154,562

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended December 31,						Nine Months Ended December 31,
(In thousands, except share data)	2020			2019			2020			2019
Net revenue:
Products	$	7,599		$	12,126		$	19,396		$	34,868
Support, maintenance and subscription services		22,846			20,965			65,647			61,377
Professional services		6,230			8,896			15,797			24,854
Total net revenue		36,675			41,987			100,840			121,099
Cost of goods sold:
Products (inclusive of developed technology amortization)		3,660			9,639			9,625			28,056
Support, maintenance and subscription services		4,655			4,841			13,515			13,676
Professional services		4,164			6,443			11,802			18,071
Total cost of goods sold		12,479			20,923			34,942			59,803
Gross profit		24,196			21,064			65,898			61,296
Gross profit margin		66.0	%		50.2	%		65.3	%		50.6	%
Operating expenses:
Product development		12,376			11,285			28,900			32,127
Sales and marketing		3,327			4,918			8,278			14,307
General and administrative		7,509			6,084			18,446			17,998
Depreciation of fixed assets		722			854			2,160			1,774
Amortization of intangibles		521			608			1,490			1,900
Severance and other charges		1,552			11			2,762			438
Legal settlements, net		-			-			50			(125	)
Total operating expense		26,007			23,760			62,086			68,419
Operating (loss) income		(1,811	)		(2,696	)		3,812			(7,123	)
Other (income) expense:
Interest income		(27	)		(92	)		(76	)		(287	)
Interest expense		9			25			13			28
Other expense (income), net		95			(142	)		284			50
(Loss) income before taxes		(1,888	)		(2,487	)		3,591			(6,914	)
Income tax expense		182			95			311			161
Net (loss) income	$	(2,070	)	$	(2,582	)	$	3,280		$	(7,075	)
Series A convertible preferred stock issuance costs		-			-			(1,031	)		-
Series A convertible preferred stock dividends		(459	)		-			(1,117	)		-
Net (loss) income attributable to common shareholders	$	(2,529	)	$	(2,582	)	$	1,132		$	(7,075	)

Weighted average shares outstanding - basic		23,429			23,240			23,419			23,230

Net (loss) income per share - basic:	$	(0.11	)	$	(0.11	)	$	0.05		$	(0.30	)

Weighted average shares outstanding - diluted		23,429			23,240			23,903			23,230

Net (loss) income per share - diluted:	$	(0.11	)	$	(0.11	)	$	0.05		$	(0.30	)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended December 31,						Nine Months Ended December 31,
(In thousands)	2020			2019			2020			2019
Net (loss) income	$	(2,070	)	$	(2,582	)	$	3,280		$	(7,075	)
Other comprehensive (loss) income, net of tax:
Unrealized foreign currency translation adjustments		(64	)		(31	)		(213	)		30
Total comprehensive (loss) income	$	(2,134	)	$	(2,613	)	$	3,067		$	(7,045	)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended December 31,
(In thousands)	2020			2019
Operating activities
Net income (loss)	$	3,280		$	(7,075	)
Adjustments to reconcile income (loss) from operations to net cash provided by operating activities
Depreciation		2,160			1,774
Amortization of intangibles		1,490			1,900
Amortization of developed technology		—			9,432
Deferred income taxes		(499	)		(313	)
Share-based compensation		9,312			3,156
Changes in operating assets and liabilities		(659	)		(3,601	)
Net cash provided by operating activities		15,084			5,273
Investing activities
Capital expenditures		(1,076	)		(3,009	)
Additional investments in corporate-owned life insurance policies		(2	)		(26	)
Net cash used in investing activities		(1,078	)		(3,035	)
Financing activities
Repurchase of common shares to satisfy employee tax withholding		(1,069	)		(1,053	)
Series A convertible preferred stock issuance proceeds, net of issuance costs		33,969			—
Payment of preferred stock dividends		(1,117	)		—
Principal payments under long-term obligations		(18	)		(18	)
Net cash provided by (used in) financing activities		31,765			(1,071	)
Effect of exchange rate changes on cash		184			(33	)
Net increase in cash and cash equivalents		45,955			1,134
Cash and cash equivalents at beginning of period		46,653			40,771
Cash and cash equivalents at end of period	$	92,608		$	41,905

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

AGILYSYS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

	Three Months Ended December 31, 2020
	Common Shares										Capital in						Accumulated
	Issued				In Treasury						excess of						other
(In thousands)	Shares		Stated value		Shares			Stated value			stated value			Retained earnings			comprehensive income (loss)			Total
Balance at September 30, 2020		31,607	$	9,482		(8,019	)	$	(2,406	)	$	8,151		$	62,645		$	52		$	77,924
Share-based compensation		—		—		—			—			6,558			—			—			6,558
Restricted shares issued, net		—		—		43			13			(13	)		—			—			—
Shares issued upon exercise of SSARs		—		—		10			3			(3	)		—			—			—
Shares withheld for taxes upon exercise of stock options, SSARs or vesting of restricted shares		—		—		(3	)		(1	)		(109	)		—			—			(110	)
Net loss		—		—		—			—			—			(2,070	)		—			(2,070	)
Series A convertible preferred stock dividends		—		—		—			—			—			(459	)		—			(459	)
Unrealized translation adjustments		—		—		—			—			—			—			(64	)		(64	)
Balance at December 31, 2020		31,607	$	9,482		(7,969	)	$	(2,391	)	$

Price	25.47	EPS	-1
Shares	24	P/E	-50
MCap	603	P/FCF	89
Net Debt	-39	EBIT	-12
TEV	564	TEV/EBIT	-48
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-12-31	Filed 2021-01-27
10-Q	2020-09-30	Filed 2020-10-28
10-Q	2020-06-30	Filed 2020-07-31
10-K	2020-03-31	Filed 2020-05-22
10-Q	2019-12-31	Filed 2020-01-29
10-Q	2019-09-30	Filed 2019-10-30
10-Q	2019-06-30	Filed 2019-07-29
10-K	2019-03-31	Filed 2019-05-24
10-Q	2018-12-31	Filed 2019-01-30
10-Q	2018-09-30	Filed 2018-10-26
10-Q	2018-06-30	Filed 2018-08-02
10-K	2018-03-31	Filed 2018-05-25
10-Q	2017-12-31	Filed 2018-01-26
10-Q	2017-09-30	Filed 2017-11-02
10-Q	2017-06-30	Filed 2017-08-04
10-K	2017-03-31	Filed 2017-06-02
10-Q	2016-12-31	Filed 2017-02-09
10-Q	2016-09-30	Filed 2016-11-09
10-Q	2016-06-30	Filed 2016-08-04
10-K	2016-03-31	Filed 2016-06-10
10-Q	2015-09-30	Filed 2015-11-05
10-Q	2015-06-30	Filed 2015-08-06
10-K	2015-03-31	Filed 2015-06-05
10-Q	2014-12-31	Filed 2015-02-05
10-Q	2014-09-30	Filed 2014-11-06
10-Q	2014-06-30	Filed 2014-08-07
10-K	2014-03-31	Filed 2014-06-04
10-Q	2013-12-31	Filed 2014-02-07
10-Q	2013-09-30	Filed 2013-11-07
10-Q	2013-06-30	Filed 2013-08-02
10-K	2013-03-31	Filed 2013-06-14
10-Q	2012-12-31	Filed 2013-02-04
10-Q	2012-09-30	Filed 2012-11-07
10-Q	2012-06-30	Filed 2012-08-09
10-K	2012-03-31	Filed 2012-06-12
10-Q	2011-12-31	Filed 2012-02-09
10-Q	2011-09-30	Filed 2011-11-09
10-Q	2011-06-30	Filed 2011-08-09
10-K	2011-03-31	Filed 2011-06-14
10-Q	2010-12-31	Filed 2011-02-08
10-Q	2010-09-30	Filed 2010-11-05
10-Q	2010-06-30	Filed 2010-08-09
10-K	2010-03-31	Filed 2010-06-11
10-Q	2009-12-31	Filed 2010-02-08

8-K	2021-01-26	Earnings, Exhibits
8-K	2021-01-14	Regulation FD, Exhibits
8-K	2020-11-19
8-K	2020-10-27
8-K	2020-10-09
8-K	2020-09-17
8-K	2020-07-27
8-K	2020-07-23
8-K	2020-07-02
8-K	2020-06-30
8-K	2020-05-26
8-K	2020-05-24
8-K	2020-05-22
8-K	2020-05-21
8-K	2020-05-11
8-K	2020-05-11
8-K	2020-04-08
8-K	2020-02-10
8-K	2020-01-28
8-K	2019-12-05
8-K	2019-09-30
8-K	2019-08-09
8-K	2019-08-07
8-K	2019-07-25
8-K	2019-06-24
8-K	2019-05-30
8-K	2019-05-16
8-K	2019-04-08
8-K	2019-02-21
8-K	2019-01-24
8-K	2019-01-16
8-K	2018-11-07
8-K	2018-10-25
8-K	2018-09-12
8-K	2018-08-09
8-K	2018-08-01
8-K	2018-05-24
8-K	2018-03-20
8-K	2018-03-13
8-K	2018-01-25
8-K	2018-01-25

EX-10.1	agys-ex101_18.htm
EX-10.2	agys-ex102_17.htm
EX-10.3	agys-ex103_16.htm
EX-10.4	agys-ex104_15.htm
EX-10.5	agys-ex105_14.htm
EX-10.6	agys-ex106_13.htm
EX-31.1	agys-ex311_6.htm
EX-31.2	agys-ex312_7.htm
EX-31.3	agys-ex313_8.htm
EX-32	agys-ex32_10.htm

AGYS 10Q Quarterly Report

Agilysys Earnings 2020-12-31