Agilysys Inc. (AGYS, Financial) filed Quarterly Report for the period ended 2008-12-31.
Agilysys Inc. is a leading provider of innovative IT solutions to corporate and public-sector customers with special expertise in select vertical markets including retail and hospitality. The company uses technology-including hardware software and services-to help customers resolve their most complicated IT needs. The company possesses expertise in enterprise architecture and high availability infrastructure optimization storage and resource management and business continuity; and provides industry-specific software services and expertise to the retail and hospitality markets. Headquartered in Boca Raton Fla. Agilysys operates extensively throughout North America with additional sales offices in the United Kingdom and China. Agilysys Inc. has a market cap of $80.94 million; its shares were traded at around $3.35 with a P/E ratio of 15.5 and P/S ratio of 0.1. The dividend yield of Agilysys Inc. stocks is 3.36%.
Eatec and Triangle were acquired on February 19, 2008, and April 9, 2008, respectively. Therefore, their sales were not included in prior year sales. Eatec contributed $5.0 million and Triangle contributed $3.0 million for the year to date ended December 31, 2008. Both acquisitions are reported in the HSG segment. InfoGenesis and Innovative were acquired on June 18, 2007, and July 2, 2007, respectively, therefore their sales were only included in a portion of the prior year total net sales. In the current year, InfoGenesis contributed an additional $9.7 million and is classified in the HSG segment. Innovative contributed an additional $69.4 million and is classified in the TSG segment.
the companys 2009 and 2008 acquisitions, which contributed $7.0 million of the increase. The remaining $2.8 million increase was from the companys existing business. The increase in services sales of $13.0 million was attributable to the companys 2009 and 2008 acquisitions, which contributed $16.7 million of incremental service revenue. The companys existing business experienced a decline in service revenue of $3.7 million.
Gross Margin. The $26.8 million increase in gross margin was primarily due to an $11.1 million increase in the HSG segment, a $4.1 million increase in the RSG segment, and a $10.7 million increase in the TSG segment. The HSG increase can be attributed to the increase in sales, as well as a favorable product mix, including higher sales of proprietary software. The RSG and TSG increases can also be attributed to favorable product mix, including an increase in service revenue, which typically generates higher gross margins than product revenue.
Selling, General and Administrative Expenses. The $20.7 million increase in SG&A expenses was due to an increase across all segments. The TSG segment increased $6.3 million, of which $4.3 can be attributed to the Innovative acquisition which was not included in the first quarter of the prior period. The HSG segment increased by $10.3 million, of which $7.2 million can be attributed to the acquisitions of Triangle, Eatec, and Infogenesis. The RSG segment experienced a slight increase of $0.9 million, and Corporate increased by $1.8 million, primarily due to an increase in professional fees of $2.2 million.
During the first half of 2009, the company performed a detailed review of the business to identify opportunities to improve operating efficiencies and reduce costs. As part of this cost reduction effort, management reorganized the professional services go-to-market strategy by consolidating its management and delivery groups. The company will continue to offer specific proprietary professional services, including identity management, security, and storage virtualization, however it will increase the use of external business partners. The cost reduction resulted in a $2.5 million and $0.5 million charge for one-time termination benefits relating to a workforce reduction in the first and second quarter of 2009, respectively. The workforce reduction was comprised mainly of sales personnel. Payment of these one-time termination benefits is expected to be substantially complete in 2009. This restructuring also resulted in a $20.6 million impairment to goodwill and intangible assets in the first quarter of 2009, related to the companys 2005 acquisition of the CTS Corporations. The entire $23.6 million restructuring charge relates to the Technology Solutions Group.
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Agilysys Inc. is a leading provider of innovative IT solutions to corporate and public-sector customers with special expertise in select vertical markets including retail and hospitality. The company uses technology-including hardware software and services-to help customers resolve their most complicated IT needs. The company possesses expertise in enterprise architecture and high availability infrastructure optimization storage and resource management and business continuity; and provides industry-specific software services and expertise to the retail and hospitality markets. Headquartered in Boca Raton Fla. Agilysys operates extensively throughout North America with additional sales offices in the United Kingdom and China. Agilysys Inc. has a market cap of $80.94 million; its shares were traded at around $3.35 with a P/E ratio of 15.5 and P/S ratio of 0.1. The dividend yield of Agilysys Inc. stocks is 3.36%.
Highlight of Business Operations:
Selling, General and Administrative Expenses. The $6.1 million decrease in SG&A expenses was due to a decrease in the TSG segment of $4.2 million. The HSG segment had a slight increase of $0.5 million, the RSG segment had a slight decrease of $0.7 million, and Corporate had a slight decrease of $1.7 million. The decrease in TSG segment was primarily due to a $3.0 million decrease in compensation and benefits related to the companys restructuring of the professional services group, described in Note 6 to consolidated financial statements. In addition, the TSG segment experienced a $0.9 million decrease in amortization of intangible assets and a $0.4 million decrease in marketing expense. The decrease in Corporate expense was attributable to a $2.2 million credit to stock compensation due to a change in the estimate of the forfeiture rate of stock options and the reversal of performance share compensation due to the management restructuring. This credit was partially offset by an increase in Professional Fees of $1.3 million, primarily related to the companys SEC filings and recently concluded evaluation of strategic alternatives.Eatec and Triangle were acquired on February 19, 2008, and April 9, 2008, respectively. Therefore, their sales were not included in prior year sales. Eatec contributed $5.0 million and Triangle contributed $3.0 million for the year to date ended December 31, 2008. Both acquisitions are reported in the HSG segment. InfoGenesis and Innovative were acquired on June 18, 2007, and July 2, 2007, respectively, therefore their sales were only included in a portion of the prior year total net sales. In the current year, InfoGenesis contributed an additional $9.7 million and is classified in the HSG segment. Innovative contributed an additional $69.4 million and is classified in the TSG segment.
the companys 2009 and 2008 acquisitions, which contributed $7.0 million of the increase. The remaining $2.8 million increase was from the companys existing business. The increase in services sales of $13.0 million was attributable to the companys 2009 and 2008 acquisitions, which contributed $16.7 million of incremental service revenue. The companys existing business experienced a decline in service revenue of $3.7 million.
Gross Margin. The $26.8 million increase in gross margin was primarily due to an $11.1 million increase in the HSG segment, a $4.1 million increase in the RSG segment, and a $10.7 million increase in the TSG segment. The HSG increase can be attributed to the increase in sales, as well as a favorable product mix, including higher sales of proprietary software. The RSG and TSG increases can also be attributed to favorable product mix, including an increase in service revenue, which typically generates higher gross margins than product revenue.
Selling, General and Administrative Expenses. The $20.7 million increase in SG&A expenses was due to an increase across all segments. The TSG segment increased $6.3 million, of which $4.3 can be attributed to the Innovative acquisition which was not included in the first quarter of the prior period. The HSG segment increased by $10.3 million, of which $7.2 million can be attributed to the acquisitions of Triangle, Eatec, and Infogenesis. The RSG segment experienced a slight increase of $0.9 million, and Corporate increased by $1.8 million, primarily due to an increase in professional fees of $2.2 million.
During the first half of 2009, the company performed a detailed review of the business to identify opportunities to improve operating efficiencies and reduce costs. As part of this cost reduction effort, management reorganized the professional services go-to-market strategy by consolidating its management and delivery groups. The company will continue to offer specific proprietary professional services, including identity management, security, and storage virtualization, however it will increase the use of external business partners. The cost reduction resulted in a $2.5 million and $0.5 million charge for one-time termination benefits relating to a workforce reduction in the first and second quarter of 2009, respectively. The workforce reduction was comprised mainly of sales personnel. Payment of these one-time termination benefits is expected to be substantially complete in 2009. This restructuring also resulted in a $20.6 million impairment to goodwill and intangible assets in the first quarter of 2009, related to the companys 2005 acquisition of the CTS Corporations. The entire $23.6 million restructuring charge relates to the Technology Solutions Group.
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