Daegis Inc. Reports Fiscal 2014 Third Quarter Results *Company aligns business segments to reflect new organizational structure *Sequentially increased Adjusted EBITDA margin by approximately 30% *Launched new product: TD Mobile Business Wire IRVING, Texas -- February 25, 2014 Daegis Inc. (NASDAQ: DAEG), a global archiving, eDiscovery and software development tools company, today announced financial results for its fiscal 2014 third quarter ended January 31, 2014. Third Quarter Fiscal 2014 Financial Highlights *Third quarter total revenue of $7.9 million, compared to $10.4 million year over year. *Third quarter GAAP net loss of $878,000 or $0.05 per share, compared to GAAP net loss of $65,000 or $0.01 per share for the same period last year. *Third quarter Adjusted EBITDA of $1.0 million, compared to $1.8 million last year. ^ (1) *Non-GAAP net income of $374,000 or $0.02 per share, compared to $1.1 million or $0.06 per share last year. ^ (1) *Cash at January 31, 2014 was $4.0 million, compared to $4.4 million at January 31, 2013. *Total debt outstanding at January 31, 2014 was $15.3 million, a decrease of $2.9 million from January 31, 2013. *We have combined our Archive and eDiscovery operations into one reporting segment, and our Database and Migration tools operations will be reported as a separate segment. As a result, we have restated historical results to reflect these new reporting segments. Nine Months Ended Fiscal 2014 Financial Highlights *Nine month total revenue of $23.6 million, compared to $30.4 million last year. *Nine month GAAP net loss of $1.7 million or $0.11 per share, compared to GAAP net income of $344,000 or $0.00 per share for the same period last year. *Nine month Adjusted EBITDA of $2.7 million, compared to $4.6 million last year. ^ (1) *Non-GAAP net income of $580,000 or $0.03 per share, compared to Non-GAAP net income of $2.3 million or $0.13 per share last year. ^ (1) “Our third quarter results met our expectations as we reversed the declining revenue trend and improved our EBITDA margin,” said Tim Bacci, CEO of Daegis Inc. “With the alignment of the archive and eDiscovery business completed, the increasing market opportunity for a one solution approach for information governance and eDiscovery and the introduction of TD Mobile, we remain confident that we’ll demonstrate growth in calendar 2014.” Third Quarter Comparative Financial Summary $ In Millions, except per share and % data Q3 Q3 % or $ FY 2014 FY 2013 Change ^(3) Total Revenue $7.9 $10.4 (24%) Total Archive and eDiscovery Revenue $4.8 $6.9 (31%) Total Database and Migration Revenue $3.1 $3.5 (12%) GAAP Net Loss ($0.9) ($0.1) ($0.8) GAAP Net Loss Per Share - Diluted ($0.05) ($0.01) ($0.04) Adjusted EBITDA ^(1) $1.0 $1.8 ($0.8) Adjusted EBITDA Margin ^(1) 13.1% 17.3% (24%) Non-GAAP Net Income ^(1) $0.4 $1.1 ($0.7) Non-GAAP Net Income Per Share – Diluted ^(1) $0.02 $0.06 ($0.04) Cash from Operations $0.5 $0.8 ($0.3) Cash ^(2) $4.0 $4.4 ($0.4) Total Debt Outstanding ^(2) $15.3 $18.2 ($2.9) ^(1) See reconciliation table below regarding the presentation of Adjusted EBITDA and Non-GAAP net income. ^(2) Results as of January 31, 2014 and 2013. ^(3) The calculation of percentage or dollar change is based on unrounded numbers. Investor Conference Call Management will host a conference call February 25, 2014, at 4:00 p.m. CT (5:00 p.m. ET) to review the third quarter financial results. The call can be accessed by dialing (877) 941-8416 or (480) 629-9808 for international callers.Additionally, the conference call will be webcast on the Daegis website at www.daegis.com. A replay of the call will be available through March 7, 2014 by dialing (800) 406-7325 or (303) 590-3030 for international callers and using the following passcode: 4667677#. About Daegis Inc. Daegis Inc. (NASDAQ: DAEG) is a global archiving, eDiscovery and software development tools company. Daegis delivers leading-edge archive and eDiscovery software throughDaegis Edge, an end-to-end platform for managing the eDiscovery life cycle,Daegis Acumen technology assisted review and Daegis AXS-One enterprise information archiving. Daegis also offers specialized services including data collection, analytics consulting, project management and managed document review. TheGupta TechnologiesandComposer Technologiesbusinesses serve customers around the globe with development tools for mobile and web application development, databases and application migration software. Visit our websites to learn more. Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that these statements involve risks and uncertainties and actual events or results may differ materially. When the words “believes,” “expects,” “plans,” “projects,” “estimates” and similar expressions are used, they identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Examples of forward-looking statements in the press release include the statements made by Mr. Bacci. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are general market and economic conditions, our ability to execute our business strategy and integrate acquired businesses, the effectiveness of our sales team and approach, our ability to target, analyze and forecast the revenue to be derived from a client and the costs associated with providing services to that client, the date during the course of a fiscal year that a new client is acquired, the length of the integration cycle for new clients and the timing of revenues and costs associated therewith, our client concentration given that the Company is currently dependent on a few large client relationships, potential competition in the marketplace, the ability to retain and attract employees, market acceptance of our service programs and pricing options, our ability to maintain our existing technology platform and to deploy new technology, our ability to sign new clients and control expenses, the possibility of the discontinuation of some client relationships, the financial condition of our clients' business and other factors detailed in the Company's filings with the Securities and Exchange Commission. DAEGIS INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands) January 31, April 30, 2014 2013 ASSETS Current assets: Cash $ 4,013 $ 5,459 Accounts receivable, net 8,863 10,594 Prepaid expenses and other current assets 640 1,203 Assets held for sale — 926 Total current assets 13,516 18,182 Property and equipment, net 1,244 1,934 Goodwill 11,706 11,706 Intangibles, net 5,998 7,152 Other assets 579 733 Total assets $ 33,043 $ 39,707 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 438 $ 243 Current portion of long-term debt 1,350 2,519 Accrued compensation and related expenses 1,635 2,697 Common stock warrant liability 255 204 Other accrued liabilities 1,003 863 Deferred revenue 7,186 8,449 Liabilities held for sale — 526 Total current liabilities 11,867 15,501 Long-term debt, net of current portion 13,959 15,170 Deferred tax liabilities, net 983 923 Other long-term liabilities 1,207 1,429 Total liabilities 28,016 33,023 Commitments and contingencies Stockholders’ equity: Preferred stock — 2 Common stock 17 15 Additional paid-in capital 100,117 100,053 Accumulated other comprehensive income 280 280 Accumulated deficit (95,387 ) (93,666 ) Total stockholders’ equity 5,027 6,684 Total liabilities and stockholders’ equity $ 33,043 $ 39,707 DAEGIS INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Nine Months Ended January 31, January 31, 2014 2013 2014 2013 Revenues: Archive and eDiscovery $ 4,779 $ 6,902 $ 14,936 $ 19,528 Database and migration 3,109 3,538 8,652 10,895 Total revenues 7,888 10,440 23,588 30,423 Operating expenses: Direct costs of Archive 1,966 2,287 6,077 7,669 and eDiscovery revenue Direct costs of database 494 826 1,357 2,252 and migration revenue Product development 1,395 1,725 4,683 5,411 Selling, general and 4,311 5,235 11,807 14,538 administrative Sale of intangible trade — — — (1,000 ) name Total operating expenses 8,166 10,073 23,924 28,870 Income (loss) from (278 ) 367 (336 ) 1,553 operations Other income (expense): Gain (loss) from change in fair value of common (163 ) 31 (51 ) 303 stock warrant liability Interest expense (312 ) (407 ) (1,039 ) (1,249 ) Other, net (54 ) 19 (51 ) (90 ) Total other income (529 ) (357 ) (1,141 ) (1,036 ) (expense) Income (loss) before (807 ) 10 (1,477 ) 517 income taxes Provision for income 71 75 244 173 taxes Net income (loss) $ (878 ) $ (65 ) $ (1,721 ) $ 344 Income (loss) per share: Basic $ (0.05 ) $ (0.01 ) $ (0.11 ) $ 0.00 Diluted $ (0.05 ) $ (0.01 ) $ (0.11 ) $ 0.00 Weighted-average shares used in computing income (loss) per share: Basic 16,384 14,718 16,022 14,718 Diluted 16,384 14,718 16,022 14,726 DAEGIS INC. RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED EBITDA (In thousands, except per share data) Three Months Ended Nine Months Ended January 31, January 31, 2014 2013 2014 2013 GAAP income (loss) from $ (278 ) $ 367 $ (336 ) $ 1,553 operations Amortization of 384 384 1,154 1,154 intangible assets Stock based compensation 38 161 130 492 expenses Depreciation 225 287 740 842 Charges related to alignment of business 667 602 966 602 units^(1) Total adjustments to GAAP income from 1,314 1,434 2,990 3,090 operations Adjusted EBITDA $ 1,036 $ 1,801 $ 2,654 $ 4,643 RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (In thousands, except per share data) GAAP net income (loss) $ (878 ) $ (65 ) $ (1,721 ) $ 344 Amortization of 384 384 1,154 1,154 intangible assets Stock based compensation 38 161 130 492 expenses (Gain) loss from change in fair value of common 163 (31 ) 51 (303 ) stock warrant liability Charges related to alignment of business 667 602 966 602 units^(1) Total adjustments to 1,252 1,116 2,301 1,945 GAAP net income (loss) Non-GAAP net income $ 374 $ 1,051 $ 580 $ 2,289 Non-GAAP diluted income $ 0.02 $ 0.06 $ 0.03 $ 0.13 per share Weighted average shares used in computing income per share: Dilutive 16,384 14,718 16,022 14,726 (1) Prior year alignment costs have been reported to conform with the current year presentation. Use of Non-GAAP Financial Information Daegis utilizes financial measures not calculated in accordance with generally accepted accounting principles in the United States ("GAAP") to supplement the Company's unaudited condensed consolidated financial statements and provide investors with an alternative method for assessing our operating results. We also believe these Non-GAAP measures provide investors with a more informed baseline for modeling the Company's future financial performance. Management uses the Non-GAAP financial measures to make operational decisions, to evaluate the Company's performance and to forecast. We believe that our investors should have access to, and that we are obligated to provide, the same set of tools that we use in analyzing our results. The presentation of these Non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from Non-GAAP financial measures used by other companies. In addition, these Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. Our Non-GAAP measures adjust GAAP income (loss) from operations and GAAP net income (loss) for non-cash stock based compensation expenses, amortization of intangible assets, depreciation and non-recurring charges. For more information on these Non-GAAP financial measures including how they are calculated, please see the tables in this release captioned “Reconciliation of GAAP to Non-GAAP Net Income” and “Reconciliation of GAAP Operating Income to Adjusted EBITDA” which includes a reconciliation of the GAAP results to Non-GAAP and Adjusted EBITDA results. Contact: Daegis Investor Relations Deb Thornton, 916-218-4779 email@example.com
Daegis Inc. Reports Fiscal 2014 Third Quarter Results
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