Daegis Inc. Reports Fiscal 2014 Third Quarter Results

  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
dthornton@daegis.com
 
Press spacebar to pause and continue. Press esc to stop.