Daegis Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results *Fourth Quarter GAAP Net Income of $163,000 *Cash at $7.2 million at April 30, 2014 Business Wire IRVING, Texas -- June 17, 2014 Daegis Inc. (NASDAQ: DAEG), a global archiving, eDiscovery and software development and migration tools company, today announced financial results for its fiscal 2014 fourth quarter and full year ended April 30, 2014. Fourth Quarter Fiscal 2014 Financial Highlights *Fourth quarter total revenue of $7.4 million, compared to $9.8 million year over year. *Fourth quarter GAAP net income of $163,000 or $0.01 per share, compared to GAAP net income of $188,000 or $0.01 per share for the same period last year. *Fourth quarter Adjusted EBITDA of $1.6 million, compared to $1.5 million last year and up sequentially from $1.0 million in the third quarter. ^ (1) *Non-GAAP net income of $1.1 million or $0.07 per share, compared to $610,000 or $0.03 per share last year. ^ (1) *Cash at April 30, 2014 was $7.2 million, compared to $5.5 million at April 30, 2013. *Total debt outstanding at April 30, 2014 was $15.0 million, a decrease of $2.7 million from April 30, 2013. Full Year Fiscal 2014 Financial Highlights *Total revenue of $31.0 million, compared to $40.2 million last year. *GAAP net loss of $1.6 million or $0.10 per share, compared to GAAP net income of $532,000 or $0.01 per share in the prior year. *Adjusted EBITDA of $4.3 million, compared to $6.5 million last year. ^ (1) *Non-GAAP net income of $1.7 million or $0.10 per share, compared to Non-GAAP net income of $3.2 million or $0.19 per share last year. ^ (1) Commenting on the results, Daegis Inc. Chief Executive Officer Tim Bacci said, “Daegis accomplished several key objectives in fiscal 2014 to advance its long-term strategy. We successfully aligned archive and eDiscovery into a cohesive, complete solution for information governance and eDiscovery, and launched our new mobile enterprise development solution, TD Mobile. We made decisions to increase the operational efficiency of our business which significantly improved the health of our financials in the fourth quarter. We are excited about our product offerings and opportunities and remain confident that we’ll demonstrate growth in the second half of calendar 2014.” Fourth Quarter and Full Year 2014 Comparative Financial Summary $ In Millions, Q4 Q4 % or $ FY FY % or $ except per FY2014 FY2013 Change^(2) 2014 2013 Change^(2) share and % data Total $7.4 $9.8 ($2.4) $31.0 $40.2 ($9.2) Revenue Total Archive and $4.4 $6.6 ($2.2) $19.3 $26.1 ($6.8) Discovery Revenue Total Database and $3.0 $3.2 ($0.2) $11.6 $14.1 ($2.4) Migration Revenue GAAP Net Income $0.2 $0.2 $0.0 ($1.6) $0.5 ($2.1) (Loss) GAAP Net Income (Loss) Per $0.01 $0.01 $0.00 ($0.10) $0.01 ($0.11) Share – Diluted Adjusted $1.6 $1.5 $0.1 $4.3 $6.5 ($2.2) EBITDA^(1) Adjusted EBITDA 22% 16% 6% 14% 16% (2%) Margin^(1) Non-GAAP Net Income $1.1 $0.6 $0.5 $1.7 $3.2 ($1.6) (Loss) ^ (1) Non-GAAP Net Income (Loss) Per $0.07 $0.03 $0.04 $0.10 $0.19 ($0.09) Share - Diluted^(1) ^(1) See reconciliation table below regarding the presentation of Adjusted EBITDA and Non-GAAP net income. ^(2) The calculation of percentage or dollar change is based on unrounded numbers. Investor Conference Call Management will host a conference call June 17, 2014, at 4:00 p.m. CT (5:00 p.m. ET) to review the financial results. The call can be accessed by dialing (888) 505-4375 or (719) 325-2281 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 June 27, 2014 by dialing (888) 203-1112 or (719) 457-0820 for international callers and using the following passcode: 8990389#. 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) April 30, April 30, 2014 2013 ASSETS Current assets: Cash $ 7,178 $ 5,459 Accounts receivable, net 6,657 10,594 Prepaid expenses 617 754 Other current assets 358 449 Assets held for sale — 926 Total current assets 14,810 18,182 Property and equipment, net 1,053 1,934 Goodwill 11,706 11,706 Intangibles, net 5,614 7,152 Other assets 470 733 Total assets $ 33,653 $ 39,707 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 308 $ 243 Current portion of long-term debt 3,123 2,519 Accrued compensation and related expenses 1,185 2,697 Other accrued liabilities 971 863 Deferred revenue 8,590 8,449 Liabilities held for sale — 526 Total current liabilities 14,177 15,297 Long-term debt, net of current portion 11,848 15,170 Deferred tax liabilities, net 1,032 923 Common stock warrant liability 276 204 Other long-term liabilities 1,095 1,429 Total liabilities 28,428 33,023 Commitments and contingencies Stockholders’ equity: Preferred stock — 2 Common stock 17 15 Additional paid-in capital 100,152 100,053 Accumulated other comprehensive income 280 280 Accumulated deficit (95,224 ) (93,666 ) Total stockholders’ equity 5,225 6,684 Total liabilities and stockholders’ equity $ 33,653 $ 39,707 DAEGIS INC. UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Twelve Months Ended April 30, April 30, 2014 2013 2014 2013 Revenues: Archive and $ 4,384 $ 6,598 $ 19,320 $ 26,126 eDiscovery Database and 2,986 3,172 11,638 14,067 migration Total revenues 7,370 9,770 30,958 40,193 Operating expenses: Direct costs of Archive and 1,618 2,188 7,929 10,091 eDiscovery revenue Direct costs of database and 524 775 1,881 3,027 migration revenue Product 1,215 2,067 5,898 7,478 development Selling, general and 3,507 3,978 15,080 18,282 administrative Sale of intangible trade — — — (1,000 ) name Total operating 6,864 9,008 30,788 37,878 expenses Income from 506 762 170 2,315 operations Other income (expense): Gain (loss) from change in fair value of common (21 ) 62 (72 ) 365 stock warrant liability Interest expense (293 ) (383 ) (1,332 ) (1,632 ) Other, net 60 (145 ) 9 (234 ) Total other (254 ) (466 ) (1,395 ) (1,501 ) income (expense) Income (loss) before income 252 296 (1,225 ) 814 taxes Provision for 89 108 333 282 income taxes Net income $ 163 $ 188 $ (1,558 ) $ 532 (loss) Income (loss) per share: Basic $ 0.01 $ 0.01 $ (0.10 ) $ 0.01 Diluted $ 0.01 $ 0.01 $ (0.10 ) $ 0.01 Weighted-average shares used in computing income (loss) per share: Basic 16,384 14,718 16,110 14,718 Diluted 16,386 14,736 16,110 14,728 DAEGIS INC. RECONCILIATION OF GAAP OPERATING INCOME TO ADJUSTED EBITDA (In thousands, except per share data) Three Months Ended Twelve Months Ended April 30, April 30, 2014 2013 2014 2013 GAAP income (loss) from $ 506 $ 762 $ 170 $ 2,315 operations Amortization of intangible 384 384 1,538 1,538 assets Stock based compensation 34 100 165 593 expenses Depreciation 207 281 947 1,123 Charges related to alignment of 485 - 1,451 935 business units^(1) Total adjustments to GAAP income 1,110 765 4,101 4,189 from operations Adjusted $ 1,616 $ 1,527 $ 4,271 $ 6,504 EBITDA RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (In thousands, except per share data) GAAP net $ 163 $ 188 $ (1,558 ) $ 532 income (loss) Amortization of intangible 384 384 1,538 1,538 assets Stock based compensation 34 100 165 593 expenses (Gain) loss from change in fair value of 21 (62 ) 72 (365 ) common stock warrant liability Charges related to alignment of 485 - 1,451 935 business units^(1) Total adjustments to 924 422 3,226 2,701 GAAP net income (loss) Non-GAAP net $ 1,087 $ 610 $ 1,668 $ 3,233 income Non-GAAP diluted income $ 0.07 $ 0.03 $ 0.10 $ 0.19 per share Weighted average shares used in computing income per share: Dilutive 16,386 14,736 16,110 14,728 (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 Deb Thornton, 916-218-4779 firstname.lastname@example.org
Daegis Inc. Reports Fiscal 2014 Fourth Quarter and Full Year Results
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