Issues Q1 FY’10 Guidance and FY’10 Targets
NEEDHAM, Mass. — (BUSINESS WIRE) — October 27, 2009 — PTC (Nasdaq: PMTC), The Product Development Company®, today reported results for its fourth fiscal quarter and full fiscal year ended September 30, 2009.
Highlights
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Q4 Results: Revenue of $246.3 million and non-GAAP EPS of $0.30
- Non-GAAP operating margin of 18.4%; GAAP operating margin of 6.2%
- GAAP EPS of $0.13, including $6.3 million restructuring charge to reduce operating expenses
- Relative to Q4 guidance, currency was favorable to revenue by approximately $1.6 million and unfavorable to expenses by approximately $0.7 million
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FY’09 Results: Revenue of $938.2 million and non-GAAP EPS of $0.80
- Non-GAAP operating margin of 12.9%; GAAP operating margin of 2.1%
- GAAP EPS of $0.27, including $22.7 million in restructuring charges to reduce operating expenses
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FY 2010 Targets: Revenue of approximately $980 million and non-GAAP
EPS of approximately $0.96
- Non-GAAP operating margin of approximately 15%; GAAP operating margin of approximately 7%
- GAAP EPS of approximately $0.43
- Assumes $1.46 USD / EURO
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Q1 Guidance: Revenue of $230 to $240 million and non-GAAP EPS of $0.12
to $0.18
- GAAP EPS of ($0.02) to $0.04
- Assumes $1.46 USD / EURO
The Q4 non-GAAP results exclude a $6.3 million restructuring charge, $14.6 million of stock-based compensation expense, $9.2 million of acquisition-related intangible asset amortization and $10.3 million of income tax adjustments. The Q4 results include a non-GAAP tax rate of 21% and a GAAP tax benefit rate of 7%.
The FY’09 non-GAAP results exclude a $22.7 million restructuring charge, $43.3 million of stock-based compensation expense, $35.6 million of acquisition-related intangible asset amortization and acquired in-process research and development expenses and $39.6 million of income tax adjustments. The FY’09 results include a non-GAAP tax rate of 21% and a GAAP tax benefit rate of 84%.
Results Commentary & Outlook
C. Richard Harrison, chairman and chief executive officer, commented, “We exit fiscal 2009 on solid financial footing with a product portfolio that has never been in better shape. Our decision to invest in R&D through the downturn is paying off as we are seeing some very encouraging signs of market momentum, especially as it relates to our Windchill product suite.”
“Our constant currency non-GAAP FY’09 revenue was down 9% compared to last year,” continued Harrison. “While license revenue was down 34%, maintenance and services revenue were up 3% and 1%, respectively, highlighting the stability of our business model and the support of a solid customer base. We are continuing to see positive sequential data points: 1) we again delivered license revenue growth in all of our major geographies except Japan, 2) we had better license and total revenue in North America than we did in Q4’08, which was PTC’s best revenue quarter ever, 3) we won 2 additional strategically important “domino” accounts, and 4) we also had a number of other large Windchill competitive wins during Q4.”
“Our pipeline for new business opportunities remains strong and lead times to close enterprise deals seem to be shortening,” continued Harrison. “We received major orders from leading organizations such as AVIC, Carrier, Deere & Company, General Atomics, Ingersoll Rand, ITT Corporation, and Stryker.”
James Heppelmann, president and chief operating officer added, “We remain focused on expanding and leveraging our technology leadership position. We have significant further enhancements underway for Windchill, Pro/ENGINEER, Arbortext, Windchill ProductPoint, and our other core products. We also continue to add to the breadth of our portfolio with future enhancements to our social product development initiative and our product analytics platform, which we launched in FY’09, and remain on target to launch our embedded software and program portfolio management platforms in FY’10. We are very optimistic about the long-term opportunity for PTC and will continue to make strategic investments that we believe are critical to delivering value to our customers and gaining market share, while remaining committed to our goal of 20% non-GAAP EPS growth for 2010 and beyond.”
Neil Moses, chief financial officer, commented, “Our Q4 operating margins and EPS were stronger than expected primarily due to stronger than expected license revenue. Our balance sheet remains solid with $235 million of cash, up from $231 million in Q3 primarily due to strong license sales. We also have an additional $172 million available on our revolving credit facility.”
“Looking forward to FY’10, we are establishing a revenue target of $980 million and a non-GAAP EPS target of $0.96,” continued Moses. “We expect that the actions we took in FY’09 to right-size our business to the current economic conditions, partially offset by some incremental investment in the business in FY’10 in support of our long-term growth objectives, will allow us to improve our non-GAAP operating margin to approximately 15%.” The GAAP EPS target for FY’10 is $0.43.
“For Q1 we are initiating guidance of $230 to $240 million in revenue with non-GAAP EPS of $0.12 to $0.18,” Moses added. The Q1 guidance assumes a non-GAAP tax rate of 23%, a GAAP tax rate of 21% and 121 million diluted shares outstanding. The Q1 non-GAAP guidance excludes approximately $14 million of stock-based compensation expense, $9 million of acquisition-related intangible asset amortization expense and the related income tax effects.
The FY’10 target assumes a non-GAAP tax rate of 23%, a GAAP tax rate of 21% and 119 million diluted shares outstanding. The FY’10 non-GAAP guidance excludes approximately $49 million of stock-based compensation expense, $35 million of acquisition-related intangible asset amortization and the related income tax effects.
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Q4 Earnings Conference Call and Webcast |
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| Supplemental financial and operating metric information and prepared remarks for the conference call will be posted to the investor relations section of our website simultaneously with this press release. The prepared remarks will not be read live; the call will be primarily Q&A. | ||
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When: |
Wednesday, October 28, 2009 at 8:30 a.m. Eastern Time | |
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Dial-in: |
1-888-566-8560 or 1-517-623-4768 | |
| Call Leader: Richard Harrison with Passcode: PTC | ||
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Webcast: |
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Replay: |
The audio replay of this event will be archived for public replay until 4:00 p.m. (CT) on November 2, 2009 at 1-866-463-2193 or 1-203-369-1378. To access the replay via webcast, please visit www.ptc.com/for/investors.htm.
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FY’10 Investor Day and Webcast |
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| PTC willhost its FY’10 Investor Day on Tuesday, November 3, 2009 from 10:00am to 3:00pm (ET). This event will be held at the Grand Hyatt New York Hotel, Park Ave at Grand Central. To register, please contact Sharon Feintuck at 781-370-6909 or sfeintuck@ptc.com. | ||
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When: |
Tuesday, November 3, 2009, from 10:00am to 3:00pm (ET) | |
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Where: |
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=116312&eventID=2492231 |
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Replay: |
The presentation will be archived for public replay until November 6, 2009 at www.ptc.com/for/investors.htm. | |
Important Information About Non-GAAP References
PTC provides non-GAAP supplemental information to its financial results. Non-GAAP revenue excludes the effect of purchase accounting on the fair value of the acquired deferred revenue of CoCreate Software GmbH. Non-GAAP operating expenses, margin and EPS exclude stock-based compensation expense, amortization of acquired intangible assets, acquired in-process research and development expense, restructuring charges, non-cash effects of liquidating subsidiaries, and the related tax effects of the preceding items and any one-time tax items. PTC provides this non-GAAP information to facilitate period-to-period comparisons of its operational performance by adjusting for certain non-cash and certain episodic expenses. We believe that providing non-GAAP measures affords investors a view of our operating results that may be more easily compared to peer companies. PTC management also uses this and other non-GAAP financial information to evaluate, manage and plan our business because the information provides additional insight into ongoing financial performance. In addition, compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. However, non-GAAP information should not be construed as an alternative to GAAP information as the items excluded from the non-GAAP measures often have a material impact on PTC’s financial results. Management uses, and investors should use, non-GAAP measures in conjunction with our GAAP results.
Forward-Looking Statements
Statements in this press release that are not historic facts, including statements about our fiscal 2010 and other future financial expectations, anticipated tax rates, the expected impact of our planned strategic investments on our future success, the stability of our maintenance and services businesses, and the long-term prospects for PTC are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the possibility that our customers may not resume purchases of our solutions when we expect or that they may further reduce, defer or forego investment in our solutions in the current economic climate, the possibility that our customers may not renew maintenance or enter into services engagements at historic rates, the possibility that strategic customer wins may not generate the revenue we expect, the possibility that our strategic investments may not have the effects we expect, the possibility that we will experience a shortfall in revenue that causes us to decrease or eliminate planned strategic investments in our business, the possibility that our efforts to reduce our operating expenses may not have the effects we expect and could harm our operations, the possibility that we may be unable to attain or maintain a technology leadership position or that any such leadership position may not generate the revenue we expect, and the possibility that we may be unable to draw from our revolving credit facility when or to the extent we decide to do so. In addition, our assumptions concerning our future GAAP and non-GAAP effective income tax rates are based on estimates and other factors that could change, including the geographic mix of our revenue, expenses (including restructuring charges) and profits and loans and cash repatriations from foreign subsidiaries. Other risks and uncertainties that could cause actual results to differ materially from those projected are detailed from time to time in reports we file with the Securities and Exchange Commission, including our most recent Quarterly Reports on Form 10-Q and Annual Report on Form 10-K.
PTC, The Product Development Company, and all other PTC product names and logos are trademarks or registered trademarks of Parametric Technology Corporation or its subsidiaries in the United States and in other countries. All other companies referenced herein are trademarks or registered trademarks of their respective holders.
About PTC ( www.ptc.com)
PTC (Nasdaq: PMTC) provides discrete manufacturers with software and services to meet the globalization, time-to-market and operational efficiency objectives of product development. Using the company’s PLM and CAD solutions, organizations in the Industrial, High-Tech, Aerospace and Defense, Automotive, Consumer and Medical industries are able to support key business objectives and create innovative products that meet customer needs and comply with industry regulations.
(continues)
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PARAMETRIC TECHNOLOGY CORPORATION |
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| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||||
| Revenue: | ||||||||||||||||||
| License | $ | 70,688 | $ | 103,632 | $ 212,710 | $ | 332,380 | |||||||||||
| Service | 175,655 | 195,915 | 725,475 | 737,950 | ||||||||||||||
| Total revenue | 246,343 | 299,547 | 938,185 | 1,070,330 | ||||||||||||||
| Costs and expenses: | ||||||||||||||||||
| Cost of license revenue(1) | 7,758 | 9,560 | 29,962 | 30,123 | ||||||||||||||
| Cost of service revenue(1) | 65,592 | 79,226 | 279,797 | 300,663 | ||||||||||||||
| Sales and marketing(1) | 76,297 | 83,731 | 301,369 | 306,880 | ||||||||||||||
| Research and development(1) | 48,826 | 47,366 | 188,501 | 182,022 | ||||||||||||||
| General and administrative(1) | 22,295 | 23,176 | 80,670 | 87,829 | ||||||||||||||
| Amortization of acquired intangible assets | 4,110 | 4,327 | 15,620 | 15,579 | ||||||||||||||
| In-process research and development | -- | -- | 300 | 1,887 | ||||||||||||||
| Restructuring charges | 6,274 | 4,735 | 22,671 | 20,102 | ||||||||||||||
| Total costs and expenses | 231,152 | 252,121 | 918,890 | 945,085 | ||||||||||||||
| Operating income | 15,191 | 47,426 | 19,295 | 125,245 | ||||||||||||||
| Other expense, net | (312 | ) | (500 | ) | (2,124 | ) | (6,359 | ) | ||||||||||
| Income before income taxes | 14,879 | 46,926 | 17,171 | 118,886 | ||||||||||||||
| Provision for (benefit from) income taxes | (1,021 | ) | 10,422 | (14,351 | ) | 39,184 | ||||||||||||
| Net income | $ | 15,900 | $ | 36,504 | $ 31,522 | $ | 79,702 | |||||||||||
| Earnings per share: | ||||||||||||||||||
| Basic | $ | 0.14 | $ | 0.32 | $ 0.27 | $ | 0.70 | |||||||||||
| Weighted average shares outstanding | 115,288 | 113,829 | 114,950 | 113,703 | ||||||||||||||
| Diluted | $ | 0.13 | $ | 0.31 | $ 0.27 | $ | 0.68 | |||||||||||
| Weighted average shares outstanding | 119,379 | 118,780 | 117,359 | 117,870 | ||||||||||||||
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(1) The amounts in the tables above include stock-based compensation as follows: |
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| Three Months Ended | Year Ended | |||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||||
| Cost of license revenue | $ | 22 | $ | 12 | $ | 50 | $ 38 | |||||||||||
| Cost of service revenue | 2,562 | 2,305 | 8,163 | 9,172 | ||||||||||||||
| Sales and marketing | 4,205 | 3,296 | 12,797 | 12,229 | ||||||||||||||
| Research and development | 2,404 | 2,500 | 8,214 | 9,429 | ||||||||||||||
| General and administrative | 5,362 | 3,602 | 14,104 | 13,528 | ||||||||||||||
| Total stock-based compensation | $ | 14,555 | $ | 11,715 | $ | 43,328 | $ 44,396 | |||||||||||
| PARAMETRIC TECHNOLOGY CORPORATION | ||||||||||||||||
| NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS (UNAUDITED) | ||||||||||||||||
| (in thousands, except per share data) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| GAAP revenue | $ | 246,343 | $ | 299,547 | $ | 938,185 | $ | 1,070,330 | ||||||||
| Fair value adjustment of acquired CoCreate deferred maintenance revenue | -- | 668 | -- | 4,588 | ||||||||||||
| Non-GAAP revenue | $ | 246,343 | $ | 300,215 | $ | 938,185 | $ | 1,074,918 | ||||||||
| GAAP operating income | $ | 15,191 | $ | 47,426 | $ | 19,295 | $ | 125,245 | ||||||||
| Fair value adjustment of acquired CoCreate deferred maintenance revenue | -- | 668 | -- | 4,588 | ||||||||||||
| Stock-based compensation | 14,555 | 11,715 | 43,328 | 44,396 | ||||||||||||
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Amortization of acquired intangible assets
included in cost of license revenue |
5,082 | 5,991 | 19,674 | 19,841 | ||||||||||||
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Amortization of acquired intangible assets
included in cost of service revenue |
-- |
16 |
8 | 67 | ||||||||||||
| Amortization of acquired intangible assets | 4,110 | 4,327 | 15,620 | 15,579 | ||||||||||||
| In-process research and development | -- | -- | 300 | 1,887 | ||||||||||||
| Restructuring charges | 6,274 | 4,735 | 22,671 | 20,102 | ||||||||||||
| Non-GAAP operating income | $ | 45,212 | $ | 74,878 | $ | 120,896 | $ | 231,705 | ||||||||
| GAAP net income | $ | 15,900 | $ | 36,504 | $ | 31,522 | $ | 79,702 | ||||||||
| Fair value adjustment of acquired CoCreate deferred maintenance revenue |
-- |
668 |
-- |
4,588 |
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| Stock-based compensation | 14,555 | 11,715 | 43,328 | 44,396 | ||||||||||||
| Amortization of acquired intangible assets included in cost of license revenue |
5,082 |
5,991 |
19,674 |
19,841 |
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| Amortization of acquired intangible assets included in cost of service revenue |
-- |
16 |
8 |
67 |
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| Amortization of acquired intangible assets | 4,110 | 4,327 | 15,620 | 15,579 | ||||||||||||
| In-process research and development | -- | -- | 300 | 1,887 | ||||||||||||
| Restructuring charges | 6,274 | 4,735 | 22,671 | 20,102 | ||||||||||||
| One-time non-cash loss included in other expense, net (2) | -- | -- | -- | 6,206 | ||||||||||||
| Income tax adjustments (3) | (10,308 | ) | (9,984 | ) | (39,552 | ) | (32,355 | ) | ||||||||
| Non-GAAP net income | $ | 35,613 | $ | 53,972 | $ | 93,571 | $ | 160,013 | ||||||||
| GAAP diluted earnings per share | $ | 0.13 | $ | 0.31 | $ | 0.27 | $ | 0.68 | ||||||||
| Stock-based compensation | 0.12 | 0.10 | 0.37 | 0.38 | ||||||||||||
| All other items identified above | 0.05 | 0.04 | 0.16 | 0.30 | ||||||||||||
| Non-GAAP diluted earnings per share | $ | 0.30 | $ | 0.45 | $ | 0.80 | $ | 1.36 | ||||||||
| Weighted average shares outstanding – diluted | 119,379 | 118,780 | 117,359 | 117,870 | ||||||||||||
(2) Reflects a one-time non-cash loss from the liquidation of certain legal entities related to previous acquisitions.
(3) Reflects the tax effect of non-GAAP adjustments above, as well as the effect of a $7.6 million one-time tax benefit recorded in the second quarter of 2009 due to the recognition of deferred tax assets in a foreign jurisdiction.
| PARAMETRIC TECHNOLOGY CORPORATION | ||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (in thousands) | ||||||
| September 30, | September 30, | |||||
| 2009 | 2008 | |||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 235,122 | $ | 256,941 | ||
| Accounts receivable, net | 166,591 | 201,509 | ||||
| Property and equipment, net | 58,105 | 55,253 | ||||
| Goodwill and acquired intangibles, net | 596,517 | 587,537 | ||||
| Other assets | 293,877 | 248,333 | ||||
| Total assets | $ | 1,350,212 | $ | 1,349,573 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Deferred revenue | $ | 234,270 | $ | 258,295 | ||
| Borrowings under revolving credit facility | 57,880 | 88,505 | ||||
| Other liabilities | 296,481 | 300,248 | ||||
| Stockholders' equity | 761,581 | 702,525 | ||||
| Total liabilities and stockholders' equity | $ | 1,350,212 | $ | 1,349,573 | ||
| PARAMETRIC TECHNOLOGY CORPORATION | ||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
| (in thousands) | ||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income | $ | 15,900 | $ | 36,504 | $ | 31,522 | $ | 79,702 | ||||||||
| Stock-based compensation | 14,555 | 11,715 | 43,328 | 44,396 | ||||||||||||
| Depreciation and amortization | 16,052 | 16,537 | 61,610 | 60,021 | ||||||||||||
| Accounts receivable | (10,566 | ) | (27,813 | ) | 56,889 | 42,006 | ||||||||||
| Accounts payable and accruals(4) | 10,705 | 15,915 | (19,281 | ) | (13,240 | ) | ||||||||||
| Deferred revenue | (24,556 | ) | (14,228 | ) | (27,256 | ) | 2,077 | |||||||||
| In-process research and development | -- | -- | 300 | 1,887 | ||||||||||||
| Income taxes | (13,329 | ) | 2,933 | (66,700 | ) | 4,578 | ||||||||||
| Other | (3,288 | ) | (429 | ) | 2,358 | 813 | ||||||||||
| Net cash provided by operating activities | 5,473 | 41,134 | 82,770 | 222,240 | ||||||||||||
| Capital expenditures | (6,278 | ) | (4,947 | ) | (30,087 | ) | (25,439 | ) | ||||||||
| Acquisitions of businesses, net of cash acquired (5) | -- | -- | (32,790 | ) | (261,592 | ) | ||||||||||
| Proceeds from (payments on) debt, net | -- | (10,860 | ) | (31,951 | ) | 88,139 | ||||||||||
| Repurchases of common stock | (4,576 | ) | -- | (14,157 | ) | (27,297 | ) | |||||||||
| Other investing and financing activities | 2,256 | 4,928 | 562 | 1,615 | ||||||||||||
| Foreign exchange impact on cash | 6,902 | (15,334 | ) | 3,834 | (3,996 | ) | ||||||||||
| Net change in cash and cash equivalents | 3,777 | 14,921 | (21,819 | ) | (6,330 | ) | ||||||||||
| Cash and cash equivalents, beginning of period | 231,345 | 242,020 | 256,941 | 263,271 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 235,122 | $ | 256,941 | $ | 235,122 | $ | 256,941 | ||||||||
(4) Includes accounts payable, accrued expenses, and accrued compensation and benefits.
(5) Acquisitions of businesses:
a. The third quarter of 2009 includes $24 million for our acquisition of Relex, net of cash acquired.
b. The first quarter of 2009 includes $7 million for our acquisition of Synapsis and $1 million for a contingent purchase price earned during the quarter related to a prior acquisition.
c. The first quarter of 2008 includes $248 million for our acquisition of CoCreate and $14 million for two other acquisitions, net of cash acquired.
Contact:
PTC
Kristian P. Talvitie, 781-370-6151
Email Contact