Deltek Reports Q4 License Revenue of $19.2 million, Up 51% From Prior Quarter
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Deltek Reports Q4 License Revenue of $19.2 million, Up 51% From Prior Quarter

Total Revenue of $70.3 million up 9.7% from Q3

Q4 EPS of $0.11 and Non-GAAP EPS of $0.15

 

HERNDON, Va. — (BUSINESS WIRE) — February 10, 2010 — Deltek, Inc. (Nasdaq: PROJ), the leading provider of enterprise applications software and solutions for project-focused businesses, today announced financial results for its fourth quarter and full year ended December 31, 2009.

Total revenue for the fourth quarter of 2009 was $70.3 million, up 9.7% from the third quarter. License revenue for Q4 was $19.2 million, up 51% compared to the third quarter of 2009. Consulting services revenue for Q4 was $18.8 million, compared to $19.7 million in Q3. Maintenance and support revenue in the fourth quarter of 2009 was $32.3 million, up 2% from the third quarter.

Non-GAAP operating income for the fourth quarter of 2009 increased 17% to $18.2 million, from $15.6 million in the third quarter. Non-GAAP operating income margins were 25.9% for Q4 2009 and up from 24.3 % in Q3. GAAP operating income for the fourth quarter increased 38% to $14.1 million from $10.2 million in the third quarter. GAAP operating income margins were 20% for Q4 2009 up from 15.9% for Q3.

Non-GAAP net income for the fourth quarter of 2009 was $9.8 million, or $0.15 per diluted share, compared to $9.9 million, or $0.15 per diluted share, in the third quarter. GAAP net income for the fourth quarter of 2009 was $7.2 million, or $0.11 per diluted share, compared to $6.6 million, or $0.10 per diluted share, in the third quarter.

Non-GAAP operating income and margin excludes the pre-tax impact of stock-based compensation, expenses associated with the Company's 2005 recapitalization, amortization of acquired intangible assets, and restructuring charges. Non-GAAP net income excludes the same items on a net-of-tax basis.

“We are very pleased with our Q4 results as the increasing confidence among our customers drove significant growth in our license revenues,” said Kevin Parker, Deltek’s president and CEO. “This strong top line performance, combined with our continuing focus on our cost structure, produced best-in-class operating margins of 26%.

During the quarter, we expanded our portfolio of solutions by acquiring mySBX, an online collaboration and business networking platform. In January, we launched govWin, delivering exciting new capabilities to our customers, built on the mySBX acquisition. We are very excited about this new initiative and the ability to expand our presence among the thousands of mySBX participants.

In 2009, we expanded our international capabilities and customers, upgraded our overall product portfolio, delivered strong profitability and improved our balance sheet significantly. These accomplishments position us well for the coming year.”

When compared to the same quarter in the prior year, total revenue for the fourth quarter of 2009 was $70.3 million versus $71.7 million. License revenue for Q4 2009 was $19.2 million, compared to $19.8 million in the fourth quarter of 2008. Consulting services revenue for Q4 2009 was $18.8 million, compared to $21.9 million in the prior-year period. Maintenance and support revenue in the fourth quarter of 2009 was $32.3 million, compared to $30.0 million in Q4 2008.

Non-GAAP operating income for the fourth quarter of 2009 was $18.2 million compared to $16.8 million in the fourth quarter 2008. Non-GAAP operating income margins were 25.9% for Q4 2009 and 23.4 % for Q4 2008. GAAP operating income for the fourth quarter of 2009 was $14.1 million compared to $12.6 million in the fourth quarter of 2008. GAAP operating income margins were 20% for Q4 2009 and 17.6% for Q4 2008.

Non-GAAP net income for the fourth quarter of 2009 was $9.8 million, or $0.15 per diluted share, compared to $8.6 million, or $0.18 per diluted share, in the fourth quarter of 2008. GAAP net income for the fourth quarter of 2009 was $7.2 million, or $0.11 per diluted share, compared to $6.1 million, or $0.13 per diluted share, in the fourth quarter of 2008.

Full-Year 2009 Results

Total revenue for 2009 was $265.8 million, compared to $289.4 million in 2008. License revenue for 2009 was $58.9 million, compared to $77.4 million in 2008. Consulting services revenue for 2009 was $77.8 million, compared to $91.6 million in 2008. Maintenance and support revenue in 2009 was $125.5 million, compared to $115.7 million in 2008.

Non-GAAP operating income for 2009 was $58.4 million, compared with $61.9 million for 2008. Non-GAAP operating income margins were 22% for 2009 and 21.4 % for 2008. GAAP operating income for 2009 was $39.3 million, compared with $47 million for 2008. GAAP operating income margin was 14.8% in 2009 and 16.2% in 2008.

Non-GAAP net income for 2009 was $33.0 million, or $0.57 per diluted share, compared to $32.6 million, or $0.68 per diluted share, in 2008. Full-year 2009 GAAP net income was $21.4 million, or $0.37 per diluted share, compared to $23.5 million, or $0.49 per diluted share, in 2008.

A reconciliation of GAAP to non-GAAP financial measures is provided in the tables at the end of this press release.

Recent Highlights

Conference Call Information

Deltek will host a conference call at 5:00 p.m. Eastern Standard Time today to discuss the Company’s fourth quarter and full-year results. To access this call, dial 1-877-381-6419 in North America and 1-706-643-9496 outside North America. No password is required to join the call. The conference call also can be accessed through the Investor Relations section of Deltek's website ( http://investor.deltek.com). Those unable to participate in the live call may hear a replay through February 17, 2010 by dialing 1-800-642-1687 in North America and 1-706-645-9291 outside North America (pass code: 52143380). The replay also will be available through February 17, 2010 on Deltek's website.

About Deltek

Deltek (Nasdaq: PROJ) is the leading provider of enterprise applications software and solutions designed specifically for project-focused businesses. For more than two decades, our software applications have enabled organizations to automate mission-critical business processes around the engagement, execution and delivery of projects. More than 12,000 customers worldwide rely on Deltek to measure business results, optimize performance, streamline operations and win new business. For more information, visit www.deltek.com.

Use of Non-GAAP Financial Measures

This press release and the related conference call described above contain certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income and margin and adjusted EBITDA. The Company defines non-GAAP net income as GAAP net income before the net-of-tax impact of stock-based compensation, expenses associated with the Company's 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. Non-GAAP operating income and margin is defined as GAAP operating income before the pre-tax impact of stock-based compensation, expenses associated with the Company's 2005 recapitalization, amortization of acquired intangible assets, New Mountain Capital fees and restructuring charges. Adjusted EBITDA is defined as GAAP net income before interest expenses (net of interest income), provision for income taxes, depreciation, amortization, stock-based compensation, expenses associated with the Company's 2005 recapitalization, New Mountain Capital fees and restructuring charges.

The Company believes that the presentation of these non-GAAP financial measures provides useful information to its investors and lenders because these measures allow for more accurate comparisons of operating results from period-to-period, enhance the overall understanding of the Company's financial performance and provide greater insight into the prospects for the Company's ongoing business operations. Moreover, the Company also believes it is appropriate to exclude costs associated with restructuring charges because these charges are excluded from management’s assessment of the Company’s operating performance and are not related to the Company’s ongoing business operations. In addition, the Company excludes the items from EBITDA described above in its calculations to determine compliance with its debt covenants and to assess its ability to borrow additional funds to finance or expand its operations.

The Company believes that by reporting these measures, it provides insight and consistency in its financial reporting and presents a basis for comparison of its business operations between current, past and future periods. In addition, the measures provide a basis for the Company to compare its financial results to those of other comparable publicly traded companies and are used by its management team to plan and forecast its business.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliations of our GAAP to non-GAAP net income and adjusted EBITDA, which are set forth below.

Forward-Looking Statements

This press release and related conference call contain forward-looking statements that involve substantial risks and uncertainties. You can identify forward-looking statements by words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "should," "will," "would" or similar words. You should consider these statements carefully because they discuss our plans, targets, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict accurately or control. Our actual results may differ materially from the expectations we describe in our forward-looking statements. Factors or events that could cause our actual results to materially differ may emerge from time to time, and it is not possible for us to accurately predict all of them. Before you invest in our common stock, you should be aware that the occurrence of any such event or of any of the additional events described as risk factors in the Company's filings with the Securities and Exchange Commission could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this press release or related conference call speaks only as of the date on which we make it. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

DELTEK, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
                 
   

Three Months Ended December 31,

 

Twelve Months Ended December 31,

    2009   2008   2009   2008
REVENUES:                
Software license fees   $ 19,212     $ 19,751     $ 58,907     $ 77,398  
Consulting services     18,788       21,916       77,807       91,566  
Maintenance and support services     32,313       29,983       125,545       115,658  
Other revenues     32       46       3,562       4,743  
Total revenues     70,345       71,696       265,821       289,365  
COST OF REVENUES:                
Cost of software license fees     1,452       1,624       5,873       6,563  
Cost of consulting services     15,660       17,695       65,833       75,327  
Cost of maintenance and support services     5,701       5,540       22,463       21,404  
Cost of other revenues     43       26       4,717       5,172  
Total cost of revenues     22,856       24,885       98,886       108,466  
GROSS PROFIT     47,489       46,811       166,935       180,899  
Research and development     10,988       11,109       43,486       45,819  
Sales and marketing     12,216       14,411       44,784       53,764  
General and administrative     9,465       8,691       35,494       33,384  
Restructuring charge (benefit)     766       (11 )     3,866       980  
Total operating expenses     33,435       34,200       127,630       133,947  
INCOME FROM OPERATIONS     14,054       12,611       39,305       46,952  
Interest income     11       19       46       637  
Interest expense     (2,704 )     (2,594 )     (7,603 )     (11,002 )
Other income (expense), net     51       (213 )     43       (474 )
INCOME BEFORE INCOME TAXES     11,412       9,823       31,791       36,113  
Income tax expense     4,178       3,773       10,395       12,594  
NET INCOME   $ 7,234     $ 6,050     $ 21,396     $ 23,519  
                 
EARNINGS PER SHARE                
Basic   $ 0.11     $ 0.13     $ 0.38     $ 0.51  
Diluted   $ 0.11     $ 0.13     $ 0.37     $ 0.49  
                 
COMMON SHARES AND EQUIVALENTS OUTSTANDING                
Basic weighted average shares     64,144       46,641       56,778       46,571  
Diluted weighted average shares     65,411       47,199       57,596       47,729  
                                 
                                 
DELTEK, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(unaudited)
         
   

December 31,

 

December 31,

    2009   2008
         
ASSETS        
CURRENT ASSETS:        
Cash and cash equivalents   $ 132,338     $ 35,788  

Accounts receivable, net of allowance of 2,658 and 2,195 at December 31, 2009 and December 31, 2008, respectively

    42,531       47,747  
Deferred income taxes     6,014       4,635  
Prepaid expenses and other current assets     11,256       6,874  
Income taxes receivable     -       846  
TOTAL CURRENT ASSETS     192,139       95,890  
         
PROPERTY AND EQUIPMENT, NET     11,371       14,639  
CAPITALIZED SOFTWARE DEVELOPMENT COSTS, NET     618       1,438  
LONG-TERM DEFERRED INCOME TAXES     6,359       4,125  
INTANGIBLE ASSETS, NET     13,748       17,396  
GOODWILL     63,910       57,654  
OTHER ASSETS     3,165       2,130  
TOTAL ASSETS   $ 291,310     $ 193,272  
         
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)        
CURRENT LIABILITIES:        
Current portion of long-term debt   $ 44,599     $ 10,154  
Accounts payable and accrued expenses     26,442       28,734  
Accrued liability for redemption of stock in recapitalization     317       317  
Deferred revenues     40,176       21,296  
Income taxes payable     992        
TOTAL CURRENT LIABILITIES     112,526       60,501  
         
LONG-TERM DEBT     134,358       182,661  
OTHER TAX LIABILITIES     1,871       1,003  
OTHER LONG-TERM LIABILITIES     1,875       2,917  
TOTAL LIABILITIES     250,630       247,082  
         
COMMITMENTS AND CONTINGENCIES        
         
STOCKHOLDERS’ EQUITY (DEFICIT):        

Preferred stock, $0.001 par value—authorized, 5,000,000 shares; none issued or outstanding at December 31, 2009 or December 31, 2008

           

Common stock, $0.001 par value—authorized, 200,000,000 shares; issued and outstanding, 66,292,415 and 43,474,220 shares at December 31, 2009 and December 31, 2008, respectively

    66       43  

Class A common stock, $0.001 par value—authorized, 100 shares; issued and outstanding, 100 shares at December 31, 2009 and December 31, 2008

           
Additional paid-in capital     249,798       177,249  
Accumulated deficit     (208,509 )     (229,905 )
Accumulated other comprehensive deficit     (675 )     (1,197 )

TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)

    40,680       (53,810 )
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)   $ 291,310     $ 193,272  
         
         
DELTEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
   

Twelve Months Ended December 31,

    2009   2008
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income   $ 21,396     $ 23,519  
Adjustments to reconcile net income to net cash provided by operating activities:        
Provision for doubtful accounts     2,267       1,023  
Depreciation and amortization     10,547       10,188  
Amortization of debt issuance costs     962       793  
Write down of acquired in process research and development     -       290  
Stock-based compensation expense     8,675       8,480  
Employee stock purchase plan expense     1,896       282  
Restructuring charge, net     932        
Loss on disposal of fixed assets     42       469  
Deferred income taxes     (3,556 )     (2,586 )
         
Change in assets and liabilities, net of effects from acquisition:        
Accounts receivable, net     3,273       6,302  
Prepaid expenses and other assets     (4,154 )     282  
Accounts payable and accrued expenses     (3,144 )     (4,022 )
Income taxes payable/receivable     1,939       (1,675 )
Excess tax benefit from stock awards     (80 )     (64 )
Other tax liabilities     868       452  
Other long-term liabilities     (824 )     (630 )
Deferred revenues     18,439       (547 )
Net Cash Provided by Operating Activities     59,478       42,556  
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Acquisitions, net of cash acquired     (5,369 )     (17,924 )
Purchase of property and equipment     (2,368 )     (5,687 )
Capitalized software development costs     (150 )     (349 )
Net Cash Used in Investing Activities     (7,887 )     (23,960 )
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Issuance of common stock in connection with rights offering, net of issuance costs     58,228        
Proceeds from exercise of stock options     887       277  
Excess tax benefit from stock awards     80       64  
Proceeds from issuance of stock under employee stock purchase plan     2,015       712  
Shares withheld for minimum tax withholding on vested restricted stock awards     (123 )      
Offering costs paid for 2007 sale of common stock in initial public offering           (275 )
Payments for deferred financing costs     (2,336 )      
Repayment of debt     (13,858 )     (498 )
Net Cash Provided by Financing Activities     44,893       280  
         
IMPACT OF FOREIGN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS     66       (179 )
         
NET INCREASE IN CASH AND CASH EQUIVALENTS     96,550       18,697  
         
CASH AND CASH EQUIVALENTS––Beginning of period     35,788       17,091  
         
CASH AND CASH EQUIVALENTS––End of period   $ 132,338     $ 35,788  
                 
                 
DELTEK, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
(in thousands, except per share data)
(unaudited)
                               
    Three Months Ended     Three Months Ended     Year Ended  
   

September 30,

   

December 31,

   

December 31,

 
   

2009

   

2009

    2008    

2009

   

2008

 
                               
Net Income (GAAP Basis)   $ 6,607       $ 7,234       $ 6,050       $ 21,396       $ 23,519    
Income Tax Expense     1,627         4,178         3,773         10,395         12,594    
Pre-Tax Income (GAAP Basis)   $ 8,234       $ 11,412       $ 9,823       $ 31,791       $ 36,113    
Adjustments:                              
Stock-based Compensation     3,799         2,431         2,602         10,571         8,762    
Recapitalization Retention Expense     -         -         160         152         611    
Amortization of Acquired Intangibles     1,054         989         1,397         4,480         4,559    
Restructuring Charge (Benefit)     552         766         (11 )       3,866         980    
                               
Adjusted Pre-Tax Income     13,639         15,598         13,971         50,860         51,025    
                               
Less: Adjusted Income Tax Expense     3,757         5,827         5,407         17,908         18,469    
                               
Non-GAAP Net Income   $ 9,882       $ 9,771       $ 8,564       $ 32,952       $ 32,556    
                               
Non-GAAP Earnings Per Share (diluted)   $ 0.15       $ 0.15       $ 0.18       $ 0.57       $ 0.68    
Weighted Average Shares     64,808         65,411         47,199         57,596         47,729    
                               
                               
                               
                               
RECONCILIATION OF GAAP OPERATING INCOME AND OPERATING MARGIN TO NON-GAAP OPERATING INCOME AND OPERATING MARGIN
(in thousands)
(unaudited)
                               
    Three Months Ended     Three Months Ended     Year Ended  
   

September 30,

   

December 31,

    December 31,  
    2009     2009     2008     2009     2008  
                               
Operating Income and Margin - GAAP   $ 10,167   16 %   $ 14,054   20 %   $ 12,611   18 %   $ 39,305   15 %   $ 46,952   16 %
Plus: Stock-based Compensation and Recapitalization Retention Expense     3,799         2,431         2,762         10,723         9,373    
Plus: Amortization of Acquired Intangibles     1,054         989         1,397         4,480         4,559    
Plus: Restructuring Charge (Benefit)     552         766         (11 )       3,866         980    
                               
Operating Income and Margin - Non-GAAP   $ 15,572   24 %   $ 18,240   26 %   $ 16,759   23 %   $ 58,374   22 %   $ 61,864   21 %
                               
Total Revenues   $ 64,114       $ 70,345       $ 71,696       $ 265,821       $ 289,365    
                               
                               
                               
                               
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
(in thousands)
(unaudited)
                               
    Three Months Ended     Three Months Ended     Year Ended  
   

September 30,

   

December 31,

    December 31,  
    2009     2009     2008     2009     2008  
                               
Net Income (GAAP Basis)   $ 6,607       $ 7,234       $ 6,050       $ 21,396       $ 23,519    
Stock-based Compensation     3,799         2,431         2,602         10,571         8,762    
Recapitalization Retention Expense     -         -         160         152         611    
Depreciation     1,255         1,304         1,311         5,100         4,626    
Amortization     1,262         1,197         1,733         5,451         5,868    
Interest Expense, net     1,904         2,693         2,575         7,557         10,365    
Income Tax Provision     1,627         4,178         3,773         10,395         12,594    
Restructuring Charge (Benefit)     552         766         (11 )       3,866         980    
                               
Adjusted EBITDA   $ 17,006       $ 19,803       $ 18,193       $ 64,488       $ 67,325    
                               
                               
                               
                               
STOCK-BASED COMPENSATION AND RECAPITALIZATION RETENTION EXPENSES
(in thousands)
(unaudited)
                               
    Three Months Ended     Three Months Ended     Year Ended  
   

September 30,

   

December 31,

   

December 31,

 
    2009     2009     2008     2009     2008  
                               
Cost of Software License Fees   $ -       $ -       $ 1       $ -       $ 4    
Cost of Consulting Services     1,021         192         637         2,059         1,851    
Cost of Maintenance and Support Services     308         166         119         679         101    
Research and Development     884         519         687         2,399         2,183    
Sales and Marketing     705         563         418         2,069         1,822    
General and Administrative     881         991         900         3,517         3,412    
Total   $ 3,799       $ 2,431       $ 2,762       $ 10,723       $ 9,373    
                               
                               
                               
AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS
(in thousands)
(unaudited)
                               
    Three Months Ended     Three Months Ended     Year Ended  
   

September 30,

   

December 31,

   

December 31,

 
    2009     2009     2008     2009     2008  
                               
Cost of Software License Fees   $ 155       $ 80       $ 362       $ 853       $ 1,354    
Cost of Consulting Services     20         19         19         78         78    
Cost of Other Revenues     -         10         -         10         -    
Research and Development     -         -         -         -         290    
Sales and Marketing     874         880         998         3,497         2,764    
General and Administrative     5         -         18         42         73    
Total   $ 1,054       $ 989       $ 1,397       $ 4,480       $ 4,559    
                               
                               
                               
                               
                               
AMORTIZATION AND DEPRECIATION EXPENSES
(in thousands)
(unaudited)
                               
    Three Months Ended     Three Months Ended     Year Ended  
   

September 30,

   

December 31,

   

December 31,

 
    2009     2009     2008     2009     2008  
                               
Cost of Software License Fees   $ 365       $ 290       $ 702       $ 1,836       $ 2,675    
Cost of Consulting Services     362         374         429         1,587         1,775    
Cost of Maintenance and Support Services     205         213         220         843         748    
Cost of Other Revenues     -         10         -         10         -    
Research and Development     401         417         297         1,393         1,277    
Sales and Marketing     1,058         1,071         1,251         4,317         3,497    
General and Administrative     126         126         145         565         522    
Total   $ 2,517       $ 2,501       $ 3,044       $ 10,551       $ 10,494    

 

 



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Deltek, Inc.
Investor Relations:
Joe Wilkinson, 703-885-9423
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or
Media Relations:
Patrick Smith, 703-885-9062
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