SofTech Announces Q2 Fiscal Year 2012 Operating Results

Sequential Revenue Increase of 9% from Q4’11 & Q1’12; EPS from Continuing Operations More Than Doubles to $.19

LOWELL, Mass. — (BUSINESS WIRE) — January 11, 2012 — SofTech, Inc. (OTCQB: SOFT), a proven provider of Product Lifecycle Management (PLM) solutions today announced its second quarter fiscal 2012 operating results. Revenue for the three months ended November 30, 2011 was $1.7 million, down 6% from the same period in the prior fiscal year but an increase of 9% from the two immediately preceding quarters. Net income from continuing operations was $187,000 or $.19 per share for the three months ended November 30, 2011, a substantial increase from the net income from continuing operations of $58,000 or $.09 for the same period in the prior fiscal year.

Revenue for the six months ended November 30, 2011 was $3.3 million as compared to $3.6 million for the same period in the prior fiscal year, a decrease of 9%. Net income from continuing operations for the six months ended November 30, 2011 was $240,000 or $.24 per share as compared to $146,000 or $.24 per share for the same period in the prior fiscal year. The decline in year over year revenue for both the three and six month periods was due almost exclusively to one customer that migrated to a competitor’s solution in February 2011. Despite the 64% increase in net income from continuing operations, the corresponding earnings per share was unchanged as the weighted average shares outstanding for the six month period ended November 30, 2011 increased from 611,000 to 995,000 as a result of the March 2011 recapitalization.

Since the recapitalization transaction was completed on March 11, 2011 and the new management team assumed control, the following significant achievements have been attained:

  • Completed the audits for fiscal 2010 and 2011 as well as all quarterly reviews. Released financial results as each was completed and included in the Company's Registration Statement (No. 333-174818) declared effective by the Securities and Exchange Commission on December 28, 2011;
  • Held our Annual Meeting for fiscal year 2010, obtained approval for 1-for-20 reverse stock split that was subsequently implemented in June 2011;
  • Regained status as a fully reporting public company;
  • Upgraded our listing tier on the OTC Market from OTCPink, a listing for speculative companies, to OTCQB, a listing for companies that are reporting in a timely manner;
  • Grew the revenue sequentially and improved profitability;
  • Reduced our long term debt by more than 17%; and
  • Initiated a business development program to identify potential business partners to leverage our technology, industry knowledge and customer relationships.

“While I am pleased with the progress made to date with the above accomplishments, the sequential revenue growth and improved profitability, I believe there are significant new opportunities for us to grow profitably,” said Joe Mullaney, President and CEO. “We have great technology, a fantastic customer base and a deeply experienced and long tenured employee group that form a rock-solid foundation from which to build shareholder value,” he added.

FINANCIAL STATEMENTS

The Statement of Operations for the three and six month periods ended November 30, 2011 compared to the same periods in the prior fiscal years are presented below. A reconciliation of Net income to EBITDA, a non-GAAP financial measure, is also provided.

     

Statements of Operations

(in thousands, except % and per share data)

 

For the three months

ended November 30,

 

Change

2011   2010  

$

   

%

 
Product revenue $ 333   $ 342 $ (9 ) -2.6 %
Service revenue   1,372       1,474       (102 )   -6.9 %
Total revenue   1,705       1,816       (111 )   -6.1 %
 
Cost of sales   352       357       (5 )   -1.4 %
Gross margin 1,353 1,459 (106 ) -7.3 %
Gross margin % 79.4 % 80.3 %
 
R&D 337 410 (73 ) -17.8 %
SG&A   718       844       (126 )   -14.9 %
 
Operating income 298 205 93 45.4 %
Interest expense 85 161 (76 ) -47.2 %
Other (income) expense   26       (14 )     40     -285.7 %
Income from continuing operations before income taxes 187 58 129 222.4 %
Provision for income taxes   -       -      

-

   

     -

Income from continuing operations   187       58       129     222.4 %
 
Discontinued operations:
Income from discontinued operations   -       29       (29 )  

-100.0

%

Net income from discontinued operations   -       29       (29 )   -100.0 %
 
Net income $ 187     $ 87     $ 100     114.9 %
 
Weighted average shares outstanding 995 611
 
Basic and diluted net income per share:
From continuing operations $ 0.19 $ 0.09

From discontinued operations

  -       0.05  
Basic and diluted net income per share: $ 0.19     $ 0.14  
 
 

Reconciliation of Net income to EBITDA

For the three months
ended November 30,
2011     2010  
Net income $ 187 $ 87
Plus interest expense 85 161
Plus tax expense - -
Non-cash expenses   39       9  
EBITDA $ 311     $ 257  
 
       

Statements of Operations

(in thousands, except % and per share data)

 
For the six months
ended November 30,    

Change

 

2011

 

2010

   

$

 

%

 
Product revenue $ 636   $ 581 $ 55 9.5 %
Service revenue   2,633       3,003         (370 )   -12.3 %
Total revenue   3,269       3,584         (315 )   -8.8 %
 
Cost of sales   700       710         (10 )   -1.4 %
Gross margin 2,569 2,874 (305 ) -10.6 %
Gross margin % 78.6 % 80.2 %
 
R&D 720 811 (91 ) -11.2 %
SG&A   1,427       1,660         (233 )   -14.0 %
 
Operating income 422 403 19 4.7 %
Interest expense 176 282 (106 ) -37.6 %
Other (income) expense   6       (25 )       31     -124.0 %
Income from continuing operations before income taxes 240 146 94 64.4 %
Provision for income taxes   -       -         -    

-

 
Income from continuing operations   240       146         94     64.4 %
 
Discontinued operations:
Income from discontinued operations   -       73         (73 )   -100.0 %
Net income from discontinued operations   -       73         (73 )   -100.0 %
 
Net income $ 240     $ 219       $ 21     9.6 %
 
Weighted average shares outstanding 995 611
 
Basic and diluted net income per share:
From continuing operations $ 0.24 $ 0.24
From discontinued operations   -       0.12  
Basic and diluted net income per share: $ 0.24     $ 0.36  
 
 
Reconciliation of Net income to EBITDA
For the six months
ended November 30,
2011   2010
Net income $ 240 $ 219
Plus interest expense 176 282
Plus tax expense - -
Non-cash expenses   79       18  
EBITDA $ 495     $ 519  
 

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