ANSYS, Inc. Reports Record Revenue in Second Quarter 2011

Closes Apache Acquisition and Raises Guidance for 2011

(PRNewswire) — ANSYS, Inc. (NASDAQ: ANSS), today announced outstanding performance in revenue and in non-GAAP EPS for the second quarter of 2011.  Revenue growth in the second quarter continued across all three major geographic regions, all major product lines and a broad array of industries. The strong revenue growth contributed to higher than planned margins and 24% non-GAAP earnings per share growth in the second quarter as compared to the second quarter of 2010.  

(Logo:   http://photos.prnewswire.com/prnh/20110127/MM38091LOGO )

"The strong second quarter numbers are a reflection of continued momentum built upon our long-term foundation of technological leadership and sustained performance.  Despite the macro-economic volatility, we focused our efforts on the things we can control and made considerable progress.  Our diversified global business and unparalleled technical solutions continue to be key differentiators as we move ahead," commented Jim Cashman, ANSYS President and Chief Executive Officer.

"On August 1, 2011, we marked another milestone in achieving our vision of Simulation Driven Product Development™ as we completed the acquisition of Apache Design Solutions," said Mr. Cashman.  "The addition of Apache builds on our formidable electronics base by adding a suite of power analysis and optimization software that is crucial in the design of power-efficient, high-performance, noise-immune integrated circuits.  Our solutions position us to capitalize on the fast-growing market for mobile devices, as well as high-end electronics that are proliferating across many industries." Mr. Cashman continued, "This acquisition also adds a market-leading, comprehensive team of talented and dedicated employees, who we welcome to the ANSYS family."

ANSYS' second quarter and year-to-date financial results are presented below. The 2011 non-GAAP results exclude the income statement effects of stock-based compensation, acquisition-related amortization of intangible assets and transaction costs related to the Apache acquisition.  The 2010 non-GAAP results exclude the income statement effects of stock-based compensation and acquisition-related amortization of intangible assets. GAAP and non-GAAP results reflect:

  • Total GAAP and non-GAAP revenue of $162.3 million in the second quarter of 2011 as compared to total GAAP and non-GAAP revenue of $137.8 million in the second quarter of 2010; total GAAP and non-GAAP revenue of $320.3 million in the first six months of 2011 as compared to total GAAP and non-GAAP revenue of $273.8 million in the first six months of 2010;
  • A GAAP operating profit margin of 39.9% in the second quarter of 2011 as compared to 38.0% in the second quarter of 2010; a GAAP operating profit margin of 39.7% in the first six months of 2011 as compared to 37.3% in the first six months of 2010; a non-GAAP operating profit margin of 51.5% in the second quarter of 2011 as compared to 50.2% in the second quarter of 2010; a non-GAAP operating profit margin of 50.7% in the first six months of 2011 as compared to 49.4% in the first six months of 2010;
  • GAAP net income of $45.4 million in the second quarter of 2011 as compared to $35.5 million in the second quarter of 2010; GAAP net income of $87.7 million in the first six months of 2011 as compared to $67.9 million in the first six months of 2010; non-GAAP net income of $58.6 million in the second quarter of 2011 as compared to $46.6 million in the second quarter of 2010; non-GAAP net income of $112.0 million in the first six months of 2011 as compared to $90.1 million in the first six months of 2010; and
  • GAAP diluted earnings per share of $0.48 in the second quarter of 2011 as compared to $0.38 in the second quarter of 2010; GAAP diluted earnings per share of $0.93 in the first six months of 2011 as compared to $0.73 in the first six months of 2010; non-GAAP diluted earnings per share of $0.62 in the second quarter of 2011 as compared to $0.50 in the second quarter of 2010; non-GAAP diluted earnings per share of $1.19 in the first six months of 2011 as compared to $0.97 in the first six months of 2010.

The Company's GAAP results reflect stock-based compensation charges of approximately $5.3 million ($4.0 million after tax) or $0.04 diluted earnings per share for the second quarter of 2011 and approximately $10.5 million ($8.0 million after tax) or $0.08 diluted earnings per share for the first six months of 2011.

The non-GAAP financial results highlighted above, and the non-GAAP financial outlook for 2011 discussed below, represent non-GAAP financial measures. Reconciliations of these measures to the appropriate GAAP measures, for the three months and six months ended June 30, 2011 and 2010, and for the 2011 financial outlook, are included in the condensed financial information included in this release.

Management's Remaining 2011 Financial Outlook

The Company has updated its 2011 revenue and earnings per share guidance below. The revenue and earnings per share guidance is provided on both a GAAP basis and a non-GAAP basis. The third quarter and fiscal year 2011 Non-GAAP diluted earnings per share excludes the income statement effects of acquisition accounting adjustments to deferred revenue, charges for stock-based compensation, acquisition-related amortization of intangible assets and acquisition-related expenses.

Third Quarter and Fiscal Year 2011 Guidance

The Company currently expects the following for the quarter ending September 30, 2011:

  • GAAP Revenue in the range of $166 – 174 million
  • Non-GAAP Revenue in the range of $172 - $178 million
  • GAAP diluted earnings per share of $0.40 - $0.47
  • Non-GAAP diluted earnings per share of $0.60 - $0.63

The Company currently expects the following for the fiscal year ending December 31, 2011:

  • GAAP Revenue in the range of $671 - $687 million
  • Non-GAAP Revenue in the range of $685 - $697 million
  • GAAP diluted earnings per share of $1.80 - $1.91
  • Non-GAAP diluted earnings per share of $2.47 - $2.52

These statements are forward-looking and actual results may differ materially.  ANSYS is unable to predict the likely duration and severity of the current disruption in the domestic and global economies.  Should these economic conditions continue to deteriorate further, it could result in ANSYS not meeting the guidance provided above and ANSYS' operating results and financial performance could be adversely affected.  Non-GAAP diluted earnings per share is a supplemental financial measure and should not be considered as a substitute for, or superior to, diluted earnings per share determined in accordance with GAAP.

Conference Call Information

ANSYS will hold a conference call at 10:30 a.m. Eastern Time on August 4, 2011 to discuss second quarter results. To participate in the live conference call, dial 866-524-3160 (US), 866-605-3852 (Canada) or 412-317-6760 (Int'l). The call will be recorded and a replay will be available approximately two hours after the call ends. The replay will be available for seven days by dialing 877-344-7529 (US), or 412-317-0088 (Canada and Int'l) and entering the passcode 10002050. The archived webcast can be accessed, along with other financial information, on ANSYS' website at http://investors.ansys.com


ANSYS, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)






















             June 30, 2011    


    December 31, 2010






Cash & short-term investments


$      630,260


$         472,934

Accounts receivable, net



68,807


76,604

Goodwill




1,035,583


1,035,083

Other intangibles, net




257,388


278,320

Other assets




245,937


263,935










Total assets




$  2,237,975


$     2,126,876

















LIABILITIES & STOCKHOLDERS' EQUITY:












Deferred revenue



$  231,719


$         199,805

Long-term debt (including current portion)



148,840


159,525

Other liabilities



217,122


237,617

Stockholders' equity



1,640,294


1,529,929









    Total liabilities & stockholders' equity


$       2,237,975


$      2,126,876





ANSYS, INC. AND SUBSIDIARIES

Consolidated Statements of Income

(in thousands, except per share data)

(Unaudited)












Three Months Ended


Six Months Ended



June 30,

2011


June 30,

2010


June 30,

2011


June 30,

2010

Revenue:









Software licenses

$   97,436


$   81,744


$   193,303


$    163,330


Maintenance and service

64,822


56,023


127,002


110,490











    Total revenue

162,258


137,767


320,305


273,820










Cost of sales:









Software licenses

3,030


2,310


5,924


4,919


Amortization of software and









    acquired technology

7,502


8,178


15,000


16,392


Maintenance and service

17,531


13,652


33,721


27,482


    Total cost of sales

28,063


24,140


54,645


48,793










Gross profit

134,195


113,627


265,660


225,027










Operating expenses:









Selling, general and administrative

40,130


35,979


80,606


71,207


Research and development

25,182


21,390


49,880


43,977


Amortization

4,070


3,875


8,087


7,837


    Total operating expenses

69,382


61,244


138,573


123,021










Operating income

64,813


52,383


127,087


102,006










Interest expense

(774)


(1,245)


(1,577)


(2,794)

Interest income

712


422


1,407


790

Other (expense) income, net

(108)


139


(622)


(368)










Income before income tax provision

64,643


51,699


126,295


99,634










Income tax provision

19,212


16,206


38,623


31,772










Net income

$  45,431


$ 35,493


$    87,672


$  67,862









Earnings per share – basic:









Basic earnings per share

$       0.49


$     0.39


$       0.95


$     0.75


Weighted average shares – basic

91,940


90,614


91,854


90,289

















Earnings per share - diluted:









Diluted earnings per share

$     0.48


$    0.38


$       0.93


$    0.73


Weighted average shares – diluted

94,188


93,146


94,179


92,960




ANSYS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures

(Unaudited)

(in thousands, except percentages and per share data)


Three Months Ended









June 30, 2011

June 30, 2010









As Reported

Non-GAAP Adjustments

Results

As Reported

Non-GAAP Adjustments

Results








Total revenue

$162,258


$162,258

$137,767


$137,767

Operating income

$ 64,813

$18,745(1)

$83,558

$52,383

$16,709(3)

$69,092

Operating profit margin

39.9%


51.5%

38.0%


50.2%

Net income

$45,431

$13,129(2)

$58,560

$35,493

$11,122(4)

$46,615

Earnings per share - diluted:







 Diluted earnings per share

$0.48


$0.62

$0.38


$0.50

 Weighted average shares - diluted

94,188


94,188

93,146


93,146


(1) Amount represents $11.6 million of amortization expense associated with intangible assets acquired in business acquisitions, including amounts primarily related to acquired software, customer lists, trademarks and non-compete agreements, $5.3 million of stock-based compensation expense and $1.9 million of transaction expenses related to the Apache acquisition.


(2) Amount represents the impact of the adjustments to operating income referred to in (1) above, adjusted for the related income tax impact of $5.6 million.


(3) Amount represents $12.1 million of amortization expense associated with intangible assets acquired in business acquisitions, including amounts primarily related to acquired software, customer lists, trademarks and non-compete agreements, as well as a $4.7 million charge for stock-based compensation.


(4) Amount represents the impact of the adjustments to operating income referred to in (3) above, adjusted for the related income tax impact of $5.6 million.



ANSYS, INC. AND SUBSIDIARIES

Reconciliation of Non-GAAP Measures

(Unaudited)

(in thousands, except percentages and per share data)


Six Months Ended









June 30, 2011

June 30, 2010









As Reported

Non-GAAP Adjustments

Results

As Reported

Non-GAAP Adjustments

Results








Total revenue

$320,305


$320,305

$273,820


$273,820

Operating income

$127,087

$35,407(1)

$162,494

$102,006

$33,360(3)

$135,366

Operating profit margin

39.7%


50.7%

37.3%


49.4%

Net income

$87,672

$24,360(2)

$112,032

$67,862

$22,204(4)

$90,066

Earnings per share - diluted:







 Diluted earnings per share

$0.93


$1.19

$0.73


$0.97

 Weighted average shares - diluted

94,179


94,179

92,960


92,960


(1) Amount represents $23.1 million of amortization expense associated with intangible assets acquired in business acquisitions, including amounts primarily related to acquired software, customer lists, trademarks and non-compete agreements, $10.5 million of stock-based compensation expense and $1.9 million of transaction expenses related to the Apache acquisition.


(2) Amount represents the impact of the adjustments to operating income referred to in (1) above, adjusted for the related income tax impact of $11.0 million.


(3) Amount represents $24.2 million of amortization expense associated with intangible assets acquired in business acquisitions, including amounts primarily related to acquired software, customer lists, trademarks and non-compete agreements, as well as a $9.2 million charge for stock-based compensation.


(4) Amount represents the impact of the adjustments to operating income referred to in (3) above, adjusted for the related income tax impact of $11.2 million.



ANSYS, INC. AND SUBSIDIARIES

Reconciliation of Forward-Looking Guidance

Quarter Ending September 30, 2011


Earnings Per Share Range – Diluted




U.S. GAAP expectation

$0.40 - $0.47

Adjustment to exclude acquisition accounting adjustment to deferred revenue

$0.03 - $0.04

Adjustment to exclude acquisition–related amortization

$0.09 - $0.11

Adjustment to exclude stock–based compensation

$0.04 - $0.05



Non-GAAP expectation

$0.60  - $0.63




ANSYS, INC. AND SUBSIDIARIES

Reconciliation of Forward-Looking Guidance

Year Ending December 31, 2011


Earnings Per Share Range – Diluted




U.S. GAAP expectation

$1.80 - $1.91  

Adjustment to exclude acquisition accounting adjustment to deferred revenue

$0.07 - $0.09

Adjustment to exclude acquisition–related amortization

$0.35 - $0.38

Adjustment to exclude stock–based compensation


$0.17 - $0.18  

Adjustment to exclude acquisition-related transaction costs

$0.02



Non-GAAP expectation

$2.47 - $2.52





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