NEEDHAM, Mass.—(BUSINESS WIRE)—July 20, 2005— PTC (Nasdaq: PMTC), the Product Development Company(TM), today reported revenue of $180.3 million for the third fiscal quarter ended July 2, 2005, up 7% from $168.4 million for the same period last year. The growth was driven primarily by strength in North America and Europe, and PTC's consulting and training services offerings around the world.
Net income for the third quarter was $26.7 million, or $0.10 per
diluted share, compared with net income of $16.1 million, or $0.06 per
diluted share, in the year-ago period. The third quarter net income
includes an income tax benefit of $4.4 million due to the favorable
resolution of a foreign jurisdiction tax audit. Excluding this
benefit, PTC's third quarter net income was $22.3 million, or $0.08
per diluted share. The year-ago period net income included
restructuring charges of $3.5 million. Cash and cash equivalents grew
to $403.0 million at the end of the third quarter from $384.2 million
at the end of the second quarter of 2005.
"We are executing our business strategy well, which is reflected
in continued revenue and earnings growth," said C. Richard Harrison,
president and chief executive officer. "Our customers are adopting our
product development solutions faster and more easily than ever before,
with a clearer return on investment. Our revenue by product line has
grown year-to-date at the high end of our expectations, and we are
poised to deliver strong full-year results that reflect both organic
growth and acquisitive growth from our recent strategic acquisitions."
Total revenue for design solutions in the third quarter was $126.0
million, up 4% from the third quarter of 2004. Design solutions
license revenue of $33.5 million declined 7% year over year, due to a
decline in the amount of revenue from large design solutions deals
when compared with the year-ago period. Base business for
Pro/ENGINEER(R) Wildfire(TM) continues to gain traction in the market
with higher year-over-year sales of entry-level and mid-range
packages, improvements in maintenance sales and coverage rates, and
higher sales of services offerings that help improve user proficiency
and engineering productivity. For the first nine months of 2005, PTC
has delivered 4% year-over-year design solutions revenue growth.
Total revenue for collaboration and control solutions in the third
quarter was $54.3 million, up 16% from the third quarter of 2004.
Collaboration and control solutions license revenue of $15.8 million
declined 4% year over year, although Windchill(R) Link solutions
license revenue grew 26% year over year. The Windchill Link solutions
are a key part of our growth strategy and we have driven significant
revenue growth for these solutions since their introduction.
Additionally, maintenance, consulting and training revenue continues
to grow significantly as PTC helps customers adopt its technology and
improve their product development processes. For the first nine months
of 2005, PTC has delivered 15% year-over-year collaboration and
control solutions growth.
In the third quarter, PTC received orders from leading
organizations, including American Standard, Boeing Company, DCN, Dover
Corporation, Harman/Becker Automotive Systems, LG Electronics,
Lockheed Martin Corporation, Schneider Electric Industries, Seiko
Epson Co., Tetra Pak, and Toyota Motor Corporation. Additionally,
PTC's reseller channel delivered $35.9 million in total revenue during
the quarter, a 4% year-over-year increase.
During and after the end of the quarter, PTC announced and closed
three acquisitions, which we believe will help accelerate PTC's
long-term growth. These acquisitions, which had no material effect on
the third quarter, were:
-- Arbortext Inc., a leader in dynamic enterprise publishing,
gives PTC the unique ability to enable customers to create,
manage and dynamically publish critical information
concurrently with the development of related products or
services, improving time-to-market, quality, cost and customer
satisfaction. The acquisition also broadens PTC's footprint
into new markets such as pharmaceuticals, financial services,
publishing and government.
-- Polyplan Technologies Inc., a technology leader in
manufacturing planning, will help PTC enable concurrent
development of products and related manufacturing processes.
PTC is focusing its extended manufacturing strategy on
providing an easy-to-use and affordable solution for use by
mainstream manufacturing engineers who have traditionally
shunned the complex, disconnected, specialist manufacturing
process management (MPM) tools available today.
-- Aptavis Technologies Corporation, an exclusive provider of
Windchill-based solutions for the retail, footwear and apparel
industry, has already helped PTC gain significant traction in
this rapidly growing market. PTC's solution for this market
has been adopted by leading brands such as Fila, Lands' End,
Limited Brands, Liz Claiborne Inc., Lost Arrow, Nike Apparel,
Redcats, Reebok, and Sara Lee.
"Our customers have responded well to our recent acquisitions,"
continued Harrison. "We are complementing our core product development
system with solutions that elevate the importance of engineering
content and significantly increase its usefulness in downstream
activities such as manufacturing, technical documentation and
after-market services. PTC is making the PLM vision a reality for
customers around the world in many different vertical markets. As a
result, we continue to differentiate ourselves from the competition,
and increase confidence in our ability to deliver long-term customer
and shareholder value."
Fourth Quarter and Fiscal 2005 Financial Outlook
In part due to PTC's adoption of stock option expensing as of July
3, 2005, we will begin to report a non-GAAP income statement in
addition to a GAAP income statement starting with the fourth quarter
ending September 30, 2005. Accordingly, earnings and expense guidance
will be provided on both a GAAP and a non-GAAP basis.
PTC's revenue forecast for the fourth quarter of fiscal 2005,
which includes the impact of the Arbortext acquisition, is between
$190 million and $195 million. Total non-GAAP fourth quarter operating
costs are expected to be between $165 million and $170 million. The
Company expects non-GAAP fourth quarter earnings per share to be
between $0.06 and $0.08. These non-GAAP operating cost and earnings
expectations exclude the following fourth quarter estimated expenses:
-- Approximately $19 million of expense related to equity-based
compensation, which includes a quarterly expense for past
stock option grants, as well as a full-year expense for PTC's
annual equity grants for 2005, which were delayed to coincide
with PTC's adoption of stock option expensing (after we record
this expense in the fourth quarter, PTC expects its average
quarterly expense related to equity-based compensation to be
approximately $8 million to $9 million during fiscal 2006);
-- Approximately $2 million of acquisition-related amortization
expense, primarily associated with the acquisition of
-- A write-off of in process R&D of approximately $2 million,
which is associated with the acquisition of Arbortext.
On a GAAP basis, including the above cost and expense estimates,
fourth quarter total costs and expenses are expected to be between
$188 million and $193 million and earnings (loss) per share are
expected to be between ($0.02) and $0.00.
For the fiscal year ending September 30, 2005, PTC expects revenue
to be between $715 million and $720 million. Total non-GAAP operating
costs are expected to be between $615 million and $620 million for the
fiscal year. The Company expects non-GAAP earnings per share to be
between $0.30 and $0.32 for the fiscal year. These non-GAAP operating
cost and earnings expectations exclude the additional fourth quarter
estimated expenses relating to equity-based compensation,
acquisition-related amortization expense and a write-off of in-process
R&D as described above.
On a GAAP basis, including the above cost and expense estimates,
fiscal year 2005 total costs and expenses are expected to be between
$638 million and $643 million and earnings per share are expected to
be between $0.22 and $0.24.
References by the Company to non-GAAP operating costs and non-GAAP
earnings per share refer to costs and expenses or earnings per share
excluding equity-based compensation cost, amortization of
acquisition-related intangible assets, in-process R&D write-offs
associated with acquisitions, and restructuring charges. GAAP requires
that these costs and charges be included in costs and expenses and
accordingly used to determine operating income (loss) and earnings per
share. The Company's management uses non-GAAP operating costs, and
associated non-GAAP net income (which is the basis for non-GAAP
earnings per share) to make operational and investment decisions, and
the Company believes that they are among several useful measures for
an enhanced understanding of our operating results for a number of