Press Release
MSC.Software Reports Financial Results for the Second Quarter Ended June 30, 2007
SANTA ANA, Calif. – August 7, 2007 - MSC.Software Corporation (NASDAQ: MSCS), a leading global provider of enterprise simulation solutions including simulation software and services, today reported results for the second quarter ended June 30, 2007.
REVENUE
Total revenue for the second quarter ended June 30, 2007 was $60.7 million compared to $67.9 million for the second quarter last year. This represents sequential growth of 5% over total revenue in the first quarter of 2007. Software revenue for the second quarter totaled $23.0 million compared to $31.4 million for the second quarter last year. For the second quarter ended June 30, 2007, maintenance revenue totaled $31.9 million and services revenue totaled $5.9 million, compared to $29.2 million of maintenance revenue and $7.3 million of services revenue for the second quarter last year.
Total revenue for the six months ended June 30, 2007 was $118.4 million compared to $135.3 million for the six month period last year. Software revenue for the six months totaled $46.0 million compared to $60.7 million for the six month period last year. For the six months ended June 30, 2007 maintenance revenue totaled $60.6 million and services revenue totaled $11.8 million, compared to $56.8 million of maintenance revenue and $17.9 million of services revenue for the six month period last year.
"We are pleased that the cost reduction program and operational improvement initiatives we implemented over the past several quarters have resulted in a decrease in our operating expenses in the second quarter," said Bill Weyand, CEO and Chairman of MSC.Software. "These improvements and efficiencies in infrastructure have resulted in SG&A decreasing by about $6 million sequentially from the first quarter."
"However, our revenue results continue to be impacted by our product evolution from engineering tools to enterprise solution. Our experience to date shows that selling enterprise solutions results in lengthening our sales cycle and leads to delays in the licensing of our products," continued Mr. Weyand.
"We are seeing positive signs with our new Enterprise Simulation products and had a number of key wins in the quarter with customers including Northrop Grumman and TRW in the US, Mitsubishi Motors and Denso in Asia Pacific, and Alenia, Audi and Fincantieri in Europe. With the major wins at Mitsubishi Motors and Audi we now have six of the top automotive OEM's implementing our MD solutions."
REVENUE BY GEOGRAPHY
Total revenue in the Americas for the three and six months ended June 30, 2007 was $17.2 million and $35.7 million respectively, compared to $18.4 million and $41.0 million for the same periods last year. Total revenue in EMEA for the three and six months ended June 30, 2007 was $24.8 million and $44.4 million, respectively, compared to $28.5 million and $51.7 million for the same periods last year. Changes in the Euro dollar increased EMEA revenue during the three and six months of 2007 by $1.7 million and $3.3 million, respectively. In the Asia Pacific region, revenue for the three and six months of 2007 totaled $18.8 million and $38.3 million respectively, compared to $21.0 million and $42.6 million for the same periods in 2006. Changes in the Japanese Yen decreased Asia Pacific revenue during the three and six months of 2007 by $1.0 million and $1.5 million, respectively. The decreases in total revenue in all world geographies generally reflect decreases in software revenue from the impacts of the transition to selling enterprise solutions to our major customers in certain key industries including automotive, aerospace and manufacturing industries, partially offset by growth in maintenance revenue.
RESULTS OF OPERATIONS AND EPS
Total operating expenses for the three and six months ended June 30, 2007 were $45.9 million and $105.3 million, respectively, compared to $50.4 million and $93.6 million for the same periods last year. Operating income for the three months ended June 30, 2007 was $3.8 million and for the six month period was a loss of $9.6 million, compared to operating income of $2.3 million and $7.9 million for the same periods in 2006. The operating loss for the six months ended June 30, 2007 included restructuring and impairment charges totaling $7.8 million.
For the three months ended June 30, 2007, income from continuing operations totaled $1.5 million or $0.03 per diluted share, compared to income from continuing operations of $0.8 million or $0.02 per diluted share for the second quarter last year. For the six months ended June 30, 2007, loss from continuing operations totaled $4.9 million or ($0.11) per diluted share, compared to income from continuing operations of $3.9 million or $0.10 per diluted share for the six month period last year.
GUIDANCE
At this time the Company will not issue guidance. The Company will evaluate its decision to provide guidance in the future, as it continues to move through this transition period and visibility improves.
CONFERENCE CALL
The Company will host a conference call to discuss the second quarter financial results today at 1:30 pm pacific (4:30 pm eastern). The call will be web cast and can be accessed at the following URL: http://www.mscsoftware.com/ir/, or by dialing in to (800) 374-0151. The international dial-in number to access the live call is (706) 634-4981. To participate in the live conference call, use the following conference ID code: 6859967. The conference call slide presentation will be available along with the audio web cast and at the Company's website at http://www.mscsoftware.com/ir/.
An archived version of the audio conference call will be available until August 9, 2007 and can be accessed at: (800) 642-1687 using the conference ID code: 6859967. An archive of the conference call and slide presentation will also be available at http://www.mscsoftware.com/ir/.
About MSC.Software Corporation
MSC.Software Corporation (NASDAQ: MSCS) is a leading global provider of enterprise simulation solutions including simulation software and services, that help companies make money, save time and reduce costs associated with designing and testing manufactured products. MSC.Software works with thousands of companies in hundreds of industries to develop better products faster by utilizing information technology, software and services. MSC.Software employs more than 1100 people in 23 countries. For additional information about MSC.Software's products and services, please visit www.mscsoftware.com.
Safe Harbor Statement
This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including, without limitation, statements regarding our expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements included in this press release are based on information available to us on the date hereof. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results to differ materially from those implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expects," "plans," "intends," "anticipates," "believes," "estimates," "predicts," "potential," "targets," "goals," "projects," "continue," "guidance" or variations of such words, similar expressions, or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Neither we nor any other person can assume responsibility for the accuracy and completeness of forward-looking statements. Important factors that may cause actual results to differ from expectations include, but are not limited to, those discussed in "Risk Factors" on our 2006 Form 10-K filed with the Securities and Exchange Commission. We undertake no obligation to revise or update publicly any forward-looking statements for any reason or at any time.
Financial Tables follow
| Contact: Joanne Keates Vice President, Investor Relations MSC.Software 714.444.8551 joanne.keates@mscsoftware.com |
