updated 5/5/2011 6:16:06 AM ET 2011-05-05T10:16:06

RA'ANANA, Israel, May 5, 2011 (GLOBE NEWSWIRE) -- Retalix® Ltd. (Nasdaq:RTLX), a leading provider of software and services for retailers and distributors, announced today results for the first quarter of 2011 ended March 31, 2011.

Summarized financial highlights for the first quarter:

  • Total Revenues were up 11% to $54.1 million, compared with $48.7 million in the first quarter of 2010.
  • Adjusted Income from Operations (Non-GAAP)* was $4.8 million, compared to $4.7 million in the first quarter of 2010.
  • Income from Operations (GAAP) was $3.4 million, compared to $2.9 million in the first quarter of 2010.
  • Financial Expense was $0.3 million, related to the impact of currency fluctuations on the Company's non-dollar assets and the costs of currency translations, net of interest income. This compares to a financial expense of $0.4 million in the first quarter of 2010.
  • Adjusted Net Income (Non-GAAP)* was $3.3 million, or $0.13 per diluted share, compared to $3.3 million, or $0.14 per diluted share, in the first quarter of 2010. The weighted number of average shares for the first quarter 2011 rose to 24,683,000 fully diluted versus 24,236,000 for the first quarter of 2010.
  • GAAP Net Income was $2.3 million, or $0.09 per diluted share, versus $1.9 million, or $0.08 per diluted share, in the first quarter of 2010.
  • Cash Flow from Operating Activities was $6.7 million.
  • Balance Sheet grew to over $140 million in cash and cash equivalents, deposits and marketable securities with negligible debt as of March 31, 2011.

Shuky Sheffer, Chief Executive Officer of Retalix, said, "We had a good first quarter for 2011 achieving 11% growth in total revenues and solid profitability while we continued to execute our strategic plan and build our growth engines. We also won new customers, successfully delivered and implemented projects for our customers and enhanced our business pipeline. We are beginning to sign longer-term, multiyear contracts with customers, which we believe is a significant demonstration of the customers' confidence in Retalix and provides us with better visibility and more efficiency in our operations. We are also successfully introducing our expanded Systems Integration (SI) offering into our customer projects. For example, we recently signed a new contract with Southern Co-operative Ltd., which operates over 150 stores in southern England. The contract includes store solutions, loyalty and replenishment integrated with SI services ranging from testing to deployment and support. In January, we launched our new Retalix 10 Store Suite, a store platform, which is differentiated by its unique architecture and enables flexible deployment options. It seamlessly combines major customer-centric retailing functions and multiple customer touch points, enhances the customer experience, enables quick time-to-market and reduces the cost of ownership. Retalix 10 is generating a lot of excitement with retailers and industry analysts. Its unique architecture and functionality provides meaningful advantages both for our existing customers to upgrade and for new customers looking for the most advanced solutions on the market today."

Hugo Goldman, the Company's Chief Financial Officer, said, "In the first quarter of 2011 we again grew total revenues, maintained profitability and generated strong cash flow from operations by carefully managing our efforts. We achieved an 8.8% operating margin (Non-GAAP), which is an improvement versus the previous quarter while we continue to invest in strategic customer programs and grow our operations. We improved the quality of our revenues with the percentage of revenues coming from hardware continuing to decline and produced a healthy cash flow from operations. We generated cash flows of approximately $6.7 million in the quarter which helped us to maintain our strong balance sheet with over $140 million in cash and cash equivalents and negligible debt."

Outlook for FY 2011

Sheffer added, "We are pleased with our progress and we had a good start to 2011. We are reiterating the guidance we announced in March for the full year 2011. We expect total revenues for 2011 to be in the range of $217 million to $228 million. We also expect to maintain at least the same level of profitability in 2011 as compared to 2010, while continuing to develop the growth engines for Retalix. We are working hard to execute on our plan to build growth for Retalix and our business pipeline is improving."

Conference Call and Webcast Information

Retalix will be holding a conference call to discuss results for the first quarter of 2011 on Thursday, May 5th 9:00 am Eastern Time (4:00 pm Israel Time). This conference can be accessed by all interested parties through the Company's web site at http://www.retalix.com/conference-call.cfm. For those unable to participate during the live broadcast, a replay will be available shortly after the call on Retalix's web site.

About Retalix

Retalix is an independent provider of software solutions and services to retailers and distributors worldwide. Retalix solutions serve the needs of grocery chains, convenience and fuel retailers, food and consumer goods distributors and independent grocers. The Company offers a portfolio of software applications that automate and synchronize essential retail and supply chain operations, encompassing stores, headquarters and warehouses. The Company's International headquarters are located in Ra'anana, Israel, and its American headquarters are located in Dallas, Texas. For more information, visit http://www.retalix.com the contents of which are not part of this press release. Follow Retalix on Twitter: @Retalix.

The Retalix Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5937

Retalix is a registered trademark of Retalix Ltd. in the United States and in other countries. The names of actual companies, products and services mentioned herein may be the trademarks of their respective owners.

* Note Regarding the Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Retalix uses Non-GAAP measures of operating income, operating margin, net income and earnings per diluted share, which are adjustments from results based on GAAP to exclude non-cash equity based compensation and amortization of intangibles related to acquisitions. Retalix's management believes the Non-GAAP financial information provided in this release is useful to investors' understanding and assessment of the Company's on-going core operations and prospects for the future. The presentation of this Non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management also uses both GAAP and Non-GAAP information in evaluating and operating business internally and as such deemed it important to provide this information to investors. Reconciliations between GAAP measures and Non-GAAP measures are contained following the GAAP financial statements in this press release.   

Safe Harbor for Forward-Looking Statements:

Except for statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other U.S. federal securities laws. For example, the statements regarding our "Outlook for FY 2011" including our expected results, expected demand and opportunities, future expansion of product offerings and services, and future strategic plans and positioning, all involve forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Retalix, including revenues, income and expenses, to be materially different from any future results, performance or achievements or other guidance or outlooks expressed or implied by such forward-looking statements. Such factors include risks relating to Retalix's anticipated future financial performance and growth, the performance of the US dollar relative to other currencies, continued roll-outs with existing customers, continued interest in Retalix's new platforms, the perception by leading retailers of Retalix's reputation, the potential benefits to food and fuel retailers and distributors, expansion into new geographic markets, and other factors over which Retalix may have little or no control. This list is intended to identify only certain of the principal factors that could cause actual results to differ. Readers are referred to the reports and documents filed by Retalix with the Securities and Exchange Commission, including Retalix's Annual Report on Form 20-F for the year ended December 31, 2010, for a discussion of these and other important risk factors. Except as required by law, Retalix undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

RETALIX LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
U.S. $ in thousands (except share and per share data)
 
  Three months ended

March 31
Year ended

December 31
  2011 2010 2010
  (Unaudited) (Unaudited) (Audited)
REVENUES:      
Product sales 11,381 13,687 58,000
Services 42,743 34,984 149,374
Total revenues 54,124 48,671 207,374
COST OF REVENUES:      
Cost of product sales 7,279 8,564 34,974
Cost of services 23,975 20,259 88,526
Total cost of revenues 31,254 28,823 123,500
       
GROSS PROFIT 22,870 19,848 83,874
OPERATING EXPENSES:      
Research and development 7,454 6,906 29,657
Selling and marketing 5,482 4,119 17,338
General and administrative 6,569 5,938 24,635
Other income – net (69) -- (181)
Total operating expenses 19,436 16,963 71,449
INCOME FROM OPERATIONS 3,434 2,885 12,425
FINANCIAL INCOME (EXPENSE), net (278) (356) 3,509
INCOME BEFORE TAXES ON INCOME 3,156 2,529 15,934
TAX EXPENSES (785) (456) (4,667)
INCOME AFTER TAXES ON INCOME 2,371 2,073 11,267
SHARE IN INCOME OF AN ASSOCIATED COMPANY 38 -- 25
NET INCOME 2,409 2,073 11,292
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (148) (142) (505)
NET INCOME ATTRIBUTABLE TO RETALIX LTD. 2,261 1,931 10,787
EARNINGS PER SHARE – in U.S. $:      
Basic 0.09 0.08 0.45
Diluted 0.09 0.08 0.44
WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION OF EARNINGS PER SHARE – in thousands:      
Basic 24,164 24,087 24,102
Diluted 24,683 24,236 24,515

 

RETALIX LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. $ in thousands)
 
  March 31 December 31,
  2011 2010 2010
  (Unaudited) (Audited)
A s s e t s      
CURRENT ASSETS:      
Cash and cash equivalents 56,669 77,428 77,066
Short-term deposits 83,000 25,000 55,000
Marketable securities 196 1,903 2,012
Accounts receivable:      
Trade 56,186 56,911 55,536
Other 2,731 10,331 2,723
Prepaid expenses 4,846 5,564 4,436
Inventories 1,284 1,528 1,016
Deferred income taxes 4,977 4,163 4,572
Total current assets 209,889 182,828 202,361
NON-CURRENT ASSETS :      
Long-term receivables 1,217 1,103 1,099
Long-term prepaid expenses 1,292 247 879
Long term investments 495 682 494
Amounts funded in respect of employee rights upon  retirement 13,588 11,104 12,855
Deferred income taxes 8,685 12,667 9,737
Other 339 271 298
Total non - current assets 25,616 26,074 25,362
PROPERTY, PLANT AND EQUIPMENT, net 15,084 15,168 15,070
GOODWILL 50,754 50,803 50,803
OTHER INTANGIBLE ASSETS, net of accumulated amortization:      
Customer  base 9,058 11,917 9,748
Other 1,388 1,607 1,348
  10,446 13,524 11,096
Total assets 311,789 288,397 304,692

 

 
RETALIX LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. $ in thousands)
  March 31 December 31,
  2011 2010 2010
  (Unaudited) (Audited)
Liabilities and equity      
CURRENT LIABILITIES:      
Short-term loan -- 115 --
Current maturities of long-term bank loans 275 245 267
Accounts payable and accruals:      
Trade 4,710 6,239 6,511
Employees and employee institutions 10,364 9,848 8,512
Accrued expenses 12,097 9,454 11,175
Other 1,884 2,828 2,145
Deferred revenues 21,913 18,717 21,366
Total current liabilities 51,243 47,446 49,976
LONG-TERM LIABILITIES :      
Long-term bank loans, net of current maturities -- 268 --
Long-term deferred revenues 2,882 2,695 2,055
Employee rights upon retirement 17,372 14,645 16,392
Deferred income tax 282 265 271
Institutions 476 482 476
Total long-term liabilities 21,012 18,355 19,194
Total liabilities 72,255 65,801 69,170
EQUITY:      
Share capital -Ordinary shares of NIS 1.00 par value (authorized):      
March 31, 2011 (unaudited), December 31, 2010 (audited),  March 31, 2010 (unaudited) 50,000,000 shares.      
issued and outstanding: March 31, 2011 (unaudited) - 24,164,243 shares; December 31, 2010 (audited) - 24,160,075 shares; March 31, 2010 (unaudited) -24,088,416 shares 6,376 6,355 6,375
Additional paid in capital 213,010 209,511 212,429
Retained earnings  13,423 2,306 11,162
Accumulated other comprehensive income 2,048 535 1,110
Total Retalix shareholders' equity 234,857 218,707 231,076
Non-controlling interest 4,677 3,889 4,446
Total equity 239,534 222,596 235,522
Total liabilities and equity 311,789 288,397 304,692
 
 
RETALIX LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
  Three months ended Year ended
  March 31 December 31
  2011 2010 2010
  (Unaudited) (Unaudited) (Audited)
  U.S. $ in thousands
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income 2,409 2,073 11,292
Adjustments required to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 1,342 1,578 5,989
Losses from sale of property, plant and equipment -- -- 21
Share in income of an associated company (38) -- (25)
Stock based compensation expenses 581 937 3,855
Changes in accrued liability for employee rights upon retirement 845 521 2,243
Gains on amounts funded in respect of employee rights upon retirement (397) (249) (1,365)
Deferred income taxes - net 672 303 2,854
Net decrease in trading securities 28 2 (99)
Other (47) 27 172
Changes in operating assets and liabilities:      
Decrease (increase) in accounts receivable:      
Trade (including the non-current portion) (531) (1,969) (598)
Other (142) (1,879) 6,781
Increase (decrease) in accounts payable and accruals:      
Trade (1,858) (779) (530)
Employees, employee institutions and other 2,717 (783) (979)
Increase in inventories (267) (37) 472
Decrease in long-term institutions -- (7) --
Increase in deferred revenues 1,341 1,658 3,638
Net cash provided by operating activities – forward 6,655 1,396 33,721
 
 
RETALIX LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
  Three months ended Year ended
  March 31 December 31
  2011 2010 2010
  (Unaudited) (Unaudited) (Audited)
  U.S. $ in thousands
Net cash provided by operating activities - brought forward 6,655 1,396 33,721
CASH FLOWS FROM INVESTING ACTIVITIES:      
Maturity of available for sale marketable debt securities 1,788 -- --
Maturity of marketable debt securities held to maturity -- -- 180
Investment in short term deposits (28,000) (25,000) (55,000)
Investment in available-for-sale marketable securities -- (1,679) (1,679)
Purchase of property, plant, equipment and other assets (850) (532) (2,566)
Amounts funded in respect of employee rights upon retirement, net (287) (253) (855)
Changes in restricted deposits -- -- (179)
Net cash used in investing activities (27,349) (27,464) (60,099)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Repayment of long-term bank loans   -- (242)
Issuance of share capital to employees resulting from exercise of options 1 4 22
Short-term loan – net -- (55) (170)
Net cash used in financing activities 1 (51) (390)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 296 (128) 159
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (20,397) (26,247) (26,609)
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 77,066 103,675 103,675
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD 56,669 77,428 77,066
 
 
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
The following tables reflect selected Retalix' non-GAAP results reconciled to GAAP results:
 
  Three months ended

March 31
Year ended

December 31
  2011 2010 2010
  U.S. $ in thousands

(except share and per share data)
OPERATING INCOME      
GAAP Operating income 3,434 2,885 12,425
GAAP Operating Margin 6.3% 5.9% 6%
Plus:      
Amortization of acquisition-related intangible assets 739 878 3,494
Stock based compensation expenses 581 937 3,855
Non-GAAP Operating income* 4,754 4,700 19,774
       
NET INCOME      
GAAP Net income 2,261 1,931 10,787
Plus:      
Amortization of acquisition-related intangible assets 739 878 3,494
Stock based compensation expenses 581 937 3,855
Less:      
Income tax effect of amortization of acquisition-related intangible assets (273) (351) (1,366)
Income tax effect of stock based compensation expenses 2 (94) 283
Non-GAAP Net income 3,310 3,301 17,053
       
NET INCOME PER DILUTED SHARE      
GAAP Net income per diluted share 0.09 0.08 0.44
Plus:      
Amortization of acquisition-related intangible assets 0.03 0.04 0.14
Stock based compensation expenses 0.02 0.04 0.16
Less:      
Income tax effect of amortization of acquisition-related intangible assets (0.01) (0.01) (0.05)
Income tax effect of stock based compensation expenses 0.00 (0.01) 0.01
Non-GAAP Net income per diluted share 0.13 0.14 0.70
Shares used in computing diluted net income per share (in thousands) 24,683 24,236 24,515
 
* We calculate Non-GAAP Operating Margin by dividing Non-GAAP Operating income (reconciled to GAAP operating income above) by revenues. For the quarter ended March 31, 2011, this resulted in a Non-GAAP Operating Margin of 8.8%, calculated as follows: $4,754/$54,124 = 8.8%.
 
 
RETALIX LTD.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
 
The following table shows the classification of stock-based compensation expense:
 
  Three months ended

March 31
Year ended

December 31
  2011 2010 2010
  U.S. $ in thousands
Cost of product sales 6 11 26
Cost of services and projects 63 105 252
Research and development - net 23 10 101
Selling and marketing 97 1 518
General and administrative 392 810 2,958
Total 581 937 3,855
 
The following table shows the classification of amortization of acquisition-related intangible assets:
 
  Three months ended

March 31
Year ended

December 31
  2011 2010 2010
  U.S. $ in thousands
Cost of product sales 531 628 2,483
Cost of services and projects 187 221 872
General and administrative 21 29 139
Total 739 878 3,494
CONTACT: Retalix Ltd.
         Hugo Goldman
         +972-9-776-6677
         investors@retalix.com

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