Knobias Clip Report (02-25-2009) RADS
Submitted By Knobias ClipReport
RADS: Shares Surge on Successful Q4 and FY08 Results
By Fain Hughes, fhughes@knobias.com
Shares of Radiant Systems, Inc. (RADS) surged on Wednesday after the Company reported financial results on Tuesday for the fourth quarter and year ended December 31, 2008.
Total Q4 revenues were $75.3 million, an increase of 7% over revenues of $70.3 million for the same period in 2007. Non-GAAP net income for the period was $6.1 million, or $0.19 per diluted share, a decrease of $3.1 million, or $0.08 per diluted share, compared to the same period in 2007. Analysts had expected EPS of $0.17 per share for the quarter.
Revenues for the year were $301.6 million, an increase of over revenues of $253.2 million in 2007. Non-GAAP net income for the year was $24.5 million, or $0.73 per diluted share, a decrease of $1.4 million, or $0.05 per diluted share, compared to 2007.
John Heyman, CEO of Radiant Systems, commented in a conference call, “The strength of our Q4 led us to our most successful year ever, with revenues up 19% from 2007 and operating income growth of 15%. Q4 was the largest quarter ever in terms of wins and improvements to our pipeline. These wins in Q4 included Yankee Stadium and our selection by a multi-thousand site quick-serve restaurant chain, which represents well over $75 million in business over the next few years. However, some of our markets are suffering, so we are seeing deferrals from certain chains and weakening across our channel businesses. These challenges translate to fewer site openings and more closings than we have ever seen.”
He explained, “Despite our success during the quarter, we are preparing ourselves for the uncertainty and are taking a very conservative view of our revenues in 2009. We have two goals in this economic climate. One, we intend to build an even stronger financial foundation in terms of cash flow, predictability of our business model and our balance sheet. Two, we want to strengthen our competitive position through continued focus on customer satisfaction and existing strategic product and marketing initiatives.”
Mr. Heyman added, “In order to accomplish these goals, we have reduced headcount by approximately 10%, reduced non-payroll spending by over $5 million, implemented a slary freeze across the company and eliminated the company’s 401(k) match, which saved over $2 million.”
He concluded, “We can’t promise growth in this environment. Growth is certainly possible, but we are not going to plan on it at this time. However, we can commit to 2009 being a very strong year for earnings, maybe our strongest ever. Regardless, we intend to meet our goals while creating a more efficient and predictable profit machine when growth resumes. While we are planning for very little upside in the business, we have identified opportunities in hand. Our strength in recurring revenues, customer satisfaction and product fit is setting us apart from a number of weaker and smaller competitors. While demand may have recently weakened, we intend to continue to gain market share.”
The Company expects Q1 revenue of $67 to $68 million, and Q1 non-GAAP EPS of $0.12 to $0.13. For FY09, the Company expects revenues of $275 to $280 million, and FY08 non-GAAP EPS of $.62 to $.63.
Mark Haidet, CFO of Radiant Systems, added, “We also expect to see an acceleration of cash generation with lower capital investments in 2009. We anticipate cash flow from operations of $20-$25 million in 2009, and free cash flow of approximately $15 milllion. This should position us to reduce our debt facility by $10-$15 million during the year. We plan to increase gross profit margins to a range of 45%-47%, based on cost reductions and product mix.”
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