Reynolds and Reynolds Reports Third Quarter Results
Press release from the issuing company
DAYTON, Ohio, Jul 21, 2004 -- The Reynolds and Reynolds Company today reported revenues of $243 million for the third fiscal quarter ended June 30, 2004, compared to $250 million a year ago. Net income was $22.0 million or 33 cents per share, compared to $26 million or 37 cents per share a year ago.
"Third quarter results were in line with guidance the company provided on June 24," Phil Odeen, chairman and acting CEO, said. "As we indicated in June, overall order rates were less than we expected. We've taken important steps to address these issues and sharpen our focus on our growth priorities, but our return to historic levels of sales growth won't happen overnight.
"Reynolds is operating from a position of strength -- excellent cash flows, a strong balance sheet, solid margins and the broadest portfolio of integrated solutions in the industry. Importantly, we are the market leader with the industry's highest customer satisfaction among the major dealer management system providers. We intend to build on that industry leadership and drive growth by selling more of our applications, extending our position in core platforms and continuing to grow our international customer base.
"Reynolds expects to build momentum through the upcoming releases of its ERA(R) XT platform and Applications on Demand(TM) architecture. We also anticipate growth from our expanding CRM application portfolio as well our Incadea platform for markets outside the U.S. and Canada. In addition, we believe that the Reynolds Generations Series Suite, the most advanced system available and the industry's only retail management system, will deliver long- term growth.
"While we are still completing our plans for fiscal year 2005, we expect that revenues and earnings will be flat to slightly up. At the same time, we'll continue investing in the business and returning cash to our shareholders through dividends and share repurchase," he said.
During the quarter, Reynolds:
-- Announced that CEO, Chairman and President Lloyd Waterhouse resigned from the company and its board of directors. Philip Odeen was named chairman and acting CEO. Odeen is the former chairman of TRW Inc. and previously served as Lead Director of Reynolds' board of directors.
-- Announced Applications on Demand, a next-generation application delivery framework offering automotive retailers simplified business operations, unprecedented choices and robust control and protection in how they access and use software applications to run their business. Early adopters include several top-five auto groups and a nine-store Midwestern auto group that is replacing its existing dealer management system provider with Reynolds solutions delivered via Reynolds Applications On Demand.
-- Was selected by a top-five auto group to shift its dealer network to Reynolds Web Solutions.
-- Was one of two winners in the Best Customer Service Organization category in the second annual American Business Awards program.
-- Teamed with Northwood University to provide online, automotive certificate programs based on the job roles within the parts, service, sales and accounting areas of the retail automotive dealership. Northwood is a private university that prepares students for leadership careers in business and management.
For the 2004 fiscal year, the company currently expects:
-- Fourth quarter earnings per share (EPS) to be 28 cents to 32 cents reflecting 2 cents to fulfill contractual commitments related to Mr. Waterhouse's resignation.
-- Full fiscal year EPS to be $1.34 to $1.38.
-- Return on equity of about 20 percent.
-- Operating margins to be between 15 percent and 16 percent.
-- Net capital expenditures of approximately $26 million.
-- Depreciation and amortization expenses of approximately $46 million.
-- Research and development expenses of approximately $93 million.
-- Estimated tax rate of 39 percent to 40 percent.
-- Continuation of its share repurchase plan.
-- Fully diluted shares used to calculate EPS to be approximately 68 million shares.
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