(Nasdaq: PMTC) today reported results for its first fiscal quarter ended
December 29, 2012.
The Q1 non-GAAP revenue and non-GAAP EPS results exclude a $1.6 million
effect of purchase accounting on the fair value of the acquired deferred
maintenance balance of Servigistics. The Q1 non-GAAP EPS results also
exclude $11.9 million of stock-based compensation expense, $11.3 million
of acquisition-related intangible asset amortization, $15.4 million of
restructuring charges, and $4.6 million of acquisition-related expense.
The Q1 non-GAAP EPS results include a tax rate of 22% and 122 million
diluted shares outstanding. The Q1 GAAP EPS results include a tax
benefit of $33 million and 122 million diluted shares outstanding.
James Heppelmann, president and chief executive officer, commented,
"Given the economic environment we are pleased with our Q1 results,
including strong performance from the recently acquired Servigistics
business, which significantly broadens our Service Lifecycle Management
(SLM) offering. Our license revenue of $79 million was down 10% on a
constant currency basis as compared to very strong performance in Q1'12,
and consistent with our guidance range. We again delivered on our
commitment to earnings growth with Q1 non-GAAP EPS exceeding the high
end of our guidance range."
Heppelmann added, "We continued to demonstrate our PLM market leadership
in Q1 with a competitive displacement of the legacy PLM provider at
Brazilian-based Embraer, one of the world's largest aircraft
manufacturers. Embraer chose PTC as its partner of record for its entire
global aircraft development program - commercial, executive and defense.
The selection further extends PTC's position as a leading PLM technology
solution provider for the aerospace and defense (A&D) industry. We also
had a strong quarter in our SLM business with double-digit organic
license growth, further bolstered by strong performance from the
Servigistics business. We remain excited about our unique positioning in
the growing after-market service market."
"We had 27 large deals (recognized license + services revenue of more
than $1 million) in Q1'13, driven primarily by activity in the Americas.
Consistent with last quarter, the mix of large deal revenue was skewed
more heavily toward Services, reflecting strong PLM implementation
activity and a lower level of large license transactions. During the
quarter we recognized revenue from leading organizations such as AGCO,
Caterpillar, Embraer, Esaote Group, Otto Bock Healthcare, Sulzer Pumpen,
Turbomeca, and the Washington Metro Area Transit Authority."
Jeff Glidden, chief financial officer, commented, "From a profitability
standpoint we had another solid quarter; we delivered $0.36 non-GAAP EPS
and achieved an 18.2% non-GAAP operating margin. We ended Q1 with $248
million of cash, down from $490 million at the end of Q4'12, reflecting
in part $222 million used to complete the Servigistics acquisition and
$16 million for stock repurchases." Q1 GAAP EPS was $0.29 and GAAP
operating margin was 4.3%.
"We continue to be excited about our long-term growth opportunity based
on the strength of our pipeline, market acceptance of our products in
core markets, as well as the significant interest we are seeing in our
broader solution areas. While the slowdown in the global manufacturing
industry and uncertainty about the near-term economy remains a headwind
for revenue growth, we remain committed to driving operating margin
expansion and achieving our goal of 25% to 27% non-GAAP operating margin
in FY'15," said Heppelmann.
Glidden added, "For Q2'13, we are providing guidance of $305 to $325
million in non-GAAP revenue with $70 to $85 million in license revenue,
$75 to $80 million in services revenue and approximately $160 million in
non-GAAP support revenue. We are expecting Q2 non-GAAP EPS of $0.32 to
$0.39." The GAAP revenue target is $304 to $324 million, the target GAAP
support revenue is $159 million, and the GAAP EPS target range is $0.03
The Q2 guidance assumes $1.33 USD / EURO, 90.0 YEN / USD, a non-GAAP tax
rate of 18% reflecting the extension of the federal R&D tax credit, a
GAAP tax rate of 30% and 122 million diluted shares outstanding. The Q2
non-GAAP guidance excludes $1 million of the effect of purchase
accounting on deferred maintenance revenue from Servigistics, $12
million of stock-based compensation expense, $15 million of
restructuring costs, $2 million of acquisition related expenses, $11
million of acquisition-related intangible asset amortization expense,
their related income tax effects, as well as any discrete tax items.
Glidden continued, "Looking to the full year FY'13, we are targeting
non-GAAP revenue of $1,340 to $1,370 million, reflecting a wider range
on our license guidance given the macroeconomic environment, as well as
a $10 million reduction to our previous Services revenue guidance. We
are, however, increasing our non-GAAP gross margin target for FY'13 by
100 bps reflecting continued improvements in our Services business. We
are targeting license revenue of $360 to $380 million, services revenue
of $320 to $330 million and non-GAAP support revenue of approximately
$660 million. Our commitment to profitability remains on track, and we
believe that vigilance on cost controls position us to achieve our
non-GAAP FY'13 EPS target. We continue to target approximately 200 basis
points of non-GAAP operating margin improvement during FY'13. Our FY'13
non-GAAP EPS target remains $1.70 to $1.80." We are targeting GAAP
revenue of $1,337 to $1,367 million (including GAAP support revenue of
$597 million) and GAAP EPS of $0.95 to $1.05.
The FY'13 targets assume a non-GAAP tax rate of 22%, a GAAP tax rate of
12% and 122 million diluted shares outstanding. The FY'13 non-GAAP
targets exclude approximately $30 million in restructuring charges,
$3 million of the effect of purchase accounting on acquired Servigistics
deferred revenue, $50 million of stock-based compensation expense, $45
million of acquisition-related intangible asset amortization, $7 million
of acquisition-related expenses, their related income tax effects, as
well as any discrete tax items.
Q1 Earnings Conference Call and Webcast
Prepared remarks for the conference call have been posted to the
investor relations section of our website. The prepared remarks will not
be read live; the call will be primarily Q&A.
1-800-857-5592 or 1-773-799-3757Call Leader: James HeppelmannPasscode:
The audio replay of this event will be archived for public replay
until 4:00 pm (CT) on February 3rd, 2013.Dial-in:
866-484-4215 Passcode: 5689To access the replay via webcast,
please visit www.ptc.com/for/investors.htm.
Important Information About Non-GAAP References
PTC provides non-GAAP supplemental information to its financial results.
Non-GAAP revenue, operating expenses, margin and EPS exclude the effect
of purchase accounting on the fair value of acquired deferred revenue of
MKS Inc. and Servigistics, Inc., stock-based compensation expense,
amortization of acquired intangible assets, restructuring charges,
acquisition-related expenses, certain foreign currency transaction
losses, and the related tax effects of the preceding items and any
one-time tax items. We use these non-GAAP measures, and we believe that
they assist our investors, to make period-to-period comparisons of our
operational performance because they provide a view of our operating
results without items that are not, in our view, indicative of our core
operating results. We believe that these non-GAAP measures help
illustrate underlying trends in our business, and we use the measures to
establish budgets and operational goals, communicated internally and
externally, for managing our business and evaluating our performance. We
believe that providing non-GAAP measures affords investors a view of our
operating results that may be more easily compared to the results of
peer companies. In addition, compensation of our executives is based in
part on the performance of our business based on these non-GAAP
measures. However, non-GAAP information should not be construed as an
alternative to GAAP information as the items excluded from the non-GAAP
measures often have a material impact on PTC's financial results.
Management uses, and investors should consider, non-GAAP measures in
conjunction with our GAAP results.
Statements in this press release that are not historic facts, including
statements about our fiscal 2013 and other future financial and growth
expectations and anticipated tax rates, are forward-looking statements
that involve risks and uncertainties that could cause actual results to
differ materially from those projected. These risks include the
possibility that the macroeconomic climate may not improve or may
deteriorate, the possibility that customers may not purchase our
solutions when or at the rates we expect and that our pipeline deals may
not convert as we expect, the possibility the foreign currency exchange
rates may vary from our expectations and thereby affect our reported
revenue and expense, the possibility that we may not achieve the
license, services or maintenance growth rates that we expect, which
could result in a different mix of revenue between license, service and
maintenance and could impact our EPS results, the possibility that new
products, including new releases of Creo and our newly expanded SLM
solutions, may not generate the revenue we expect, the possibility that
resource constraints and staff reductions could adversely affect our
revenue, the possibility that our strategic investments may not generate
the growth or revenues we expect, the possibility that the acquisition
of Servigistics may not generate the revenue we expect, and the
possibility that remedial actions relating to our previously announced
investigation in China will have a material impact on our operations in
China and that fines and penalties may be assessed against us in
connection with this matter. In addition, our assumptions concerning our
future GAAP and non-GAAP effective income tax rates are based on
estimates and other factors that could change, including the geographic
mix of our revenue, expenses and profits and loans and cash
repatriations from foreign subsidiaries. Other risks and uncertainties
that could cause actual results to differ materially from those
projected are detailed from time to time in reports we file with the
Securities and Exchange Commission, including our Annual Report on
Form 10-K and our Quarterly Reports on Form 10-Q.
PTC, the PTC logo, and all other PTC product names and logos are
trademarks or registered trademarks of Parametric Technology Corporation
or its subsidiaries in the United States and in other countries. All
other companies referenced herein are trademarks or registered
trademarks of their respective holders.
(Nasdaq: PMTC) enables manufacturers to achieve sustained product and
service advantage. The company's technology solutions help customers
transform the way they create and service products across the entire
product lifecycle - from conception and design to sourcing and service.
Founded in 1985, PTC employs nearly 6,000 professionals serving more
than 27,000 businesses in rapidly-evolving, globally distributed
manufacturing industries worldwide. Get more information at www.ptc.com.
Weighted average shares outstanding
(1) The amounts in the tables above include stock-based
compensation as follows:
Fair value of acquired company's deferred maintenance
Amortization of acquired intangible assets included in
cost of license revenue
Acquisition-related charges included in general and
Amortization of acquired intangible assets
(3) In the first quarter of 2012 we recorded $0.8 million of foreign
currency transaction losses related to legal entity mergers completed
during the quarter.
(4) Reflects the tax effects of non-GAAP adjustments for the first
quarter of 2013 and 2012, which are calculated by applying the
applicable tax rate by jurisdiction to the non-GAAP adjustments listed
above, as well as one-time non-cash GAAP charges. In the fourth quarter
of 2012, a valuation allowance was established against our U.S. net
deferred tax assets. As the U.S. is profitable on a non-GAAP basis, the
2013 non-GAAP tax provision is being calculated assuming there is no
U.S. valuation allowance and as a result an income tax benefit of $6.2
million is included in the first quarter of 2013. The first quarter of
2013 also includes a one-time non-cash tax benefit of $32.6 million
related to the release of a portion of the valuation allowance as a
result of deferred tax liabilities established in accounting for the
acquisition of Servigistics. In the first quarter of 2012, the tax
effects exclude one-time non-cash GAAP charges net, of $1.4 million
related to the impact from a reduction in the statutory tax rate in
Japan on deferred tax assets from a litigation settlement.
Payments of withholding taxes in connection with vesting
of stock-based awards
(5) Includes accounts payable, accrued expenses, and accrued
compensation and benefits
(6) The first quarter of 2013 includes $10 million in restructuring
payments and $4 million in acquisition-related payments.
(7) We acquired Servigistics on October 2, 2012, for $222.4 million (net
of cash acquired) which was funded with $230 million in borrowings under
our revolving credit facility. We borrowed the funds in the fourth
quarter of 2012 in contemplation of the acquisition closing.
[ Back To NFVZone's Homepage ]