MROI Mro Software

MRO Software, Inc. (Nasdaq: MROI), the leading provider of asset and service management solutions, today announced results for the Company's third quarter of fiscal 2006 ended June 30, 2006. Total revenues for the third quarter were $60.3 million compared with $53.2 million for the third quarter last year, an increase of 13 percent. The Company reported net income for the third quarter of $7.5 million or $0.27 per diluted share, compared with net income of $4.1 million or $0.16 per diluted share for the same quarter of last year, a net income increase of 83 percent. Revenues from software license sales for the third quarter were $21.5 million, compared with $19.2 million for the same quarter last year, an increase of 12 percent. Support and services revenues were $38.8 million for the third quarter, compared with $34.0 million for the same quarter last year, an increase of 14 percent. During the third quarter, the Company sold 221 software licenses. Customers across a range of industries and geographies purchased MRO Software products during the quarter, including: City of Austin, City of Corpus Christi, Cummins Inc., Detroit Newspapers, GAF Materials Corp., Honeywell Middle East, Johns Hopkins Hospital, Lee County Port Authority, McCarren International Airport, Naval Facilities Engineering, Orange County Public Works, Pennsylvania State University, Provident Energy Ltd, Sacramento Regional Wastewater, Sarasota County Government, Toshiba Corp., Tubelines, University of Kansas Medical Center, U.S. Army, and the U. S Air Force. The balance sheet as of June 30, 2006 contained $161.0 million in cash and marketable securities and no long-term debt. This compares with $133.2 million in cash and marketable securities as of September 30, 2005, an increase of $27.8 million for the first three quarters of the fiscal year. As of June 30, 2006, deferred revenue was $37.5 million, and days sales outstanding (DSO) was 72 days. "Our third fiscal quarter financial results continued our recent trend of record quarterly revenues and improved productivity throughout all our operations," said Chip Drapeau, president and CEO, MRO Software. "MXES's unique architecture, deep vertical function and IT Service Management applications continue to differentiate us against other competitive offerings." "The results of our initiatives to improve productivity and drive increases in operating margins are now evident," said Peter Rice, executive vice president and CFO, MRO Software. "This strategy has produced improvements in our key financial metrics, and further strengthened the Company's financial foundation." For fiscal year 2006, the Company now expects total revenue will grow in the range of 10 to 15 percent over fiscal 2005, with growth in software revenues expected to remain in the range of 10 to 20 percent over fiscal 2005. The Company expects fiscal 2006 earnings to be at the high end of its $0.85 to $0.90 range, on a diluted per share basis. For fiscal year 2007, the Company expects total revenue growth to be in the range of 5 to 10 percent above fiscal 2006 results. Software revenues are expected to grow in the range of 10 to 20 percent. As a result, the Company expects earnings to grow in the range of 15 to 25 percent per diluted share over fiscal 2006 results. The Company will conduct a conference call to discuss the quarter's results on Thursday, July 20, 2006 at 4:30 p.m. EDT. To participate in this call within the U.S. and Canada, dial (800) 932-9896, international callers should dial (706) 634-5804; all participants should use conference ID 2564074. A digital recording of the call will be available beginning two hours after the call and will be available through January 26, 2006. To access the replay within the U.S. and Canada, dial (800) 642-1687, international callers should dial (706) 645-9291; all participants should use the same conference ID: 2564074. A webcast of the call is available at: www.mro.com/investor. A transcript of the call will be promptly archived on the Investor Relations portion of the Company's website, and may be found at: www.mro.com/investor. About MRO Software, Inc. MRO Software is the leading provider of asset and service management solutions. The Company's integrated suite of applications optimizes performance, improves productivity and service levels and enables asset-related sourcing and procurement across the entire spectrum of strategic assets. The Company's asset management solutions allow customers to manage the complete lifecycle of strategic assets including: planning, procurement, deployment, tracking, maintenance and retirement. Using MRO Software's solutions, customers improve production reliability, labor efficiency, material optimization, software license compliance, lease management, warranty and service management and provisioning across the asset base. MRO Software (Nasdaq: MROI) is a global company based in Bedford, Mass., with approximately 900 employees and more than 300,000 end-users. The Company markets its products through a direct sales organization in combination with a network of international distributors. MRO Software has sales offices throughout North America, Europe, Asia/Pacific and Latin America. Additional information on MRO Software can be found at http://www.mro.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause such a difference include, among other things: continued stagnation in the market for our traditional products; increased competitive pressures; slower than anticipated penetration into the markets addressed by our new products; the Company's reliance on, and unanticipated delays or obstacles to, larger software license transactions; and those factors discussed in the Section entitled "Risk Factors" in Item 2 of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2006. Maximo(R) is a registered trademark, and MRO Software(TM) and MXES(TM) are trademarks, of MRO Software, Inc. -0- *T MRO SOFTWARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Three Months Ended Nine Months Ended June 30, June 30, 2006 2005 2006 2005 -------- -------- -------- --------- (in thousands, except per share data) Revenues: Software $ 21,513 $ 19,233 $ 51,990 $ 44,231 Support and services 38,835 33,997 114,702 99,534 -------- -------- -------- --------- Total revenues 60,348 53,230 166,692 143,765 -------- -------- -------- --------- Cost of revenues: Software 1,352 2,608 4,652 5,087 Support and services 17,983 16,441 51,530 48,376 -------- -------- -------- --------- Total cost of revenues 19,335 19,049 56,182 53,463 -------- -------- -------- --------- Gross profit 41,013 34,181 110,510 90,302 Operating expenses: Sales and marketing 16,637 15,861 45,969 44,443 Product development 8,089 8,183 23,331 21,921 General and administrative 5,556 4,486 15,167 13,606 -------- -------- -------- --------- Total operating expenses 30,282 28,530 84,467 79,970 -------- -------- -------- --------- Income from operations 10,731 5,651 26,043 10,332 Interest income, net 1,468 693 3,861 1,811 Other (expense)/income, net (48) 7 16 78 -------- -------- -------- --------- Income before income taxes 12,151 6,351 29,920 12,221 Provision for income taxes 4,679 2,289 11,298 4,377 -------- -------- -------- --------- Net income $ 7,472 $ 4,062 $ 18,622 $ 7,844 ======== ======== ======== ========= Net income per share, basic $ 0.29 $ 0.16 $ 0.72 $ 0.31 Net income per share, diluted $ 0.27 $ 0.16 $ 0.69 $ 0.31 Shares used to calculate net income per share Basic 26,061 25,327 25,797 25,206 Diluted 27,393 25,936 26,880 25,687 MRO SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) June 30, September 30, 2006 2005 ------------------------------ (in thousands) ASSETS Cash and cash equivalents $ 120,802 $ 120,301 Marketable securities 33,283 5,130 Accounts receivable, net 48,274 40,362 Other current assets 9,045 6,678 ------------- ------------- TOTAL CURRENT ASSETS 211,404 172,471 ------------- ------------- Marketable securities 6,902 7,743 Property and equipment, net 6,868 7,210 Intangible assets, net 48,181 49,455 Other assets 8,405 9,491 ------------- ------------- TOTAL ASSETS $ 281,760 $ 246,370 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities $ 30,113 $ 30,116 Deferred revenue 37,165 31,718 ------------- ------------- TOTAL CURRENT LIABILITIES 67,278 61,834 ------------- ------------- Other long term liabilities 2,275 2,830 ------------- ------------- TOTAL LIABILITIES 69,553 64,664 ------------- ------------- STOCKHOLDERS' EQUITY 212,207 181,706 ------------- ------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 281,760 $ 246,370 ============= ============= *T