* Company wins $2.3 million contract with Washoe County, Nevada
KALAMAZOO, Mich., July 19 /PRNewswire-FirstCall/ -- Manatron, Inc.
(NASDAQ:MANA) a leading provider of software products and services
for local governments, including the recently introduced Government
Revenue Management(R) (GRM(R)) software, today announced its
financial results for the fourth quarter and full fiscal year,
which ended April 30, 2006. For the quarter, the Company reported
net revenues of $9.9 million and a net loss of $1.6 million or
$0.33 per diluted share compared to $11.8 million of net revenues
and a net profit of $721,000 or $0.16 per diluted share for the
fourth quarter in the prior fiscal year. The Company's net revenues
did increase by 23.5 percent compared to the $8.0 million of net
revenues that were posted for the third fiscal quarter. This
increase was primarily due to the inclusion of operations from
ASIX, Inc., which was acquired on February 1, 2006. For the
quarter, ASIX contributed approximately $1.4 million in revenue and
$94,000 of operating income before amortization of the acquired
intangible assets. For the year ended April 30, 2006, net revenues
were $36.3 million and the net loss was $4.3 million or $0.97 per
diluted share. In the prior fiscal year, the Company reported net
revenues of $40.2 million and net income of $2.4 million or $0.53
per diluted share. The prior year net income included an after-tax
non-recurring gain of $1.4 million (using an effective tax rate of
38.5 percent) or $0.31 per diluted share related to the sale of the
Company's Judicial Product line in May 2004. "Without question,
fiscal 2006 was a tough year for us financially as we continued our
journey of transitioning the Company from a project-oriented,
hardware focused, regional company with over two hundred different
products to an industry-leading, national company with a primary
focus on building scale and leveraging the significant investments
in our new GRM property suite of software and services," commented
Paul R. Sylvester, Chief Executive Officer. "The challenges we have
encountered in Baltimore and other legacy projects, where we have
been developing a fully customized Property Tax solution, are
evidence that our GRM initiative is the right strategy. Despite the
poor financial results, we still had a number of major
accomplishments during fiscal 2006 and finished the year more
confident than ever in our direction." "The completion of our first
GRM Property Tax and CAMA software implementation in Gwinnett
County, Georgia was by far our most significant accomplishment for
the year," Mr. Sylvester continued. "Gwinnett County is currently
processing and mailing their second year of tax bills with our new
integrated system. The references and additional assistance
Gwinnett County provided during fiscal 2006 were instrumental in
our GRM contract wins in Minnesota and Nevada. As previously
announced our initial contracts with the Minnesota Counties
Computer Cooperative (MCCC) and Blue Earth County amount to over $5
million. We have the capability to sign more business as additional
Minnesota counties purchase our GRM Property Tax software. In
addition, we are aggressively pursuing leads for our CAMA and
Recorder modules of the GRM suite. We also secured a $2.3 million
GRM Property Tax contract with Washoe County (Reno), Nevada, which
is the second largest county in that state." "Both the Minnesota
and Nevada implementations are underway and are benefiting from the
knowledge that ASIX brings to the table as a result of their
experience in Anoka County, Minnesota and Clark County (Las Vegas),
Nevada," Mr. Sylvester continued. "The ASIX acquisition, which we
completed on February 1, 2006, was another major accomplishment for
Manatron and will allow us to accelerate the execution of our GRM
strategy in California and other states. Equally important is the
additional revenue and operating income that ASIX will contribute
in the upcoming years. Finally, as noted in more detail below, we
restructured our business to balance our costs with our current
revenue stream. Our organization is now streamlined and we believe
Manatron will show significant progress in the upcoming first
quarter and ultimately return to profitability in fiscal 2007."
"While we continue to face lengthy sales cycles as local
governments evaluate their purchase decisions, our success in
Gwinnett County, coupled with our recent successful GRM
implementations in Kenai, Alaska and Payette County, Idaho should
serve as high quality references as we communicate the benefits of
our GRM products nationwide and look to shorten the sales cycle,"
Mr. Sylvester added. "This is particularly true in California,
where ASIX has outstanding contacts and an established reputation.
We have also made significant progress in our core markets of
Florida, Illinois, Indiana and Ohio, which will help our future
financial results. I remain optimistic that we are close to that
inflection point and believe Manatron is appropriately positioned
to capture more business." Financial Results The decreases in net
revenues for the fourth quarter and entire year were primarily
related to significant reductions in appraisal services revenues
and software license fees. These decreases were partially offset by
a 26.6 percent increase in recurring software support and
maintenance revenues for the quarter and a 10.2 percent increase
for the year. As a result of the Company's recent software
implementations for new clients, price increases and the
acquisitions of VisiCraft on November 1, 2004, Plexis on November
1, 2005 and ASIX on February 1, 2006, total recurring revenue from
hardware and software maintenance, e-government subscriptions, and
printing and processing contracts currently stands at approximately
$20 million annually, representing over fifty-five percent of the
Company's revenue for the last fiscal year. The Company anticipates
that this revenue stream will continue to grow with price increases
and as it completes the software implementations for additional new
clients in Alaska, Arizona, Idaho, Maryland, Minnesota, Nevada,
South Carolina, Tennessee, and Virginia. Cost of revenues for the
fourth quarter increased by 8.6 percent to $6.8 million, resulting
in gross profit of $3.1 million and a gross margin of 31.4 percent
compared to gross profit of $5.5 million and a gross margin of 47.0
percent in the fourth quarter of last year. For the year, cost of
revenues increased 11.3 percent to $25.2 million, resulting in
gross profit of $11.1 million and a gross margin of 30.6 percent
compared to gross profit of $17.5 million and a gross margin of
43.6 percent for the prior fiscal year. Gross margins were
primarily impacted by the lower year over year sales revenue,
specifically software licenses. In addition, the Company incurred
substantially higher subcontractor expenses in connection with its
City of Baltimore project. Selling, general and administrative
expenses increased slightly to $4.9 million for the three months
ended April 30, 2006 from $4.4 million for the prior year fourth
quarter. For the year, selling, general and administrative expenses
increased by 8.1 percent to $17.5 million compared to the prior
fiscal year. This increase was directly related to the Company's
additional investments in its sales, marketing and product
development activities, as well as the new intangible asset
amortization expense associated with recent acquisitions. On April
26, 2006, the Company announced an immediate strategic workforce
reduction as part of an effort to reduce its fixed costs. This
resulted in the elimination of 62 positions or about 14 percent of
the workforce level on February 1, 2006. The Company reported a
one-time charge to expense in the fourth quarter of $532,000 in
connection with this restructuring. Total signed contracts or sales
for the year ended April 30, 2006 were $19.0 million compared to
$20.2 million for the prior fiscal year. As of April 30, 2006, the
Company's backlog amounted to $18 million for software and related
services and $5.0 million for appraisal services compared to $15.6
million and $7.9 million, respectively at April 30, 2005. These
backlog amounts are exclusive of the Company's recurring revenue
noted above. The Company finished the year with working capital of
$4.7 million, $4.2 million in cash and no bank debt. Shareholders'
equity was $23.0 million at April 30, 2006 compared to $23.6
million at the end of the last fiscal year. The Company also
announced that G. William McKinzie has been promoted to the
position of President in addition to his current role as Chief
Operating Officer. Mr. McKinzie will oversee the ongoing transition
to a GRM-based product offering, including sales, marketing and
administration. Paul Sylvester has been named Co-Chairman of the
Company and will remain as Chief Executive Officer. "I've spent
considerable time building a team which can lead Manatron through
the current challenges and take the Company to the next stage of
its evolution," Mr. Sylvester said. "Bill has demonstrated the
technical expertise and drive to ensure that our GRM strategy gets
executed sooner rather than later so that Manatron is viewed as the
leader in the national Property Tax and CAMA market. This
transition will enable me to focus on more strategic initiatives,
such as building shareholder value, mergers and acquisitions, and
Investor Relations. I look forward to providing guidance and
support to Bill as he moves into his new role." Mr. McKinzie added,
"Manatron possesses a compelling solution for local governments.
Our mission is to clearly demonstrate the capability of our
software to our potential customers and drive our GRM sales into
new markets profitably. I am confident that we have the right
vision and a solid strategy. With the addition of the talent,
expertise and intellectual property from ASIX, we are in the
strongest competitive position in the Company's history. I believe
we have the right pieces in place for us to be successful and
return to profitability, and I look forward to meeting the
challenges we currently face head-on." Teleconference Information
Management will discuss the results in a conference call, scheduled
for 4:15 p.m. Eastern Time, on Wednesday, July 19, 2006. Anyone
interested in participating should call 800-683-1585 if calling
within the United States or 973-935-2107 if calling
internationally. There will be a playback available until July 26,
2006. To listen to the playback, please call 877-519-4471 if
calling within the United States or 973-341-3080 if calling
internationally. Please use pin number 7610923 for the replay. This
call is being web cast by ViaVid Broadcasting and can be accessed
at Manatron's website at http://www.manatron.com/. The web cast may
also be accessed at ViaVid's website at http://www.viavid.net/. The
web cast can be accessed until August 19, 2006 on either site. To
access the web cast, you will need to have the Windows Media Player
on your desktop. For the free download of the Media Player please
visit:
http://www.microsoft.com/windows/windowsmedia/en/download/default.asp.
About Manatron, Inc.: Manatron, Inc. designs, develops, markets and
supports a family of web-based and client/server application
software products for county, city and township governments.
Manatron's products support the back-office processes for these
government agencies and facilitate the broader business processes
via eGovernment and Internet features, such as Internet payments
and mortgage lender integration, targeted at the needs of taxpayers
and industry professionals. Manatron also provides mass appraisal
services, which includes the assessment of residential, commercial
and other types of properties to ensure updated and equitable
property valuations. Manatron is headquartered in Portage, Michigan
and has offices in Florida, Georgia, Illinois, Indiana, North
Carolina, Ohio, Tennessee and Washington. Manatron currently serves
approximately 1,300 customers in 30 states and two Canadian
territories. Information about Manatron, Inc. is available at the
Company's site on the World Wide Web at http://www.manatron.com/.
Safe Harbor Statement: The information provided in this news
release may include forward-looking statements relating to future
events, such as the development of new products, the commencement
of production, or the future financial performance of the Company.
Actual results may differ from such projections and are subject to
certain risks including, without limitation, risks arising from:
changes in the rate of growth of the local government market,
increased competition in the industry, delays in developing and
commercializing new products, adequacy of financing and other
factors described in the Company's most recent annual report on
Form 10-K filed with the Securities and Exchange Commission, which
can be reviewed at http://www.sec.gov/ . MANATRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Year Ended
April 30, April 30, (unaudited) (audited) 2006 2005 2006 2005 NET
REVENUES $9,909,583 $11,799,340 $36,324,396 $40,154,825 COST OF
REVENUES 6,795,931 6,255,686 25,194,840 22,642,555 Gross profit
3,113,652 5,543,654 11,129,556 17,512,270 SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 4,853,308 4,419,816 17,491,957 16,176,608
RESTRUCTURING CHARGE (532,421) -- (532,421) -- Income (loss) from
operations (2,272,077) 1,123,838 (6,894,822) 1,335,662 GAIN ON SALE
-- -- -- 2,237,157 OTHER INCOME (EXPENSE) (29,170) 84,759 177,908
273,835 Income (loss) before provision (credit) for income taxes
(2,301,247) 1,208,597 (6,716,914) 3,846,654 PROVISION (CREDIT) FOR
INCOME TAXES (722,815) 488,000 (2,400,255) 1,481,000 NET INCOME
(LOSS) $(1,578,432) 720,597 (4,316,659) 2,365,654 BASIC EARNINGS
(LOSS) PER SHARE $(.33) $.17 $(.97) $.57 DILUTED EARNINGS (LOSS)
PER SHARE $(.33) $.16 $(.97) $.53 BASIC WEIGHTED AVERAGE SHARES
OUTSTANDING 4,808,776 4,202,930 4,463,838 4,143,173 DILUTED
WEIGHTED AVERAGE SHARES OUTSTANDING 4,808,776 4,510,042 4,463,838
4,448,796 MANATRON, INC. CONSOLIDATED BALANCE SHEETS April 30,
April 30, 2006 2005 (audited) (audited) ASSETS CURRENT ASSETS: Cash
and equivalents $4,209,831 $8,444,195 Accounts receivable, net
7,556,313 6,387,440 Income tax receivable 2,182,248 659,736
Revenues earned in excess of billings 6,151,346 6,596,025 Unbilled
retainages on long term contracts 1,105,320 1,349,371 Notes
receivable 450,565 339,958 Inventories 146,800 198,995 Deferred tax
assets 1,153,651 901,000 Other current assets 485,525 706,000 Total
current assets 23,441,599 25,582,720 NET PROPERTY AND EQUIPMENT
2,618,588 2,882,004 OTHER ASSETS: Notes receivable, less current
portion 272,261 280,227 Computer software development costs, net of
accumulated amortization 2,610,216 2,760,762 Goodwill 12,022,385
4,886,676 Intangible assets, net of accumulated amortization
3,202,935 1,243,903 Other, net 253,980 164,908 Total other assets
18,361,777 9,336,476 Total assets 44,421,964 37,801,200 LIABILITIES
AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable
898,301 781,110 Current portion of notes payable 2,700,000 300,000
Billings in excess of revenues earned 3,373,271 2,445,813 Billings
for future services 8,369,114 6,020,275 Accrued liabilities
3,419,286 3,267,771 Total current liabilities 18,759,972 12,814,969
DEFERRED INCOME TAXES 284,963 538,000 LONG-TERM PORTION OF NOTES
PAYABLE 2,334,228 807,686 SHAREHOLDERS' EQUITY: Common stock
17,933,574 14,321,184 Retained earnings 6,504,318 10,820,977
Deferred stock compensation (1,395,091) (1,501,616) Total
shareholders' equity 23,042,801 23,640,545 Total liabilities and
shareholders' equity $44,421,964 $37,801,200 DATASOURCE: Manatron,
Inc. CONTACT: Paul Sylvester, CEO of Manatron, Inc.,
+1-269-567-2900, Web site: http://www.viavid.net/ Web site:
http://www.manatron.com/
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