Click Commerce (NASDAQ:CKCM)
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Click Commerce, Inc. (Nasdaq:CKCM), a leading provider
of on-demand supply chain management solutions, today announced
results for its second quarter ended June 30, 2006.
Total second quarter 2006 revenues were $19.7 million,
representing a 48% growth from second quarter 2005 revenues of $13.3
million. Net income on a GAAP basis was $3.2 million, or $0.24 per
share for the quarter ended June 30, 2006. Because of significant net
operating loss carryforwards, the Company had an effective tax rate of
0% in the prior year quarter. If the Company had been taxed in the
prior year quarter at the current quarters' tax rate of 33%, the prior
year net income would have been $2.1 million or $0.18 per share for
the quarter ended June 30, 2005 on a GAAP basis. The Company, however,
was not taxed at that effective tax rate in the prior year quarter and
thus reported net income of $3.2 million or $.27 per share on a GAAP
basis.
The Company's second quarter results represent its twelfth
consecutive profitable quarter. As compared to the first quarter of
2006, the Company incurred additional expenses of approximately $0.4
million including increased spending on marketing, Sarbanes Oxley
compliance and legal fees related to building our intellectual
property portfolio. The Company reduced its effective tax rate from
41% in the first quarter of 2006 to 33% for the second quarter of 2006
due to an estimated credit for research and development costs. The
Company estimates its effective tax rate will be 37% for the remainder
of the year.
On a fully-taxed non-GAAP basis, excluding certain charges as
described below, net income was $4.6 million, or $0.36 per share on a
diluted basis. This represents an improvement of approximately $1.7
million over Q2 2005's non-GAAP net income of $2.9 million, or $0.24
per share on a diluted basis. Non-GAAP adjustments comprise non-cash
charges related to the amortization of intangible assets and
stock-based compensation, net of related income taxes calculated at a
33% effective tax rate.
The Company's cash and cash equivalents were $12.7 million as of
June 30, 2006 compared to $22.3 million as of March 31, 2006. The
decrease of $9.6 million primarily related to the use of $8.0 million
of cash to repurchase shares originally issued in connection with its
acquisition of certain business assets from Elance and the purchase of
property and equipment of $0.8 million. Cash flow from operations in
the quarter was a net use of $0.4 million. In addition, the Company
repaid a short-term note of $0.4 million. For the six months ended
June 30, 2006, the Company generated $7.7 million of cash flow from
operations. Second quarter days sales outstanding were 102 days as
compared to first quarter 2006 days sales outstanding of 101 days.
Deferred revenue was $14.3 million as of June 30, 2006.
Conference Call
The Company will hold a conference call to discuss the results
today, July 27, immediately following the issue of this release with
remarks from Chairman and CEO Michael W. Ferro, Jr. and CFO David
Arney. Nancy Koenig, executive vice president of operations, will be
joining the call for Q&A. The call will also be broadcast live over
the Internet. Investors interested in listening to the Webcast should
go to the "Investor Center" on Click Commerce's Web site, located at
www.clickcommerce.com, at least 15 minutes prior to the call.
Information Concerning Forward-Looking Statements
Information contained in this release that are not historical
facts and refer to the Company's future operations are forward-looking
statements under the Private Securities Litigation Reform Act of 1995.
Such statements involve expectations, estimates, assumptions, beliefs,
hopes, plans or strategies regarding the future. These statements are
subject to risks and uncertainties and actual results may differ
materially from those indicated by these forward-looking statements.
Factors which could cause or contribute to such differences include,
but are not limited to: the ability of the Company to integrate
acquisitions or investments in other companies, the extent of customer
acceptance and utilization of channel management products and
services, the impact of competitive products and services, the volume
and timing of customer contracts, changes in technology, deployment
delays or errors associated with Click Commerce products and the
ability to protect Click Commerce's intellectual property rights. We
refer you to the risk factors listed in our annual report on Form 10-K
for the year ended December 31, 2005, quarterly reports on Form 10-Q
and other filings, which are on file with the Securities and Exchange
Commission. The Company expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statement contained herein to reflect any change in
the Company's expectations with regard thereto or to reflect any
change in any event, condition or circumstance on which such
forward-looking statement is based, in whole or in part.
Non-GAAP Financial Measures
The non-GAAP financial measures contained in this earnings press
release exclude amortization of intangible assets, stock based
compensation expense and an adjustment to present the prior year net
income as if such results had been fully taxed. The Company uses these
measures for planning and forecasting its future business as well as
analyzing such forecasts against past performance. In addition,
excluding these charges and including prior year tax expense enhances
the Company's understanding of trends developing in its operations as
well as its performance in its market and against its competitors. The
Company believes that providing specific financial information on the
cost of such expenses, as well as providing non-GAAP net income
measures that exclude such items, best allows investors to understand
the Company's ongoing business activities during the quarter. The
Company believes that inclusion of certain non-GAAP financial measures
provides comparability to similar companies in the Company's industry,
many of which present similar non-GAAP financial measures to
investors. The non-GAAP financial measures should not be considered as
a substitute for, or preferable to, measures of financial performance
prepared in accordance with GAAP and may be different from non-GAAP
financial measures used by others.
The Company believes that these non-GAAP financial measures
provide an additional tool for investors to evaluate its ongoing
operating results and trends. Investors are encouraged to review the
reconciliation of these non-GAAP financial measures to the most
directly comparable GAAP financial measures as detailed below (in
thousands, except earnings per share and margins):
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Reconciliation of Non-GAAP Financial Measures (unaudited)
Three months ended June 30, 2006
----------------------------------------
Basic Diluted
Net Earnings Earnings Profit
income per share per share Margin
----------------------------------------
As reported GAAP financial
measures $3,160 $0.26 $0.24 16%
Adjustments
Amortization of intangible
assets presented in:
Cost of revenues, Product
License 488 0.04 0.04 2%
Operating expense 961 0.08 0.08 5%
Stock-based compensation 129 0.01 0.01 1%
Income tax effect of non-GAAP
adjustments and applying the
same current year effective
tax rate to prior year (148) (0.01) (0.01) -1%
----------------------------------------
Total adjustments 1,431 0.12 0.12 7%
----------------------------------------
Non-GAAP financial measures $4,591 $0.38 $0.36 23%
========================================
Three months ended June 30, 2005
----------------------------------------
Basic Diluted
Net Earnings Earnings Profit
income per share per share Margin
----------------------------------------
As reported GAAP financial
measures $3,212 $0.29 $0.27 24%
Adjustments
Amortization of intangible
assets presented in:
Cost of revenues, Product
License 279 0.03 0.02 2%
Operating expense 505 0.05 0.04 4%
Stock-based compensation - - - 0%
Income tax effect of non-GAAP
adjustments and applying the
same current year effective
tax rate to prior year (1,063) (0.10) (0.09) -8%
----------------------------------------
Total adjustments (279) (0.02) (0.03) -2%
----------------------------------------
Non-GAAP financial measures $2,933 $0.27 $0.24 22%
========================================
Six months ended June 30, 2006
----------------------------------------
Basic Diluted
Net Earnings Earnings Profit
income per share per share Margin
----------------------------------------
As reported GAAP financial
measures $6,077 $0.51 $0.47 15%
Adjustments
Amortization of intangible
assets presented in:
Cost of revenues, Product
License 919 0.08 0.07 2%
Operating expense 1,947 0.16 0.15 5%
Stock-based compensation 210 0.02 0.02 1%
Income tax effect of non-GAAP
adjustments and applying the
same current year effective
tax rate to prior year (299) (0.02) (0.02) -1%
----------------------------------------
Total adjustments 2,778 0.24 0.22 7%
----------------------------------------
Non-GAAP financial measures $8,855 $0.75 $0.69 22%
========================================
Six months ended June 30, 2005
----------------------------------------
Basic Diluted
Net Earnings Earnings Profit
income per share per share Margin
----------------------------------------
As reported GAAP financial
measures $5,842 $0.54 $0.50 24%
Adjustments
Amortization of intangible
assets presented in:
Cost of revenues, Product
License 481 0.04 0.04 2%
Operating expense 1,225 0.11 0.10 5%
Stock-based compensation - - - 0%
Income tax effect of non-GAAP
adjustments and applying the
same current year effective
tax rate to prior year (2,175) (0.20) (0.18) -9%
----------------------------------------
Total adjustments (469) (0.05) (0.04) -2%
----------------------------------------
Non-GAAP financial measures $5,373 $0.49 $0.46 22%
========================================
March 31, 2006 income tax effect of non-GAAP adjustments has been
adjusted due to a change in estimate
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About Click Commerce, Inc.
Click Commerce, Inc., (Nasdaq:CKCM), a leading provider of
on-demand supply chain management solutions, enables millions of users
in 70 countries to collaborate, in real time, with business partners
across the extended enterprise. Click Commerce solutions support the
unique business processes of multiple industry segments such as
manufacturing, aerospace and defense, high-tech, and research and
healthcare. Click Commerce enables corporations including Alaska
Airlines, BASF, Citibank, Delphi, Eastman Kodak Company, Jabil Global
Services, Lockheed Martin, Microsoft, Pier 1, Ryder, and Verizon to
coordinate and optimize business processes, accelerate revenue, lower
costs, and improve customer service. More information can be found at
www.clickcommerce.com.
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CLICK COMMERCE, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data)
June 30, December 31,
2006 2005
-------------------------
(unaudited)
ASSETS
Current Assets:
Cash, cash equivalents, and short-term
investments $12,696 $17,498
Trade accounts receivable, net 22,514 25,336
Revenue earned on contracts in progress in
excess of billings 1,054 481
Other current assets 4,311 1,879
------------ ------------
Total current assets 40,575 45,194
Property and equipment, net 3,411 2,765
Intangibles 23,880 22,129
Goodwill 60,303 48,782
Deferred tax asset 3,239 7,116
Other assets 1,719 1,673
------------ ------------
Total assets $133,127 $127,659
============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,010 $1,454
Billings in excess of revenues earned on
contracts in progress 15 177
Deferred revenue 14,331 16,421
Accrued compensation 1,351 3,190
Accrued rent 1,834 2,610
Accrued expenses and other current
liabilities 4,416 4,552
Short-term notes payable - 829
------------ ------------
Total current liabilities 22,957 29,233
Long-term debt 6,417 6,464
Other liabilities 1,177 846
------------ ------------
Total liabilities 30,551 36,543
Preferred stock - -
Common stock 13 12
Additional paid-in capital 133,898 120,589
Accumulated other comprehensive income 249 194
Treasury stock (10,905) (2,923)
Accumulated deficit (20,679) (26,756)
------------ ------------
Total shareholders' equity 102,576 91,116
------------ ------------
Total liabilities and
shareholders' equity $133,127 $127,659
============ ============
Click Commerce, Inc.
Condensed Consolidated Statements of Income
(Dollars in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Revenues
Product license and
hardware
Product license $2,288 $1,841 $4,964 $3,804
Hardware $350 - $726 -
----------- ----------- ----------- -----------
Total product
license and
hardware $2,638 $1,841 $5,690 $3,804
Service
Maintenance and
hosting 9,098 5,729 18,105 9,543
Consulting and
implementation
service 6,017 3,849 11,660 7,346
Subscription 1,989 1,930 3,975 3,581
----------- ----------- ----------- -----------
Total service 17,104 11,508 33,740 20,470
----------- ----------- ----------- -----------
Total revenues 19,742 13,349 39,430 24,274
Cost of revenues
Product license and
hardware 818 344 1,636 542
Service 6,102 4,827 12,185 8,816
----------- ----------- ----------- -----------
Total cost of
revenues 6,920 5,171 13,821 9,358
Gross profit 12,822 8,178 25,609 14,916
Operating expenses
Sales and marketing 2,179 1,602 4,270 2,748
Research and
development 2,309 1,666 4,748 2,875
General and
administrative 2,629 1,282 4,993 2,288
Amortization of
intangible assets 961 505 1,947 1,225
Stock-based
compensation 129 - 210 -
----------- ----------- ----------- -----------
Total operating
expenses 8,207 5,055 16,168 9,136
Operating income 4,615 3,123 9,441 5,780
Other income 109 89 240 62
----------- ----------- ----------- -----------
Income before income
taxes 4,724 3,212 9,681 5,842
Income tax expense 1,564 - 3,604 -
----------- ----------- ----------- -----------
Net income $3,160 $3,212 $6,077 $5,842
=========== =========== =========== ===========
Basic net income per
common share $0.26 $0.29 $0.51 $0.54
----------- ----------- ----------- -----------
Diluted net income per
common share $0.24 $0.27 0.47 $0.50
----------- ----------- ----------- -----------
Weighted average common
shares outstanding -
basic 12,041,614 11,008,162 11,969,504 10,720,961
Weighted average common
shares outstanding -
diluted 12,912,929 12,116,806 12,927,854 11,766,721
CLICK COMMERCE, INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(unaudited)
Six months ended
June 30,
2006 2005
-------- --------
Cash flows from operating activities:
Net income $6,077 $5,842
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Income tax expense 2,995 --
Amortization of stock-based compensation 210 --
Depreciation 704 470
Amortization of intangibles 2,866 1,706
Provision for doubtful accounts (1) 60
Gain on disposal of assets (6) --
Changes in operating assets and liabilities, net of
effect of acquisitions:
Trade accounts receivable 3,065 (1,033)
Prepaids and other current assets (2,440) 673
Accounts payable (451) (1,726)
Billings in excess of revenues earned on contracts
in progress (162) 276
Deferred revenue (3,432) (3,374)
Accrued compensation (1,881) (3,922)
Accrued expenses and other current liabilities 227 (284)
Other, net -- 465
-------- --------
Net cash provided by (used in) operating activities 7,771 (847)
Cash flows from investing activities:
Purchase of property and equipment (1,148) (247)
Payments for acquisitions, net of transaction costs
and cash acquired (3,935) (1,774)
Other investing activities 22 --
-------- --------
Net cash used in investing activities (5,061) (2,021)
Cash flows from financing activities:
Proceeds from exercise of stock options 1,349 219
Payments on stock repurchase (7,982) --
Proceeds from long-term debt -- 6,368
Payments on long-term and short-term debt (879) (5,270)
Payments under capital lease obligations -- (3)
-------- --------
Net cash (used in) provided by financing activities (7,512) 1,314
Net decrease in cash and cash equivalents (4,802) (1,554)
Cash and cash equivalents at beginning of period 17,498 13,382
-------- --------
Cash and cash equivalents at end of period $12,696 $11,828
-------- ========
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