Retalix Ltd. Posts Record Quarterly Net Income and Revenues for the Third Quarter 2005
Revenues up 55% to $52.5 million
Net income grows by 163% to $4.7 million, or $0.24 per share
Ra’anana, Israel, November 9, 2005 -- Retalix Ltd. (Nasdaq: RTLX) a provider of integrated enterprise-wide software solutions for the food and consumer goods retail and distribution industries worldwide, today announced record quarterly operating results for the third quarter ended September 30, 2005.
Revenues for the quarter were $52.5 million, an increase of 54.9% from $33.9 million in the third quarter of 2004. The Company reported net income for the quarter of $4.7 million, or $0.24 per diluted share, compared to net income of $1.8 million, or $0.10 per diluted share, in the third quarter of 2004, and $4.0 million, or $0.20 per diluted share in the second quarter of 2005.
Q3 2005 Highlights:
• Revenues increased 54.9 % to a quarterly record $52.5 million
• Operating income for the quarter grew 191% to $6.8 million, or 12.9% of sales
• New Retalix InSync platform launched as next-generation, fully integrated software platform for retailers and distributors
• Integration of IDS and TCI organizations proceeding on track
• First Retalix InSync applications being deployed with two US customers
• First two wins for Retalix InSync suite with North American mid-sized grocers
• Fuel provider at premier U.S. discount retailer selected the Retalix StorePoint POS solution
• A.S. Watson Retail Group expands the deployment of Retalix StoreLine to 1,500 stores in Asia.
• Rautakirja, leading convenience chain in Finland, rolls out an integrated POS-Head Office solution
• Affiliated Foods Southwest and Berner Food Service selected the Retalix Power Enterprise suite to streamline and optimize their distribution operations
“During the third quarter, we took our Synchronized Retail and Distribution strategy to the next level of success by launching our next-generation, integrated suite of enterprise and supply chain solutions (Retalix InSync) and continuing to secure major customer wins for our enterprise software solutions with retailers and distributors across the grocery, convenience store, food service, and fuel verticals,” said Barry Shaked, President and CEO of Retalix Ltd.
“We have made tremendous progress with the integration of our IDS and TCI acquisitions, and are now uniquely positioned to provide a proven, end-to-end solution that addresses the business and technology needs of food retailers and distributors from the point-of-sale all the way to the warehouse. Our success in the marketplace is reflected in our very strong financial results for the first nine months of the year, with revenues up by 55% to $137 million and operating income up by 209% to $15.5 million year to date.”
“During the quarter, we held our first international customer conference at which we presented our combined customer set with our full scope of software solutions and outlined a detailed technology roadmap for the Retalix InSync platform. Feedback from the hundreds of assembled customers and business partners confirmed that the direction in which we are driving our technology is aligned with the top business imperatives of our customers. And I am pleased to report that we have already won two deals for the Retalix InSync portfolio in the grocery segment, and we have already deployed key modules of the Retalix InSync suite with two different customers. We continue to make a robust level of investment in developing the next generation of solutions and enhancing the functionality of our existing applications, with nearly $33 million in R&D in the first nine months of 2005.”
North America
“In North America, we secured additional customers for our synchronized retail and distribution solutions. In the third quarter, a regional fuel provider for a major discount retailer ordered StorePoint licenses for 1,000 stores. A regional convenience store chain with 51 stores selected our Retalix DemandAnalytix (DAX) solution. Also, a significant number of food and consumer goods distributors selected the Retalix Power Enterprise software suite for deployments.”
International
“On the international front, Retalix is gaining traction with several major grocery, food and health and beauty chains. We continued our expansion efforts in Europe, Asia and Australia – all of which offer excellent prospects for growth and market share expansion. We began deployment of the Retalix StoreLine in over 1,500 of A.S. Watson’s stores across Asia. The top convenience store operator in Finland, Rautakirja, selected the Retalix StorePoint Point of Sale solution and the Retalix Head Office solution to enhance customer service and facilitate new product sales at its R-Kioski stores. We are exploring promising new markets, such as Korea and Eastern Europe; experienced our second win with a Japanese retailer, and inked a sizable new customer in Australia. Finally, we are moving ahead with three large projects for major European retail chains.”
Financial Highlights
During the third quarter of 2005, revenues contributed by North America made up $31.1 million, or 59.2% of sales, with $21.4 million or 40.8% of sales, coming from the International and Israeli business divisions.
Gross margin in the third quarter of 2005 was 65.7% of sales, as compared to 66.1% in the third quarter of 2004, and 64.9% in the second quarter of 2005.
In the third quarter of 2005, Retalix generated $2.8 million in cash flow from operations, or $10.2 million for the first nine months of 2005. As of September 30, 2005, the Company’s balance sheet showed liquid financial resources (cash and equivalents, deposits and marketable securities) of $65.2 million, $1.2 million in long-term debt and shareholders’ equity of $199.9 million.
Business Outlook
For the full year 2005, Retalix reaffirms its updated guidance for revenues to exceed $190 million. The Company also expects that net income for 2005 will exceed $15.5 million.
Conference Call
The Company will hold a conference call to discuss results for the third quarter of 2005 on Wednesday, November 9, 2005, at 10:30 a.m. EST (17:30 Israeli Time). Participating in the call will be Retalix Ltd. President and CEO Barry Shaked, Retalix Ltd. CFO Danny Moshaioff, and Retalix USA CEO Victor Hamilton.
This conference call will be broadcast live over the Internet and can be accessed by all interested parties at www.retalix.com. To listen to the live call, please go to the Web site at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a replay will be available shortly after the call on the Retalix site for 90 days.
About Retalix Ltd.
Retalix Ltd. is an independent provider of integrated enterprise-wide software solutions to global food and fuel retailers and U.S. grocery and convenience store distributors. Retalix solutions serve the needs of the entire range of food and fuel retailers and U.S. grocery and convenience store distributors, from multi national supermarket chains, major food distributors and major fuel retailers to local independent grocers. With more than 34,000 installations across 50 countries, Retalix develops and supports its software through more than 1,300 employees in its various subsidiaries and offices worldwide.
For further information, please visit the Company`s web site at www.retalix.com
Safe Harbor for Forward-Looking Statements: Except for statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and U.S. federal securities law. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Retalix, including revenues, income and expenses, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include risks relating to Retalix`s anticipated future financial performance and growth, the integration of Retalix`s acquisition of TCI as well as its other acquisitions, management of the anticipated increased market share of supply chain solutions and enterprise-wide solutions, continued roll-outs with existing customers, the market reception of its new e-marketplace and ASP services and broader integrated offerings and solutions, the potential benefits to food and fuel retailers and suppliers, expansion into new geographic markets, the conversion of sales leads into customers and the ramp-up of ASP users, the continuing integration of Retalix`s acquisition of OMI and other factors over which Retalix may have little or no control. This list is intended to identify only certain of the principal factors that could cause actual results to differ. Readers are referred to the reports and documents filed by Retalix with the Securities and Exchange Commission, including Retalix`s Annual Report on Form 20-F for the year ended December 31, 2004, for a discussion of these and other important risk factors. Retalix undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
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