Retalix Ltd. Announces Record Revenues of $28.7 Million for Q2 2004
RA`ANANA, Israel--Aug. 4, 2004--Retalix Ltd. (Nasdaq:RTLX) a
provider of integrated, enterprise-wide software solutions for the
retail food and fuel industries worldwide, including supermarkets,
convenience stores and fuel stations, today announced its operating
results for the second quarter ended June 30th, 2004.
Revenues for the quarter were $28.7 million, an increase of 33.5%
from $21.5 million in the second quarter of 2003 and up 11.2% from
$25.8 million reported in the first quarter of 2004. The Company
reported net income for the quarter of $1.3 million, or 8 cents per
diluted share, compared to a net income of $1.4 million, or 11 cents
per diluted share, in the second quarter of 2003. Net income reflects
the intensive investment in developing the next generation of
supply-chain management applications and their integration with the
Company`s suite of products -- a process the company committed to and
announced as part of the OMI acquisition.
Q2 2004 Highlights:
-- Revenues up 33.5% to $28.7 million
-- Net income of $1.3 million, or 8 cents per diluted share
-- Tesco to install Retalix BackOffice across all sites in U.K.,
Europe and Asia
-- Tussauds Group selects Retalix StorePoint for the group`s
international theme parks
-- Costco installs 200th site with Retalix StoreLine Fuel
solution
-- Cumberland Farms installs 200th site with Retalix StorePoint
POS and forecourt solution
-- Market Basket completes rollout of Retalix DemandAnalytx
forecasting and ordering solution
"I`m pleased to report another very strong quarter for Retalix,
not just from a financial standpoint but also from delivering on our
concept of true Synchronized Retail capabilities that offer retailers
a suite of seamlessly integrated business solutions from warehouse to
checkout," said Barry Shaked, President and CEO of Retalix Ltd.
"Our acquisition of OMI International in January 2004 was a key
milestone in realizing this vision. Integration and migration of OMI`s
advanced supply-chain and warehouse management applications to our
ReMA architecture are proceeding on schedule. We are committed to
extending our track record of investment in next-generation technology
as a means to fuel our growth and build a market-leading position in
the food retailing sector. Our warehouse-to-checkout enterprise
solutions will enable retailers to realize a new level of
enterprise-wide synchronization, visibility and functionality that
promise to drive a dramatic impact on business performance. The
reaction from our customers has been excellent, and we are continuing
to receive positive buy-in for our Synchronized Retail strategy."
International
During the second quarter, Retalix announced significant
multi-national contract wins across Europe and Asia.
"We were pleased to announce that Tesco has selected Retalix
BackOffice for global deployment across all sites in the U.K., Europe
and Asia. Our relationship with this leading global retailer is one
that spans almost a decade. As a Tesco preferred retail software IT
partner, Retalix continues to play a key role in helping Tesco meet
the challenges of standardizing their global retail software
technology and shaping their future IT strategy," said Shaked. "In
addition, we went live with our first Tesco Express store in Thailand,
confirming our ability to support the special requirements of Asian
markets. This is another example of the multi-national capabilities of
our software solutions across multiple retail environments, languages
and countries."
The Tussauds Group (TTG), one of the world`s leading entertainment
operations, selected the Retalix StorePoint solution to be rolled out
in all its sites in the U.K., Europe, the U.S. and Asia, including the
world-famous Madame Tussauds Waxwork attractions in London. "This
exciting project is powered by the unique capability of our solutions
to seamlessly combine various retail and food service formats in one
synchronized business solution," said Shaked.
Implementation with A.S. Watson is progressing at full speed. The
group`s U.K.-based Superdrug chain had already installed StoreLine in
600 of its stores, and continues rolling out 30 stores per week,
complete with support for Chip PIN and E-Topups (airtime) sales.
Rossman, another of the A.S. Watson chains, has completed a rollout of
StoreLine in its 105 stores in Hungary.
As previously announced, Retalix is progressing on schedule with
the pilot project of StorePoint in both Europe and the U.S. with a
major global petroleum retailer.
U.S. Grocery and Convenience
"We are continuing to build on our momentum in the North American
marketplace. For Hannaford Bros., we have 66 sites fully operational
running our industry-first, Linux-based StoreLine solution. Costco
announced that they have completed the 200th installation of our
Retalix StoreLine Fuel solution. Costco operates some of the
highest-volume transaction gasoline outlets in the country, with a
primary focus on throughput and reliability, and they have gone on
record that the Retalix solutions are excelling in both areas," Shaked
continued.
"We are helping to drive supply-chain efficiencies with retailers
such as the Market Basket supermarket chain, which completed the
rollout of Retalix`s DemandAnalytx store-based forecasting and order
replenishment system. Market Basket reports results which have
`exceeded expectations`, manifested in driving efficient orders,
reducing out-of-stocks and increasing return on inventory investment.
"In the C-store segment, Casey`s achieved the distinction of
becoming the largest user of Retalix StorePoint in the U.S., with over
600 stores installed and continuing at a rate of ten stores per week.
We rolled out our loyalty program in 126 Irving Oil stores and have
had a strong performance thus far," Shaked added.
"We`ve also seen excellent progress with StoreNext, our joint
venture with Fujitsu, targeted to the needs of the independent grocery
sector. Dealers and operators are increasingly embracing our
subscription-based model of delivering sophisticated software
functionality and connected services. Significant sign-ups in the
quarter included Lowes Food Stores, a 65-store chain in Texas, which
has ordered the StoreNext Connected Services hosting applications."
Financial Highlights
Gross margin in the second quarter of 2004 was 65.9% of sales, as
compared to 66.4% in the second quarter of 2003, and 65.9% in the
first quarter of 2004. Second quarter R expenses increased by 78.7%
to $7.6 million and sales and marketing expenses increased 17.7% to
$5.9 million, as compared to second quarter of 2003. Second quarter
operating margin was 6.0%, compared with 8.9% in Q2 2003 and 3.7% in
the first quarter of 2004. Operating margin was impacted by increased
spending on R as part of our efforts in integrating and upgrading
our newly acquired supply-chain management solutions.
In the second quarter of 2004, Retalix generated $0.6 million in
cash flow from operations. As of June 30, 2004, the Company`s balance
sheet showed liquid financial resources (cash and equivalents,
deposits and marketable securities) of $95 million, $3.1 million in
long-term debt and shareholders` equity of $145.8 million.
Business Outlook
Retalix reaffirmed its previous 2004 guidance, which included
revenue growth of approximately 30% in 2004 in comparison to 2003 and
a net income of $5.5 million, including adjustment for the effects of
its recent offering. This figure takes into account the anticipated
expenses involved in the integration of the OMI acquisition, as well
as the expected costs of integrating the OMI applications with ReMA
and developing the next-generation version of OMI`s applications.
Conference Call
The Company will be holding a conference call to discuss results
for the second quarter of FY 2004 on Wednesday, August 4th, 2004, at
10:30 AM EDT (7:30 AM PDT and 17:30 Israeli Time). Participating in
the call will be Retalix Ltd. CEO Barry Shaked; CFO Danny Moshaioff;
and Jeff Yelton, CEO of Retalix USA.
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., with North American headquarters in Dallas, provides
integrated enterprise-wide software solutions for the global food and
fuel retail industries, including supermarkets, convenience stores,
fuel stations and restaurants. The Company offers a full suite of
software applications that support a food retailer`s essential
retailing operations and enable retailers to increase their operating
efficiencies while improving customer acquisition, retention and
profitability. With installations in more than 30,000 stores and
across 44 countries, the Company markets its software solutions
through direct sales, distributors, local dealers and its various
subsidiaries. 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. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or
achievements of the Company, 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 the Company`s anticipated
future financial performance, continued roll-outs with existing
customers, the market reception of its StoreNext connected services,
marketplace and ASP offerings, expansion into new geographic markets
and industry verticals, the conversion of sales leads into customers,
the integration of the Company`s acquisition of OMI and customer
demand for its next-generation supply-chain applications, 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 the Company`s Annual Report on Form 20-F for the
year ended December 31, 2003, for a discussion of these and other
important risk factors. The Company 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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