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Logility Logs Strong Fiscal First Quarter

by Alan Alper, MA Editorial Staff

Posted on Friday, September 08, 2006 5:11:00 PM       Sign Up to receive Daily News Alerts in your E-mail Inbox                               

Picking up where it left off last fiscal year, Logility Inc. today reported healthy increases in fiscal 2007 first-quarter sales and profits, fueled in part by a surge in license revenue from customers located in North America and across the globe.

For the fiscal first quarter ended July 31, the supply chain management software company posted total revenues of $9.6 million, an increase of 21% from the corresponding period last year. The company's operating earnings in the quarter reached $1.2 million, a whopping 63% increase over the figure recorded in last fiscal year's first quarter.

Net earnings on a GAAP (generally accepted accounting principles) basis were $923,000, or seven cents per fully diluted share, compared with $869,000, or seven cents a fully diluted share, for the first quarter of last fiscal year. The quarter was hindered by an effective tax rate of 41.5% -- compared to 4.0% for the comparable period last fiscal year, the company said.

The robust results were aided by strong growth in license revenues, company officials said on a conference call this morning with financial analysts. Software license fees registered $3.3 million in the period, an increase of 36% over the first quarter of fiscal 2006.

Reiterating comments made on previous analyst calls, Logility CEO Mike Edenfield attributed the company's "excellent quarter" to an improved economy and continued globalization of the supply chain, which he said are driving demand for the company's Voyager and Demand Solutions supply chain planning and forecasting products. He also pointed to Logility's financial strength (its balance sheet lists $28.5 million in cash and investments, $1.6 million more than the prior quarter, and no debt) and management stability as critical to its continuing success.

Many companies have moved or are moving existing sourcing relationships to Asia, he noted. "While this transition certainly allows corporations to reduce manufacturing and sourcing costs, it puts significantly more pressure and less transparency on the supply chain process. Lead times are significantly longer, transportation costs are higher, and the cost of what's at stake is much higher."

To maintain cost savings, manufacturers are looking to technologies that can improve visibility and productivity, synchronize product availability, and increase on-time delivery performance, while scaling with the globally distributed supply chain. The trend is benefiting Logility, Edenfield said. The company signed a record 33 customers worldwide in the quarter, both through its direct sales channel and network of resellers, which it gained in its acquisition 22 months ago of Demand Management, he noted.

Deals in the period were inked with companies operating in 12 countries, spanning Australia, Europe, North America, and Asia. They included companies such as 3M Central and Eastern Europe, American Air Filter International, Ceres Fruit Juices, Furniture Brands International, Heineken USA, Oneida Ltd., and the Bon Ton Stores, the company said.

Much of the international growth is being spurred by Logility's Demand Management unit, noted Vince Klinges, Logility's CFO, in an interview. Approximately 15% of Logility's revenues in the fiscal first quarter were derived from overseas accounts, Klinges said, which was roughly equivalent with the prior period. That compares with about 11% in the year-earlier period, he pointed out.

Logility has, on average, closed deals in eight to 12 countries every quarter for the past seven quarters -- be they divisions of North American companies or foreign-based enterprises, noted Karin Bursa, Logility's vice president of marketing, in an interview. "Overall, we're seeing more global activity," she added.

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