Logility Inc., a supplier of supply chain management software, recorded a fiscal year 2005 loss of $549,000, or $0.04 per share, compared with earnings of $1.7 million, or $0.13 per share, for the same period a year earlier.
Company executives attributed the loss primarily to an accounting requirement for last September's $8.7 million acquisition of Demand Management Inc. (DMI). Without the acquisition costs and other charges, Logility would have had earned $358,000, or $0.03 per share, in the fiscal year.
The impact of the DMI acquisition should be felt for the next two quarters, said Vince Klinges, Logility's chief financial officer. At that point, Logility should return to profitability, he added.
Despite the loss, Demand Management Inc. is generating cash for Logility and has provided the company with a new distribution channel that has already proven beneficial, said J. Michael Edenfield, Logility's CEO, on a conference call with industry analysts. "The acquisition of Demand Management has diluted our earnings for now, but DMI has a positive cash flow. We have significantly more sales coverage this year than we did last year, in addition to 28 partners selling Logility worldwide," he said.
Logility's cash and investment position increased this quarter, as well. The company now has $25.7 million in cash with no debt, an increase of $2.6 million over the previous quarter. "We are in a strong financial position that serves as a competitive advantage over our direct competitors," Edenfield said, adding that Logility is in a position to acquire another company. "We are looking for acquisitions and it is a buyers' market," Edenfield added.
However, the company would not look to add another product to its portfolio with an acquisition. Instead, Logility would look to acquire another sales channel. "Right now we have a lot of products," Edenfield said. "We need to sell more of what we have and not dilute the effectiveness of the sales force by adding even more products."
Edenfield also said that its new sales channel is creating strong demand. For instance, a number of existing DMI customers were referred to Logility by the DMI sales channel, he pointed out. Moreover, Logility added 13 new customers in the fourth quarter and signed contracts with Farley's & Sathers Candy Co., The Coleman Company Inc., Hamilton Beach, Honeywell, JS Products and Republic Beverage Co., among others.
For the fiscal fourth quarter ended April 30, software license fees increased 22% to $2.2 million and services revenues increased 25% to $1.7 million over the like period last year. Also, maintenance revenues jumped 40% to $3.7 million.
The company, however, lost $224,000 in the fiscal fourth quarter compared with a profit of $62,000 in the year-earlier period, on a revenues of $7.6 million -- a 31% increase from the corresponding period last year.
Total revenues for fiscal 2005 were $25 million, compared to $22.8 million for the year earlier. Services revenues also increased to $5.3 million from $5.2 million in fiscal 2004; meanwhile, maintenance revenues grew to $13 million from $11 million in fiscal 2004. Software license fees, however, were flat at $6.7 million.