Retalix Ltd. Announces Fourth Quarter and Year End 2002 Results Fourth quarter revenues increase 46% to $22.5 million
Net income up 190% to $1.8 million, or $0.15 per diluted share
Ra’anana, Israel, February 13, 2003 – Retalix Ltd., (Nasdaq: RTLX), a leading provider of integrated enterprise-wide software solutions for the retail food industry worldwide, today announced record results for the fourth quarter and fiscal year ended December 31, 2002.
Revenues for the three months ended December 31, 2002 were $22.5 million, an increase of 46% from $15.5 million in the fourth quarter of 2001. Net income for the quarter was $1.8 million, or $0.15 per fully diluted share, as compared to a net income of $635,000, or $0.05 per fully diluted share, in the fourth quarter of 2001.
For the year 2002, the Company reported revenues of $76.5 million, an increase of 29% as compared to revenues of $59.3 million in 2001. The Company realized net income for the year of $5.6 million, or $0.45 per fully diluted share, as compared to a net profit of $4.0 million, or $0.33 per fully diluted share, for the year 2001.
The fourth quarter includes other income of approximately $1.1 million from the sale of a small dealership activity, resulting from the restructuring of the dealer network within StoreNext USA.
Excluding all one-time events, net of taxes, net income increased from approximately $1.1 million in 2001 to approximately $5 million in 2002.
2002 financial highlights:
* 2002 revenues up 29% to $76.5 million
* 2002 operating income up 249% to $7.7 million
* Net income of $5.6 million, $0.45 per diluted share
* Generated $10 million in cash from operations in 2002
"In the fourth quarter, Retalix achieved excellent results fueled by strong global demand for our advanced software solutions," said Barry Shaked, Chairman and CEO of Retalix. "This marks a strong finish to what has been a very successful year for our company."
"2002 showed our growth strategy in action," continued Shaked. "We expanded our position as the leading independent software provider in the Tier-One and Tier-Two grocery sector. This week we announced that Hannaford Brothers, a 119-store chain in the Northeast United States owned by the Delhaize Group, has chosen to run StoreLine on a Linux, small-footprint platform, after an intensive evaluation process. This is a first in the grocery sector. In the UK, we are on track in rolling out StoreLine in a Tier 1 Grocery chain. The combination of technologically advanced POS applications and the ability to operate on multiple platform configurations is proving to be very compelling for large grocery chains."
Retalix continued to expand its market presence in the convenience store and petroleum sector, driven mainly by the StorePoint product suite's ability to seamlessly integrate multiple store formats. This was illustrated by recent wins of two large convenience and fuel chains in the Northeast, US.
"We also made major strides in realizing our vision to transform the independent grocery sector by delivering advanced productivity applications over the Internet and building Web-based communities that create value for retailers, food manufacturers and wholesalers," said Shaked. "StoreNext Israel is now an established, growing force in the Israeli marketplace, connecting over 25 food manufacturers and over 500 independent food retailers representing $1.2 billion in annual sales. And we announced a breakthrough joint venture with Fujitsu, StoreNext USA, which is applying this proven model to the much larger U.S. marketplace. Both of these ventures are on track to make a positive contribution to Retalix's profitability in 2003."
Retalix continued to develop next-generation technology designed to improve retail operational efficiencies as well as reduce the technology cost of ownership, including:
* POS applications running on embedded NT, embedded XP and Linux
operating systems,
* "Thin-store" applications that simplify deployment and maintenance
of back office applications,
* Web-based, solutions that enable global food retailers to optimize
supply chains processes, manage inventories, and establish one-to-one
relationships with their customers.
In 2002, R&D expense increased by 17% to $17.0 million and sales and marketing expenses increased 25% to $18.1 million. These increases reflect significant investments made in developing next-generation applications and Web-based architectures targeted to the needs of both large chains and independent retailers.
"Results for both the fourth quarter and the year illustrate our ability to enter new markets and fund an aggressive level of research and development, while still driving strong bottom-line performance," said Shaked.
Operating margin increased by over 600 basis points in 2002 to 10% of sales, from 3.7% of sales in 2001. Fourth quarter operating margin was 11.6%, up from 4.3% in the prior year's quarter.
In 2002, Retalix generated over $10 million in cash flow from operations, or $8.3 million in free cash flow, net of capital expenditures. Shaked noted that the company's financial condition remains strong, with liquid financial resources (cash and equivalents, deposits and marketable securities) of $34.0 million, $10.3 million in long-term debt and shareholders' equity of $56.7 million.
Business Outlook
"Despite our strong performance in 2002, we believe that we are only beginning to realize the potential market demand for advanced software solutions that can make global food, convenience and petroleum retailers more competitive and efficient. During 2003, we plan to continue our growth in each major market segment we serve by:
* Expanding our position as a strategic technology partner for major
grocery chains in both the U.S. and European markets looking to choose
their next generation POS systems,
* Increasing our market share in the convenience/petroleum sector as a
number of global chains upgrade both point-of-sale and back office
technology,
* Building our e-marketplace communities in the U.S. and Israel in a
manner that enhances the growth and profitability of our core business,
* And broadening and deepening our integrated host-to-post solution with
leading-edge, Web-based applications that allow global food retailers
to harness the potential of e-business to increase revenues and
profitability.
"With these goals in mind for the coming year, we expect to continue our strong performance with an annual growth exceeding 20% in both the top and bottom lines. These expectations take into account the seasonal effect of StoreNext USA on the consolidated revenues that may strengthen the second half of the year in comparison to first half. Several ongoing pilot projects, expected to mature towards mid 2003, are also expected to generate a higher growth rate during the second half of the year," said Shaked. "We remain confident and excited about Retalix's prospects for growth in 2003 and beyond." ______________________________________________________________________________
The Company will be holding a conference call to discuss results for the fourth quarter of FY 2002 on Thursday, February 13, 2003 at 10:30 AM EST (7:30 AM PST 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. Fourth quarter results will be released on Thursday, February 13, 2003 at 5:00 AM EST (2:00 AM PST and 12:00 Israeli Time).
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, TX, provides integrated enterprise-wide software solutions for the retail food industry worldwide, including supermarkets, convenience stores 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. Recently, the Company expanded its product line by offering its head and back-office applications via the Internet to small chains and single store food retailers. With installations in more than 20,000 stores and quick service restaurants across 44 countries, the Company markets its software solutions through direct sales, distributors, local dealers and through its U.S. subsidiary, Retalix USA, Inc., and its various other subsidiaries. The Company was founded in 1982 as Point of Sale Limited and changed its name in November of 2000 to Retalix Ltd. The Company's ordinary shares have been publicly traded on the Tel Aviv Stock Exchange since November 1994 and on the NASDAQ National Market System since July 1998. 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 new e-marketplace and ASP services, the potential benefits to food retailers and suppliers, the conversion of sales leads into customers and the ramp-up of ASP users, 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, 2001, 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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