First quarter revenues increase 27% to $20.7 million Net income up 38% to $1.1 million, or $0.09 per diluted share
Ra'anana, Israel, May 13, 2003 - Retalix Ltd., (Nasdaq: RTLX), a leading provider of integrated enterprise-wide software solutions for the retail food industry worldwide, today announced its operating results for the first quarter ended March 31, 2003.
Net revenues for the quarter ended March 31, 2003 were $20.7 million, an increase of 27% from $16.2 million in the first quarter of 2002. Operating income rose 13% to $1.4 million, as compared to $1.3 million in the first quarter of 2002. The Company reported net income for the quarter of $1.1 million, or $0.09 per diluted share, compared to a net income of $819,000, or $0.06 per diluted share, in the first quarter of 2002.
Business highlights for Q1 2003 include:
* Publix Supermarkets chooses StoreLine for its 747 stores
* 200-store US grocery chain selects StoreLine
* ALON USA chooses StorePoint Host to Post solution
* StoreLine selected by an international 2,000 store health and beauty
chain
* Roll out of StoreLine continues at Sainsbury’s, UK, currently 370
stores installed
* Hannaford Bros. Co. goes live with StoreLine POS on Linux operating
system
"I'm pleased to announce another strong quarter for Retalix," said Barry Shaked, CEO of Retalix, Ltd. "We continue to win almost every significant account that we compete for in the grocery industry, while expanding our market share in convenience store and fuel segments. These wins confirm that Retalix provides food retailers with a very compelling value proposition as they seek to better serve their customers, increase operating efficiency and develop meaningful differentiation in the marketplace. The brisk pace of new signings provides confidence that we will continue to meet our financial objectives.
Contract Wins
"North America continued to be our primary growth driver, accounting for 64% of total revenues in the first quarter," continued Shaked. "In February, we announced that Publix Super Markets, Inc. intends to deploy Retalix StoreLine as its next generation POS solution across 747 stores in five states. Publix is renowned as a premier operational company in the grocery industry and this win underlines our competitive strength at a point when most Tier One chains are actively evaluating their next generation software platform. StoreLine was also chosen, during the first quarter by an additional 200 stores Grocery chain in the US.
"In the convenience store sector, we announced that ALON USA, representing 171 corporate-owned 7-Eleven sites and an additional 1,500 FINA brand locations, has contracted with us to deploy Retalix StorePoint. With a number of global fuel and convenience chains looking for an integrated, enterprise-wide software solution, we are very focused on this market opportunity as well.
"In the UK, the successful roll out of our StoreLine POS application for Sainsbury's continued with a total of 370 locations currently installed. Working closely with Accenture and NCR, we replaced twelve legacy systems with a single, integrated front-end platform. And we continue to work on large-scale development of new customer service modules and continuing support services.
"In Europe, our relationship with Delhaize continues to grow. In the first quarter, we had our first Retalix Storeline installation in Germany, which was also our very first Embedded XP system in that country. In addition an international health and beauty chain operating over 2,000 stores across Europe has chosen StoreLine as its next generation solution. Hannaford Brothers, a 119-store chain in the Northeast United States owned by the Delhaize Group, implemented our Retalix StoreLine suite on a Linux-based, small-footprint platform - a first in the grocery sector."
Technology Leadership
Shaked noted that the Company will continue its long-standing commitment to investing in new technology, with $4.2 million, or 20% of revenues, spent on R&D in the first quarter.
"In 2003, we will continue to add functionality to our ReMA (Retalix e-Market Applications) platform, which provides food retailers with a browser-based architecture that will support true e-business integration from the point of sale to advanced head office applications and collaborative supply chain management. This revolutionary approach will enable retailers to reduce IT costs, synchronize their operations to achieve new levels of efficiency, and develop rich, one-to-one relationships with their customers.
"In the first quarter, Pilot Travel Centers recently decided to roll out our RPO (Retalix PocketOffice) mobile store platform. This next-generation technology, which recently won the Microsoft RAD Award, is designed to boost back office operations productivity through easy-to-use workflow-based mobile applications."
In February Retalix announced the launch of IREX, a public B2B electronic marketplace in Israel that will provide online collaboration services between Super-Sol, Israel's largest supermarket chain, and its suppliers. The ReMA platform is at the heart of the initiative, offering Super-Sol and the participating suppliers web-based collaborative processes, including new product introductions, product price synchronization and promotion management, and assortment management. Each supplier is also able to receive updated sales and inventory data regarding its items from Super-Sol's data warehouse, through an advanced OLAP system.
Financial Highlights
Gross margin in the first quarter was 66.2% of sales, as compared to 73.4% in the first quarter of 2002. The decline in gross margin reflected primarily the growth of hardware associated sales in comparison to the corresponding period last year, as a result of the StoreNext USA activity, a shift of license revenues towards the second half of 2003, and to some extent additional direct costs associated with some projects the company has been involved with. The margins on projects and service activities could vary from time to time. S,G&A declined to 38.8% of sales in the quarter, from 41.0% in the first quarter of 2002, reflecting tight control over overhead expense.
Retalix generated $2.6 million in cash from operations in the first quarter of 2003. Shaked noted that the company's financial condition remains strong, with liquid financial resources (cash and equivalents, deposits and marketable securities) of $35.7 million, $4.7 million in long-term bank debt and shareholders' equity of $58.1 million.
The Company remains confident with its expectations for 2003 annual growth exceeding 20% in both top and bottom lines.
The Company will be holding a conference call to discuss results for the first quarter of FY 2003 on Tuesday, May 13, 2003 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. First quarter results will be released on Tuesday, May 13, 2003 at 5:00 AM EDT (2:00 AM PDT 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, 2002, 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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