Retalix Ltd. Announces Revenues of $25.8 Million for first Quarter of 2004
Acquisition of OMI International and $58 million follow-on offering position Retalix for continued growth
Ra'anana, Israel, May 10, 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 first quarter ended March 31st, 2004.
Revenues for the first quarter of 2004 were $25.8 million, an increase of 25% from $20.7 million in the first quarter of 2003. The Company reported net income for the quarter of $770,000, or $0.05 per diluted share, compared to a net income of $1.1 million, or $0.09 per diluted share, in the first 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, as part of the recent OMI acquisition, and is in line with the Company's plans as announced in January of 2004.
Q1 2004 Highlights:
* Revenues up 25% to $25.8 million
* Net income of $770,000, or $0.05 per diluted share
* Completion of follow on offering generates proceeds
of $58 million
* OMI Acquisition strengthens position in supply-chain
software for retailers
"During the quarter we made significant strides in realizing our vision of Synchronized Retail from warehouse to checkout. We continue to believe that Retalix is uniquely positioned to address the technology and business imperatives of global retailers in a period of sweeping industry change," said Barry Shaked, President and CEO of Retalix Ltd.
"As expected and planned, first quarter results reflect a meaningful increase in research & development spending. We strongly believe that the inclusion of advanced supply chain management solutions within our synchronized suite of enterprise-wide offerings, as well as our investment in next-generation technology, will be key factors to building on our position as an industry leader, and capturing the breadth of opportunities available to us from current and future customers," said Shaked.
"We are off to an excellent start with the integration of OMI's products, which strengthens our offering in critical areas including supply-chain execution and warehouse management for the grocery sector. We have subsequently acquired OMI's distribution organizations in both Europe and Israel. We now have a clear technology road map to integrate OMI's applications with our web-based ReMA data architecture. The result will be end-to-end solutions that enable retailers to move to a new level of enterprise-wide data synchronization and visibility, and significantly improved business performance. Our vision has been validated by the strong interest from both Retalix and OMI customers. And we have already identified multiple opportunities to expand the scope of solutions we provide to our customers."
"Retalix continues to enrich the advanced enterprise applications we offer to food retailers in areas including: customer loyalty, demand forecasting optimization, inventory management, and recently, support for Country of Origin and Bioterrorism. We are continuing to deepen our relationships with Tier-One grocery clients. Chains including A&P, Albertson's, Costco, Tesco, K-VA-T and Winn-Dixie are actively assessing some of our latest enterprise applications."
In the convenience store sector, Cumberland Farms, Inc., a leading convenience store chain based in New England, is rolling out StorePoint and is on target to achieve its 100th store installation in May. In addition, rollouts are continuing on schedule for Casey's and Pilot Travel Centers among others.
International
During the first quarter, Retalix continued to expand its global presence with new installations with retailers in Europe, Asia, the Middle East and Africa. StoreLine rollouts are in progress for Superdrug in the UK and Rossman in Hungary and a pilot has been completed for Savers in the UK. These chains are all part of the A.S. Watson Group, which plans to install around 1,000 stores by end of 2004.
"Our relationship with Tesco continues to grow and they recently decided to implement our Inventory Management and Retalix PocketOffice Solutions, working towards a pilot this year," Shaked continued. "Lotus Supermarkets selected StoreLine for its chain of hypermarkets in China, to pilot in September. And we are nearing completion of a StoreLine roll out for Shoprite in Africa that covers 500 sites and over 9,000 lanes across fifteen different countries," Shaked continued. "As previously announced, Retalix is progressing with the pilot project of StorePoint in both Europe and North America, with a major global petroleum retailer. And in Israel, we had a busy quarter in the fuel sector with rollouts starting for Delek Fuel Corporation and continuing at a fast pace for Paz Oil Company, the two largest Israeli energy companies."
Financial Highlights
Gross margin in the first quarter of 2004 was 65.9% of sales, as compared to 66.3% in the first quarter of 2003. First quarter R&D expenses increased by 60% to $6.8 million and sales and marketing expenses increased 15.7% to $5.7 million, as compared to first quarter of 2003. First quarter operating margin was 3.7%, a decline from 7.1% in Q1 2003, primarily as a result of increased spending on R&D as part of our efforts in integrating and upgrading our newly acquired supply chain management solutions.
In Q1 2004, Retalix generated $0.5 million in cash flow from operations. As of March 31, 2004, the Company's balance sheet showed liquid financial resources (cash and equivalents, deposits and marketable securities) of $38.1 million, $3.9 million in long-term debt and shareholders' equity of $83.4 million.
On April 7, 2004 Retalix completed an offering of 3,450,000 ordinary shares, including the exercise of the underwriters' over-allotment option, generating net proceeds of approximately $58 million to the Company.
"This offering significantly enhances Retalix's financial condition, providing us with the flexibility to execute our growth strategy. We are actively evaluating potential acquisitions that will expand our global presence and market share", concluded Shaked.
Business Outlook
"Retalix expects that revenues for 2004 will grow by approximately 30% in comparison to 2003. The Company continues to expect net income in 2004 of approximately $5 million. 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 first quarter of 2004 on Monday, May 10, 2004 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.
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 global retail fuel and food 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. 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 and fuel retailers and suppliers, expansion into new geographic markets, the conversion of sales leads into customers and the ramp-up of ASP users, the integration of the Company's acquisition of OMI 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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