Pegasus Solutions, Inc. Announces First Quarter Results; Cash EPS of 0,04 USD on 11% Revenue Increase
DALLAS, April 30 / Pegasus Solutions, Inc.
Total revenue for the three months ended March 31, 2001, was $46.1 million. Cash earnings, which excludes a one-time gain associated with the sale of its Summit and Sterling branded hotel representation services, restructuring charges, and non-cash charges, such as the amortization of goodwill and purchased software and intangible assets, were $0.04 per diluted share.
Assuming the REZsolutions acquisition had taken place at the beginning of fiscal 2000, pro forma cash earnings per share for the first quarter of 2000 would have been approximately breakeven on total revenue of $41.6 million.
Pegasus Solutions' technology business, comprised of Pegasus Commission Processing,
"Our ASP central reservations systems (CRS) business was a key driver in this quarter's revenue growth," said John F. Davis, III, chairman and chief executive officer of Pegasus Solutions. "This business grew by 24 percent compared to the first quarter of 2000, primarily as a result of the new Summit and Sterling CRS contracts that we gained through the sale of these two brands in January to Indecorp Corporation," said Mr. Davis. "We believe we will see continued growth in this area, especially as we implement Preferred Hotels and Resorts and Kimpton Hotels, based upon contracts signed earlier this year.
"Revenues from Pegasus Commission Processing were up 32 percent compared to the first quarter of 2000, as we processed $131 million in hotel commissions during the quarter. New customers, including Wyndham, Delta, Fairmont, Omni and Four Seasons, contributed to the transaction growth, as did the ramp up of our new Commission Processing service that provides commission reconciliation and tracking for travel agencies. Notable recent signings for this value-added service include Carlson North America and American Express," Mr. Davis noted.
"In our Utell and Golden Tulip hotel representation services, we saw encouraging growth in the number of electronic bookings processed. Electronic bookings for member hotels were up 19 percent compared to the first quarter of 2000, during a time when hotel reservations industry-wide were slowing. We believe this is an indication that reliance upon Utell's marketing services may increase when the economy begins to soften because hotels need more help in generating bookings," said Mr. Davis.
"During the first quarter of 2001, we took steps to consolidate and improve the efficiencies of our Utell operations in Europe, which we believe will enable us to operate more cost effectively, while continuing to provide high quality services to our customers.
"Looking forward to the remainder of 2001, we will continue our efforts aimed at growing our commission processing and ASP operations through the addition of new customers and services, and improving the financial results of our Utell subsidiary through a reduced cost structure.
In regard to new product offerings, we are particularly excited about the long-term potential of our new Web-based property management service (PMS). Our initial customer reaction to this system is very favorable, our pilot tests continue to go well, and we expect to launch the product later this year," said Mr. Davis.
Financial Outlook
Commenting on the Company's economic outlook, Jerry Galant, chief financial officer of Pegasus Solutions, said, "Some of our hotel customers have indicated that they are seeing a softening of the travel market, particularly in the UK and in certain U.S. business destinations. We too are beginning to see a softening of our reservation volumes. As a result, we believe that our revenue guidance for the remainder of the year should be reduced per quarter by about $1 million, or 2 percent, per quarter. Accordingly, our revised revenue guidance for the next three quarters is as follows: $51 to $53 million for the second quarter, $54 to $56 million for the third quarter, and $52 to $54 million for the fourth quarter.
"However, we believe that in light of the productivity efficiencies we are implementing and the cost reduction steps we are taking, our previous cash EPS guidance for the next three quarters remains the same as previously stated," Mr. Galant said. The Company expects to see cash earnings per share in the range of $0.18 to $0.20 for the second quarter, $0.23 to $0.24 for third quarter and $0.13 to $0.15 for the fourth quarter.
Conference Call
In conjunction with this release, Pegasus Solutions will host a conference call today at 4:45 p.m. (EDT), 3:45 p.m. (CDT). The call will be simultaneously Webcast over the Internet. To access the Webcast, go to the Company's Web site,
Dallas-based Pegasus Solutions, Inc. (
This statement contains references to future events and projected results, including anticipated transactions involving the Company and its service offerings. There can be no assurance that the referenced future events or projected results will actually occur or that the future financial performance of the Company will be as projected. Actual occurrences, results and performance may differ substantially and materially from those projected as a result of risks and uncertainties mentioned in this statement or detailed in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission including its Form 10-K for the year ended December 31, 2000.
(1) Travel Weekly, June 26, 2000, "Top 50 Travel Agencies"
(2) Business Travel News, May 29, 2000, "The Top Hotel Companies"
PEGASUS SOLUTIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS - CASH EARNINGS
(In thousands except for per share amounts)
(Unaudited)
Three Months Ended
March 31, 2001
Cash Earnings
As Adjustments Cash
Reported Earnings
Net revenues $46,108 $-- $46,108
Cost of services 26,259 -- 26,259
Restructure costs 797 (797)
Research and development 1,994 -- 1,994
General and administrative expenses 6,552 -- 6,552
Marketing and promotion expenses 6,352 -- 6,352
Depreciation and amortization 16,425 (13,229) (1) 3,196
Operating income (loss) (12,271) 14,026 1,755
Other income (expense):
Interest income, net 39 -- 39
Gain on sale of business unit 4,789 (4,789)
Equity in loss of investee (298) 298 (2)
Other (43) -- (43)
Income (loss) before income taxes (7,784) 9,535 1,751
Income tax expense (benefit) (1,270) 1,935 (3) 665
Net income (loss) $(6,514) $7,600 $1,086
Diluted net income per share $0.04
Diluted weighted average shares
outstanding 25,010
Notes:
(1) To adjust for amortization of purchased goodwill and intangible
assets.
(2) To adjust for amortization of excess cost over net assets acquired
for investment in Global Enterprise Technology Solutions LLC.
(3) To adjust income tax expense (benefit) for assumed 38% tax rate
for cash earnings.
PEGASUS SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
March 31, December 31,
2001 2000
ASSETS
Cash and cash equivalents $30,800 $32,576
Restricted cash 4,618 4,574
Short-term investments 5,808 1,563
Accounts receivable, net 36,007 29,889
Other current assets 6,322 4,189
Total current assets $83,555 $72,791
Goodwill, net 146,145 149,764
Intangible assets, net 52,666 62,909
Property and equipment, net 61,844 64,434
Other noncurrent assets 10,929 7,807
Total assets $355,139 $357,705
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $38,776 $36,097
Deferred tax liability 12,078 12,078
Unearned income 13,292 9,428
Income tax payable 7,213 6,212
Other current liabilities 5,900 2,771
Total current liabilities $77,259 $66,586
Note payable 20,000 20,000
Deferred tax liability 2,714 8,961
Other noncurrent liabilities 2,593 1,586
Stockholders' equity:
Common stock 249 249
Additional paid-in capital 288,495 288,422
Unearned compensation (124) (157)
Accumulated comprehensive loss (252) (265)
Accumulated deficit (33,015) (26,501)
Less treasury stock (2,780) (1,176)
Total stockholders' equity $252,573 $260,572
Total liabilities and
stockholders' equity $355,139 $357,705
PEGASUS SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except for per share amounts)
(Unaudited)
Three Months Ended
March 31,
2001 2000
Net revenues $46,108 $10,661
Cost of services 26,259 3,431
Restructure costs 797
Research and development 1,994 603
General and administrative expenses 6,552 1,905
Marketing and promotion expenses 6,352 1,594
Depreciation and amortization 16,425 605
Operating income (loss) $(12,271) $2,523
Other income (expense):
Interest income (expense), net 39 1,588
Gain on sale of business unit 4,789
Equity in loss of investee (298) (1)
Other (43)
Income (loss) before income taxes $(7,784) $4,111
Income tax expense (benefit) (1,270) 1,090
Net income (loss) $(6,514) $3,021
Net income (loss) per share:
Basic $(0.26) $0.15
Diluted $(0.26) $0.14
Weighted average shares outstanding:
Basic 24,596 20,356
Diluted 24,596 21,048
Note:
(1) Includes amortization of excess cost over net assets acquired for
investment in Global Enterprise Technology Solutions LLC.