TROY, Mich., Aug. 09, 2018 (GLOBE NEWSWIRE) -- Altair (Nasdaq:ALTR) released its financial results for the second quarter ended June 30, 2018.

“Altair’s strong second quarter results exceeded our revenue and profitability expectations and reflect continued business momentum,” said James Scapa, Founder, Chairman and CEO.  “Our performance is benefitting from growing market demand for CAE solutions that greatly enhance product design across a growing number of industries.”

Scapa continued, “We are seeing the positive impact our organic and inorganic investments are having across the business.  As we move into the second half of 2018 and beyond, we are confident Altair is well positioned to generate a compelling combination of strong revenue growth and expanding profitability.”

Second Quarter 2018 Financial Highlights

  • Software product revenue was $72.8 million, an increase of 22% from $59.6 million for the second quarter of 2017.
  • Total revenue was $95.6 million, an increase of 17% compared to $81.6 million for the second quarter of 2017.
  • GAAP net income was $1.5 million, compared to net loss of $(7.2) million for the second quarter of 2017. Diluted net income per share was $0.02, based on 73.4 million diluted weighted average common shares outstanding, compared to diluted net loss per share of $(0.14) for the second quarter of 2017, based on 50.4 million diluted weighted average common shares outstanding.
  • Adjusted EBITDA was $7.3 million, compared to $4.1 million for the second quarter of 2017. Adjusted EBITDA represents net income (loss) adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as determined by management.
  • Non-GAAP net income was $3.9 million, compared to $5.1 million for the second quarter of 2017. Non-GAAP net income per share was $0.05, based on 77.0 million non-GAAP diluted common shares outstanding, compared to $0.08 for the second quarter of 2017, based on 62.1 million non-GAAP diluted common shares outstanding. Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions and certain tax adjustments.
  • Cash flow from operations was $10.6 million, compared to $6.9 million for the second quarter of 2017.
  • Free cash flow, which consists of cash flow from operations less capital expenditures, was $9.2 million compared to $5.5 million for the second quarter of 2017.              

Business Outlook

Based on information available as of today, Altair is issuing forward-looking statements on guidance for the third quarter and full year 2018 as indicated below.

 Third Quarter 2018Full Year 2018
Software Product Revenue$72.5to$73.5$288.0to$290.0
Total Revenue$95.0 $96.0$380.0 $382.0
GAAP Net Income$2.0 $2.5$11.5 $13.0
Adjusted EBITDA$8.0 $8.5$34.0 $35.5
Non-GAAP Net Income$4.6 $5.1$21.2 $22.7

 (All figures in millions)

 
Conference Call Information
 
What: Altair Second Quarter 2018 Financial Results Conference Call
When: Thursday, August 9, 2018
Time: 4:30 p.m. EDT
Live Call: (866) 754-5204, domestic
  (636) 812-6621, international
 Replay:  (855) 859-2056, passcode 1776298, domestic
  (404) 537-3406, passcode 1776298, international
Webcast: http://investor.altair.com  (live & replay)
   

Non-GAAP Financial Measures 
This press release contains the following non-GAAP financial measures: Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Share and Free Cash Flow.

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Altair
Altair transforms design and decision making by applying simulation, machine learning and optimization throughout product lifecycles. Our broad portfolio of simulation technology and patented units-based software licensing model enable Simulation-Driven Innovation for our customers. With more than 2,000 employees, Altair is headquartered in Troy, Michigan, USA and operates 71 offices throughout 24 countries. Altair serves more than 5,000 customers across broad industry segments. To learn more, please visit www.altair.com

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our business outlook, potential growth, market positioning and future investments, and our reconciliations of projected non-GAAP financial measures. These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

Investor Relations
Brian Denyeau
ICR
248-614-2400 ext. 346
ir@altair.com

Media Relations
Dave Simon
Altair
248-614-2400 ext. 332
pr@altair.com

  
  
Altair Engineering Inc. and subsidiaries 
Consolidated balance sheets  
      
      
  June 30,
 2018
 December 31, 
2017
 
(In thousands, except per share data) (Unaudited)   
ASSETS     
CURRENT ASSETS:     
Cash and cash equivalents $199,230  $39,213  
Accounts receivable, net  73,793   86,635  
Inventory, net  1,786   1,980  
Income tax receivable  7,260   6,054  
Prepaid expenses and other current assets  13,290   10,006  
Total current assets  295,359   143,888  
Property and equipment, net  30,112   31,446  
Goodwill  63,263   62,706  
Other intangible assets, net  24,846   24,461  
Deferred tax assets  8,113   8,351  
Other long-term assets  16,077   17,019  
TOTAL ASSETS $437,770  $287,871  
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY 
CURRENT LIABILITIES:     
Current portion of long-term debt $390  $232  
Accounts payable  5,957   4,880  
Accrued compensation and benefits  26,393   26,560  
Obligations for acquisition of businesses  9,842   13,925  
Other accrued expenses and current liabilities  20,443   21,744  
Deferred revenue  147,261   130,122  
Total current liabilities  210,286   197,463  
Long-term debt, net of current portion  690   178  
Deferred revenue, non-current  9,256   9,640  
Other long-term liabilities  13,474   17,647  
TOTAL LIABILITIES  233,706   224,928  
Commitments and contingencies     
MEZZANINE EQUITY  2,352   2,352  
STOCKHOLDERS’ EQUITY:     
Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding       
Common stock ($0.0001 par value)     
Class A common stock, authorized 513,797 shares, issued and outstanding 36,518 and 26,725 shares as of June 30,  2018 and December 31, 2017, respectively  4   2  
Class B common stock, authorized 41,203 shares, issued and outstanding 33,171 and 36,508 shares as of June 30, 2018 and December 31, 2017, respectively  3   4  
Additional paid-in capital  369,579   232,156  
Accumulated deficit  (161,066)  (166,499) 
Accumulated other comprehensive loss  (6,808)  (5,072) 
TOTAL STOCKHOLDERS’ EQUITY  201,712   60,591  
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $437,770  $287,871  
      
      

 

Altair Engineering Inc. and subsidiaries
Consolidated statements of operations
(Unaudited)
         
  Three months ended June 30, Six months ended June 30,
(in thousands, except per share data) 2018 2017 2018 2017
Revenue        
Software $72,813  $59,600  $140,956  $113,697 
Software related services  8,707   8,204   18,180   17,175 
Total software  81,520   67,804   159,136   130,872 
Client engineering services  12,417   12,365   24,497   24,594 
Other  1,629   1,477   3,664   3,062 
Total revenue  95,566   81,646   187,297   158,528 
Cost of revenue        
Software*  11,983   8,729   22,905   17,633 
Software related services  6,512   7,114   13,221   13,773 
Total software  18,495   15,843   36,126   31,406 
Client engineering services  9,960   9,828   20,160   19,969 
Other  1,001   1,247   2,212   2,297 
Total cost of revenue  29,456   26,918   58,498   53,672 
Gross profit  66,110   54,728   128,799   104,856 
Operating expenses:        
Research and development*  24,744   22,838   47,447   41,608 
Sales and marketing*  20,183   19,428   39,160   36,338 
General and administrative*  17,412   21,201   34,402   37,290 
Amortization of intangible assets  1,986   1,155   3,926   2,098 
Other operating income  (392)  (2,736)  (2,583)  (3,330)
Total operating expenses  63,933   61,886   122,352   114,004 
Operating income (loss)  2,177   (7,158)  6,447   (9,148)
Interest expense  45   548   61   1,159 
Other (income) expense, net  (176)  427   (1,076)  786 
Income (loss) before income taxes  2,308   (8,133)  7,462   (11,093)
Income tax expense (benefit)  795   (887)  2,029   (1,659)
Net income (loss) $1,513  $(7,246) $5,433  $(9,434)
Income (loss) per share:        
Net income (loss) per share attributable to common stockholders, basic $0.02  $(0.14) $0.08  $(0.19)
Net income (loss) per share attributable to common stockholders, diluted $0.02  $(0.14) $0.07  $(0.19)
Weighted average shares outstanding:        
Weighted average number of shares used in computing net income (loss) per share, basic  65,580   50,374   64,614   50,255 
Weighted average number of shares used in computing net income (loss) per share, diluted  73,391   50,374   72,881   50,255 
                 
                 

 

*Amounts include stock-based compensation expense as follows (in thousands):      
         
  (Unaudited)
  Three months ended June 30, Six months ended June 30,
   2018  2017  2018  2017
Cost of revenue – software $8 $11 $16 $16
Research and development  108  3,009  155  3,784
Sales and marketing  134  1,684  175  2,115
General and administrative  184  6,464  304  8,122
Total stock-based compensation expense $434 $11,168 $650 $14,037
         
         

 

Altair Engineering Inc. and subsidiaries
Consolidated statements of cash flows
(Unaudited)
     
  Six months ended June 30,
(In thousands) 2018
 2017
OPERATING ACTIVITIES:    
Net income (loss) $5,433  $(9,434)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:        
Depreciation and amortization  7,525   5,084 
Provision for bad debt  269   116 
Stock-based compensation expense  650   14,037 
Deferred income taxes  (283)  (3,679)
Other, net  (154)  34 
Changes in assets and liabilities:        
Accounts receivable  11,743   11,412 
Prepaid expenses and other current assets  (2,927)  (3,850)
Other long-term assets  (278)  (2,567)
Accounts payable  335   955 
Accrued compensation and benefits  73   (1,531)
Other accrued expenses and current liabilities  (4,496)  (2,331)
Deferred revenue  19,423   17,871 
Net cash provided by operating activities  37,313   26,117 
INVESTING ACTIVITIES:        
Payments for acquisition of businesses, net of cash acquired  (7,028)  (6,437)
Capital expenditures  (3,130)  (2,335)
Payments for acquisition of developed technology  (2,738)  (2,120)
Other investing activities, net  38   (28)
Net cash used in investing activities  (12,858)  (10,920)
FINANCING ACTIVITIES:        
Proceeds from issuance of Class A common stock in follow-on public offering,
  net of underwriters' discounts and commissions
  135,572    
Proceeds from the exercise of stock options  1,668   476 
Payments for follow-on public offering and initial public offering costs  (468)  (869)
Payments for redemption of common stock  (119)  (611)
Principal payments on long-term debt  (76)  (5,248)
Payments on revolving commitment     (53,564)
Borrowings under revolving commitment     44,227 
Other financing activities  (147)  (20)
Net cash provided by (used in) financing activities  136,430   (15,609)
Effect of exchange rate changes on cash, cash equivalents and restricted cash  (877)  962 
Net increase in cash, cash equivalents and restricted cash  160,008   550 
Cash, cash equivalents and restricted cash at beginning of year  39,578   17,139 
Cash, cash equivalents and restricted cash at end of period $199,586  $17,689 
Supplemental disclosure of cash flow:        
Interest paid $41  $1,163 
Income taxes paid $3,660  $2,352 
Supplemental disclosure of non-cash investing and financing activities:        
Capital leases $1,010  $ 
Property and equipment in accounts payable and other accrued expenses
 and current liabilities
 $935  $155 
Follow-on public offering costs in accounts payable $88  $ 
Promissory notes issued and deferred payment obligations for acquisitions $278  $2,728 
Issuance of common stock with put rights $  $2,345 
Initial public offering costs in other long-term assets $  $1,522 
Issuance of common stock in connection with acquisitions $  $415 
         
         

 

The following table provides a reconciliation of Non-GAAP net income and Non-GAAP diluted earnings per share to net income (loss) and earnings (loss) per share - diluted, the most comparable GAAP financial measures (in thousands):
           
    (Unaudited)
    Three months ended June 30, Six months ended June 30,
    2018 2017
 2018 2017
Net income (loss) $1,513 $(7,246) $5,433 $(9,434)
Stock-based compensation expense  434  11,168   650  14,037 
Amortization of intangible assets  1,986  1,155   3,926  2,098 
  Non-GAAP net income $3,933 $5,077  $10,009 $6,701 
                 
                 
Earnings (loss) per share - diluted $0.02 $(0.14) $0.07 $(0.19)
Non-GAAP earnings per share - diluted $0.05 $0.08  $0.13 $0.11 
                 
                 
GAAP diluted shares outstanding:              
 Weighted average number of shares used in computing net income (loss) per share, diluted  73,391  50,374   72,881  50,255 
                 
Non-GAAP diluted shares outstanding:              
 Number of shares used in computing net income per share, diluted  77,000  62,100   77,000  62,100 
                
                

 

The following table provides a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial measure (in thousands): 
   (Unaudited)
   Three months ended June 30, Six months ended June 30,
    2018  2017   2018   2017 
Net income (loss) $  1,513 $  (7,246) $  5,433  $  (9,434)
Income tax expense (benefit)    795    (887)    2,029     (1,659)
Stock-based compensation expense    434    11,168     650     14,037 
Interest expense    45    548     61     1,159 
Interest income and other(1)    536    (2,046)    (719)    (2,131)
Depreciation and amortization    3,982    2,610     7,525     5,084 
Adjusted EBITDA $  7,305 $  4,147  $  14,979  $  7,056 
  
(1)Includes an impairment charge for royalty contracts resulting in $0.9 million and $1.8 million of expense for the three and six months ended June 30, 2018, respectively. Includes a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the six months ended June 30, 2018, and three and six months ended June 30, 2017. 
  


The following table provides a reconciliation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure (in thousands): 
         
  (Unaudited)
  Three months ended June 30, Six months ended June 30,
   2018   2017   2018   2017 
Net cash provided by operating activities $  10,624  $  6,915  $  37,313  $  26,117 
Capital expenditures    (1,446)    (1,366)    (3,130)    (2,335)
Free cash flow $  9,178  $  5,549  $  34,183  $  23,782 
         


The following table provides a reconciliation of projected net income to projected Non-GAAP net income, the most comparable GAAP financial measure (in thousands): 
           
   (Unaudited) 
   Three months ending Year ending 
   September 30, 2018 December 31, 2018 
   low high low high 
Net income$2,000 $2,500 $11,500 $13,000 
Stock-based compensation expense 600  600  1,700  1,700 
Amortization of intangible assets 2,000  2,000  8,000  8,000 
Non-GAAP net income$4,600 $5,100 $21,200 $22,700 
           

 

The following table provides a reconciliation of projected Adjusted EBITDA to projected net income, the most comparable GAAP financial measure (in thousands): 
  (Unaudited) 
  Three months ending Year ending 
  September 30, 2018 December 31, 2018 
  low high low high 
Net income$2,000 $2,500 $11,500)$13,000 
Income tax expense 1,200  1,200  6,000  6,000 
Stock-based compensation expense 600  600  1,700  1,700 
Interest expense -  -  -  - 
Interest income and other -  -  -  - 
Depreciation and amortization 4,000  4,000  14,600  14,600 
Other non-recurring charges(1) 200  200  200  200 
Adjusted EBITDA$8,000 $8,500 $34,000 $35,500 
          
(1)  Represents projected non-recurring costs related to impairment charges.