OREANDA-NEWS. ANSYS, Inc. (NASDAQ:ANSS), today announced its financial results for the first quarter of 2016.  The Company reported GAAP and non-GAAP revenue growth in constant currency of 6% and 5%, respectively, and GAAP and non-GAAP diluted earnings per share of $0.63 and $0.77, respectively, for the quarter.  Recurring revenue, which is comprised of lease license and maintenance revenue, totaled 78% of revenue for the first quarter. 

“Our first quarter results reflect a solid start to the year with strong contributions from markets such as India and China, partially offset by less than expected growth in Europe and North America.  We are highly focused on improving direct and indirect sales execution, enhancing our growth rates and continuing to generate returns for our shareholders over the long-term. Through solid internal execution and discipline, we achieved strong margins and earnings, we generated over $100 million in operating cash flow and we continued to return capital to shareholders through our recently increased share repurchase plan,” commented Jim Cashman, ANSYS President and Chief Executive Officer. 

He continued, “During Q1, we signed an enterprise license agreement of over $10 million with one of our long-standing industrial equipment customers, successfully completing the largest displacement of a competitor’s mechanical code in our history, and ultimately proved that the ANSYS solutions are more capable, accurate and faster.   As we have observed our customers’ historical buying preferences evolving, we have recently expanded our licensing offerings, introducing a new elastic licensing model in the first quarter.  Providing usage-based access to virtually our entire portfolio is yet another significant differentiator for ANSYS and an additional means to reach a greater number of users.” 

ANSYS' first quarter financial results are presented below.

  GAAP   Non-GAAP
(in millions, except EPS
and %’s)		 Q1 2016 Q1 2015 %
Change		   Q1 2016 Q1 2015 %
Change
               
Revenue $ 225.9   $ 217.8     4 %   $ 226.0   $ 218.4     3 %
Net income $ 56.5   $ 56.1     1 %   $ 69.4   $ 70.8     (2 %)
Earnings per share $ 0.63   $ 0.61     3 %   $ 0.77   $ 0.77     0 %
Operating profit margin   37.6 %   36.8 %       46.4 %   47.3 %  
Operating cash flow $ 108.6   $ 114.1     (5 %)        
                           

The non-GAAP financial results highlighted above, and the non-GAAP financial outlook for 2016 discussed below, represent non-GAAP financial measures. The 2016 and 2015 non-GAAP results exclude the income statement effects of acquisition adjustments to deferred revenue, the impact of stock-based compensation and acquisition-related amortization of intangible assets, as well as acquisition-related transaction costs.  Reconciliations of these measures to the appropriate GAAP measures for the three months ended March 31, 2016 and 2015, and for the 2016 financial outlook, are included in the condensed financial information included in this release. 

Management's Remaining 2016 Financial Outlook 

The Company has provided its second quarter and fiscal year 2016 revenue and earnings per share guidance below. The earnings per share guidance is provided on both a GAAP and a non-GAAP basis.  Non-GAAP diluted earnings per share excludes charges for stock-based compensation, the income statement effects of acquisition accounting for deferred revenue, acquisition-related amortization of intangible assets and acquisition-related transaction costs. 

Second Quarter and Fiscal Year 2016 Guidance  

The Company currently expects the following for the quarter ending June 30, 2016:

  • GAAP revenue in the range of $240.0 - $248.0 million
  • Non-GAAP revenue in the range of $240.0 - $248.0 million
  • GAAP diluted earnings per share of $0.69 - $0.75
  • Non-GAAP diluted earnings per share of $0.86 - $0.90

The Company currently expects the following for the fiscal year ending December 31, 2016:

  • GAAP revenue in the range of $990.0 - $1,020 million ($1.02 billion)
  • Non-GAAP revenue in the range of $990.0 - $1,020 million ($1.02 billion)
  • GAAP diluted earnings per share of $2.81 - $2.98
  • Non-GAAP diluted earnings per share of $3.48 - $3.62

These statements are forward-looking and actual results may differ materially.  Non-GAAP diluted earnings per share is a supplemental financial measure and should not be considered as a substitute for, or superior to, diluted earnings per share determined in accordance with GAAP.

 

ANSYS, INC. AND SUBSIDIARIES  
Condensed Consolidated Balance Sheets  
(in thousands)  
(Unaudited)  
                 
                 
          March 31,
2016		   December 31,
2015		  
ASSETS:              
           
Cash & short-term investments   $ 863,877     $ 784,614    
Accounts receivable, net       82,498       91,579    
Goodwill         1,334,129       1,332,348    
Other intangibles, net         209,677       220,553    
Other assets         268,647       300,810    
                 
  Total assets       $ 2,758,828     $ 2,729,904    
                 
                 
LIABILITIES & STOCKHOLDERS' EQUITY:        
                 
Deferred revenue     $ 375,140     $ 364,644    
Other liabilities       149,785       170,833    
Stockholders' equity       2,233,903       2,194,427    
                 
Total liabilities & stockholders' equity   $ 2,758,828     $ 2,729,904    
                   
ANSYS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
       
    Three Months Ended
    March 31, 2016  March 31, 2015
Revenue:                
Software licenses   $ 126,051     $ 124,969  
Maintenance and service     99,855       92,812  
                 
Total revenue     225,906       217,781  
       
Cost of sales:      
Software licenses     6,738       7,209  
Amortization     9,511       9,357  
Maintenance and service     19,036       19,322  
Total cost of sales     35,285       35,888  
             
Gross profit     190,621       181,893  
       
       
Operating expenses:      
Selling, general and administrative     57,769       56,749  
Research and development     44,672       40,009  
Amortization     3,158       5,077  
Total operating expenses     105,599       101,835  
             
Operating income     85,022       80,058  
       
Interest expense     (86 )     (154 )
Interest income     950       656  
Other (expense) income, net     (108 )     767  
             
Income before income tax provision     85,778       81,327  
       
Income tax provision     29,310       25,195  
                 
Net income   $ 56,468     $ 56,132  
                 
Earnings per share – basic:      
Basic earnings per share   $ 0.64     $ 0.62  
Weighted average shares - basic     88,114       90,059  
       
Earnings per share – diluted:      
Diluted earnings per share   $ 0.63     $ 0.61  
Weighted average shares - diluted     90,084       92,140  

                            

ANSYS, INC. AND SUBSIDIARIES
Reconciliation of Non-GAAP Measures
 (Unaudited)
(in thousands, except percentages and per share data)
 
    Three Months Ended
 
    March 31, 2016    March 31, 2015
    As
Reported		 Adjustments   Non-
GAAP
Results		   As
Reported		 Adjustments   Non-
GAAP
Results
                     
Total revenue   $ 225,906      $   103 (1)   $ 226,009       $ 217,781      $    593 (4)   $ 218,374  
Operating income     85,022       19,850 (2)     104,872         80,058       23,133 (5)     103,191  
Operating profit margin     37.6 %           46.4 %       36.8 %           47.3 %
Net income   $ 56,468      $ 12,965 (3)   $ 69,433       $ 56,132      $ 14,682 (6)   $ 70,814  
Earnings per share – diluted:                    
Diluted earnings per share   $ 0.63           $ 0.77       $ 0.61           $ 0.77  
Weighted average shares -  diluted     90,084             90,084         92,140             92,140  
                                               

(1) Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment associated with accounting for deferred revenue in business combinations.

(2) Amount represents $12.7 million of amortization expense associated with intangible assets acquired in business combinations, $7.1 million of stock-based compensation expense and the $0.1 million adjustment to revenue as reflected in (1) above.

(3) Amount represents the impact of the adjustments to operating income referred to in (2) above, adjusted for the related income tax impact of $6.9 million.  

(4) Amount represents the revenue not reported during the period as a result of the acquisition accounting adjustment associated with accounting for deferred revenue in business combinations.

(5) Amount represents $14.4 million of amortization expense associated with intangible assets acquired in business combinations, $7.8 million of stock-based compensation expense, the $0.6 million adjustment to revenue as reflected in (4) above and $0.3 million of transaction expenses related to business combinations.

(6) Amount represents the impact of the adjustments to operating income referred to in (5) above, adjusted for the related income tax impact of $8.5 million.

ANSYS, INC. AND SUBSIDIARIES
Reconciliation of Forward-Looking Guidance
Quarter Ending June 30, 2016
 
  Diluted Earnings Per Share Range
U.S. GAAP guidance $0.69 - $0.75
Adjustment to exclude acquisition–related amortization $0.08 - $0.09
Adjustment to exclude stock–based compensation $0.07 - $0.08 
   
Non-GAAP guidance $0.86 - $0.90
   
ANSYS, INC. AND SUBSIDIARIES
Reconciliation of Forward-Looking Guidance
Year Ending December 31, 2016
 
  Diluted Earnings Per Share Range
U.S. GAAP guidance $2.81 - $2.98
Adjustment to exclude acquisition–related amortization $0.35 - $0.36
Adjustment to exclude stock–based compensation $0.29 - $0.31
   
Non-GAAP guidance $3.48 - $3.62
   


About ANSYS, Inc.

ANSYS brings clarity and insight to customers' most complex design challenges through fast, accurate and reliable engineering simulation. Our technology enables organizations ? no matter their industry ? to predict with confidence that their products will thrive in the real world. Customers trust our software to help ensure product integrity and drive business success through innovation. Founded in 1970, ANSYS employs almost 3,000 professionals, many of them experts in engineering fields such as finite element analysis, computational fluid dynamics, electronics and electromagnetics, and design optimization. Headquartered south of Pittsburgh, Pennsylvania, U.S.A., ANSYS has more than 75 strategic sales locations throughout the world with a network of channel partners in 40+ countries.