Sibanye Stillwater Limited
Q3 2008 Earnings Call Transcript

Published: 12 Nov 2008

[Operator:]

Greetings and welcome to the St. Bernard Software third quarter 2008 financial results conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator's instruction) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lorrie Hunsaker Investor Relations and PR Manager. Thank you. You may begin.

[Lorrie Hunsaker:]

Thank you, operator and welcome to everyone joining St. Bernard third quarter 2008 financial results conference call. I am Lorie Hansberger, the IR Manager at St. Bernard Software. Vince Rossi, President and CEO of St. Bernard Software and John Burke, Financial Adviser of the St. Bernard will be presenting today. Before we begin, I would like to add that during the call, management will make a number of forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including future revenue guidance provided, statements of the Company's position to capitalize on a growing market and statements regarding the future demand for filtering technologies. Risk factors that could cause events or our results to differ from those expressed or implied by such forward-looking statements are described in our most recent annual report on Form 10-K, as well as other subsequent filings with the Securities and Exchange Commission. We assume no obligation and do not intend to update these forward-looking statements. Today's call is being recorded and will be accessible on our website, www.stbernard.com in the Investor Relations section of the site. A replay of the conference call will be available within two hours after the call through Tuesday, November 25, 2008 at 11

[Vince Rossi:]

Thanks, Lorrie and welcome to St. Bernard's third quarter 2008 financial results conference call. Q3 2008 was an exciting time at St. Bernard that represents the third consecutive quarter where we are able to focus exclusively on operational execution versus the numerous envisioned management activities of 2007. During Q3, we achieved strong gains growth and critically important financial management goals that have enabled us to be cash more positive for the entire quarter. Later in the call, I will go into greater detail regarding our growth and Q4 2008 guidance. However, right now, I would like to introduce our financial adviser John Burke to review our Q3 2008 financials in more detail.

[John Burke:]

Thank you, Vince and good afternoon everyone. It is my pleasure to walk you through our third quarter 2008 financial result. We will review several key items of our operating results as disclosed in our 10-Q to be filed on November 12, 2008. As discussed on our prior quarterly conference calls, we sold up two product lines in 2007, in order to compare the current quarter result to prior periods, it is important to note the sale of our Open File Manager product line in August of 2007. This is the last quarter that we will need to extract the results from Open File Manager and there will be no differences between core business results and GAAP results from Q4 2008 earnings call and forward. Total GAAP revenues for Q3 2008 were $4.4 million compared to Q3 2007 of $4.5 million resulting in a 1% decrease in GAAP revenues. In order to compare the current quarter results, it is important to extract the revenues generated from Open File Manager product line of $527,000 in Q3 2007. Excluding the legacy product line revenue, our core business revenues for Q3 2008 were $4.4 million compared to Q3 2007 core business revenues of $3.9 million resulting in core business growth of approximately 13%. Throughout the rest of this call, I will reference core business revenue which excludes the revenues from Open File Manager within Q3 2007 GAAP revenues. The following are the results of our core business for each component of revenue

[Vince Rossi:]

Thanks, John. I would like to highlight a few significant achievements during Q3. We achieved $5.1 million in gains of our core product. This is a 53% increase in gains compared to Q3 2007. We believe this is a strong indication of the success of our sales initiative and increasing customers' acceptance of our product. In addition to this outstanding sales performance, we achieved $346,000 in positive GAAP cash flow for the quarter. To better illustrate this achievement, I would like to describe how we manage the business internally. Within Q3 2008, we incurred GAAP cost of sales and operating expenses of approximately $4.9 million which includes non cash stock base compensation and depreciation charges of approximately $452,000 resulting in a non GAAP cash expense within Q3 2008 of approximately $4.5 million. When compared to our billing's performance of $5.1 million, the Company's operating performance result resulted in approximately $600,000 in positive operating performance during this quarter. The continued strong management of our expenses and good expense control processes has enabled us to achieve this very significant financial milestone. In summary, outstanding sales performance combined with continued strong operations management demonstrates the health and potential of the business. Q4 2008 guidance and our financial goals

[Operator:]

(Operator's instruction) Your first question comes from the line of David Barris - Newbridge Securities.

[David Barris:]

It sounds like you have reached the level on your business where you are becoming relatively self-sustainable as far as the cash flow in this recovery. How do you explain the lack of the things and the things related to stock?

[Vince Rossi:]

Well, it is a great question. As we continue to talk to investors and investor representatives in the marketplace, the only common theme that I hear there is that, their portfolios, being in the middle of nothing short of a blood bath and so their appetites to look at other investments has been dampened considerably. Beyond that, I do not think we have a great answer to your question. We would love some suggestions but at this stage I do believe that the commitments that we have made in the investor community over the last three quarters, we have been very diligent at delivering and you are correct, we believe that we are positioned today to be able to sustain ourselves without raising additional capital and we are being cautious in going into 2009 to try to ensure that we continue in that mode.

[David Barris:]

Well, this is a difficult market environment and I guess the company that keeps earning more and more money does not quite always take care of itself so just keep up the good work and we do appreciate it on the events.

[Operator:]

(Operator's instruction) I am showing no further questions in queue. I would like to turn the call back over to management for closing remarks.

[Vince Rossi:]

Everyone, thank you again very much for joining the call. We look forward to chatting with you again sometime soon. As always, we are here if you would like to give us a call on any individual questions. Other than that, we are going to continue to have our heads down and running the business. Thank you again very much. Goodbye.

[Operator:]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.