Renaissance earnings down 46 percent
Laptop Battery By Joe Vanden Plas • 04/19/06 Wisconsin Rapids Even solid revenue growth could not prevent Renaissance Learning, Inc. from posting disappointing earnings during the first quarter of 2006, and as a result the company will drop some unprofitable education software programs, CEO Terrance D. Paul said Tuesday.
Renaissance is a provider of computerized assessment and progress monitoring tools for pre-K-12 schools and districts. The company said net income, which includes a pre-tax restructuring charge of $1.9 million or $.04 cents per share, was $3.5 million compared to net income of $6.5 million for the first quarter of 2005, a decrease of 46.2 percent. Earnings per share for the quarter were $0.12, compared to $0.21 per share earned during the prior year.
Paul was brutally honest about why the company under performed. "It wasn't a good quarter and our performance hasn't been great for several years," he commented. "We have great products, good margins, outstanding employees, and are fundamentally sound, but our product line has become too complicated and we are not executing as well as we need to in several key areas."
Paul said the company would phase out several products that take what he called "inordinate resources" and do not generate profit. It will instead refocus on its core strengths in order to "see the type of growth that both we and our shareholders expect." Among the software programs that will be discontinued are Assessment Master, Accelerated Writer, Spanish in a Flash, Accelerated Reader's Summer Reading Program, and Accelerated Grammar and Spelling.
The company said first quarter revenues were $31.1 million, an increase of 12.9 percent over first quarter 2005 revenues of $27.6 million. It was able to add about 400 new customer schools in the U.S. and Canada during the quarter, bringing total North American schools that are actively using Renaissance products to more than 70,000. Of these customers, more than 57,000 are using the company's reading products, and more than 24,000 are using its math products.
Excluding AlphaSmart, which Renaissance acquired in 2005, the company's revenues actually declined by 4.8 percent compared to the prior year. AlphaSmart, a developer of hand-held computing devices for use in the classroom, saw its revenues decline by 30 percent compared to its first quarter 2005 results, which were reported prior to its acquisition by Renaissance Learning.
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