Agilysys CEO expects top-line growth with recovery in economy
Cost cuts have helped Agilysys Inc.'s bottom line, and now CEO Martin Ellis is expecting an economic recovery to help the information technology company's top line. Sales at the Solon-based company, which sells IT hardware, software and services, are on the way up after hitting bottom in the quarter that ended June 30, said Mr. Ellis, who gave a presentation on the company's anticipated turnaround this afternoon during a luncheon organized by the CFA Society of Cleveland, a group of investment professionals. Agilysys was forced to make several layoffs and other cuts over the past 18 months to stabilize the business while revenue fell in conjunction with the downturn in the economy. For instance, in June 2008 the company laid of 150 people, and in November 2008 it cut a handful of top executives and closed its previous headquarters — a small office in Boca Raton, Fla.
“We've been particularly aggressive here in the last 15 months or so in addressing cost structure,” Mr. Ellis said.
After losing money for several quarters, the company turned a profit of $2.8 million in the quarter ended Sept. 30, largely because of those cuts.
Sales, which totaled $156 million in that quarter, should show a seasonal improvement through the end of the calendar year, but bigger improvements should come next year as the economy improves, he said.
Mr. Ellis said he expects Agilysys' technology services division, which provides consulting as well as hardware and software to various industries, to pick up first as the economy improves. The company's other two divisions, which serve the retail and hospitality sectors, should improve more slowly, mainly because they sell proprietary software in addition to hardware and services, he said. Such purchase decisions typically take longer to make, he noted.
Long term, however, the retail and hospitality divisions have more potential than the general technology services division because they differentiate the company from other IT firms, Mr. Ellis said. He added that the largest opportunities are in the hospitality division, which provides IT systems for casinos, high-end hotels and cruise ships. Demand for such products is growing in Asia and other foreign countries.
“Longer term, I think the growth is still in the hospitality industry,” he said.
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