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Accelrys, Inc. (ACCL)

F3Q09 (Qtr End 12/31/08) Earnings Call Transcript

February 4, 2009 5:00 pm ET


Ken Coleman – Chairman

Todd Johnson – Interim President and CEO

Rick Russo – SVP and CFO


Steven DeLuca – Spinner Asset

Chad Bennett – Northland Securities

Adam Fischer – Burnham

James McAree [ph] – Neuberger [ph]

Michael Kaufman – MAK Capital

Adam Hutt [ph] – Hill Partners [ph]

Raghavan Sarathy – Dougherty & Company



Welcome everyone and thank you for joining Accelrys’ fiscal third quarter earnings call. Speaking today will be Ken Coleman, Accelrys’ Chairman of the Board; Todd Johnson, Accelrys’ interim President and Chief Executive Officer; and Rick Russo, Accelrys’ Chief Financial Officer.

Before they begin, I’d like to remind you that the following discussion, including the company’s responses to questions at the end of the formal remarks, contain forward-looking statements. These statements relate to the company's or management's intentions, hopes, beliefs, expectations or predictions of the future. Such statements include statements relating to the company’s future financial results and strategic plans and opportunities, including future orders, revenues, profits and expense, growth initiatives, new products, product capabilities, future markets and customers, and need and demand of existing and future customers.

These forward-looking statements are subject to a number of risks and uncertainties. Such risks and uncertainties include, without limitation, risks relating to the timely successful release and customer acceptance of new products, demand for the company’s new and existing products, successful execution of the company’s strategic plans and growth initiatives, and the impact of macroeconomic conditions. As a result of these risks and uncertainties, the company’s actual results could differ materially from those projected in these forward-looking statements.

Additionally, information concerning factors that could cause actual results to differ materially from these forward-looking statements is contained in the company’s SEC filings, including the company’s annual report on Form 10-K for the fiscal year ended March 31, 2008, quarterly report on Form 10-Q and current report on Form 8-K. The company disclaims any intention or obligation to revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Now, I would like to turn the call over to Ken Coleman, Chairman of Accelrys Board of Directors.

Ken Coleman

Good afternoon and thank you for joining us today. We announced on January 6th that Mark Emkjer was resigning as the company’s President and CEO, and that we were appointing Todd Johnson as the company's interim President and CEO.

We made this announcement after Mark and the board together reached the conclusion, a conclusion that it was time for a change in leadership for Accelrys. The board has initiated a search for a permanent president and CEO. We have every confidence in Todd and expect that his skills and experience will have a very positive impact on moving the company forward. As a board, we are very confident in the company's strategy and have asked Todd to focus on a more rapid execution of that strategy and to specifically work on the company’s go-to-market initiative. I think that you will see Todd has come up to speed very quickly. With that I will now turn the call over to Todd. Go ahead Todd.

Todd Johnson

Thank you, Ken, and also thank you for joining us today on our earnings conference call. I would like to start off the call by giving a little background on myself and my reasons for joining Accelrys. Following this brief introduction, I will turn the call over to Rick to provide you with our financial highlights for the quarter.

I commenced my career at Hewlett-Packard where I spent close to a decade. After leaving HP, I spent 11 years at Silicon Graphics. In both companies I held marketing and sales executive roles, and eventually became Silicon Graphics’ senior vice president of worldwide marketing. Interestingly, while at Silicon Graphics, I became familiar with many of Accelrys products and customers while co-marketing these products to several of the companies’ joint customers.

I was impressed at the breadth and depth of these products as well as by the uniqueness Accelrys occupied at the intersection of science and business. Throughout my career, I focused on sales and marketing. In my many roles I have created and implemented strategies to target my company’s products towards larger markets and large customers, finding ways to broaden distribution in order to increase overall sales and revenues.

Most recently as Chief Executive Officer at Kontiki, we retargeted the business towards much larger markets and larger customers, and bringing a keen focus on our go-to-market strategy and execution. This strategy was extremely successful and led to Kontiki’s acquisition by VeriSign. When I was asked to join Accelrys, I began refamiliarizing myself with the company. I was not surprised to find that Accelrys has an outstanding customer base, consisting of virtually all the world's largest pharmaceutical customers, numerous biotechnology companies, and many of the world's largest energy and chemical companies; nor was I surprised to find the company also had rock solid financials with over $70 million in cash and significant cash flows in its past two fiscal years.

Importantly, the company had built upon its very unique employee base consisting of numerous PhD scientists and expanded upon a vast reservoir of scientific products, several of which I was familiar with from my days at Silicon graphics. I was excited to see that the sales of the Pipeline Pilot scientific operating system has grown exponentially since the company acquired it in 2004.

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