MONTREAL, Feb. 28, 2019 (GLOBE NEWSWIRE) -- TECSYS Inc. (TSX: TCS) an industry-leading supply chain management software company, today announced its results for the third quarter of fiscal year 2019, ended January 31, 2019. The unaudited interim financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). All dollar amounts are expressed in Canadian dollars unless otherwise indicated.

Third Quarter Highlights:

  • Total revenue increased 9% to $18.8 million from $17.2 million in Q3 2018.
  • Proprietary products revenue increased 67% to $1.6 million from $0.9 million in Q3 2018.
  • Cloud, maintenance and subscription revenue was $8.1 million, a 23% increase from $6.6 million in Q3 2018.
  • Professional services revenue was flat at $7.3 million.
  • Total gross profit margin was 50%, compared with 47% in Q3 2018.
  • Operating expenses were $11.1 million, compared to $7.3 million for Q3 2018.
  • Loss from operations was $1.7 million compared to a profit of $0.8 million for the same period in fiscal 2018.
  • Operating profitability was impacted by $2.0 million of combined acquisition costs, expected and incurred operating losses from the acquired business, non-recurring marketing rebranding program costs and non-cash stock-compensation expenses.
  • Total contract value bookings amounted to $17.1 million, a 42% increase compared to $12.0 million for the same period in fiscal 2018. During Q3 2019, the Company signed seven new accounts with a total contract value of $5.6 million compared to one new account with a total contract value of $1.3 million in Q3 2018.
  • Cash and cash equivalents totaled $11.4 million at the end of Q3 fiscal 2019, compared to $13.5 million at the end of Q4 2018.

“With proprietary product revenue up 67%, total bookings up 42% and seven new accounts, this was a great quarter.  There were many successful milestones we achieved in the third quarter, including the launching our new global brand identity, the acquisition of OrderDynamics, and Bill King joining the team as Chief Revenue Officer,” said Peter Brereton, President and CEO of Tecsys Inc. “Additionally we continue to make strategic investments with our expansion into Europe through the acquisition of PCSYS A/S, announced on February 1. We are very pleased with the many important steps we undertook this past quarter to build upon our strong market position and best situate Tecsys for accelerated growth.” 

“Our bookings success has continued thanks to our strong pipeline, and as a result we achieved our second consecutive quarter of record booking levels. Consistent with our stated strategy, the Company is seeing increasing software as a service (SaaS) bookings.  Roughly 40% of new account license bookings in the quarter were on a SaaS basis.  Such bookings are recognized as revenue over the contract period as opposed to up-front sales of perpetual licenses. While this establishes a stream of recurring revenue, it will impact comparable quarterly revenue and operating profit in the medium term,” added Mark J. Bentler, Chief Financial Officer of Tecsys Inc.

In thousands of dollars except per share amounts:

Results from OperationsQ3 2019
Jan. 31, 2019
Q3 2018
Jan. 31, 2018
9 months ended
Jan. 31, 2019
9 months ended
Jan. 31, 2018
Trailing 12 months ended Jan. 31, 2019Trailing 12 months ended Jan. 31, 2018
       
Total Revenue $   18,792  $   17,227$   53,258  $   51,810 $  72,166  $   70,257
Recurring Revenue18,0956,56921,92220,10528,81726,978
Gross Margin9,4388,12026,53225,31036,09734,694
Gross Margin %50%47%50%49%50%49%
Operating Expenses11,1257,27527,49322,80535,30926,139
Op. Ex. As % of Revenue59%42%52%44%49%37%
(Loss) Profit from Operations  (1,687)  845  (961)  2,505  788   8,5553
EBITDA2  (1,012)  1,312946   4,183  3,253   10,8573
Adj. EBITDA2  (98)  1,3122,092   4,183  4,399   10,8573
EPS  (0.11)  0.06(0.06)  0.17  0.07   0.563
Contract Bookings  17,098   12,024  43,963   33,369  58,694   44,471

1 Recurring revenue is comprised of cloud, maintenance and subscription revenue

This is a non-IFRS measure. Please refer to the “Non-IFRS Measure” section below

3 Recognized $4.6 million of Canadian federal non-refundable R&D tax credit

First Nine Months Highlights:

  • Total revenue was $53.3 million, an increase from $51.8 million for the first nine months of fiscal 2018.
  • Proprietary products revenue increased to $5.3 million, compared to $3.8 million for the first nine months of fiscal 2018.
  • Cloud, maintenance and subscription revenue was $21.9 million, compared with $20.1 million for the first nine months of fiscal 2018.
  • Professional services revenue was $20.3 million, compared with $21.4 million in the first nine months of fiscal 2018.
  • Total gross profit margin was 50% compared with 49% for the first nine months of fiscal 2018.
  • Operating expenses were $27.5 million, compared to $22.8 million for the first nine months of 2018.
  • Loss from operations was $1.0 million, compared to profit of $2.5 million for the same period in fiscal 2018.
  • Operating profitability was impacted by $2.3 million of combined acquisition costs, expected and incurred operating losses from the acquired business, non-recurring marketing rebranding program costs and non-cash stock-compensation expenses.
  • Net loss was $0.8 million or $(0.06) per share compared with a profit of $2.1 million or $0.17 per share for the same period in fiscal 2018.
  • Total contract value bookings amounted to $44.0 million, compared to $33.4 million for the first nine months of 2018.

The Company has declared a dividend of $0.055 per share to be paid on April 11, 2019 to shareholders of record at the close of business on March 21, 2019.

Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be “eligible” dividends.

Third Quarter 2019 Results Conference Call

Date: March 1, 2019

Time: 8:30 am EST

Phone number: (416) 981-9011 or (800) 763-5615

The call can be replayed until March 8th, 2019 by calling (416) 626-4100 or (800) 558-5253 (access code: 21916614).

About Tecsys                                                    

Tecsys is a global provider of transformative supply chain solutions that equip growing organizations with industry-leading services and tools to achieve operational greatness. Tecsys’ solutions are designed to create clarity out of the complex supply chain challenges that organizations with increases in scale, customer expectations and inventory. Built on an enterprise platform, Tecsys solutions include warehouse management, distribution and transportation management, supply management at point-of-use, retail order management, as well as complete financial management and analytics solutions. Through the co-creation of a more responsive supply chain, Tecsys ensures that growth-minded organizations have the chance to thrive and reach their aspirations.

Over 600 mid-size and Fortune 1000 customers trust their supply chains to Tecsys in the healthcare, service parts, third-party logistics, and general wholesale high-volume distribution industries. Tecsys’ shares are listed on the Toronto Stock Exchange under the ticker symbol TCS.

Contact

Solutions and General info: info@tecsys.com

Investor Relations: steve.li@tecsys.com, (514) 866-5800 ext. 4120

Media Relations: adam.polka@tecsys.com 

By phone: (514) 866-0001 or (800) 922-8649 

Non-IFRS Measure

Reconciliation of EBITDA and adjusted EBITDA

EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA less acquisition related costs and stock-based compensation. The Company believes that these measures are commonly used by investors and analysts to measure a company’s performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement.

The EBITDA and adjusted EBITDA calculations, for the three and nine-months periods ending January 31 of fiscal 2019 and 2018, derived from IFRS measures in the Company’s condensed interim consolidated financial statements, is as follows:

  Three-months ended January 31, 2019 Three-months ended
January 31, 2018
 Nine-months ended
January 31, 2019
 Nine-months ended
January 31, 2018
Profit for the period$ (1,429)$  722$  (820) $  2,147
Adjustments for:    
Depreciation of property and equipment214157649562
Depreciation of deferred development costs219257777856
Depreciation of other intangible assets259113502348
Interest expense9-91
Interest income(26)(77)(171)(173)
Income taxes(258)140-442
     
EBITDA$  (1,012)$  1,312$  946$  4,183
Adjustments for:    
Acquisition related costs772-887-
Stock-based compensation 142-259-
     
Adjusted EBITDA$  (98)$  1,312$  2,092$  4,183

Acquisition related costs: These costs mainly pertain to professional fees related to the acquisition of Order Dynamics and PCSYS.

Stock-based compensation: expense related to the issuance of stock options to employees and directors of the Company.

TECSYS Inc.    
Condensed Interim Consolidated Statements of Financial Position  
As at January 31, 2019 and April 30, 2018    
(in thousands of Canadian dollars)    
     
  January  31, April 30,
  2019 2018 
  (Unaudited)  
     
Assets    
     
Current assets    
Cash and cash equivalents$  11,416$  13,496 
Restricted cash   12,000   -  
Accounts receivable   14,727   13,939 
Work in progress   1,292   617 
Other receivables   508   535 
Tax credits   5,720   3,391 
Inventory   767   1,145 
Prepaid expenses   2,878   1,829 
Total current assets   49,308   34,952 
     
Non-current assets    
Long-term investments   -    10,007 
Other long-term receivables   208   215 
Tax credits   5,048   4,840 
Property and equipment   2,756   3,091 
Deferred development costs   1,161   1,850 
Other intangible assets   6,891   1,342 
Goodwill   10,709   3,596 
Deferred tax assets   3,984   3,524 
Total non-current assets   30,757   28,465 
     
Total assets$  80,065$  63,417 
     
Liabilities    
     
Current liabilities    
Accounts payable and accrued liabilities$  12,631$  9,087 
Current portion of long-term debt   947   47 
Deferred revenue   13,388   10,774 
Total current liabilities   26,966   19,908 
     
Non-current liabilities    
Long-term debt   11,139   74 
Other non-current liabilities   1,707   300 
Total non-current liabilities   12,846   374 
Total liabilities   39,812   20,282 
     
Equity    
     
Share capital   19,144   19,144 
Contributed surplus   9,836   9,577 
Retained earnings   11,258   14,527 
Accumulated other comprehensive income (loss)   15   (113)
Total equity attributable to the owners of the Company   40,253   43,135 
     
     
     
Total liabilities and equity$  80,065$  63,417 
See accompanying notes to the unaudited condensed interim consolidated financial statements.
     

 

TECSYS Inc.        
Condensed Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)      
Three and nine month periods ended January 31, 2019 and 2018        
(in thousands of Canadian dollars, except per share data)      
         
 Three Months Three Months Nine Months Nine Months 
 Ended Ended Ended Ended 
 January 31, January 31, January 31, January 31, 
 2019  2018  2019  2018  
 (unaudited) (unaudited) (unaudited) (unaudited) 
         
         
Revenue:        
Proprietary products  1,556  $   930  $   5,342  $   3,823  $ 
Third-party products  1,316    1,943    4,128    4,912  
Cloud, maintenance and subscription  8,095    6,569    21,922    20,105  
Professional services  7,338    7,332    20,336    21,360  
Reimbursable expenses  487    453    1,530    1,610  
Total revenue  18,792    17,227    53,258    51,810  
         
Cost of revenue:        
Products  1,015    1,766    3,659    4,498  
Services  7,852    6,888    21,537    20,392  
Reimbursable expenses  487    453    1,530    1,610  
Total cost of revenue  9,354    9,107    26,726    26,500  
         
Gross profit  9,438    8,120    26,532    25,310  
         
Operating expenses:        
Sales and marketing  4,612    3,327    12,146    10,811  
General and administration  3,007    1,591    6,518    4,778  
Research and development, net of tax credits  3,506    2,357    8,829    7,216  
Total operating expenses  11,125    7,275    27,493    22,805  
         
(Loss) profit from operations  (1,687)   845    (961)   2,505  
         
Net finance income  -     (17)   (141)   (84) 
         
(Loss) profit before income taxes  (1,687)   862    (820)   2,589  
         
Income tax (recovery) expense  (258)   140    -    442  
         
         
(Loss) Profit attributable to the owners of the Company  (1,429) $   722  $   (820) $   2,147  $ 
         
Other comprehensive income :        
Effective portion of changes in fair value on designated revenue hedges   122    335    128    475  
         
Comprehensive (loss) income attributable to the owners of the Company  (1,307) $   1,057  $   (692) $   2,622  $ 
         
Basic and diluted (loss) earnings per common share  (0.11) $   0.06  $   (0.06) $   0.17  $ 
         
See accompanying notes to the unaudited condensed interim consolidated financial statements.      
         

 

TECSYS Inc.        
Condensed Interim Consolidated Statements of Cash Flows        
Three and nine month periods ended January 31, 2019 and 2018        
(in thousands of Canadian dollars)        
         
   Three Months
Ended
January 31,
2019
(unaudited)
  Three Months
Ended
January 31,
2018
(unaudited)
  Nine Months
Ended
January 31,
2019
(unaudited)
   Nine Months
Ended
January 31,
2018 (unaudited)
 
         
Cash flows from (used in) operating activities:        
Profit for the year$  (1,429)$  722  $   (820) $   2,147 
Adjustments for:        
Depreciation of property and equipment   214    157    649    562 
Depreciation of deferred development costs   219    257    777    856 
Depreciation of other intangible assets   259    113    502    348 
Net finance (income)   -     (17)   (141)   (84)
Unrealized foreign exchange and other   (261)   (294)   (232)   (850)
Non-refundable tax credit   (201)   (222)   (676)   (590)
Stock-based compensation   142    -     259    -  
Income taxes   (265)   113    -     323 
Operating activities excluding changes in non-cash working         
capital items related to operations   (1,322)   829    318    2,712 
         
Accounts receivable   (379)   (1,280)   75    1,591 
Work in progress   (392)   53    (675)   140 
Other receivable   77    (11)   155    (338)
Tax credits   (755)   (828)   (2,172)   (2,157)
Inventory   111    (552)   378    (513)
Prepaid expenses   45    (152)   (384)   88 
Accounts payable and accrued liabilities   2,047    799    1,229    277 
Deferred revenue   1,076    757    1,215    (2,078)
Changes in non-cash working capital items related to operations   1,830    (1,214)   (179)   (2,990)
         
Net cash from (used in) operating activities   508    (385)   139    (278)
         
Cash flows (used in) financing activities:        
Repayment of long-term debt   (12)   (18)   (35)   (55)
Proceeds from long-term debt   12,000    -     12,000    -  
Issuance of common shares   -     -     -     10,454 
Payment of dividends   (720)   (654)   (2,028)   (1,832)
Interest paid   -     -     -     (1)
Net cash from (used in) financing activities   11,268    (672)   9,937    8,566 
         
Cash flows (used in) investing activities:        
Long-term investments   10,000    -     10,000    (10,007)
Business acquisition   (9,880)   -     (9,880)   -  
Increase in restricted cash   (12,000)   -     (12,000)   -  
Interest received   27    77    172    173 
Acquisitions of property and equipment   (166)   (577)   (269)   (830)
Acquisitions of other intangible assets   (27)   (114)   (92)   (241)
Deferred development costs   (22)   (72)   (87)   (144)
Net cash used in investing activities   (12,068)   (686)   (12,156)   (11,049)
         
Net decrease in cash and cash equivalents during the period   (292)   (1,743)   (2,080)   (2,761)
         
Cash and cash equivalents - beginning of period   11,708    12,458    13,496    13,476 
         
Cash and cash equivalents - end of period   11,416    10,715  $   11,416  $   10,715 
         
See accompanying notes to the consolidated financial statements.        
         

 

TECSYS Inc.           
Condensed Interim Consolidated Statements of Changes in Equity           
Nine Month periods ended January 31, 2019 and 2018           
(in thousands of Canadian dollars, except number of shares)           
            
 Share capital Contributed Accumulated Retained Total
 Number Amount surplus other comprehensive earnings  
       income (loss)    
Balance, April 30, 2018  13,082,376 $  19,144 $  9,577 $  (113) $  14,527  $  43,135 
            
Adjustment on initial application of IFRS 15   -    -    -    -     (421)   (421)
   13,082,376   19,144   9,577   (113)   14,106    42,714 
Profit for the year  -    -    -    -     (820)   (820)
Other comprehensive income for the year:           
Effective portion of changes in fair value on designated revenue hedges   -    -    -    128    -     128 
Total comprehensive income for the year  -    -    -    128    (820)   (692)
            
Dividends to equity owners          (2,028)   (2,028)
Stock based compensation  -    -    259   -     -     259 
Total transactions with owners of the Company  -    -    259   -     (2,028)   (1,769)
            
Balance, January 31, 2019  13,082,376 $  19,144 $  9,836 $  15  $  11,258  $  40,253 
            
Balance, April 30, 2017  12,315,326 $  8,349 $  9,577 $  (279) $  13,064  $  30,711 
            
Profit for the year  -    -    -    -     2,147    2,147 
Other comprehensive loss for the year:           
Effective portion of changes in fair value on designated revenue hedges   -    -    -    475    -     475 
Total comprehensive income (loss) for the year  -    -    -    475    2,147    2,622 
Common shares issued under bought deal financing, net of taxes of $306  767,050   10,454   -    -     -     10,454 
Dividends to equity owners  -    -    -    -     (1,832)   (1,832)
Total transactions with owners of the Company  767,050   10,454   -    -     (1,832)   8,622 
            
Balance, January 31, 2018  13,082,376 $  18,803 $  9,577 $  196  $  13,379  $  41,955 
            
See accompanying notes to the consolidated financial statements.           

Forward Looking Statements

The statements in this news release relating to matters that are not historical fact are forward looking statements that are based on management's beliefs and assumptions. Such statements are not guarantees of future performance and are subject to a number of uncertainties, including but not limited to future economic conditions, the markets that Tecsys Inc. serves, the actions of competitors, major new technological trends, and other factors beyond the control of Tecsys Inc., which could cause actual results to differ materially from such statements. More information about the risks and uncertainties associated with Tecsys Inc.'s business can be found in the MD&A section of the Company's annual report and annual information form for the fiscal year ended April 30th, 2018. These documents have been filed with the Canadian securities commissions and are available on our website (www.tecsys.com) and on SEDAR (www.sedar.com).

Copyright © Tecsys Inc. 2019. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.