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 Operations | Q3 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, 2019 | Trailing 12 months ended Jan. 31, 2018 |
| Total Revenue | $ 18,792 | $ 17,227 | $ 53,258 | $ 51,810 | $ 72,166 | $ 70,257 |
| Recurring Revenue1 | 8,095 | 6,569 | 21,922 | 20,105 | 28,817 | 26,978 |
| Gross Margin | 9,438 | 8,120 | 26,532 | 25,310 | 36,097 | 34,694 |
| Gross Margin % | 50% | 47% | 50% | 49% | 50% | 49% |
| Operating Expenses | 11,125 | 7,275 | 27,493 | 22,805 | 35,309 | 26,139 |
| Op. Ex. As % of Revenue | 59% | 42% | 52% | 44% | 49% | 37% |
| (Loss) Profit from Operations | (1,687) | 845 | (961) | 2,505 | 788 | 8,5553 |
| EBITDA2 | (1,012) | 1,312 | 946 | 4,183 | 3,253 | 10,8573 |
| Adj. EBITDA2 | (98) | 1,312 | 2,092 | 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
2 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 equipment | 214 | 157 | 649 | 562 | ||||
| Depreciation of deferred development costs | 219 | 257 | 777 | 856 | ||||
| Depreciation of other intangible assets | 259 | 113 | 502 | 348 | ||||
| Interest expense | 9 | - | 9 | 1 | ||||
| Interest income | (26) | (77) | (171) | (173) | ||||
| Income taxes | (258) | 140 | - | 442 | ||||
| EBITDA | $ (1,012) | $ 1,312 | $ 946 | $ 4,183 | ||||
| Adjustments for: | ||||||||
| Acquisition related costs | 772 | - | 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.