TECSYS Posts 6% Revenue Growth & 6 Cents EPS For Q3, 2011-Increases Semi-Annual Dividend by 20%

MONTREAL, QUEBEC--(Marketwire - March 3, 2011) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, announced today its results for the third quarter of fiscal year 2011, ended January 31, 2011. All dollar amounts are expressed in Canadian currency and reported in accordance with Canadian Generally Accepted Accounting Principles (GAAP) and are unaudited.

Highlights of the Third Quarter include:

• Revenue increased 6% to $9.3M in Q3, 2011 from $8.8M in Q3, 2010. The increase is primarily attributable to improvement in license revenue for the Company's proprietary product. During Q3, 2011, the stronger Canadian dollar against the U.S. dollar had a negative revenue impact of about $225K compared to Q3, 2010.

• Earnings from operations for the third quarter, 2011 reached $417K up from $142K in Q3, 2010.

• Net earnings were significantly higher in the third quarter, 2011 reaching $750K or $0.06 per share compared to $62K or $0.00 per share for the third quarter of last fiscal year. Net earnings for the quarter include a $302K increase in the valuation of the Asset Backed Commercial Paper (ABCP) being held by the company. 

• EBITDA for Q3, 2011 also increased to $1,138K from $458K in Q3 of last fiscal year.

• At the end of Q3, 2011 annualized recurring revenue in Canadian currency increased to $14M compared to $13.2M at the end of Q3, 2010. Annualized recurring revenue at the end of Q3, 2011 represented 39% of the Company's last 12 months revenue.

• Backlog increased to $20.8M at the end of Q3, 2011, compared to $17.8M at the end of Q3, 2010.

• Cash from operations amounted to $1.3M during the third quarter, up from $617K, during the same quarter of the prior year.

• Cash, cash equivalents and other short-term investments amounted to $7.0M at the end of Q3, 2011, compared to $7.5M at the end of Q3, 2010 with no significant long-term debt.

TECSYS also announced today that the Company's Board of Directors has increased the semi-annual dividend by 20% to $0.03/share, to be paid on March 31^st, 2011 to shareholders of record on March 17, 2011.

Peter Brereton, President and CEO of TECSYS Inc., commented on the results: "Good growth in our top line through greater revenue contribution by our proprietary software drove overall revenue up by 6%, enabling us to continue with our profitability trend and achieve 6 cents EPS for the quarter. This is in spite of currency headwinds. Our leading position in the healthcare supply chain industry continued to prove to be a key contributor to our growth, with a strategic win of a high profile and sizeable hospital network in United States. Healthcare providers need safe, efficient and cost effective supply chains. Over the past couple of years, we have seen hospital supply network leadership evolve to a new state of readiness for improvement. They are no longer in a "wait and see" mode, but are beginning to take concrete steps to address their supply chain challenges."

During the quarter, the Company signed 30 agreements with new and base account clients across its business units, with significant value coming from the healthcare market; four agreements were signed with existing healthcare clients, and one with a major new client in the hospital supply network space in the United States. The Company also deployed its software at 19 customer sites, 50% of these deployments were at major customers in North America, most notably in healthcare.

Highlights of the first Nine Months of fiscal year 2011 include:

• Revenue for first nine months, 2011 was $27.2M compared to $27.9 for the same period of last fiscal year. As a result of a stronger Canadian dollar against the U.S. dollar, revenue was negatively impacted by about $870K during the first nine months of 2011 compared to the same period of the last fiscal year.

• Earnings from operations for the first nine months, 2011 were $765K compared to $1,255K for the same period in last fiscal year.

• Cash from operations was $845K, compared to $859K for the same period of last year.

• Net earnings for the first nine months of fiscal, 2011 were $974K or $0.08 per share compared to $916K or $0.07 per share for the same period of the prior fiscal year.

• EBITDA for first nine months, 2011 was $2,080K compared to $2,032K for the same period in 2010.

TECSYS' Third Quarter 2011 Earnings Conference Call:

Subject: Third Quarter FY2011 Results Conference Call

Date: March 3, 2011

Time: 4:30 pm

Phone number: 800-909-4761 or 416-981-9035

The call can be replayed by calling 800-558-5253 (access code: 21513248) or 416-626-4100 (access code: 21513248).

About TECSYS

TECSYS is a leading supply chain management software provider that delivers powerful enterprise distribution, warehouse and transportation logistics software solutions. The company's customers include more than 500 mid-size and Fortune 1000 corporations in healthcare, heavy equipment, third-party logistics, and general wholesale high-volume distribution industries. TECSYS' shares are listed on the Toronto Stock Exchange under the ticker symbol TCS.

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, 2010. 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. 2011. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

TECSYS Inc.

Consolidated Balance Sheets

Prepared in Accordance with Canadian Generally Accepted Accounting Principles

(in thousands of Canadian dollars)
	January 31,	April 30,
	2011	2010
	(unaudited)
Assets
Current assets
Cash and cash equivalents	6,122	7,256
Short-term and other investments	850	850
Accounts receivable	8,489	7,346
Work in progress	152	66
Other accounts receivable	102	425
Tax credits receivable	1,513	1,914
Inventory	198	171
Prepaid expenses	921	879
Future tax assets	142	142
	18,489	19,049
Restricted cash equivalents and other investments	200	200
Asset-backed commercial paper	3,797	3,514
Long-term receivables	27	48
Investment tax credits	930	930
Long-term investment	150	211
Property and equipment	2,382	2,472
Intangible assets	486	623
Deferred development costs	2,310	1,991
Future tax assets	453	453
Goodwill	2,804	2,804
	32,028	32,295
Liabilities
Current liabilities
Bank advances	3,943	3,951
Accounts payable and accrued liabilities	5,467	5,305
Current portion of long-term debt	107	249
Deferred revenue	5,571	5,827
	15,088	15,332
Shareholders' equity
Capital stock	1,485	1,386
Contributed surplus	11,140	11,931
Retained earnings	4,315	3,646
	16,940	16,963
	32,028	32,295

TECSYS Inc.

Consolidated Statements of Earnings and Comprehensive Earnings

Prepared in Accordance with Canadian Generally Accepted Accounting Principles

(in thousands of Canadian dollars, except share and per share data)
		Three Months Ended January 31, 2011		Three Months Ended January 31, 2010		Nine Months Ended January 31, 2011		Nine Months Ended January 31, 2010
		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Revenue
Products		3,609		2,774		9,943		9,866
Services		5,477		5,740		16,555		17,240
Reimbursable expenses		213		286		666		819
		9,299		8,800		27,164		27,925
Cost of revenue
Products		1,629		1,203		4,039		3,535
Services		3,420		3,482		10,395		10,781
Reimbursable expenses		213		286		666		819
		5,262		4,971		15,100		15,135
Gross margin		4,037		3,829		12,064		12,790
Operating expenses
Sales and marketing		1,362		1,376		4,563		4,267
General and administration		924		806		2,648		2,744
Gross research and development		1,465		1,589		4,440		4,614
Research and development tax credits		(342	)	(262	)	(763	)	(609	)
Deferred development costs		(222	)	(229	)	(743	)	(621	)
Stock-based compensation		19		32		80		92
Amortization of property and equipment		216		153		489		401
Amortization of intangible assets		48		131		161		375
Amortization of deferred development costs		150		91		424		272
		3,620		3,687		11,299		11,535
Earnings from operations		417		142		765		1,255
Interest income		15		2		23		14
Interest expense		15		(8	)	3		(18	)
Foreign exchange gains (losses)		14		(27	)	(35	)	(221	)
Changes in fair value of asset-backed commercial paper		302		-		302		-
Share of net loss and amortization of intangible assets of a company subject to significant influence		(13	)	(47	)	(61	)	(96	)
Earnings before income taxes		750		62		997		934
Income taxes		-		-		23		18
Net earnings and comprehensive earnings for the period		750		62		974		916
Weighted average number of common shares outstanding
	- basic	12,081,013		12,341,102		12,149,318		12,395,115
	- diluted	12,212,537		12,568,344		12,300,747		12,571,301
Basic and diluted net earnings per common share		$0.06		$-		$0.08		$0.07

TECSYS Inc.

Consolidated Statements of Cash Flows

Prepared in Accordance with Canadian Generally Accepted Accounting Principles

(in thousands of Canadian dollars)
		Three Months Ended January 31, 2011		Three Months Ended January 31, 2010		Nine Months Ended January 31, 2011		Nine Months Ended January 31, 2010
		(unaudited)		(unaudited)		(unaudited)		(unaudited)
Cash flows from
Operating activities
Net earnings for the period		750		62		974		916
Adjustments for
	Amortization of property and equipment	216		153		489		401
	Amortization of intangible assets	48		131		161		375
	Amortization of deferred development costs	150		91		424		272
	Stock-based compensation	19		32		80		92
	Changes in fair value of asset-backed commercial paper	(302	)	-		(302	)	-
	Unrealized foreign exchange (gains) losses	(32	)	137		36		17
	Deferred development costs	(222	)	(229	)	(743	)	(621	)
	Share of net loss and amortization of intangible assets of a company subject to
	significant influence	13		47		61		96
		640		424		1,180		1,548
Changes in non-cash working capital items related to operations
	(Increase) decrease in accounts receivable	(954	)	1,220		(1,143	)	1,262
	Decrease (increase) in work in progress	156		131		(86	)	203
	Decrease (increase) in other accounts receivable	109		(5	)	255		3
	Decrease (increase) in tax credits receivable	1,138		(391	)	401		(854	)
	(Increase) decrease in inventory	(6	)	3		(27	)	12
	(Increase) decrease in prepaid expenses	(68	)	33		(42	)	(135	)
	Increase (decrease) in accounts payable and accrued liabilities	4		(292	)	563		(1,035	)
	Increase (decrease) in deferred revenue	296		(506	)	(256	)	(145	)
		1,315		617		845		859
Financing activities
	Bank advances	(6	)	(9	)	(8	)	(31	)
	Purchase price adjustments on acquisition applied against long-term debt	-		17		-		17
	Repayment of long-term debt	(142	)	-		(142	)	-
	Issuance of common shares	77		-		104		-
	Purchase of common shares for cancellation	(630	)	(100	)	(876	)	(389	)
	Payment of dividends	-		-		(305	)	(310	)
		(701	)	(92	)	(1,227	)	(713	)
Investing activities
	Increase in short-term and other investments and restricted cash equivalents and other investments	-		-		-		(201	)
	Interest and principal received on asset-backed commercial paper	10		29		19		124
	Acquisitions of property and equipment	(105	)	(131	)	(800	)	(311	)
	Acquisitions of intangible assets	(13	)	(5	)	(24	)	(41	)
	Decrease (increase) in long-term receivables including the current portion from a related party	17		16		53		(3	)
		(91	)	(91	)	(752	)	(432	)
Increase (decrease) in cash and cash equivalents		523		434		(1,134	)	(286	)
Cash and cash equivalents - beginning of period		5,599		6,790		7,256		7,510
Cash and cash equivalents - end of period		6,122		7,224		6,122		7,224

TECSYS Inc.

Consolidated Statements of Shareholders' Equity

Prepared in Accordance with Canadian Generally Accepted Accounting Principles

(in thousands of Canadian dollars, except number of shares)
(unaudited)
	Capital stock				Contributed		Retained		Total
	Number		Amount		surplus		earnings
Balance, April 30, 2010	12,225,306		1,386		11,931		3,646		16,963
Repurchase of common shares	(456,553	)	(52	)	(824	)	-		(876	)
Stock options exercised	73,718		104		-		-		104
Fair value associated with options exercised	-		47		(47	)	-		-
Stock-based compensation	-		-		80		-		80
Net earnings for the period	-		-		-		974		974
Dividends	-		-		-		(305	)	(305	)
Balance, January 31, 2011	11,842,471		1,485		11,140		4,315		16,940
	Capital stock				Contributed		Retained		Total
	Number		Amount		surplus		earnings
Balance, April 30, 2009	12,525,884		1,420		12,328		2,082		15,830
Repurchase of common shares	(207,340	)	(23	)	(366	)	-		(389	)
Stock options exercised	281		-		-		-		-
Stock-based compensation	-		-		92		-		92
Net earnings for the period	-		-		-		916		916
Dividends	-		-		-		(310	)	(310	)
Balance, January 31, 2010	12,318,825		1,397		12,054		2,688		16,139