MARKHAM, ONTARIO--(Marketwired - Sept. 10, 2013) - Enghouse Systems Limited (TSX:ESL) today announced its unaudited third quarter financial results for the period ended July 31, 2013.

Third quarter revenue was $46.3 million, an increase of 31% over revenue of $35.4 million in the third quarter last year, with incremental revenue coming primarily from acquisitions. Revenue includes recurring hosted and maintenance services contributions of $23.5 million in the quarter, an increase of 21% over last year's revenue of $19.5 million. Adjusted EBITDA for the quarter was $12.2 million or $0.46 per diluted share compared to $9.2 million or $0.35 per diluted share in last year's third quarter. Results from operating activities for the quarter were $11.7 million compared to $8.3 million in the prior year's third quarter and include special charges booked on acquisitions of $0.1 million in the quarter. Net income for the third quarter was $6.3 million or $0.24 per diluted share compared to the prior year's third quarter net income of $4.3 million or $0.16 per share. On a year to date basis, revenue was $132.7 million compared to $97.4 million, an increase of 36%. Adjusted EBITDA for the year to date was $32.5 million or $1.23 per diluted share compared to $24.9 million or $0.96 per share.

Operating expenses increased to $21.2 million from $17.5 million in the prior year's third quarter and include incremental operating costs related to acquisitions as well as special charges related to restructuring of acquired operations. Non-cash amortization charges in the quarter were $4.0 million compared to $2.9 million in the prior year's third quarter and includes amortization charges for acquired software and customer relationships including operations acquired in the current year.

Enghouse closed the quarter with $92.0 million in cash, cash equivalents and short-term investments, compared to $80.9 million at April 30, 2013 and $83.7 million at October 31, 2012. This reflects cash paid in the quarter of approximately $3.0 million related to holdbacks for the acquisitions of Zeacom and Locus. It also reflects a cash dividend of $2.1 million paid in June 2013. The Company continues to have no long-term debt.

During the quarter, the corporate management team was strengthened with the additions of Craig Wallace as Chief Operations Officer and Geoff Bartle as Corporate Vice President, Information Systems. The additional corporate management was needed to take the Company to the next level of its development.

On September 6, 2013, the Company acquired Safeharbor Knowledge Systems, LLC. Based in Satsop (Seattle), Washington, Safeharbor delivers a SaaS based, unified knowledge base and community forum platform with proven scalability, augmenting the Company's Interactive Management solutions portfolio.

The Board of Directors has approved an eligible quarterly dividend of $0.08 per common share, payable on November 29, 2013 to shareholders of record at the close of business on November 15, 2013.

Enghouse continues to seek further acquisitions to grow its market share.

A conference call to discuss the results will be held on Wednesday, September 11, 2013 at 8:45 a.m. EST. To participate, please call 416-849-8296 (PIN 89681544#) in Toronto or North American Toll-Free 1-866-551-3680 (PIN 89681544#).

About Enghouse

Enghouse Systems Limited is a leading global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a larger and more diverse software company through strategic acquisitions and managed growth. Enghouse shares are listed on the Toronto Stock Exchange under the symbol "ESL". Further information about Enghouse may be obtained from the Company's web site at www.enghouse.com.

Non-IFRS Measures

The Company uses non-IFRS measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses results from operating activities and Adjusted EBITDA as a measure of operating performance. Therefore, results from operating activities and Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Results from operating activities are calculated as net income before amortization of acquired software and customer relationships, finance income, finance expenses, other income, and the provision for income taxes. Results from Adjusted EBITDA are calculated as net income before depreciation of property, plant and equipment, amortization of acquired software and customer relationships, finance income, finance expenses, other income, the provision of income tax and special charges for acquisition related restructuring and transaction costs. Management uses results from operating activities and Adjusted EBITDA to evaluate operating performance as they exclude amortization of software and intangibles (which is an accounting allocation of the cost of software and intangible assets arising on acquisition), any impact of finance and tax related activities, asset depreciation, other income and restructuring costs primarily related to acquisitions.

Adjusted EBITDA:

The table below reconciles Adjusted EBITDA to net income:

		Three Months ended								Nine Months ended
		July 31, 2013				July 31, 2012				July 31, 2013				July 31, 2012
Total Revenue		$	46,247			$	35,427			$	132,715			$	97,416
Net income for the period			6,297				4,288				14,635				12,528
Provision for income taxes			1,723				1,244				3,971				3,873
Depreciation of property, plant and equipment			425				377				1,303				942
Amortization of acquired software and customer relationships			4,025				2,949				11,485				7,770
Finance income			(90	)			(194	)			(517	)			(698	)
Finance expenses			81				72				258				183
Other income			(307	)			(13	)			(1,116	)			(168	)
Special charges			77				491				2,491				491
Adjusted EBITDA		$	12,231			$	9,214			$	32,510			$	24,921
Adjusted EBITDA margin			26	%			26	%			24	%			26	%
Adjusted EBITDA per diluted share		$	0.46			$	0.35			$	1.23			$	0.96

Enghouse Systems Limited Condensed Consolidated Interim Statements of Financial Position (in thousands of Canadian dollars) (Unaudited)
			July 31, 2013			October 31, 2012
Assets
Current assets:
	Cash and cash equivalents		$	58,792		$	59,544
	Short-term investments			33,245			24,108
	Accounts receivable, net			30,971			31,368
	Prepaid expenses and other assets			5,593			3,853
				128,601			118,873
Non-current assets:
Property, plant and equipment				3,651			3,365
Intangibles				121,696			106,995
Deferred income tax assets				7,637			10,477
Total assets			$	261,585		$	239,710
Liabilities
Current liabilities:
	Trade payables		$	29,556		$	26,053
	Income taxes payable			303			2,008
	Dividends payable			2,079			1,676
	Accrued provisions			3,292			1,621
	Deferred revenue			41,797			35,935
				77,027			67,293
Non-current liabilities:
Deferred income tax liabilities				13,502			13,241
Deferred revenue				1,750			1,236
Total liabilities				92,279			81,770
Shareholders' Equity
Share capital				57,879			55,751
Contributed surplus				3,007			2,847
Retained earnings				108,171			99,371
Accumulated other comprehensive gain (loss)				249			(29	)
Total shareholders' equity				169,306			157,940
Total liabilities and shareholders' equity			$	261,585		$	239,710

Enghouse Systems Limited Condensed Consolidated Interim Statements of Operations and Comprehensive Income (in thousands of Canadian dollars, except per share amounts) (Unaudited)
			Three months ended July 31								Nine months ended July 31
			2013				2012				2013				2012
Revenue
	Software licenses		$	15,189			$	10,853			$	43,877			$	32,001
	Hosted and maintenance services			23,543				19,475				67,500				51,494
	Professional services			6,013				4,727				17,581				12,873
	Hardware			1,502				372				3,757				1,048
				46,247				35,427				132,715				97,416
Direct costs
	Software licenses			1,113				808				3,191				2,583
	Services			11,243				8,567				31,719				22,549
	Hardware			941				242				2,538				726
				13,297				9,617				37,448				25,858
Revenue, net of direct costs				32,950				25,810				95,267				71,558
Operating expenses
	Selling, general and administrative			13,298				11,255				40,221				31,092
	Research and development			7,421				5,341				22,536				15,545
	Depreciation of property, plant and equipment			425				377				1,303				942
	Special charges			77				491				2,491				491
				21,221				17,464				66,551				48,070
Results from operating activities				11,729				8,346				28,716				23,488
Amortization of acquired software and customer relationships				(4,025	)			(2,949	)			(11,485	)			(7,770	)
Finance income				90				194				517				698
Finance expenses				(81	)			(72	)			(258	)			(183	)
Other income				307				13				1,116				168
Income before income taxes				8,020				5,532				18,606				16,401
Provision for income taxes				1,723				1,244				3,971				3,873
Net income for the period			$	6,297			$	4,288			$	14,635			$	12,528
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation differences from foreign operations				(162	)			(373	)			221				(1,664	)
Transfer to net income of realized gains on available for sale investments, net of tax of ($177); nine months - ($291)				(1,156	)			-				(1,910	)			(132	)
Unrealized gain (loss) on available for sale investments, net of tax of $169; nine months-$300				1,106				(291	)			1,967				(883	)
Other comprehensive (loss) income				(212	)			(664	)			278				(2,679	)
Comprehensive income			$	6,085			$	3,624			$	14,913			$	9,849
Earnings per share
Basic			$	0.24			$	0.17			$	0.57			$	0.49
Diluted			$	0.24			$	0.16			$	0.55			$	0.48

Enghouse Systems Limited Condensed Consolidated Interim Statements of Changes in Equity (in thousands of Canadian dollars) (Unaudited)
			Number of common shares	Share capital $		Contributed surplus $		Accumulated other comprehensive income (loss) $		Retained earnings $			Total $
Balance - November 1, 2012			25,780,562	55,751		2,847		(29	)	99,371			157,940
Net income			-	-		-		-		14,635			14,635
Other Comprehensive Income (net of tax):
Cumulative Translation Adjustment			-	-		-		221		-			221
Transfer to net income of realized gains on available-for-sale investments, net of tax			-	-		-		(1,910	)	-			(1,910	)
Unrealized gain on available-for-sale investments, net of tax			-	-		-		1,967		-			1,967
Comprehensive income (loss) for the period			-	-		-		278		14,635			14,913
Employee share options:
	Value of services recognized		-	-		704		-		-			704
	Proceeds on issuing shares		207,400	2,128		(544	)	-		-			1,584
Dividends			-	-		-		-		(5,835	)		(5,835	)
Balance - July 31, 2013			25,987,962	57,879		3,007		249		108,171			169,306
Balance - November 1, 2011			25,337,262	52,134		2,970		1,035		84,782			140,921
Net income			-	-		-		-		12,528			12,528
Other Comprehensive Income (net of tax):
Cumulative Translation Adjustment			-	-		-		(1,664	)	-			(1,664	)
Transfer to net income of realized gain on available-for-sale investments, net of tax			-	-		-		(132	)	-			(132	)
Unrealized (loss) on available-for-sale investments, net of tax			-	-		-		(883	)	-			(883	)
Comprehensive income (loss) for the period			-	-		-		(2,679	)	12,528			9,849
Employee share options:
	Value of services recognized		-	-		502		-		-			502
	Proceeds on issuing shares		332,300	2,951		(634	)	-		-			2,317
Dividends			-	-		-		-		(4,608	)		(4,608	)
Balance - July 31, 2012			25,669,562	55,085		2,838		(1,644	)	92,702			148,981

Enghouse Systems Limited Condensed Consolidated Interim Statements of Cash Flows (in thousands of Canadian dollars) (Unaudited)
			Three months ended July 31								Nine months ended July 31
			2013				2012				2013				2012
Cash flows from operating activities
Net income			$	6,297			$	4,288			$	14,635			$	12,528
Adjustments for:
	Depreciation of property, plant and equipment			425				377				1,303				942
	Amortization of acquired software and customer relationships			4,025				2,949				11,485				7,770
	Stock-based compensation expense			281				216				704				502
	Income tax expense			1,723				1,244				3,971				3,873
	Finance expenses and other income			(226	)			59				(858	)			15
				12,525				9,133				31,240				25,630
Changes in non-cash operating working capital				2,725				990				2,475				(3,476	)
Income tax paid				(724	)			(1,360	)			(3,510	)			(3,188	)
Net cash flows from operating activities				14,526				8,763				30,205				18,966
Cash flows from investing activities
Purchase of property, plant and equipment, net				(194	)			(224	)			(1,165	)			(1,893	)
Acquisitions, net of cash acquired of $3,617				(2,974	)			(26,651	)			(19,805	)			(32,453	)
Net (purchase) sale of short-term investments				(10,773	)			2,371				(6,058	)			(8,692	)
Net cash flows used in investing activities				(13,941	)			(24,504	)			(27,028	)			(43,038	)
Cash flows from financing activities
Issuance of share capital				209				441				1,584				2,317
Payment of cash dividend				(2,076	)			(1,664	)			(5,432	)			(4,206	)
Net cash flows used in financing activities				(1,867	)			(1,223	)			(3,848	)			(1,889	)
Effect of currency translation adjustments on cash and cash equivalents				15				440				(81	)			200
Net decrease in cash and cash equivalents during the period				(1,267	)			(16,524	)			(752	)			(25,761	)
Cash and cash equivalents- beginning of period				60,059				56,387				59,544				65,624
Cash and cash equivalents - end of period			$	58,792			$	39,863			$	58,792			$	39,863

Enghouse Systems Limited Selected Segment Reporting Information (in thousands of Canadian dollars) (Unaudited)
			For the three months ended July 31								For the nine months ended July 31
			2013				2012				2013				2012
Revenue:
	Asset Management Group		$	9,983			$	4,725			$	23,472			$	11,519
	Interactive Management Group			36,264				30,702				109,243				85,897
Total			$	46,247			$	35,427			$	132,715			$	97,416
Segment Profit (EBIT):
	Asset Management Group		$	2,001			$	1,016			$	2,957			$	1,918
	Interactive Management Group			6,961				5,383				17,440				16,430
	Corporate expenses			(1,258	)			(1,002	)			(3,166	)			(2,630	)
	Finance income			90				194				517				698
	Finance expenses			(81	)			(72	)			(258	)			(183	)
	Other income			307				13				1,116				168
Total			$	8,020			$	5,532			$	18,606			$	16,401