TECSYS Reports Record Quarterly Revenue, Signs Largest IDN to Date

MONTREAL, QUEBEC--(Marketwired - Nov. 25, 2014) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, today announced its results for the second quarter of fiscal year 2015, ended October 31, 2014.

All dollar amounts are expressed in Canadian currency and are prepared in accordance with the International Financial Reporting Standards (IFRS).

Second Quarter Highlights:

• Revenue grew 16% to $13.5M in Q2 2015 compared to $11.7M in Q2 2014.
• EBITDA for Q2, 2015 was $1.2M, in line with the $1.2M recorded in Q2 2014.
• Proprietary products revenue grew 29% to $3.2M on strong demand from the Company's newly acquired Logi-D point-of-use products.
• Services revenue improved by 10% to $8.1M while services profit margin grew to 37% from 34% in Q2 2014.
• Profit from operations was $532K in Q2 2015, compared to $748K in Q2 2014. Before acquisition related expenses and amortizations, profit from operations was $621K in Q2, 2015 compared to $748K in Q2, 2014.
• Recurring revenue on an annualized basis grew to $19.4M, a 19% jump compared to the end of Q2 2014, representing 38% of the last twelve months trailing revenue.
• Total contract bookings in the quarter totaled $9.3M, over 60% of which came from new and existing healthcare clients.
• Backlog was $34.7M at the end of Q2 2015 compared to $27.5M at the end of Q2 2014.
• Cash and cash equivalents totaled $5.1M at the end of Q2 2015 compared to $8.8M at the end of Q4 2014, of which $3.1M was used for the acquisition of Logi-D.
• Signed one of the largest Hospital Networks (IDN) in the United States with 46 hospitals.
• Go-lives at 21 customers' sites, most notably: two IDNs, one major service parts operation of a large imaging products manufacturer and a third-party logistics provider for med surg products.

"Signing one of North America's largest IDNs was a notable achievement for us this quarter, and demonstrates the growing acceptance of our solutions and recognition of its quick ROI," said Peter Brereton, President and CEO of TECSYS Inc. "We are now focused on integrating Logi-D's sales and marketing teams and have been actively introducing these new products to our existing and potential customers. Feedback has been positive and we continue to advance a number of opportunities which leverage our expanded product and client portfolio to accelerate growth."

First Half Highlights:

• Revenue grew 19% to $26.6M in the first half of FY2015, compared to $22.3M in the first half of last fiscal year.
• EBITDA for the first half of FY 2015 was $2.2M.compared to $1.8M in the first half of FY 2014. EBITDA in the first half of FY 2015 includes a one-time acquisition related expenses of $160K.
• Profit from operations for the first six months of fiscal 2015 was $1M compared to $0.9M in the same period of fiscal 2014. Before acquisition related expenses and amortizations, profit from operations increased to $1.3M in the first half of FY 2015 from $0.9 in the first half of FY 2014, a 38% increase.
• Net profit for the first half of fiscal 2015 was $753K or $0.07 per share compared to $688K or $0.06 per share for the same period of the prior fiscal year. Net profit for the first half of FY 2015 includes acquisition related expenses and amortization of $265K.
• Total contract bookings for the first half of FY2015 totaled $19M, which includes the addition of four new IDNs.

TECSYS also announced that the Company's Board of Directors has declared a quarterly dividend of $0.0225 per share, to be paid on January 6, 2015 to shareholders of record at the close of business on December 16, 2014.

Second Quarter 2015 Results Conference Call

Date: November 25, 2014

Time: 4:30 pm EST

Phone number: 800-381-7839 or 416-981-9030

The call can be replayed by calling 800-558-5253 (access code: 21742734) or 416-626-4100 (access code: 21742734).

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 over 600 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, 2014. 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. 2014. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

TECSYS Inc.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
As at October 31, 2014 and April 30, 2014
(in thousands of Canadian dollars)
			October 31,			April 30,
			2014			2014
Assets
Current assets
	Cash and cash equivalents	$	5,134		$	8,839
	Accounts receivable		8,582			9,076
	Work in progress		1,382			524
	Other accounts receivable		168			46
	Tax credits		4,198			2,704
	Inventory		592			293
	Prepaid expenses		1,020			1,037
Total current assets			21,076			22,519
Non-current assets
	Restricted cash equivalents		40			80
	Tax credits		1,500			1,350
	Property and equipment		2,537			2,627
	Deferred development costs		4,290			4,088
	Other intangible assets		2,193			508
	Goodwill		3,594			2,239
	Deferred tax assets		564			714
Total non-current assets			14,718			11,606
Total assets		$	35,794		$	34,125
Liabilities
Current liabilities
	Accounts payable and accrued liabilities	$	6,738		$	5,406
	Current portion of long-term debt		1,079			1,000
	Deferred revenue		8,685			8,326
Total current liabilities			16,502			14,732
Non-current liabilities
	Long-term debt		2,195			2,500
	Other non-current liabilities		356			299
Total non-current liabilities			2,551			2,799
Total liabilities			19,053			17,531
Equity
	Share capital		2,253			2,153
	Contributed surplus		9,577			9,577
	Retained earnings		5,098			4,864
	Accumulated other comprehensive loss		(187	)		-
Total equity attributable to the owners of the Company			16,741			16,594
Total liabilities and equity		$	35,794		$	34,125

TECSYS Inc.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three and six-month periods ended October 31, 2014 and 2013
(in thousands of Canadian dollars, except per share data)
			Three Months			Three Months		Six Months			Six Months
			Ended			Ended		Ended			Ended
			October 31,			October 31,		October 31,			October 31,
			2014			2013		2014			2013
Revenue:
	Proprietary products	$	3,226		$	2,507	$	5,305		$	3,973
	Third-party hardware and software products		1,727			1,433		3,505			3,187
	Services		8,096			7,345		16,839			14,448
	Reimbursable expenses		499			371		911			650
Total revenue			13,548			11,656		26,560			22,258
Cost of revenue:
	Products		1,293			1,036		2,622			2,295
	Services		5,138			4,879		10,323			9,630
	Reimbursable expenses		499			371		911			650
Total cost of revenue			6,930			6,286		13,856			12,575
Gross profit			6,618			5,370		12,704			9,683
Operating expenses:
	Sales and marketing		2,935			2,306		5,546			4,249
	General and administration		1,521			966		2,948			1,964
	Research and development, net of tax credits		1,630			1,350		3,204			2,551
Total operating expenses			6,086			4,622		11,698			8,764
Profit from operations			532			748		1,006			919
Net finance costs			22			68		78			156
Profit before income taxes			510			680		928			763
Income taxes			100			75		175			75
Profit attributable to the owners of the Company		$	410		$	605	$	753		$	688
Other comprehensive loss:
	Effective portion of changes in fair value on designated revenue hedges		(119	)		-		(187	)		-
Comprehensive income attributable to the owners of the Company		$	291		$	605	$	566		$	688
Basic and diluted earnings per common share		$	0.04		$	0.05	$	0.07		$	0.06

TECSYS Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
Six-month periods ended October 31, 2014 and 2013
(in thousands of Canadian dollars)
			Six Months			Six Months
			Ended			Ended
			October 31,			October 31,
			2014			2013
Cash flows from (used in) operating activities:
Profit for the period		$	753		$	688
Adjustments for:
	Depreciation of property and equipment		385			365
	Depreciation of deferred development costs		603			475
	Depreciation of other intangible assets		187			95
	Net finance costs		78			156
	Unrealized foreign exchange losses, realized foreign exchange gains and other		100			7
	Federal non-refundable research and development tax credits		(150	)		(150	)
	Income taxes		150			75
	Operating activities excluding changes in non-cash workingcapital items related to operations		2,106			1,711
	Accounts receivable		1,306			(1,880	)
	Work in progress		(454	)		256
	Other accounts receivable		(125	)		(102	)
	Tax credits		(1,284	)		586
	Inventory		169			176
	Prepaid expenses		39			211
	Accounts payable and accrued liabilities		(103	)		282
	Deferred revenue		(178	)		(226	)
	Changes in non-cash working capital items related to operations		(630	)		(697	)
Net cash from operating activities			1,476			1,014
Cash flows (used in) from financing activities:
	Repayment of bank loans		(140	)		-
	Repayment of loan to related party		-			(9	)
	Repayment of long-term debt		(529	)		(500	)
	Issuance of common shares		-			40
	Purchase of common shares for cancellation and related fees		-			(11	)
	Purchase of share options for cancellation		(13	)		(7	)
	Payment of dividends		(519	)		(402	)
	Interest paid		(71	)		(87	)
Net cash used in financing activities			(1,272	)		(976	)
Cash flows (used in) from investing activities:
	Restricted cash equivalents		40			40
	Interest received		14			25
	Acquisitions of property and equipment		(101	)		(258	)
	Acquisitions of other intangible assets		(136	)		(123	)
	Deferred development costs		(805	)		(905	)
	Current and non-current receivables from TECSYS Latin America Inc.		28			42
	Business combination, net of cash and cash equivalents acquired		(2,949	)		-
Net cash used in investing activities			(3,909	)		(1,179	)
Net decrease in cash and cash equivalents during the period			(3,705	)		(1,141	)
Cash and cash equivalents - beginning of period			8,839			5,348
Cash and cash equivalents - end of period		$	5,134		$	4,207

TECSYS Inc.

Condensed Interim Consolidated Statements of Changes in Equity

(Unaudited)

Six-month periods ended October 31, 2014 and 2013

(in thousands of Canadian dollars, except number of shares)

										Accumulated
										other
			Share capital				Contributed			comprehensive			Retained
			Number		Amount		surplus			loss			earnings			Total
Balance, April 30, 2014			11,524,421	$	2,153	$	9,577		$	-		$	4,864		$	16,594
	Profit for the period		-		-		-			-			753			753
	Other comprehensive loss for the period:
		Effective portion of changes in fair value on designated revenue hedges	-		-		-			(187	)		-			(187	)
Total comprehensive income for the period			-		-		-			(187	)		753			566
	Common shares issued related to purchase of Logi D Holding Inc.		15,625		100		-			-			-			100
	Dividends to equity owners		-		-		-			-			(519	)		(519	)
Total transactions with owners of the Company			15,625		100		-			-			(519	)		(419	)
Balance, October 31, 2014			11,540,046	$	2,253	$	9,577		$	(187	)	$	5,098		$	16,741
Balance, April 30, 2013			11,449,421	$	1,748	$	9,588		$	-		$	3,930		$	15,266
	Profit and comprehensive income for the period		-		-		-			-			688			688
Total comprehensive income for the period			-		-		-			-			688			688
	Normal course issuer bid fees for repurchase of common shares		-		-		(11	)		-			-			(11	)
	Share options exercised		25,000		40		-			-			-			40
	Fair value associated with options exercised		-		64		-			-			-			64
	Dividends to equity owners		-		-		-			-			(402	)		(402	)
Total transactions with owners of the Company			25,000		104		(11	)		-			(402	)		(309	)
Balance, October 31, 2013			11,474,421	$	1,852	$	9,577		$	-		$	4,216		$	15,645