TECSYS Reports Financial Results for First Quarter Fiscal 2018

MONTREAL, QUEBEC--(Marketwired - Sept. 7, 2017) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, today announced its results for the first quarter of fiscal year 2018, ended July 31, 2017. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS) and are unaudited.

"The first quarter of our fiscal year covers the summer months and is typically our slowest quarter. This year however we experienced increased sales activity in the quarter resulting in a record level of contract bookings for a first quarter. Included in the new bookings is a contract from a provincial liquor board, the fourth to choose TECSYS for its SCM needs and another from one of our largest existing customers for additional distribution centre deployment," said Peter Brereton, President and CEO of TECSYS Inc. "The continued adoption of TECSYS solutions as the standardized platform for our customers and entire sectors is a testament to both the agility and reliability of our software. Today's rapidly evolving supply chain requires agile solutions that the old monolithic systems struggle to provide."

"In order to provide more clarity to our investors, beginning this quarter we have regrouped cloud, maintenance and subscription revenue on a separate line on the Consolidated Statements of Income and Comprehensive Income. This revenue stream, which is mostly recurring in nature, grew by 7% in the quarter," said Brian Cosgrove, the Chief Financial Officer of TECSYS Inc.

First Quarter Highlights:

• Total revenue was $16.5 million, 3% higher than $16.1 million for Q1 2017.
• Proprietary products revenue remained flat at $1.2 million, compared to Q1 2017.
• Cloud, maintenance and subscription revenue increased to $7.1 million, 7% higher than $6.6 million for Q1 2017.
• Professional services revenue was $6.1 million, compared to $6.2 million in Q1 2017.
• Total gross profit margin was flat at 47% compared to Q1 2017.
• Operating expenses increased to $7.7 million, compared to $7.4 million for Q1 2017.
• Profit from operations was $65,000, compared to $243,000 for the same period in fiscal 2017.
• Profit was $69,000 or $0.01 per share in Q1 2018 compared to $128,000 or $0.01 per share for Q1 2017.
• EBITDA was $687,000, compared to $814,000 for Q1 2017.
• Total contract value bookings amounted to $9.9 million, a 64% increase over $6.0 million for Q1 2017.
• Cash and cash equivalents totaled $23.2M at the end of Q1 2018 compared to $13.5M at the end of Q4 2017.

"The strong bookings are expected to translate into revenue growth in future quarters. In the meantime, we experienced increasing operating costs and lower profits in the quarter as we incurred sales commission expenses and applied additional resources to ensure a successful launch of a new point-of-use healthcare solution," added Mr. Brereton. "The solution is now live at a large U.S. hospital network and will serve as a model for further implementations in fiscal 2018."

Results from Operations	3 Months Ended July 31 2017		3 Months Ended July 31 2016		Trailing 12 Months Ended July 31, 2017		Trailing 12 Months Ended July 31, 2016
In thousands of dollars except per share amounts
Total Revenue	$16,511		$16,097		$68,861		$68,632
Gross Margin	$7,752		$7,606		$34,342		$35,011
Gross Margin %	47	%	47	%	50	%	51	%
Operating Expenses	$7,687		$7,363		$26,569		$30,426
Op. Ex. As % of Revenue	47	%	46	%	39	%	44	%
Profit from Operations	$65		$243		$7,773		$4,585
EBITDA	$687		$814		$10,237		$7,147
EPS	$0.01		$0.01		$0.49		$0.39
Contract Bookings	$9,892		$6,016		$46,504		$41,524

The Company has declared a dividend of $0.045 per share to be paid on October 6, 2017 to shareholders of record at the close of business on September 22, 2017.

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

First Quarter 2018 Results Conference Call

Date: September 7, 2017 Time: 4:30 pm EST

Phone number: (416) 981-9070 or (800) 672-8406

The call can be replayed until July 14, 2017 by calling (416) 626-4100 or (800) 558-5253 (access code: 21857756).

About TECSYS

TECSYS provides transformative supply chain solutions that equip our customers to succeed in a rapidly-changing omni-channel world. TECSYS solutions are built on a true enterprise supply chain platform, and include warehouse management, distribution, transportation management, supply management at point-of-use as well as complete financial management and analytics solutions. Customers running on TECSYS' Supply Chain Platform are confident knowing they can execute, day in and day out, regardless of business fluctuations or changes in technology, they can adapt and scale to any business needs or size, and they can expand and collaborate with customers, suppliers and partners as one borderless enterprise. From demand planning to demand fulfillment, TECSYS puts power into the hands of both front line workers and back office planners, and unshackles business leaders so they can see and manage their supply chains like never before.

TECSYS is the market leader in supply chain solutions for health systems and hospitals. 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.

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, 2017. 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. 2017. 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 July 31, 2017 and April 30, 2017
(in thousands of Canadian dollars)
		July 31,		April 30,
		2017		2017
Assets
Current assets
	Cash and cash equivalents	$	23,246	$	13,476
	Accounts receivable		11,738		14,218
	Work in progress		695		612
	Other receivables		1,359		370
	Tax credits		3,973		3,126
	Inventory		1,033		914
	Prepaid expenses		1,823		1,899
Total current assets			43,867		34,615
Non-current assets
	Other long-term receivables		276		-
	Tax credits		5,437		5,407
	Property and equipment		2,329		2,444
	Deferred development costs		2,521		2,751
	Other intangible assets		1,447		1,523
	Goodwill		3,596		3,596
	Deferred tax assets		2,194		2,201
Total non-current assets			17,800		17,922
Total assets		$	61,667	$	52,537
Liabilities
Current liabilities
	Accounts payable and accrued liabilities	$	7,931	$	9,265
	Current portion of long-term debt		61		69
	Deferred revenue		11,860		12,094
Total current liabilities			19,852		21,428
Non-current liabilities
	Long-term debt		110		121
	Other non-current liabilities		265		277
Total non-current liabilities			375		398
Total liabilities			20,227		21,826
Equity
	Share capital		18,803		8,349
	Contributed surplus		9,577		9,577
	Retained earnings		12,544		13,064
	Accumulated other comprehensive income (loss)		516		(279	)
Total equity attributable to the owners of the Company			41,440		30,711
Total liabilities and equity		$	61,667	$	52,537

TECSYS Inc.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three month periods ended July 31, 2017 and 2016
(in thousands of Canadian dollars, except per share data)
			Three Months Ended July 31, 2017			Three Months Ended July 31, 2016
Revenue:
	Proprietary products	$	1,248		$	1,224
	Third-party products		1,522			1,493
	Cloud, maintenance and subscription		7,090			6,644
	Professional services		6,144			6,184
	Reimbursable expenses		507			552
Total revenue			16,511			16,097
Cost of revenue:
	Products		1,360			1,263
	Services		6,892			6,676
	Reimbursable expenses		507			552
Total cost of revenue			8,759			8,491
Gross profit			7,752			7,606
Operating expenses:
	Sales and marketing		3,633			3,586
	General and administration		1,576			1,340
	Research and development, net of tax credits		2,478			2,437
Total operating expenses			7,687			7,363
Profit from operations			65			243
Net finance (income) costs			(34	)		96
Profit before income taxes			99			147
Income taxes			30			19
Profit attributable to the owners of the Company		$	69		$	128
Other comprehensive income (loss):
	Effective portion of changes in fair value on designated revenue hedges		795			(725	)
Comprehensive income (loss) attributable to the owners of the Company		$	864		$	(597	)
Basic and diluted earnings per common share		$	0.01		$	0.01

TECSYS Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
Three-month periods ended July 31, 2017 and 2016
(in thousands of Canadian dollars)
		Three Months			Three Months
		Ended			Ended
		July 31,			July 31,
		2017			2016
Cash flows from (used in) operating activities:
Profit for the period		$	69		$	128
Adjustments for:
	Depreciation of property and equipment		203			201
	Depreciation of deferred development costs		302			348
	Depreciation of other intangible assets		118			125
	Net finance (income) costs		(34	)		96
	Unrealized foreign exchange and other		(823	)		195
	Non-refundable tax credits		(189	)		(215	)
	Income taxes		-			19
	Operating activities excluding changes in non-cash working capital items related to operations		(354	)		897
	Accounts receivable		2,480			5,545
	Work in progress		(83	)		(662	)
	Other receivables		(354	)		(106	)
	Tax credits		(688	)		1,656
	Inventory		(119	)		(91	)
	Prepaid expenses		77			(11	)
	Accounts payable and accrued liabilities		(1,223	)		(2,786	)
	Deferred revenue		(234	)		(146	)
	Changes in non-cash working capital items related to operations		(144	)		3,399
Net cash (used in) from operating activities			(498	)		4,296
Cash flows (used in) from financing activities:
	Repayment of long-term debt		(19	)		(359	)
	Issuance of common shares		10,454			-
	Interest paid		(1	)		(26	)
Net cash from (used in) financing activities			10,434			(385	)
Cash flows from (used in) investing activities:
	Interest received		36			33
	Acquisitions of property and equipment		(88	)		(94	)
	Acquisitions of other intangible assets		(42	)		(48	)
	Deferred development costs		(72	)		-
Net cash used in investing activities			(166	)		(109	)
Net increase in cash and cash equivalents during the period			9,770			3,802
Cash and cash equivalents - beginning of period			13,476			9,704
Cash and cash equivalents - end of period		$	23,246		$	13,506

TECSYS Inc.

Condensed Interim Consolidated Statements of Changes in Equity

(Unaudited)

Three-month periods ended July 31, 2017 and 2016

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

			Share capital
			Number	Amount		Contributed surplus		Accumulated other comprehensive (loss) income			Retained earnings			Total
Balance, April 30, 2017			12,315,326	$	8,349	$	9,577	$	(279	)	$	13,064		$	30,711
	Profit for the period		-		-		-		-			69			69
	Other comprehensive income for the period:
		Effective portion of changes in fair value on designated revenue hedges	-		-		-		795			-			795
Total comprehensive income for the period			-		-		-		795			69			864
	Common shares issued under bought deal financing		767,050		10,454		-		-			-			10,454
	Dividends to equity owners		-		-		-		-			(589	)		(589	)
Total transactions with owners of the Company			767,050		10,454		-		-			(589	)		9,865
Balance, July 31, 2017			13,082,376	$	18,803	$	9,577	$	516		$	12,544		$	41,440
Balance, April 30, 2016			12,315,326	$	8,349	$	9,577	$	607		$	8,913		$	27,446
	Profit for the period		-		-		-		-			128			128
	Other comprehensive loss for the period:
		Effective portion of changes in fair value on designated revenue hedges	-		-		-		(725	)		-			(725	)
Total comprehensive (loss) income for the period			-		-		-		(725	)		128			(597	)
	Dividends to equity owners		-		-		-		-			(369	)		(369	)
Total transactions with owners of the Company			-		-		-		-			(369	)		(369	)
Balance, July 31, 2016			12,315,326	$	8,349	$	9,577	$	(118	)	$	8,672		$	26,480