MONTREAL, QUEBEC–(Marketwired – Dec. 1, 2016) – TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, today announced its results for the second quarter of fiscal year 2017, ended October 31, 2016. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS) and are unaudited.
Second Quarter Highlights:
- Total revenue for Q2 2017 increased to $16.5M, $756K or 5% higher, compared to $15.8M for Q2 2016.
- Recurring revenue on an annualized basis grew 15% compared to Q2 2016 to $26.5M which represents 38% of the last 12 months trailing revenue.
- Total gross margin percentage in Q2 2017 was 50% compared to 49% in Q2 2016.
- Operating expenses for Q2 2017 increased to $8.0M, higher by $682K or 9%, compared to $7.3M for the same three-month period last fiscal year.
- EBITDA of $935K in Q2 2017 compared to $1.2M in Q2 2016.
- Net profit of $206K, or $0.02 per share, in Q2 2017 compared to $367K, or $0.03 per share, for Q2 2016.
- Total contract value bookings amounted to $10.9M in Q2 2017 in comparison to $13.4M for Q2 2016.
- Cash and cash equivalents totalled $11.5M at the end of Q2 2017 compared to $9.7M at the end of fiscal 2016.
“In the second quarter of fiscal 2017, we continued to grow our account base with four new customer contracts signed, including two complex distribution customers, one healthcare organization, and one large hospital network,” said Peter Brereton, President and CEO of TECSYS Inc. “Our strategy to grow the complex distribution channel is proving successful with the total contract value signed in the first half of fiscal 2017 already higher than the total amount signed in all of fiscal year 2016”.
“New account sales did very well during the quarter with total new account bookings up 50% for the quarter and 30% for the first six months. We experienced some delays in base account upgrades which we believe is attributable to the uncertainty of the U.S. election. Since then, business is coming back to normal and we are optimistic we will be able to execute our strong pipeline in the back-half of our fiscal year.
We were pleased to see our recurring revenues rise by 15% over Q2 of last year. We believe we are entering a new phase in the business with the re-write of our software platform behind us and the heavy ramp up in sales & marketing yielding results and beginning to normalize as a percentage of the business model. With this in mind, the board has decided to increase the dividend by 50% as outlined below. We believe this brings projected dividend payout into the 30-35% of projected free cash flow range.” added Mr. Brereton.
Berty Ho-Wo-Cheong, Vice President, Finance & Administration and CFO commented “If we compare the operating expenses during the quarter to the previous year’s quarter, we had three significant cost items worth mentioning. First our September user conference, which is held every 18 months, incurred net expenses of approximately $250,000. Second, R&D capitalization during the second quarter was $27K against $280,000 in the second quarter of fiscal 2016. Third, we had an exceptional legal expense that accounted for about $416,000 compared to $162,000 for the same period last year. With a decision rendered in our favour in September, we look forward to potentially recouping a substantial portion of our legal expenses. Adjusting for these costs for both periods, our Profit from Operations in the quarter would have been $959,000 against $383,000 for the same period of last year. We believe that the exceptional legal fees and the R&D capitalization are now behind us.
| Results from Operations | 3 Months Ended Oct. 31 2016 |
3 Months Ended Oct. 31 2015 |
6 Months Ended Oct. 31 2016 | 6 Months Ended Oct. 31, 2015 | Trailing 12 Months Ended Oct. 31, 2016 |
Trailing 12 Months Ended Oct. 31, 2015 |
||||||||||||
| In thousands of dollars except per share amounts | ||||||||||||||||||
| Total Revenue | $16,518 | $15,762 | $32,615 | $30,693 | $69,388 | $61,417 | ||||||||||||
| Gross Margin | $8,291 | $7,790 | $15,897 | $15,210 | $35,512 | $30,079 | ||||||||||||
| Gross Margin % | 50 | % | 49 | % | 49 | % | 50 | % | 51 | % | 49 | % | ||||||
| Operating Expenses | $7,971 | $7,289 | $15,334 | $14,502 | $31,108 | $28,430 | ||||||||||||
| Op. Ex. As % of Revenue | 48 | % | 46 | % | 47 | % | 47 | % | 45 | % | 46 | % | ||||||
| Profit from Operations | $320 | $501 | $563 | $708 | $4,404 | $1,649 | ||||||||||||
| EBITDA | $935 | $1,153 | $1,749 | $1,984 | $6,929 | $4,225 | ||||||||||||
| EPS | $0.02 | $0.03 | $0.03 | $0.04 | $0.38 | $0.10 | ||||||||||||
| Contract Bookings | $10,920 | $13,415 | $16,936 | $20,102 | $39,029 | $48,107 | ||||||||||||
First Half Highlights:
- Revenue for the first six months of fiscal 2017 was $32.6, up 6% from $30.7M in the first half of last fiscal year.
- EBITDA for the first half of FY 2017 was $1.7M compared to $2.0M in the same period of fiscal 2016.
- Profit from operations for the first half of fiscal 2017 was $563K compared to $708K in the same period of fiscal 2016.
- Net profit for the first six months of fiscal 2017 was $334K, or $0.03 per share, compared to $436K, or $0.04 per share, for the same period of the prior fiscal year.
- Total contract bookings for the first six months of fiscal 2017 totalled $16.9M.
The Company has declared a dividend of $0.045 per share to be paid on January 12, 2017 to shareholders of record at the close of business on December 22, 2016.
Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be “eligible” dividends.
| Second Quarter 2017 Results Conference Call |
| Date: December 2, 2016 Time: 8:30 am EST |
| Phone number: (416) 981-9001 or (800) 920-3356 |
| The call can be replayed by calling (416) 626-4100 or (800) 558-5253 (access code: 21822170). |
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 and transportation management, as well as complete financial management and analytics. 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, 2016. 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. 2016. 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, 2016 and April 30, 2016 | ||||||
| (in thousands of Canadian dollars) | ||||||
| October 31, | April 30, | |||||
| 2016 | 2016 | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 11,474 | $ | 9,704 | ||
| Accounts receivable | 13,504 | 18,239 | ||||
| Work in progress | 1,844 | 513 | ||||
| Other accounts receivable | 935 | 1,393 | ||||
| Tax credits | 4,188 | 4,893 | ||||
| Inventory | 908 | 744 | ||||
| Prepaid expenses | 1,418 | 1,622 | ||||
| Total current assets | 34,271 | 37,108 | ||||
| Non-current assets | ||||||
| Tax credits | 1,633 | 1,483 | ||||
| Property and equipment | 2,453 | 2,633 | ||||
| Deferred development costs | 3,161 | 3,817 | ||||
| Other intangible assets | 1,674 | 1,831 | ||||
| Goodwill | 3,596 | 3,596 | ||||
| Deferred tax assets | 2,229 | 2,222 | ||||
| Total non-current assets | 14,746 | 15,582 | ||||
| Total assets | $ | 49,017 | $ | 52,690 | ||
| Liabilities | ||||||
| Current liabilities | ||||||
| Accounts payable and accrued liabilities | $ | 9,109 | $ | 10,399 | ||
| Current portion of long-term debt | 1,474 | 1,455 | ||||
| Deferred revenue | 10,810 | 11,205 | ||||
| Total current liabilities | 21,393 | 23,059 | ||||
| Non-current liabilities | ||||||
| Long-term debt | 1,153 | 1,889 | ||||
| Other non-current liabilities | 291 | 296 | ||||
| Total non-current liabilities | 1,444 | 2,185 | ||||
| Total liabilities | 22,837 | 25,244 | ||||
| Equity | ||||||
| Share capital | 8,349 | 8,349 | ||||
| Contributed surplus | 9,577 | 9,577 | ||||
| Retained earnings | 8,508 | 8,913 | ||||
| Accumulated other comprehensive (loss) income | (254 | ) | 607 | |||
| Total equity attributable to the owners of the Company | 26,180 | 27,446 | ||||
| Total liabilities and equity | $ | 49,017 | $ | 52,690 | ||
| TECSYS Inc. | ||||||||||||
| Condensed Interim Consolidated Statements of Income and Comprehensive Income | ||||||||||||
| (Unaudited) | ||||||||||||
| Three and six-month periods ended October 31, 2016 and 2015 | ||||||||||||
| (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, | |||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Revenue: | ||||||||||||
| Proprietary products | $ | 2,922 | $ | 3,000 | $ | 5,278 | $ | 5,148 | ||||
| Third-party hardware and software products | 1,831 | 2,092 | 4,001 | 4,156 | ||||||||
| Services | 11,181 | 10,172 | 22,200 | 20,488 | ||||||||
| Reimbursable expenses | 584 | 498 | 1,136 | 901 | ||||||||
| Total revenue | 16,518 | 15,762 | 32,615 | 30,693 | ||||||||
| Cost of revenue: | ||||||||||||
| Products | 1,578 | 1,914 | 3,276 | 3,522 | ||||||||
| Services | 6,065 | 5,560 | 12,306 | 11,060 | ||||||||
| Reimbursable expenses | 584 | 498 | 1,136 | 901 | ||||||||
| Total cost of revenue | 8,227 | 7,972 | 16,718 | 15,483 | ||||||||
| Gross profit | 8,291 | 7,790 | 15,897 | 15,210 | ||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 3,769 | 3,503 | 7,355 | 7,095 | ||||||||
| General and administration | 1,719 | 1,391 | 3,059 | 2,760 | ||||||||
| Research and development, net of tax credits | 2,483 | 2,395 | 4,920 | 4,647 | ||||||||
| Total operating expenses | 7,971 | 7,289 | 15,334 | 14,502 | ||||||||
| Profit from operations | 320 | 501 | 563 | 708 | ||||||||
| Net finance costs | 55 | 32 | 151 | 72 | ||||||||
| Profit before income taxes | 265 | 469 | 412 | 636 | ||||||||
| Income taxes | 59 | 102 | 78 | 200 | ||||||||
| Profit attributable to the owners of the Company | $ | 206 | $ | 367 | $ | 334 | $ | 436 | ||||
| Other comprehensive (loss) income: | ||||||||||||
| Effective portion of changes in fair value on designated revenue hedges | (136 | ) | 356 | (861 | ) | (227 | ) | |||||
| Comprehensive income (loss) attributable to the owners of the Company | $ | 70 | $ | 723 | $ | (527 | ) | $ | 209 | |||
| Basic and diluted earnings per common share | $ | 0.02 | 0.03 | $ | 0.03 | $ | 0.04 | |||||
| TECSYS Inc. | |||||||
| Condensed Interim Consolidated Statements of Cash Flows | |||||||
| (Unaudited) | |||||||
| Six-month periods ended October 31, 2016 and 2015 | |||||||
| (in thousands of Canadian dollars) | |||||||
| Six Months | Six Months | ||||||
| Ended | Ended | ||||||
| October 31, | October 31, | ||||||
| 2016 | 2015 | ||||||
| Cash flows from (used in) operating activities: | |||||||
| Profit for the period | $ | 334 | $ | 436 | |||
| Adjustments for: | |||||||
| Depreciation of property and equipment | 413 | 373 | |||||
| Depreciation of deferred development costs | 683 | 694 | |||||
| Depreciation of other intangible assets | 247 | 243 | |||||
| Gain on disposal of property and equipment | – | (12 | ) | ||||
| Net finance costs | 151 | 72 | |||||
| Unrealized foreign exchange and others | 575 | 111 | |||||
| Non-refundable tax credits | (457 | ) | (150 | ) | |||
| Income taxes | 78 | 150 | |||||
| Operating activities excluding changes in non-cash working capital items related to operations | 2,024 | 1,917 | |||||
| Accounts receivable | 4,735 | (1,094 | ) | ||||
| Work in progress | (1,331 | ) | (505 | ) | |||
| Other accounts receivable | (598 | ) | (479 | ) | |||
| Tax credits | 934 | 1,472 | |||||
| Inventory | (164 | ) | 180 | ||||
| Prepaid expenses | 204 | (32 | ) | ||||
| Accounts payable and accrued liabilities | (1,839 | ) | (643 | ) | |||
| Deferred revenue | (395 | ) | (224 | ) | |||
| Changes in non-cash working capital items related to operations | 1,546 | (1,325 | ) | ||||
| Net cash from operating activities | 3,570 | 592 | |||||
| Cash flows used in financing activities: | |||||||
| Repayment of long-term debt | (717 | ) | (727 | ) | |||
| Purchase of share options for cancellation | – | (4 | ) | ||||
| Payment of dividends | (739 | ) | (616 | ) | |||
| Interest paid | (49 | ) | (74 | ) | |||
| Net cash used in financing activities | (1,505 | ) | (1,421 | ) | |||
| Cash flows (used in) from investing activities: | |||||||
| Interest received | 55 | 36 | |||||
| Acquisitions of property and equipment | (233 | ) | (204 | ) | |||
| Proceeds on disposal of property and equipment | – | 12 | |||||
| Acquisitions of other intangible assets | (90 | ) | (47 | ) | |||
| Deferred development costs | (27 | ) | (679 | ) | |||
| Net cash used in investing activities | (295 | ) | (882 | ) | |||
| Net increase (decrease) in cash and cash equivalents during the period | 1,770 | (1,711 | ) | ||||
| Cash and cash equivalents – beginning of period | 9,704 | 10,815 | |||||
| Cash and cash equivalents – end of period | $ | 11,474 | $ | 9,104 | |||
| TECSYS Inc. | |||||||||||
| Condensed Interim Consolidated Statements of Changes in Equity | |||||||||||
| (Unaudited) | |||||||||||
| Six-month periods ended October 31, 2016 and 2015 | |||||||||||
| (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, 2016 | 12,315,326 | $ 8,349 | $ 9,577 | $ 607 | $ 8,913 | $ 27,446 | |||||
| Profit for the period | – | – | – | – | 334 | 334 | |||||
| Other comprehensive loss for the period: | |||||||||||
| Effective portion of changes in fair value on designated revenue hedges | – | – | – | (861 | ) | – | (861 | ) | |||
| Total comprehensive income (loss) for the period | – | – | – | (861 | ) | 334 | (527 | ) | |||
| Dividends to equity owners | – | – | – | – | (739 | ) | (739 | ) | |||
| Total transactions with owners of the Company | – | – | – | – | (739 | ) | (739 | ) | |||
| Balance, October 31, 2016 | 12,315,326 | $ 8,349 | $ 9,577 | $ (254 | ) | $ 8,508 | $ 26,180 | ||||
| Balance, April 30, 2015 | 12,315,326 | $ 8,349 | $ 9,577 | $ 95 | $ 5,341 | $ 23,362 | |||||
| Profit for the period | – | – | – | – | 436 | 436 | |||||
| Other comprehensive loss for the period: | |||||||||||
| Effective portion of changes in fair value on designated revenue hedges | – | – | – | (227 | ) | – | (227 | ) | |||
| Total comprehensive income (loss) for the period | – | – | – | (227 | ) | 436 | 209 | ||||
| Dividends to equity owners | – | – | – | – | (616 | ) | (616 | ) | |||
| Total transactions with owners of the Company | – | – | – | – | (616 | ) | (616 | ) | |||
| Balance, October 31, 2015 | 12,315,326 | $ 8,349 | $ 9,577 | $ (132 | ) | $ 5,161 | $ 22,955 | ||||
Investor relations: steve.li@tecsys.com
(514) 866-5800 ext. 4120
Media relations: media@tecsys.com
TECSYS Inc.
(514) 866-0001 or (800) 922-8649