TECSYS Reports Financial Results for Second Quarter of Fiscal 2018

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MONTREAL, QUEBEC–(Marketwired – Nov. 30, 2017) – TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, today announced its results for the second quarter of fiscal year 2018, ended October 31, 2017. 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 was .1 million, 9% higher than .5 million for Q2 2017.
  • Proprietary products revenue decreased 8% to .6 million, compared to Q2 2017.
  • Cloud, maintenance and subscription revenue increased to .4 million, 4% higher than .2 million for Q2 2017.
  • Professional services revenue was .9 million, 22% higher than .5 million in Q2 2017.
  • Total gross profit margin was 52%, compared to 50% in Q2 2017.
  • Operating expenses decreased to .8 million, compared to .0 million for Q2 2017.
  • Profit from operations was .6 million, compared to 0,000 for the same period in fiscal 2017.
  • Profit was .4 million or {$content}.10 per share in Q2 2018 compared to 6,000 or {$content}.02 per share for Q2 2017.
  • EBITDA was .2 million, compared to 5,000 for Q2 2017.
  • Total contract value bookings amounted to .5 million, compared to .9 million for Q2 2017.
  • Cash and cash equivalents, as well as redeemable long-term investments, totaled .5 million at the end of Q2 2018 compared to .5M at the end of Q4 2017.

“In the second quarter of fiscal 2018, solid bookings and revenue growth combined with flat to declining expenses led to a surge in profitability.” said Peter Brereton, President and CEO of TECSYS Inc. “The quarter was also a validation of our strategy to deploy one common technology platform that is robust and versatile into two diverse sectors where each has a different sales cycle and is affected differently by external events. In the quarter, our complex distribution business achieved solid growth in terms of both new contract and base account sales and added accounts in floor finishing products, heavy equipment and MRO. Our healthcare business continued to be constrained in the quarter by uncertainty around U.S. healthcare legislation, however this situation seems to be improving based on orders signed early in the third quarter. Our pipeline and general business activity in healthcare remains strong. The board has approved an increase of the quarterly dividend of 11% to {$content}.05.”

Results from
Operations		 Q2 2018 Q2 2017 6 months
ended
Oct. 31,
2017		 6 months
ended
Oct. 31,
2016		 Trailing 12
months
ended
Oct. 31,
2017		 Trailing 12
months
ended
Oct. 31,
2016
In thousands of dollars except per share amounts
Total Revenue ,072 ,518 ,583 ,615 ,415 ,388
Gross Margin ,438 ,291 ,190 ,897 ,489 ,512
Gross Margin % 52% 50% 50% 49% 50% 51%
Operating Expenses ,843 ,971 ,530 ,334 ,441 ,108
Op. Ex. As % of Revenue 43% 48% 45% 47% 38% 45%
Profit from Operations ,595 0 ,660 3 ,048 ,404
EBITDA ,184 5 ,871 ,749 ,486 ,929
EPS {$content}.10 {$content}.02 {$content}.11 {$content}.03 {$content}.57 {$content}.38
Contract Bookings ,453 ,920 ,345 ,936 ,037 ,029

First Half Fiscal 2018 Highlights:

  • Total revenue was .6 million, 6% higher than .6 million for H1 2017.
  • Proprietary products revenue decreased 4% to .9 million, compared to H1 2017.
  • Cloud, maintenance and subscription revenue increased to .5 million, 5% higher than .8 million for H1 2017.
  • Professional services revenue was .0 million, 11% higher than .6 million in H1 2017.
  • Total gross profit margin was 50%, compared to 49% in H1 2017.
  • Operating expenses were flat year-over-year at .5 million, compared to .3 million for H1 2017.
  • Profit from operations was .7 million, compared to 3,000 for the same period in fiscal 2017.
  • Profit was .4 million or {$content}.11 per share for H1 2018 compared to 4,000 or {$content}.03 per share for H1 2017.
  • EBITDA was .9 million, compared to .7 million for H1 2017.
  • Total contract value bookings amounted to .3 million, compared to .9 million for H1 2017.

The Company has declared a dividend of {$content}.05 per share to be paid on January 11, 2018 to shareholders of record at the close of business on December 21, 2017.

Second Quarter 2018 Results Conference Call
Date: December 1, 2017 Time: 8:30 am EST
Phone number: (416) 359-3126 or (800) 672-2065
The call can be replayed until December 8, 2017 by calling (416) 626-4100 or (800) 558-5253 (access code: 21862899).

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 October 31, 2017 and April 30, 2017
(in thousands of Canadian dollars)
October 31, April 30,
2017 2017
Assets
Current assets
Cash and cash equivalents $ 12 458 $ 13 476
Accounts receivable 11 347 14 218
Work in progress 525 612
Other receivables 705 370
Tax credits 4 562 3 126
Inventory 875 914
Prepaid expenses 1 659 1 899
Total current assets 32 131 34 615
Non-current assets
Long-term investments 10 007 –
Other long-term receivables 249 –
Tax credits 5 252 5 407
Property and equipment 2 292 2 444
Deferred development costs 2 224 2 751
Other intangible assets 1 415 1 523
Goodwill 3 596 3 596
Deferred tax assets 2 402 2 201
Total non-current assets 27 437 17 922
Total assets $ 59 568 $ 52 537
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 8 348 $ 9 265
Current portion of long-term debt 55 69
Deferred revenue 9 259 12 094
Total current liabilities 17 662 21 428
Non-current liabilities
Long-term debt 98 121
Other non-current liabilities 256 277
Total non-current liabilities 354 398
Total liabilities 18 016 21 826
Equity
Share capital 18 803 8 349
Contributed surplus 9 577 9 577
Retained earnings 13 311 13 064
Accumulated other comprehensive loss (139 ) (279 )
Total equity attributable to the owners of the Company 41 552 30 711
Total liabilities and equity $ 59 568 $ 52 537
TECSYS Inc.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three and six-month periods ended October 31, 2017 and 2016
(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,
2017 2016 2017 2016
Revenue:
Proprietary products $ 1 645 $ 1 779 $ 2 893 $ 3 003
Third-party products 1 447 1 505 2 969 2 998
Cloud, maintenance and subscription 6 446 6 193 13 536 12 837
Professional services 7 884 6 457 14 028 12 641
Reimbursable expenses 650 584 1 157 1 136
Total revenue 18 072 16 518 34 583 32 615
Cost of revenue:
Products 1 372 1 350 2 732 2 613
Services 6 612 6 293 13 504 12 969
Reimbursable expenses 650 584 1 157 1 136
Total cost of revenue 8 634 8 227 17 393 16 718
Gross profit 9 438 8 291 17 190 15 897
Operating expenses:
Sales and marketing 3 851 3 769 7 484 7 355
General and administration 1 611 1 719 3 187 3 059
Research and development, net of tax credits 2 381 2 483 4 859 4 920
Total operating expenses 7 843 7 971 15 530 15 334
Profit from operations 1 595 320 1 660 563
Net finance (income) costs (33 ) 55 (67 ) 151
Profit before income taxes 1 628 265 1 727 412
Income taxes 272 59 302 78
Profit attributable to the owners of the Company $ 1 356 $ 206 $ 1 425 $ 334
Other comprehensive (loss) income:
Effective portion of changes in fair value on designated revenue hedges (655 ) (136 ) 140 (861 )
Comprehensive income (loss) attributable to the owners of the Company $ 701 $ 70 $ 1 565 $ (527 )
Basic and diluted earnings per common share $ 0,10 $ 0,02 $ 0,11 $ 0,03
TECSYS Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
Six-month periods ended October 31, 2017 and 2016
(in thousands of Canadian dollars)
Six Months Six Months
Ended Ended
October 31, October 31,
2017 2016
Cash flows from (used in) operating activities:
Profit for the period $ 1 425 $ 334
Adjustments for:
Depreciation of property and equipment 405 413
Depreciation of deferred development costs 599 683
Depreciation of other intangible assets 235 247
Net finance (income) costs (67 ) 151
Unrealized foreign exchange and other (556 ) 575
Non-refundable tax credits (368 ) (457 )
Income taxes 210 78
Operating activities excluding changes in non-cash working capital items related to operations 1 883 2 024
Accounts receivable 2 871 4 735
Work in progress 87 (1 331 )
Other receivables (327 ) (598 )
Tax credits (1 329 ) 934
Inventory 39 (164 )
Prepaid expenses 240 204
Accounts payable and accrued liabilities (522 ) (1 839 )
Deferred revenue (2 835 ) (395 )
Changes in non-cash working capital items related to operations (1 776 ) 1 546
Net cash from operating activities 107 3 570
Cash flows (used in) from financing activities:
Repayment of long-term debt (37 ) (717 )
Issuance of common shares 10 454 –
Payment of dividends (1 178 ) (739 )
Interest paid (1 ) (49 )
Net cash from (used in) financing activities 9 238 (1 505 )
Cash flows (used in) from investing activities:
Long-term investments (10 007 ) –
Interest received 96 55
Acquisitions of property and equipment (253 ) (233 )
Acquisitions of other intangible assets (127 ) (90 )
Deferred development costs (72 ) (27 )
Net cash used in investing activities (10 363 ) (295 )
Net (decrease) increase in cash and cash equivalents during the period (1 018 ) 1 770
Cash and cash equivalents – beginning of period 13 476 9 704
Cash and cash equivalents – end of period $ 12 458 $ 11 474
TECSYS Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited)
Six-month periods ended October 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 – – – – 1 425 1 425
Other comprehensive income for the period:
Effective portion of changes in fair value on designated revenue hedges – – – 140 – 140
Total comprehensive income for the period – – – 140 1 425 1 565
Common shares issued under bought deal financing 767 050 10 454 – – – 10 454
Dividends to equity owners – – – – (1 178 ) (1 178 )
Total transactions with owners of the Company 767 050 10 454 – – (1 178 ) 9 276
Balance, October 31, 2017 13 082 376 $ 18 803 $ 9 577 $ (139 ) $ 13 311 $ 41 552
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 (loss) income 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
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