News Press Releases

Softchoice Announces Record Fourth Quarter Earnings, Increases Quarterly Dividend

T.SFTC | February 19, 2013

Fourth Quarter Highlights

Reported revenue grows 15 percent
Gross profit increases 14 percent
EBITDA up 30 percent
Net income increases 29 percent. Adjusted net earnings per diluted share grows 50 percent

2012 Full Year Highlights

Net income increases 25 percent. Adjusted net earnings per diluted share increases 14 percent to $1.37 per diluted share
Gross profit up 10 percent

TORONTO, Feb. 19, 2013 /CNW/ - Softchoice Corporation (TSX: SO), a North American provider of technology solutions and services, today reported earnings for the fourth quarter and fiscal year 2012.

For the three-month period ended December 31, 2012, Softchoice reported net income of US$8.4 million compared to US$6.5 million for the same period in the prior year. Eliminating the impact of certain non-cash foreign exchange gains and losses, and an adjustment resulting from the retroactive change to Canadian tax legislation, adjusted net income grew 50 percent in the period, increasing to US$9.5 million, or US$0.48 per diluted share, compared to adjusted net income of US$6.3 million, or US$0.32 per diluted share recorded in the fourth quarter of 2011.

Fourth quarter revenue grew 15 percent to US$308.7 million. The Company's Services business grew 65 percent compared to the same quarter in the prior year, bolstered by the additive impact of the acquisition of Unis Lumin. Sales of Enterprise Software, Servers, Storage and Networking solutions also made steady gains in the period, increasing 33 percent for the quarter while sales of Microsoft grew by 10 percent. Fourth quarter earnings before interest, taxes, depreciation and amortization ("EBITDA") margin increased 63 basis points to 5.4 percent.

"Our focus on delivering high-value solutions and services to our clients and expanding our reach within the small and medium-size business segment resulted in strong net income growth in the quarter," said David MacDonald, President and CEO of Softchoice. "Moreover, the solid growth in EBITDA reflects the leverage our operating model is delivering to our business as we benefit from the integration of UNIS LUMIN, major upgrades to our internal CRM system and strong execution on the part of our field sales organization."

On a full year basis, Softchoice reported net income of US$27.7 million or US$1.37 per diluted share. On an adjusted basis, earnings amounted to US$27.5 million or US$1.37 per diluted share, representing an earnings increase of 15 percent compared to the US$23.9 million or US$1.20 per diluted share reported for fiscal year 2011.

"The fourth quarter was a strong close to a transformational year for Softchoice," added Mr. MacDonald. "In 2012 we largely completed the integration of UNIS LUMIN, built new recurring revenue streams with the launch of Softchoice Cloud and Keystone, our first North American-wide managed services offering, and strengthened our Services organization with the appointment of new regional leadership. With solid momentum and alignment around our services strategy, we are well-positioned to continue outgrowing the market."

In August 2012, the Company reinstated its quarterly dividend in the amount of CAD$0.07 per common share. The quarter will see a dividend increase to CAD$0.09 per common share. This dividend will be payable on March 15, 2013 to shareholders of record as of March 1, 2013.

At the end of the quarter, Softchoice had cash on hand of US$67.9 million compared to $33.0 million ending the fourth quarter of 2011 and total debt of nil. Cash flow generated from operations for the year was $44.1 million, which increased by $5.5 million or 14 percent.

Quarterly Operating Highlights

In the fourth quarter, total revenue, including imputed revenue, increased 9 percent to $589.4 million.
Microsoft Canada recognized Softchoice with awards for marketing innovation and collaboration at the recent 2012 IMPACT awards ceremony in Toronto.
During the quarter, Softchoice was honored with the Cisco Customer Satisfaction Excellence award for both the U.S. and Canada, the highest distinction a partner can achieve for customer satisfaction within the Cisco Channel Partner Community.
Softchoice has once again been named to the CRN Tech Elite 250 list, a definitive list of solution providers with deep technical expertise and premier certifications in the data center market.

The Management's Discussion & Analysis and Audited Consolidated Financial Statements can be found on the company's website at http://www.softchoice.com/about/ir/financials.aspx

Softchoice Fourth Quarter Earnings Call Details

Softchoice Corporation will host its fourth quarter earnings call on February 20, 2013 at 8:00 am ET.

The call will be moderated by David MacDonald, Softchoice's President and CEO and Chief Financial Officer, David Long. The conference call will begin with a brief web presentation followed by a question-and-answer session.

Participant Information:

Local Dial in number: 416 800 1066

Toll Free Dial in number: 1 866 212 4491

Webcast URL:

http://www.snwebcastcenter.com/custom_events/softchoice-20130220/site/

To ensure participation, please dial in at least 10 minutes prior to the start of the conference at 8:00 am ET.

For those unable to attend the call, a link will be made available on the Softchoice website to an archived web and audio version on February 21, 2013.

About Softchoice

As a leading North American provider of technology solutions and services, Softchoice combines the efficiency and reliability of a national IT supplier with the personal touch and technical expertise of a local solutions provider. Softchoice's holistic approach to technology includes solution design, implementation and asset management services, as well as access to one of the most comprehensive and cost-effective technology distribution networks in North America. With over 1,200 employees, Softchoice manages the technology needs of thousands of corporate and public sector organizations across the United States and Canada.

Softchoice stock is listed on the Toronto Stock Exchange (TSX) under the trading symbol "SO." The common shares of Softchoice are not registered under the U.S. Securities Act of 1933 and are not publicly traded in the United States.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to expectations, intentions and plans contained in this press release that are not historical fact. When used in this press release, the words "anticipate", "expect", "will" and similar expressions generally identify forward-looking statements. These statements reflect our current expectations and are subject to a number of risks and uncertainties including, but not limited to, change in technology and general market conditions, many of which are set out or incorporated by reference in the Company's latest Annual Information Form. Due to the many risks and uncertainties, Softchoice cannot assure that the forward-looking statements contained in this press release will be realized.

SOFTCHOICE CORPORATION
Consolidated Statements of Financial Position
(In thousands of U.S. dollars)

December 31, 2012 and 2011


			2012		2011
Assets
Current assets:
	Cash	$	67,875	$	32,993
	Trade and other receivables		280,241		306,434
	Inventories		3,836		8,872
	Deferred costs		2,644		2,591
	Prepaid expenses and other assets		7,635		6,158
	Total current assets		362,231		357,048
Non-current assets:
	Long-term accounts receivable		207		643
	Long-term prepaid expenses		1,690		1,821
	Property and equipment		5,478		6,309
	Goodwill		16,696		16,441
	Intangible assets		40,571		46,203
	Deferred tax assets		18,708		19,224
	Total non-current assets		83,350		90,641
Total assets		$	445,581	$	447,689
Liabilities and Shareholders' Equity
Current liabilities:
	Trade and other payables	$	263,813	$	290,267
	Deferred lease inducements		276		243
	Deferred revenue		11,321		10,627
	Income taxes payable		779		2,279
	Total current liabilities		276,189		303,416
Non-current liabilities:
	Deferred lease inducements		498		648
	Deferred revenue		3,991		3,307
	Total non-current liabilities		4,489		3,955
Total liabilities			280,678		307,371
Shareholders' equity:
	Capital stock		26,728		26,548
	Contributed surplus		2,907		3,274
	Retained earnings		136,567		111,689
	Accumulated other comprehensive loss		(1,299)		(1,193)
	Total shareholders' equity		164,903		140,318
Total liabilities and shareholders' equity		$	445,581	$	447,689

SOFTCHOICE CORPORATION
Consolidated Statements of Comprehensive Income
(In thousands of U.S. dollars, except per share information)

Years ended December 31, 2012 and 2011


			2012		2011
Net sales		$	1,065,620	$	999,400
Cost of sales			858,304		810,518
Gross profit			207,316		188,882
Expenses:
	Selling and marketing		119,543		102,434
	Administrative		47,225		45,680
			166,768		148,114
Income from operations			40,548		40,768
Finance costs			528		6,169
Finance income			(1,289)		(82)
Other income			(232)		(119)
Other expense			96		673
			(897)		6,641
Income before income taxes			41,445		34,127
Income tax expense			13,789		12,007
Net income			27,656		22,120
Other comprehensive loss:
	Foreign currency translation adjustment		(106)		(51)
Total comprehensive income		$	27,550	$	22,069
Net earnings per common share:
	Basic	$	1.40	$	1.12
	Diluted		1.37		1.11

SOFTCHOICE CORPORATION
Consolidated Statements of Changes in Equity
(In thousands of U.S. dollars)

Years ended December 31, 2012 and 2011


									Accumulated
									other				Total
			Number		Capital		Contributed		comprehensive		Retained		shareholders'
2012			of shares		stock		surplus		loss		earnings		equity
Balance, January 1, 2012			19,837,211	$	26,548	$	3,274	$	(1,193)	$	111,689	$	140,318
Total comprehensive income (loss):
	Net income		-		-		-		-		27,656		27,656
	Other comprehensive loss:
		Foreign currency translation adjustment	-		-		-		(106)		-		(106)
	Total comprehensive income (loss)		-		-		-		(106)		27,656		27,550
Transactions with shareholders recorded directly in equity:
	Share options exercised		40,151		516		(194)		-		-		322
	Share-based compensation		-		-		2,091		-		-		2,091
	Repurchase of common shares		(219,600)		(336)		(2,264)		-		-		(2,600)
	Dividends declared		-		-		-		-		(2,778)		(2,778)
			(179,449)		180		(367)		-		(2,778)		(2,965)
Balance, December 31, 2012			19,657,762	$	26,728	$	2,907	$	(1,299)	$	136,567	$	164,903


									Accumulated
									other				Total
			Number		Capital		Contributed		comprehensive		Retained		shareholders'
2011			of shares		stock		surplus		loss		earnings		equity
Balance, January 1, 2011			19,780,039	$	26,016	$	2,054	$	(1,142)	$	89,569	$	116,497
Total comprehensive income (loss):
	Net income		-		-		-		-		22,120		22,120
	Other comprehensive loss:
		Foreign currency translation adjustment	-		-		-		(51)		-		(51)
	Total comprehensive income (loss)		-		-		-		(51)		22,120		22,069
Transactions with shareholders recorded directly in equity:
	Share options exercised		8,599		108		(41)		-		-		67
	Share-based compensation		-		-		1,722		-		-		1,722
	Repurchase of common shares		(4,000)		(37)		-		-		-		(37)
	Deferred share units exercised		52,573		461		(461)		-		-		-
			57,172		532		1,220		-		-		1,752
Balance, December 31, 2011			19,837,211	$	26,548	$	3,274	$	(1,193)	$	111,689	$	140,318

SOFTCHOICE CORPORATION
Consolidated Statements of Cash Flows
(In thousands of U.S. dollars)

Years ended December 31, 2012 and 2011


				2012		2011
Cash provided by (used in):
Operating activities:
	Net income		$	27,656	$	22,120
	Adjustments for:
		Amortization of intangible assets		8,663		5,989
		Depreciation of property and equipment		3,124		3,018
		Share-based compensation		2,091		1,722
		Income tax expense		13,789		12,007
		Unrealized foreign currency (gain) loss		(1,086)		648
		Loss on disposal of intangible assets and property and equipment		167		16
		Interest expense on financial liabilities		52		1,840
		Amortization of deferred financing costs		-		1,844
				54,456		49,204
	Change in non-cash operating working capital			2,951		4,477
				57,407		53,681
	Interest paid			(53)		(1,832)
	Income taxes paid			(13,252)		(13,259)
	Cash provided by operating activities			44,102		38,590
Financing activities:
	Repayment of loans and borrowings			-		(12,784)
	Proceeds from issuance of common shares			322		67
	Dividends paid to shareholders			(2,778)		-
	Repurchase of common shares			(2,600)		(37)
	Cash used in financing activities			(5,056)		(12,754)
Investing activities:
	Purchase of property and equipment			(2,346)		(2,280)
	Purchase of intangible assets			(2,563)		(2,620)
	Restricted cash			-		500
	Acquisition of UNIS LUMIN Inc.			-		(23,941)
	Cash used in investing activities			(4,909)		(28,341)
Increase (decrease) in cash				34,137		(2,505)
Cash, beginning of year				32,993		35,752
Effect of exchange rate fluctuations on cash held				745		(254)
Cash, end of year			$	67,875	$	32,993