Strong SaaS Momentum and 41% Organic Professional Services Growth Powers Almost 4x Adjusted EBITDA Expansion
MONTREAL, Sept. 5, 2019 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management software company, today announced its results for the first quarter of fiscal year 2020, ended July 31, 2019. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).
First Quarter Highlights:
- Cloud, maintenance and subscription revenue increased 40% year-over-year to $9.8 million in Q1 2020 driven by $2.2 million contribution from OrderDynamics and PCSYS and by 9% organic growth primarily on the back of recent SaaS bookings.
- Total revenue was $24.3 million, $8.0 million or 49% higher than $16.3 million for Q1 2019. Organic revenue growth of 15% contributed $2.4 million of the increase including $0.5 million from a favorable foreign exchange impact.
- Adjusted EBITDAi was $2.0 million or 8.2% of revenue in Q1 2020 compared to $0.5 million or 3.3% of revenue in Q1 2019. Growth in professional services and cloud revenues drove this increase.
- During Q1 2020, SaaS subscription bookingsi were $0.4 million compared to zero in Q1 2019.
- Professional services revenue was $9.7 million, 61% higher than $6.1 million in Q1 2019, driven primarily by organic growth of $2.5 million or 41%. This increase continues the sequential trend from the fourth quarter of fiscal 2019 and results from the accumulation of backlog over the previous quarters.
- Total gross profit increased to $11.5 million, up 52% from $7.6 million in Q1 2019, driven by higher service margin of $4.3 million offset by lower products margin of $0.4 million.
- Gross margin was 48% compared to 47% in the prior year, with significant expansion in services gross margin offset by lower product margin due to lower mix of license revenue.
- Operating expenses increased to $11.0 million, higher by $3.3 million or 44% compared to $7.7 million in Q1 fiscal 2019. $2.7 million of this increase was attributed directly to operating expenses from OrderDynamics and PCSYS, including acquisition integration costs of $0.4 million.
- Profit from operations was $0.5 million, compared to a loss of $0.1 million in Q1 2019 and a loss of $0.8 million in Q4 2019. This was driven primarily by higher professional services and cloud, maintenance and subscription contribution.
- Loss was $0.3 million or $0.02 per share in Q1 2020 compared to profit of $13,000 or $NIL per share for the same period in fiscal 2019.
- Total backlogi at July 31, 2019 was $76.4 million, up from $47.8 million at July 31, 2018, with $14.1 million or 29% representing growth in organic backlog.
- Annual Recurring Revenuei was $38.3 million in Q1 2020 compared to $26.8 million in Q1 2019. This increase reflects the Company's ongoing focus on the move to a SaaS revenue and business model which should result in value creation for shareholders.
- Total contract value bookingsi increased 32% from $10.6 million in Q1 2019 to $14.0 million in Q1 2020. During Q1 2020, the Company signed 8 new accounts with a total contract value of $3.4 million compared to 3 new accounts with a total contract value of $1.9 million in Q1 2019.
"The first quarter of fiscal 2020 represented a continuation of the core strategic focus for Tecsys," said Peter Brereton, President and CEO of Tecsys Inc. "We continue to transform our revenue base as we move to SaaS revenues and are seeing growth in our pipeline of business larger than that at any time in our history. We are particularly pleased with the robust growth in our professional services business where several quarters of strong bookings are now flowing through into revenue. Our healthcare business continues to perform well with a new hospital network (IDN) added in the first quarter and the momentum continued in August with another IDN added as well as the signing of a significant SaaS deal."
Mark Bentler, Chief Financial Officer of Tecsys Inc., added, "We are pleased that our Cloud, Maintenance and Subscription revenues continue their robust growth in line with our plans. We will continue to make the transition from perpetual license revenues to SaaS which helps us to deliver a more predictable recurring revenue stream."
Results from operations
|
|
|
|
|
| Trailing 12
|
| Trailing 12
|
| 3 months ended
|
| 3 months ended
|
| months ended
|
| months ended
|
| July 31, 2019
|
| July 30, 2018
|
| July 31, 2019
|
| July 31, 2018
|
|
|
|
|
|
|
|
|
|
Total Revenue
| $
| 24,250
| $
| 16,282
| $
| 84,417
| $
| 70,489
|
Cloud, Maintenance and Subscription Revenue
|
| 9,782
|
| 6,991
|
| 34,073
|
| 26,901
|
Gross Profit
|
| 11,533
|
| 7,584
|
| 41,390
|
| 34,707
|
Gross Margin %
|
| 48%
|
| 47%
|
| 49%
|
| 49%
|
Operating Expenses
|
| 11,030
|
| 7,682
|
| 42,587
|
| 30,616
|
Op. Ex. As % of Revenue
|
| 45%
|
| 47%
|
| 50%
|
| 43%
|
Profit from Operations
|
| 503
|
| (98)
|
| (1,197)
|
| 4,091
|
Adjusted EBITDA i
|
| 1,995
|
| 536
|
| 4,235
|
| 6,339
|
EPS
|
| (0.02)
|
| NIL
|
| (0.08)
|
| 0.29
|
|
|
|
|
|
|
|
|
|
Bookings
|
| 14,007
|
| 10,639
|
| 66,579
|
| 48,847
|
License Booking
|
| 393
|
| 963
|
| 5,364
|
| 6,460
|
SAAS ARR Bookings
|
| 380
|
| NIL
|
| 2,008
|
| 73
|
|
|
|
|
|
|
|
|
|
Backlog
|
| 76,389
|
| 47,819
|
| 76,389
|
| 47,819
|
Annual Recurring Revenue
|
| 38,348
|
| 26,811
|
| 38,348
|
| 26,811
|
Professional Services Backlog
|
| 22,229
|
| 16,179
|
| 22,229
|
| 16,179
|
i See Key Performance Indicators and Non-IFRS Performance Measure in Management's Discussion and Analysis
Today the Company declared a quarterly dividend of $0.055 per share payable on October 4, 2019 to shareholders of record at the close of business on September 20, 2019.
Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be "eligible" dividends.
First Quarter 2020 Results Conference Call
Date: September 5, 2019
Time: 5:00 pm (EDT)
Phone number: (416) 359-3128 or (800) 671-8540
The call can be replayed until September 12, 2019 by calling (416) 626-4100 or (800) 558-5253 (access code: 21928966).
About Tecsys
Tecsys is a global provider of transformative supply chain solutions that equip growing organizations with industry-leading services and tools to achieve operational greatness. Tecsys' solutions are designed to create clarity out of the complex supply chain challenges that organizations face with increases in scale, customer expectations and inventory. Built on an enterprise platform, Tecsys solutions include warehouse management, distribution and transportation management, supply management at point-of-use, retail order management, as well as complete financial management and analytics solutions. Through the co-creation of a more responsive supply chain, Tecsys ensures that growth-minded organizations have the chance to thrive and reach their aspirations.
Over 1,000 customers trust their supply chains to Tecsys in the healthcare, retail, 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.
Forward-Looking Statements
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 30, 2019. 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. 2019. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.
Non-IFRS Measure
|
|
Reconciliation of EBITDA and adjusted EBITDA
|
|
EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA less acquisition related costs and stock-based compensation. The Company believes that these measures are commonly used by investors and analysts to measure a company's performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement.
|
|
The EBITDA and adjusted EBITDA calculations, for the three-months periods ending July 31 of fiscal 2020 and 2019, derived from IFRS measures in the Company's condensed interim consolidated financial statements, is as follows:
|
|
|
|
|
|
| Three Months
| Three Months
|
| Ended
| Ended
|
| July 31,
| July 31,
|
| 2019
| 2018
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
| $
| (267)
| $
| 13
|
Adjustments for:
|
|
|
|
|
Depreciation of property and equipment and right-of-use assets
|
| 477
|
| 223
|
Depreciation of deferred development costs
|
| 162
|
| 278
|
Depreciation of other intangible assets
|
| 413
|
| 122
|
Interest expense
|
| 282
|
| -
|
Interest income
|
| (29)
|
| (81)
|
Income taxes
|
| 349
|
| (19)
|
|
|
|
|
|
EBITDA
|
| 1,387
|
| 536
|
Adjustments for:
|
|
|
|
|
Stock-based compensation
|
| 188
|
| -
|
Restructuring costs
|
| 420
|
| -
|
|
|
|
|
|
Adjusted EBITDA
|
| 1,995
|
| 536
|
Tecsys Inc.
|
Condensed Interim Consolidated Statements of Financial position
|
(Unaudited)
|
As at July 31, 2019 and April 30, 2019
|
(in thousands of Canadian dollars)
|
|
|
|
|
|
|
| July 31,
|
| April 30,
|
|
| 2019
|
| 2019
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
| $
| 13,348
| $
| 14,913
|
Accounts receivable
|
| 13,203
|
| 14,986
|
Work in progress
|
| 660
|
| 811
|
Other receivables
|
| 756
|
| 392
|
Tax credits
|
| 4,356
|
| 3,493
|
Inventory
|
| 659
|
| 673
|
Prepaid expenses
|
| 3,785
|
| 3,223
|
Total current assets
|
| 36,767
|
| 38,491
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
Other long-term receivables
|
| 505
|
| 278
|
Tax credits
|
| 5,326
|
| 5,260
|
Property and equipment
|
| 2,620
|
| 2,714
|
Right-of-use asset
|
| 8,146
|
| -
|
Deferred development costs
|
| 1,068
|
| 1,064
|
Other intangible assets
|
| 14,127
|
| 14,706
|
Goodwill
|
| 17,314
|
| 17,456
|
Deferred tax assets
|
| 5,878
|
| 5,476
|
Total non-current assets
|
| 54,984
|
| 46,954
|
|
|
|
|
|
Total assets
| $
| 91,751
| $
| 85,445
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable and accrued liabilities
| $
| 11,167
| $
| 11,633
|
Deferred revenue
|
| 13,772
|
| 14,252
|
Current portion of long-term debt
|
| 1,097
|
| 1,022
|
Lease obligations
|
| 968
|
| -
|
Other current liabilities
|
| 4,073
|
| 4,111
|
Total current liabilities
|
| 31,077
|
| 31,018
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Long-term debt
|
| 10,516
|
| 10,827
|
Other non-current liabilities
|
| 2,066
|
| 2,333
|
Lease obligations
|
| 8,986
|
| -
|
Deferred tax liabilities
|
| 1,745
|
| 1,769
|
Total non-current liabilities
|
| 23,313
|
| 14,929
|
Total liabilities
|
| 54,390
|
| 45,947
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Share capital
|
| 19,144
|
| 19,144
|
Contributed surplus
|
| 10,131
|
| 9,943
|
Retained earnings
|
| 8,514
|
| 10,618
|
Accumulated other comprehensive income loss
|
| (428)
|
| (207)
|
Total equity attributable to the owners of the Company
|
| 37,361
|
| 39,498
|
|
|
|
|
|
Total liabilities and equity
| $
| 91,751
| $
| 85,445
|
|
See accompanying notes to the unaudited condensed interim consolidated financial statements.
|
Tecsys Inc.
|
Condensed Interim Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
|
(Unaudited)
|
Three-month periods ended July 30, 2019 and 2018
|
(in thousands of Canadian dollars, except per share data)
|
|
|
|
|
|
| Three Months
| Three Months
|
| Ended
| Ended
|
| July 31,
| July 31,
|
| 2019
| 2018
|
|
|
|
|
|
Revenue:
|
|
|
|
|
Proprietary products
| $
| 444
| $
| 1,325
|
Third-party products
|
| 3,652
|
| 1,456
|
Cloud, maintenance and subscription
|
| 9,782
|
| 6,991
|
Professional services
|
| 9,742
|
| 6,067
|
Reimbursable expenses
|
| 630
|
| 443
|
Total revenue
|
| 24,250
|
| 16,282
|
|
|
|
|
|
Cost of revenue:
|
|
|
|
|
Products
|
| 2,962
|
| 1,275
|
Services
|
| 9,125
|
| 6,980
|
Reimbursable expenses
|
| 630
|
| 443
|
Total cost of revenue
|
| 12,717
|
| 8,698
|
|
|
|
|
|
Gross profit
|
| 11,533
|
| 7,584
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Sales and marketing
|
| 4,508
|
| 3,434
|
General and administration
|
| 2,384
|
| 1,580
|
Research and development, net of tax credits
|
| 3,718
|
| 2,668
|
Restructuring costs
|
| 420
|
| -
|
Total operating expenses
|
| 11,030
|
| 7,682
|
|
|
|
|
|
Profit (Loss) from operations
|
| 503
|
| (98)
|
|
|
|
|
|
Net finance costs (income)
|
| 421
|
| (92)
|
|
|
|
|
|
Profit (loss) before income taxes
|
| 82
|
| (6)
|
|
|
|
|
|
Income tax (benefit) expense
|
| 349
|
| (19)
|
|
|
|
|
|
|
|
|
|
|
(Loss) profit attributable to the owners of the Company
| $
| (267)
| $
| 13
|
|
|
|
|
|
Other comprehensive (loss) income:
|
|
|
|
|
Effective portion of changes in fair value on designated revenue hedges
|
| 136
|
| 50
|
Exchange differences on translation of foreign operations
|
| (357)
|
| -
|
|
|
|
|
|
Comprehensive (loss) income attributable to the owners of the Company
| $
| (488)
| $
| 63
|
|
|
|
|
|
Basic and diluted (loss) earnings per common share
| $
| (0.02)
| $
| NIL
|
|
See accompanying notes to the unaudited condensed interim consolidated financial statements.
|
Tecsys Inc.
|
Condensed Interim Consolidated Statements of Cash Flows
|
(Unaudited)
|
Three-month periods ended July 31, 2019 and 2018
|
(in thousands of Canadian dollars)
|
|
|
|
|
| Three Months
| Three Months
|
| Ended
| Ended
|
| July 31,
| July 31,
|
| 2019
| 2018
|
|
|
|
|
Cash flows (used in) from operating activities:
|
|
|
|
(Loss) profit for the period
| $
| (267)
| 13
|
Adjustments for:
|
|
|
|
Depreciation of property and equipment and right-of-use assets
|
| 477
| 223
|
Amortization of deferred development costs
|
| 162
| 278
|
Amortization of other intangible assets
|
| 413
| 122
|
Net finance costs (income)
|
| 421
| (92)
|
Unrealized foreign exchange and other
|
| (252)
| 142
|
Non-refundable tax credits
|
| (236)
| (227)
|
Stock-based compensation
|
| 188
| -
|
Income taxes
|
| 349
| -
|
Net cash from operating activities excluding changes in non-cash working capital items related to operations
|
| 1,255
| 459
|
|
|
|
|
Accounts receivable
|
| 1,756
| 1,369
|
Work in progress
|
| 139
| (657)
|
Other receivables
|
| (714)
| (184)
|
Tax credits
|
| (691)
| (677)
|
Inventory
|
| 14
| 223
|
Prepaid expenses
|
| (433)
| (411)
|
Accounts payable and accrued liabilities
|
| (1,382)
| (853)
|
Deferred revenue
|
| (463)
| 1,657
|
Changes in non-cash working capital items related to operations
|
| (1,774)
| 467
|
|
|
|
|
Net cash (used in) from operating activities
|
| (519)
| 926
|
|
|
|
|
Cash flows (used in) financing activities:
|
|
|
|
Repayment of long-term debt
|
| (236)
| (12)
|
Payment of lease obligations
|
| (242)
| -
|
Interest paid
|
| (241)
| -
|
Net cash (used in) financing activities
|
| (719)
| (12)
|
|
|
|
|
Cash flows (used in) investing activities:
|
|
|
|
Interest received
|
| 29
| 81
|
Acquisitions of property and equipment
|
| (127)
| (37)
|
Acquisitions of other intangible assets
|
| (63)
| (17)
|
Deferred development costs
|
| (166)
| (55)
|
Net cash (used in) investing activities
|
| (327)
| (28)
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents during the period
|
| (1,565)
| 886
|
|
|
|
|
Cash and cash equivalents - beginning of period
|
| 14,913
| 13,496
|
|
|
|
|
Cash and cash equivalents - end of period
| $
| 13,348
| 14,382
|
|
See accompanying notes to the consolidated financial statements.
|
Tecsys Inc.
|
Condensed Interim Consolidated Statements of Changes in Equity
|
(Unaudited)
|
Three-month periods ended July 31, 2019 and 2018
|
(in thousands of Canadian dollars, except per share data)
|
|
| Share capital
| Contributed
| Accumulated
| Retained
| Total
|
| Number
|
| Amount
| surplus
| other comprehensive
| earnings
|
|
|
|
|
|
|
|
| income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 31, 2019
| 13,082,376
| $
| 19,144
| $
| 9,943
| $
| (207)
| $
| 10,618
| $
| 39,498
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment on initial Application of IFRS 16
|
|
|
|
|
|
|
|
| (1,117)
|
| (1,117)
|
Adjusted Balance, May 1, 2019
| 13,082,376
|
| 19,144
|
| 9,943
|
| (207)
|
| 9,501
|
| 38,381
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the period
| -
|
| -
|
| -
|
| -
|
| (267)
|
| (267)
|
Other comprehensive income (loss) for the period:
|
|
|
|
|
|
|
|
|
|
|
|
Effective portion of changes in fair value on designated revenue hedges
| -
|
| -
|
| -
|
| 136
|
| -
|
| 136
|
Exchange difference on translation of foreign operations
|
|
|
|
|
|
| (357)
|
|
|
| (357)
|
Stock-Based Compensation
|
|
|
|
| 188
|
|
|
|
|
| 188
|
Total comprehensive income (loss) for the period
| -
|
| -
|
| 188
|
| (221)
|
| (267)
|
| (300)
|
Dividends to equity owners
| -
|
| -
|
| -
|
| -
|
| (720)
|
| (720)
|
Total transactions with owners of the Company
| -
|
| -
|
| -
|
| -
|
| (720)
|
| (720)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2019
| 13,082,376
| $
| 19,144
| $
| 10,131
| $
| (428)
| $
| 8,514
| $
| 37,361
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2018
| 13,082,376
| $
| 19,144
| $
| 9,577
| $
| (113)
| $
| 14,527
| $
| 43,135
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment on initial Application of IFRS 15
| -
|
|
|
|
|
|
|
| (421)
|
| (421)
|
Adjusted Balance, May 1, 2018
| 13,082,376
|
| 19,144
|
| 9,577
|
| (113)
|
| 14,106
|
| 42,714
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
| -
|
| -
|
| -
|
| -
|
| 13
|
| 13
|
Other comprehensive income for the period:
|
|
|
|
|
|
|
|
|
|
|
|
Effective portion of changes in fair value on designated revenue hedges
| -
|
| -
|
| -
|
| 50
|
| -
|
| 50
|
Total comprehensive income (loss) for the period
| -
|
| -
|
| -
|
| 50
|
| 13
|
| 63
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends to equity owners
| -
|
| -
|
| -
|
| -
|
| (654)
|
| (654)
|
Total transactions with owners of the Company
| -
|
| -
|
| -
|
| -
|
| (654)
|
| (654)
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2018
| 13,082,376
|
| 19,144
|
| 9,577
|
| (63)
|
| 13,465
|
| 42,123
|
|
See accompanying notes to the unaudited interim consolidated financial statements.
|
SOURCE Tecsys Inc.
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/September2019/05/c0149.html
Solutions and General info: info@tecsys.com; Investor Relations: investor@tecsys.com; Media Relations: adam.polka@tecsys.com; By phone: (514) 866-0001 or (800) 922-8649, www.tecsys.comCopyright CNW Group 2019