MARKHAM, ON, Sept. 10, 2020 /CNW/ -Enghouse Systems Limited (TSX: ENGH) today announced its third quarter (unaudited) financial results for the period ended July 31, 2020. All of the financial information is in Canadian dollars unless otherwise indicated.
Key financial and operational highlights for the three months ended July 31, 2020 (compared to the same period in 2019) are as follows:
- Revenue grew 29.7% to $131.3 million;
- Results from operating activities increased 56.2% to $42.2 million;
- Net income increased 77.3% to $26.0 million or $0.46 per diluted share;
- Adjusted EBITDA increased 62.4% to $45.6 million;
- Cash flows from operating activities excluding changes in working capital increased 58.8% to $45.3 million;
- Cash, cash equivalents and short-term investments were $228.9 million, an increase from $150.3 million at October 31, 2019, which was achieved after making payments of $19.5 million for dividends and $43.9 million for acquisitions;
- The Company has no long-term debt other than a nominal amount that is non-interest bearing.
In the quarter, the Company experienced growth from both internal sources and from acquisitions. Internal growth includes the expansion of the acquired businesses, particularly Vidyo, since acquisition.
To date, COVID-19 continues to have an overall positive impact on revenue. Although the initial surge of customers requiring immediate remote-work and visual computing solutions upon the initial outbreak of the pandemic was primarily served in the second quarter of 2020, demand for these solutions remains above historic averages.
The pandemic has tested Enghouse's ability and capacity to respond to significantly altered circumstances. Enghouse's results continue to demonstrate the resiliency of its business model, which is based on significant recurring revenue streams, positive operating cash flows, large cash reserves with nominal debt and a disciplined cost management and value for money philosophy.
Quarterly Dividend:
Today, the Board of Directors approved the Company's eligible quarterly dividend of $0.135 per common share, payable on November 30, 2020 to shareholders of record at the close of business on November 16, 2020.
Enghouse Systems Limited
Financial Highlights
(Unaudited, in thousands of Canadian dollars)
|
For the period ended July 31
|
Three months
|
Nine months
|
|
2020 $
|
2019
$
|
Variance
|
2020
$
|
2019
$
|
Variance
|
|
$
|
%
|
$
|
%
|
|
Revenue
|
131,324
|
101,274
|
30,050
|
29.7
|
382,880
|
276,522
|
106,358
|
38.5
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
39,740
|
31,749
|
7,991
|
25.2
|
111,916
|
86,421
|
25,495
|
29.5
|
|
Revenue, net of direct costs
|
91,584
|
69,525
|
22,059
|
31.7
|
270,964
|
190,101
|
80,863
|
42.5
|
|
As a % of revenue
|
69.7%
|
68.7%
|
|
|
70.8%
|
68.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
49,351
|
42,038
|
7,313
|
17.4
|
150,157
|
110,142
|
40,015
|
36.3
|
|
Special charges
|
35
|
470
|
(435)
|
(92.6)
|
1,490
|
526
|
964
|
183.3
|
|
Results from operating activities
|
42,198
|
27,017
|
15,181
|
56.2
|
119,317
|
79,433
|
39,884
|
50.2
|
|
As a % of revenue
|
32.1%
|
26.7%
|
|
|
31.2%
|
28.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired software and customer relationships
|
(11,502)
|
(8,453)
|
(3,049)
|
(36.1)
|
(33,182)
|
(22,453)
|
(10,729)
|
(47.8)
|
|
Foreign exchange (losses) gains
|
(1,102)
|
( 131)
|
(971)
|
(741.2)
|
(1,148)
|
433
|
(1,581)
|
(365.1)
|
|
Interest expense – lease obligations
|
(302)
|
-
|
(302)
|
-
|
(864)
|
-
|
(864)
|
-
|
|
Finance income
|
209
|
469
|
(260)
|
(55.4)
|
691
|
1,474
|
(783)
|
(53.1)
|
|
Finance expenses
|
(5)
|
(11)
|
6
|
54.5
|
(39)
|
(66)
|
27
|
40.9
|
|
Other income
|
3,827
|
( 64)
|
3,891
|
6079.7
|
4,224
|
411
|
3,813
|
927.7
|
|
Income before income taxes
|
33,323
|
18,827
|
14,496
|
77.0
|
88,999
|
59,232
|
29,767
|
50.3
|
|
Provision for income taxes
|
7,330
|
4,166
|
3,164
|
75.9
|
19,781
|
13,070
|
6,711
|
51.3
|
|
Net Income for the period
|
25,993
|
14,661
|
11,332
|
77.3
|
69,218
|
46,162
|
23,056
|
49.9
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
0.47
|
0.27
|
0.20
|
74.1
|
1.26
|
0.84
|
0.42
|
50.0
|
|
Diluted earnings per share
|
0.46
|
0.27
|
0.19
|
70.4
|
1.25
|
0.84
|
0.41
|
48.8
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows
|
55,690
|
13,862
|
41,828
|
301.7
|
133,156
|
59,646
|
73,510
|
123.2
|
|
Operating cash flows excluding changes in working capital
|
45,294
|
28,531
|
16,763
|
58.8
|
130,510
|
84,662
|
45,848
|
54.2
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating activities
|
42,198
|
27,017
|
15,181
|
56.2
|
119,317
|
79,433
|
39,884
|
50.2
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
801
|
570
|
231
|
40.5
|
2,446
|
1,599
|
847
|
53.0
|
|
Depreciation of right-of-use asset
|
2,534
|
-
|
2,534
|
-
|
6,925
|
-
|
6,925
|
-
|
|
Special charges
|
35
|
470
|
(435)
|
(92.6)
|
1,490
|
526
|
964
|
183.3
|
|
Adjusted EBITDA
|
45,568
|
28,057
|
17,511
|
62.4
|
130,178
|
81,558
|
48,620
|
59.6
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
34.7%
|
27.7%
|
|
|
34.0%
|
29.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per diluted share
|
0.81
|
0.51
|
0.30
|
58.8
|
2.35
|
1.48
|
0.87
|
58.8
|
Enghouse Systems Limited
Consolidated Interim Statements of Financial Position
(Unaudited, in thousands of Canadian dollars)
|
|
As at July 31,
2020
|
As at October
31, 2019
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
219,423
|
$
|
144,764
|
|
Short-term investments
|
|
|
9,515
|
|
5,505
|
|
Accounts receivable
|
|
|
98,360
|
|
84,982
|
|
Prepaid expenses and other assets
|
|
|
12,346
|
|
11,147
|
|
|
|
339,644
|
|
246,398
|
|
Non-current assets:
|
|
|
|
|
|
|
Property and equipment
|
|
|
6,554
|
|
6,280
|
|
Right-of-use assets
|
|
|
38,457
|
|
-
|
|
Intangible assets
|
|
|
135,831
|
|
121,885
|
|
Goodwill
|
|
|
221,540
|
|
203,298
|
|
Deferred income tax assets
|
|
|
16,073
|
|
12,739
|
|
|
|
418,455
|
|
344,202
|
|
|
$
|
758,099
|
$
|
590,600
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
74,288
|
$
|
62,813
|
|
Income taxes payable
|
|
|
15,459
|
|
6,953
|
|
Dividends payable
|
|
|
7,463
|
|
6,021
|
|
Provisions
|
|
|
6,139
|
|
6,536
|
|
Deferred revenue
|
|
|
106,033
|
|
78,405
|
|
Lease obligations
|
|
|
8,370
|
|
-
|
|
Current portion of long-term loans
|
|
|
269
|
|
249
|
|
|
|
218,021
|
|
160,977
|
|
Non-current liabilities:
|
|
|
|
|
|
|
Non-current portion of income taxes payable
|
|
|
3,854
|
|
4,434
|
|
Deferred income tax liabilities
|
|
|
15,868
|
|
16,197
|
|
Deferred revenue
|
|
|
6,304
|
|
3,665
|
|
Net employee defined benefit obligation
|
|
|
2,896
|
|
2,380
|
|
Lease obligations
|
|
|
28,969
|
|
-
|
|
Long-term loans
|
|
|
875
|
|
874
|
|
|
|
58,766
|
|
27,550
|
|
|
|
276,787
|
|
188,527
|
|
Shareholders' equity
|
|
|
|
|
|
|
Share capital
|
|
|
98,527
|
|
81,576
|
|
Contributed surplus
|
|
|
5,366
|
|
6,677
|
|
Retained earnings
|
|
|
357,478
|
|
309,198
|
|
Accumulated other comprehensive income
|
|
|
19,941
|
|
4,622
|
|
|
|
481,312
|
|
402,073
|
|
|
$
|
758,099
|
$
|
590,600
|
Enghouse Systems Limited
Condensed Consolidated Interim Statements of Operations and Comprehensive Income
(Unaudited, in thousands of Canadian dollars)
|
|
Three months
|
Nine months
|
|
Periods ended July 31
|
|
2020
|
2019
|
2020
|
2019
|
|
Revenue
|
|
|
|
|
|
|
Software licenses
|
|
$ 29,438
|
$ 22,081
|
$ 106,629
|
$ 62,328
|
|
Hosted and maintenance services
|
|
77,356
|
58,416
|
213,733
|
158,699
|
|
Professional services
|
|
16,059
|
15,281
|
47,329
|
43,927
|
|
Hardware
|
|
8,471
|
5,496
|
15,189
|
11,568
|
|
|
131,324
|
101,274
|
382,880
|
276,522
|
|
Direct costs
|
|
|
|
|
|
|
Software licenses
|
|
2,058
|
1,327
|
8,445
|
4,058
|
|
Services
|
|
30,417
|
26,399
|
91,843
|
74,125
|
|
Hardware
|
|
7,265
|
4,023
|
11,628
|
8,238
|
|
|
39,740
|
31,749
|
111,916
|
86,421
|
|
|
|
|
|
|
|
Revenue, net of direct costs
|
|
91,584
|
69,525
|
270,964
|
190,101
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
Selling, general and administrative
|
|
25,812
|
24,890
|
80,106
|
66,786
|
|
Research and development
|
|
20,204
|
16,578
|
60,680
|
41,757
|
|
Depreciation
|
|
801
|
570
|
2,446
|
1,599
|
|
Depreciation of right-of-use assets
|
|
2,534
|
-
|
6,925
|
-
|
|
Special charges
|
|
35
|
470
|
1,490
|
526
|
|
|
49,386
|
42,508
|
151,647
|
110,668
|
|
|
|
|
|
|
|
Results from operating activities
|
|
42,198
|
27,017
|
119,317
|
79,433
|
|
|
|
|
|
|
|
Amortization of acquired software and customer
relationships
|
|
(11,502)
|
(8,453)
|
(33,182)
|
(22,453)
|
|
Foreign exchange (losses) gains
|
|
(1,102)
|
(131)
|
(1,148)
|
433
|
|
Interest expense – lease obligations
|
|
(302)
|
-
|
(864)
|
-
|
|
Finance income
|
|
209
|
469
|
691
|
1,474
|
|
Finance expenses
|
|
(5)
|
(11)
|
(39)
|
(66)
|
|
Other income (expense)
|
|
3,827
|
(64)
|
4,224
|
411
|
|
|
|
|
|
|
|
Income before income taxes
|
|
33,323
|
18,827
|
88,999
|
59,232
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
7,330
|
4,166
|
19,781
|
13,070
|
|
|
|
|
|
|
Net income for the period
|
|
$ 25,993
|
$ 14,661
|
$ 69,218
|
$ 46,162
|
|
Items that may be subsequently reclassified to income:
|
|
|
|
|
|
Cumulative translation adjustment
|
|
2,868
|
(9,947)
|
15,319
|
(3,966)
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
2,868
|
(9,947)
|
15,319
|
(3,966)
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$ 28,861
|
$ 4,714
|
$ 84,537
|
$ 42,196
|
|
Earnings per share
|
|
|
|
|
|
|
Basic
|
|
$ 0.47
|
$ 0.27
|
$ 1.26
|
$ 0.84
|
|
Diluted
|
|
$ 0.46
|
$ 0.27
|
$ 1.25
|
$ 0.84
|
Enghouse Systems Limited
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited, in thousands of Canadian dollars)
|
Three months
|
Nine months
|
|
Periods ended July 31
|
2020
|
2019
|
2020
|
2019
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
Net income for the period
|
$ 25,993
|
$ 14,661
|
$ 69,218
|
$ 46,162
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
|
|
|
|
|
|
Depreciation
|
801
|
570
|
2,446
|
1,599
|
|
Depreciation of right-of-use assets
|
2,534
|
-
|
6,925
|
-
|
|
Interest expense – lease obligations
|
302
|
-
|
864
|
-
|
|
Amortization of acquired software and customer
relationships
|
11,502
|
8,453
|
33,182
|
22,453
|
|
Stock-based compensation expense
|
654
|
606
|
2,279
|
1,723
|
|
Provision for income taxes
|
7,330
|
4,166
|
19,781
|
13,070
|
|
Finance expenses and other (income) expenses
|
(3,822)
|
75
|
(4,185)
|
(345)
|
|
45,294
|
28,531
|
130,510
|
84,662
|
|
|
|
|
|
|
Changes in non-cash operating working capital
|
17,614
|
(10,174)
|
18,150
|
(10,801)
|
|
Income taxes paid
|
(7,218)
|
(4,495)
|
(15,504)
|
(14,215)
|
|
Net cash provided by operating activities
|
55,690
|
13,862
|
133,156
|
59,646
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
Purchase of property and equipment
|
(458)
|
(559)
|
(1,902)
|
(1,340)
|
|
Acquisitions, net of cash acquired*
|
1,103
|
(68,667)
|
(46,561)
|
(94,233)
|
|
Purchase consideration for prior-year acquisitions
|
3,201
|
-
|
2,655
|
(1,105)
|
|
Purchase of short-term investments
|
233
|
743
|
(1,569)
|
(1,110)
|
|
Net cash provided by (used in) investing activities
|
4,079
|
(68,483)
|
(47,377)
|
(97,788)
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
Interest paid on lease obligations
|
(302)
|
-
|
(864)
|
-
|
|
Issuance of share capital
|
7,789
|
563
|
13,361
|
1,348
|
|
Repayment of loans
|
-
|
-
|
(62)
|
(957)
|
|
Repayment of lease obligations
|
(2,181)
|
-
|
(6,071)
|
-
|
|
Dividends paid
|
(7,427)
|
(6,011)
|
(19,496)
|
(15,840)
|
|
Net cash used in financing activities
|
(2,121)
|
(5,448)
|
(13,132)
|
(15,449)
|
|
Effect of currency translation adjustments on cash and cash equivalents
|
(555)
|
(3,393)
|
2,012
|
(538)
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
57,093
|
(63,462)
|
74,659
|
(54,129)
|
|
Cash and cash equivalents - beginning of period
|
162,330
|
196,884
|
144,764
|
187,551
|
|
|
|
|
|
|
Cash and cash equivalents - end of period
|
$ 219,423
|
$ 133,422
|
$ 219,423
|
$ 133,422
|
|
|
* Acquisitions are net of cash acquired of nil and $6,906 for the three and nine months ended July 31, 2020, respectively, and $27,683 and $33,965 for the three and nine months ended July 31, 2019, respectively.
|
Enghouse Systems Limited
Segment Reporting Information
(Unaudited, in thousands of Canadian dollars)
Three months ended July 31, 2020
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
75,151
|
$
|
56,173
|
$
|
131,324
|
|
Direct costs
|
|
(18,152)
|
|
(21,588)
|
|
(39,740)
|
|
Revenue, net of direct costs
|
|
56,999
|
|
34,585
|
|
91,584
|
|
Operating expenses excluding special charges
|
|
(22,871)
|
|
(12,735)
|
|
(35,606)
|
|
Depreciation of property and equipment
|
|
(646)
|
|
(155)
|
|
(801)
|
|
Depreciation of right-of-use assets
|
|
(1,447)
|
|
(1,087)
|
|
(2,534)
|
|
Segment profit
|
$
|
32,035
|
$
|
20,608
|
$
|
52,643
|
|
Special charges
|
|
|
|
|
|
(35)
|
|
Corporate and shared service expenses
|
|
|
|
|
|
(10,410)
|
|
Results from operating activities
|
|
|
|
|
$
|
42,198
|
Three months ended July 31, 2019
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
56,869
|
$
|
44,405
|
$
|
101,274
|
|
Direct costs
|
|
(14,838)
|
|
(16,911)
|
|
(31,749)
|
|
Revenue, net of direct costs
|
|
42,031
|
|
27,494
|
|
69,525
|
|
Operating expenses excluding special charges
|
|
(20,163)
|
|
(12,506)
|
|
(32,669)
|
|
Depreciation of property and equipment
|
|
(404)
|
|
(166)
|
|
(570)
|
|
Segment profit
|
$
|
21,464
|
$
|
14,822
|
$
|
36,286
|
|
Special charges
|
|
|
|
|
|
(470)
|
|
Corporate and shared service expenses
|
|
|
|
|
|
(8,799)
|
|
Results from operating activities
|
|
|
|
|
$
|
27,017
|
Nine months ended July 31, 2020
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
227,949
|
$
|
154,931
|
$
|
382,880
|
|
Direct costs
|
|
(54,240)
|
|
(57,676)
|
|
(111,916)
|
|
Revenue, net of direct costs
|
|
173,709
|
|
97,255
|
|
270,964
|
|
Operating expenses excluding special charges
|
|
(69,722)
|
|
(40,815)
|
|
(110,537)
|
|
Depreciation of property and equipment
|
|
(1,619)
|
|
(827)
|
|
(2,446)
|
|
Depreciation of right-of-use assets
|
|
(3,891)
|
|
(3,034)
|
|
(6,925)
|
|
Segment profit
|
$
|
98,477
|
$
|
52,579
|
$
|
151,056
|
|
Special charges
|
|
|
|
|
|
(1,490)
|
|
Corporate and shared service expenses
|
|
|
|
|
|
(30,249)
|
|
Results from operating activities
|
|
|
|
|
$
|
119,317
|
Nine months ended July 31, 2019
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
144,863
|
$
|
131,659
|
$
|
276,522
|
|
Direct costs
|
|
(37,877)
|
|
(48,544)
|
|
(86,421)
|
|
Revenue, net of direct costs
|
|
106,986
|
|
83,115
|
|
190,101
|
|
Operating expenses excluding special charges
|
|
(51,642)
|
|
(34,363)
|
|
(86,005)
|
|
Depreciation of property and equipment
|
|
(1,184)
|
|
(415)
|
|
(1,599)
|
|
Segment profit
|
$
|
54,160
|
$
|
48,337
|
$
|
102,497
|
|
Special charges
|
|
|
|
|
|
(526)
|
|
Corporate and shared service expenses
|
|
|
|
|
|
(22,538)
|
|
Results from operating activities
|
|
|
|
|
$
|
79,433
|
About Enghouse
Enghouse is a Canadian publicly traded company (TSX:ENGH), which provides enterprise software solutions focusing on remote work, visual computing and communications for next-generation software-defined networks. The Company's two-pronged growth strategy focuses on internal growth and acquisitions, which, to date, have been funded through operating cash flows. The Company is well capitalized, has nominal long-term debt and is organized around two business segments: the Interactive Management Group and the Asset Management Group. Further information about Enghouse may be obtained from the Company's website at www.enghouse.com.
Conference Call and Webcast
A conference call to discuss the results will be held on Friday, September 11, 2020 at 8:45 a.m. EST. To participate, please call +1-647-490-5367 or North American Toll-Free +1-800-367-2403. Confirmation code: 9567603. A webcast is also available at: https://www.enghouse.com/investors.php
The Company uses non-IFRS measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses Adjusted EBITDA as a measure of operating performance. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is calculated based on results from operating activities adjusted for depreciation of property and equipment and right-of-use assets, and special charges for acquisition related restructuring costs. Management uses Adjusted EBITDA to evaluate operating performance as it excludes amortization of software and intangibles (which is an accounting allocation of the cost of software and intangible assets arising on acquisition), any impact of finance and tax related activities, asset depreciation, foreign exchange gains and losses, other income and restructuring costs primarily related to acquisitions.
SOURCE Enghouse Systems Limited
View original content: http://www.newswire.ca/en/releases/archive/September2020/10/c4385.html
Sam Anidjar, Vice President, Corporate Development, Tel: (905) 946-3200, Email: investor@enghouse.comCopyright CNW Group 2020