MARKHAM, ON, Dec. 14, 2023 /CNW/ - Enghouse Systems Limited (TSX: ENGH) announces its fourth quarter (unaudited) and year-end financial results for the period ended October 31, 2023. All figures are denominated in Canadian dollars unless otherwise indicated.
Highlights for the Fourth Quarter ended October 31, 2023 compared to the same period in the prior year:
- Revenue increased 13.9% to $123.1 million.
- Recurring revenue, which includes SaaS and maintenance services, grew 35.0% to $87.2 million.
- Operating profits improved from $33.1 to $35.7 million, while achieving a 30.8% EBITDA margin.
Financial highlights for the three and twelve months ended October 31, 2023 compared to the three and twelve months ended October 31, 2022 are as follows:
- Revenue increased to $123.1 and $454.0 million, respectively, compared to revenue of $108.1 and $427.6 million;
- Results from operating activities were $35.7 and $122.1 million, respectively, compared to $33.1 and $129.7 million;
- Net income was $25.1 and $72.2 million, respectively, compared to $36.9 and $94.5 million;
- Adjusted EBITDA was $37.9 and $133.8 million, respectively, compared to $35.8 and $140.6 million;
- Cash flows from operating activities, excluding changes in working capital, was $43.5 and $140.5 million, respectively, compared to $37.7 and $145.1 million;
In fiscal 2023 we achieved a significant milestone by expanding our revenue, increasing our cash reserves and also deploying $55.2 million on acquisitions. We are pleased to announce record annual SaaS and Maintenance services revenue of $297.6 million, an increase of $39.4 million or 15.2% compared to the prior year. SaaS and maintenance services are an important strategic source of revenue characterized by their predictable and recurring nature. They now represent 65.6% of total revenues for the year compared to 60.4% in the prior year.
The growth in revenue was accomplished through the expansion of our recurring SaaS revenue base, bolstered by new revenues from Qumu, Navita and Lifesize, all of which were acquired and successfully integrated in Fiscal 2023, combined with positive impacts from foreign exchange rates in the year. This positive momentum was somewhat offset by declining software license revenue as we see increasing customer preference for SaaS solutions. Aligned with our commitment to provide our customers choice, we are actively broadening the global availability of our SaaS offerings, particularly in our customer experience and contact center technologies where demand for SaaS is growing. Despite the industry shift, we remain profitable, reporting results from operating activities of $122.1 million.
With cash reserves of $240.4 million and no external debt, we continue to actively pursue opportunities to strategically deploy our cash reserves on acquisitions and return cash to our shareholders in the form of dividends.
Quarterly dividends:
Today, the Board of Directors approved the Company's eligible quarterly dividend of $0.22 per common share payable on February 29, 2024 to shareholders of record at the close of business on February 15, 2024.
Enghouse Systems Limited
Financial Highlights
(unaudited, in thousands of Canadian dollars)
|
For the period ended October 31
|
Three months
|
|
Twelve months
|
|
2023
|
|
2022
|
Var ($)
|
Var (%)
|
|
|
2023
|
|
2022
|
Var ($)
|
Var (%)
|
|
Revenue
|
$
|
123,129
|
$
|
108,060
|
15,069
|
13.9
|
|
$
|
454,022
|
$
|
427,585
|
26,437
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
41,213
|
|
32,340
|
8,873
|
27.4
|
|
|
149,999
|
|
130,097
|
19,902
|
15.3
|
|
Revenue, net of direct costs
|
$
|
81,916
|
$
|
75,720
|
6,196
|
8.2
|
|
$
|
304,023
|
$
|
297,488
|
6,535
|
2.2
|
|
As a % of revenue
|
|
66.5 %
|
|
70.1 %
|
|
|
|
|
67.0 %
|
|
69.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
46,115
|
|
42,448
|
3,667
|
8.6
|
|
|
179,438
|
|
167,418
|
12,020
|
7.2
|
|
Special charges
|
|
117
|
|
123
|
(6)
|
(4.9)
|
|
|
2,477
|
|
403
|
2,074
|
514.6
|
|
Results from operating activities
|
$
|
35,684
|
$
|
33,149
|
2,535
|
7.6
|
|
$
|
122,108
|
$
|
129,667
|
(7,559)
|
(5.8)
|
|
As a % of revenue
|
|
29.0 %
|
|
30.7 %
|
|
|
|
|
26.9 %
|
|
30.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired software and
customer relationships
|
|
(11,205)
|
|
(8,826)
|
(2,379)
|
(27.0)
|
|
|
(39,605)
|
|
(36,174)
|
(3,431)
|
(9.5)
|
|
Foreign exchange gains
|
|
2,753
|
|
931
|
1,822
|
n/a
|
|
|
1,266
|
|
1,954
|
(688)
|
(35.2)
|
|
Interest expense – lease obligations
|
|
(164)
|
|
(164)
|
-
|
0.0
|
|
|
(695)
|
|
(735)
|
40
|
5.4
|
|
Finance income
|
|
2,581
|
|
651
|
1,930
|
n/a
|
|
|
6,264
|
|
1,192
|
5,072
|
425.5
|
|
Finance expenses
|
|
(27)
|
|
(27)
|
-
|
0.0
|
|
|
(163)
|
|
(89)
|
(74)
|
(83.1)
|
|
Other (expense) income
|
|
17
|
|
(507)
|
524
|
103.4
|
|
|
(1,950)
|
|
423
|
(2,373)
|
(561.0)
|
|
Income before income taxes
|
$
|
29,639
|
$
|
25,207
|
4,432
|
17.6
|
|
$
|
87,225
|
$
|
96,238
|
(9,013)
|
(9.4)
|
|
Provision for (recovery of) income taxes
|
|
4,517
|
|
(11,742)
|
16,259
|
138.5
|
|
|
14,977
|
|
1,740
|
13,237
|
760.7
|
|
Net Income for the period
|
$
|
25,122
|
$
|
36,949
|
(11,827)
|
(32.0)
|
|
$
|
72,248
|
$
|
94,498
|
(22,250)
|
(23.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
0.45
|
|
0.67
|
(0.22)
|
(32.8)
|
|
|
1.31
|
|
1.70
|
(0.39)
|
(22.9)
|
|
Diluted earnings per share
|
|
0.45
|
|
0.67
|
(0.22)
|
(32.8)
|
|
|
1.31
|
|
1.70
|
(0.39)
|
(22.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows
|
|
28,318
|
|
18,539
|
9,779
|
52.7
|
|
|
115,298
|
|
103,181
|
12,117
|
11.7
|
|
Operating cash flows excluding changes in
working capital
|
|
43,504
|
|
37,740
|
5,764
|
15.3
|
|
|
140,492
|
|
145,074
|
(4,582)
|
(3.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating activities
|
|
35,684
|
|
33,149
|
2,535
|
7.6
|
|
|
122,108
|
|
129,667
|
(7,559)
|
(5.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
627
|
|
709
|
(82)
|
(11.6)
|
|
|
2,451
|
|
2,799
|
(348)
|
(12.4)
|
|
Depreciation of right-of-use assets
|
|
1,491
|
|
1,824
|
(333)
|
(18.3)
|
|
|
6,764
|
|
7,754
|
(990)
|
(12.8)
|
|
Special charges
|
|
117
|
|
123
|
(6)
|
(4.9)
|
|
|
2,477
|
|
403
|
2,074
|
514.6
|
|
Adjusted EBITDA
|
$
|
37,919
|
$
|
35,805
|
2,114
|
5.9
|
|
$
|
133,800
|
$
|
140,623
|
(6,823)
|
(4.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
30.8 %
|
|
33.1 %
|
|
|
|
|
29.5 %
|
|
32.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per diluted share
|
$
|
0.69
|
$
|
0.65
|
0.04
|
6.2
|
|
$
|
2.42
|
$
|
2.53
|
( 0.11)
|
(4.3)
|
|
|
|
|
|
Consolidated Statements of Financial Position
|
|
|
|
|
(in thousands of Canadian dollars)
|
|
As at October 31, 2023
|
As at October 31, 2022
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
239,532
|
$
|
225,104
|
|
Short-term investments
|
|
|
827
|
|
2,950
|
|
Accounts receivable
|
|
|
93,383
|
|
93,104
|
|
Prepaid expenses and other assets
|
|
|
15,515
|
|
12,848
|
|
Income taxes recoverable
|
|
|
114
|
|
492
|
|
|
|
349,371
|
|
334,498
|
|
Non-current assets:
|
|
|
|
|
|
|
Property and equipment
|
|
|
3,273
|
|
4,186
|
|
Right-of-use assets
|
|
|
12,242
|
|
20,063
|
|
Intangible assets
|
|
|
109,659
|
|
85,902
|
|
Goodwill
|
|
|
280,241
|
|
230,002
|
|
Deferred income tax assets
|
|
|
28,884
|
|
30,347
|
|
|
|
434,299
|
|
370,500
|
|
|
$
|
783,670
|
$
|
704,998
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
67,769
|
$
|
60,525
|
|
Dividends payable
|
|
|
12,156
|
|
10,221
|
|
Provisions
|
|
|
2,238
|
|
3,183
|
|
Deferred revenue
|
|
|
109,019
|
|
83,122
|
|
Lease obligations
|
|
|
6,322
|
|
6,822
|
|
|
|
197,504
|
|
163,873
|
|
Non-current liabilities:
|
|
|
|
|
|
|
Income taxes payable
|
|
|
1,333
|
|
2,576
|
|
Deferred income tax liabilities
|
|
|
13,340
|
|
12,038
|
|
Deferred revenue
|
|
|
8,170
|
|
3,470
|
|
Net employee defined benefit obligation
|
|
|
1,912
|
|
1,821
|
|
Lease obligations
|
|
|
6,080
|
|
13,055
|
|
|
|
30,835
|
|
32,960
|
|
|
|
228,339
|
|
196,833
|
|
Shareholders' equity
|
|
|
|
|
|
|
Share capital
|
|
|
107,701
|
|
107,007
|
|
Contributed surplus
|
|
|
10,404
|
|
8,882
|
|
Retained earnings
|
|
|
426,397
|
|
401,247
|
|
Accumulated other comprehensive income (loss)
|
|
|
10,829
|
|
(8,971)
|
|
|
|
555,331
|
|
508,165
|
|
|
$
|
783,670
|
$
|
704,998
|
|
|
|
|
Consolidated Statement of Operations and Comprehensive Income
|
|
|
|
(in thousands of Canadian dollars, except per share amounts)
|
|
|
|
|
Three months
|
Twelve months
|
|
Periods ended October 31
|
|
2023
(unaudited)
|
2022
(Unaudited)
|
2023
|
2022
|
|
Revenue
|
|
|
|
|
|
|
Software licenses
|
|
$ 17,467
|
$ 25,588
|
$ 80,054
|
$ 90,602
|
|
SaaS and maintenance services
|
|
87,196
|
64,575
|
297,635
|
258,277
|
|
Professional services
|
|
16,483
|
16,066
|
67,273
|
68,648
|
|
Hardware
|
|
1,983
|
1,831
|
9,060
|
10,058
|
|
|
123,129
|
108,060
|
454,022
|
427,585
|
|
Direct costs
|
|
|
|
|
|
|
Software licenses
|
|
622
|
704
|
2,910
|
4,340
|
|
Services
|
|
39,108
|
30,594
|
141,802
|
119,762
|
|
Hardware
|
|
1,483
|
1,042
|
5,287
|
5,995
|
|
|
41,213
|
32,340
|
149,999
|
130,097
|
|
Revenue, net of direct costs
|
|
81,916
|
75,720
|
304,023
|
297,488
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
Selling, general and administrative
|
|
23,702
|
21,727
|
90,889
|
84,603
|
|
Research and development
|
|
20,295
|
18,188
|
79,334
|
72,262
|
|
Depreciation
|
|
627
|
709
|
2,451
|
2,799
|
|
Depreciation of right-of-use assets
|
|
1,491
|
1,824
|
6,764
|
7,754
|
|
Special charges
|
|
117
|
123
|
2,477
|
403
|
|
|
46,232
|
42,571
|
181,915
|
167,821
|
|
|
|
|
|
|
|
Results from operating activities
|
|
35,684
|
33,149
|
122,108
|
129,667
|
|
|
|
|
|
|
|
Amortization of acquired software and customer relationships
|
|
(11,205)
|
(8,826)
|
(39,605)
|
(36,174)
|
|
Foreign exchange gains
|
|
2,753
|
931
|
1,266
|
1,954
|
|
Interest expense – lease obligations
|
|
(164)
|
(164)
|
(695)
|
(735)
|
|
Finance income
|
|
2,581
|
651
|
6,264
|
1,192
|
|
Finance expenses
|
|
(27)
|
(27)
|
(163)
|
(89)
|
|
Other income (expense)
|
|
17
|
(507)
|
(1,950)
|
423
|
|
Income before income taxes
|
|
29,639
|
25,207
|
87,225
|
96,238
|
|
|
|
|
|
|
|
Provision for (recovery of) income taxes
|
|
4,517
|
(11,742)
|
14,977
|
1,740
|
|
|
|
|
|
|
Net income for the period
|
|
$ 25,122
|
$ 36,949
|
$ 72,248
|
$ 94,498
|
|
Items that may be subsequently reclassified to income:
|
|
|
|
|
|
Cumulative translation adjustment
|
|
12,394
|
17,883
|
19,800
|
5,613
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
12,394
|
17,883
|
19,800
|
5,613
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$ 37,516
|
$ 54,832
|
$ 92,048
|
$ 100,111
|
|
Earnings per share
|
|
|
|
|
|
|
Basic
|
|
$ 0.45
|
$ 0.67
|
$ 1.31
|
$ 1.70
|
|
Diluted
|
|
$ 0.45
|
$ 0.67
|
$ 1.31
|
$ 1.70
|
|
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
(in thousands of Canadian dollars)
|
|
Three months
|
Twelve months
|
|
Periods ended October 31
|
|
2023
(Unaudited)
|
2022
(Unaudited)
|
2023
|
2022
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net income for the period
|
|
$ 25,122
|
$ 36,949
|
$ 72,248
|
$ 94,498
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
627
|
709
|
2,451
|
2,799
|
|
Depreciation of right-of-use assets
|
|
1,491
|
1,824
|
6,764
|
7,754
|
|
Interest expense – lease obligations
|
|
164
|
164
|
695
|
735
|
|
Amortization of acquired software and customer relationships
|
|
11,205
|
8,826
|
39,605
|
36,174
|
|
Stock-based compensation expense
|
|
368
|
476
|
1,639
|
1,708
|
|
Provision for (recovery of) income taxes
|
|
4,517
|
(11,742)
|
14,977
|
1,740
|
|
Finance expenses and other (expense) income
|
|
10
|
534
|
2,113
|
(334)
|
|
|
43,504
|
37,740
|
140,492
|
145,074
|
|
|
|
|
|
|
|
Changes in non-cash operating working capital
|
|
(11,624)
|
(14,467)
|
(11,244)
|
(26,139)
|
|
Income taxes paid
|
|
(3,562)
|
(4,734)
|
(13,950)
|
(15,754)
|
|
Net cash provided by operating activities
|
|
28,318
|
18,539
|
115,298
|
103,181
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Purchase of property and equipment, net
|
|
(453)
|
(321)
|
(1,060)
|
(919)
|
|
Acquisitions, net of cash acquired*
|
|
(27,189)
|
(14,139)
|
(55,167)
|
(20,231)
|
|
Recovery (payment) of purchase consideration for prior-year acquisitions
|
|
13
|
528
|
(999)
|
120
|
|
Sale (purchase) of short-term investments
|
|
65
|
-
|
(4)
|
(60)
|
|
Net cash used in investing activities
|
|
(27,564)
|
(13,932)
|
(57,230)
|
(21,090)
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Issuance of share capital
|
|
-
|
-
|
604
|
971
|
|
Normal course issuer bid share repurchases
|
|
(425)
|
(367)
|
(425)
|
(9,318)
|
|
Repayment of lease obligations
|
|
(1,440)
|
(2,010)
|
(7,194)
|
(8,235)
|
|
Dividends paid
|
|
(12,159)
|
(10,224)
|
(44,765)
|
(38,286)
|
|
Net cash used in financing activities
|
|
(14,024)
|
(12,601)
|
(51,780)
|
(54,868)
|
|
Impact of foreign exchange on cash and cash equivalents
|
|
4,018
|
7,152
|
8,140
|
1,991
|
|
|
|
|
|
|
|
(Decrease) increase in cash and cash equivalents
|
|
(9,252)
|
(842)
|
14,428
|
29,214
|
|
Cash and cash equivalents - beginning of period
|
|
248,784
|
225,946
|
225,104
|
195,890
|
|
Cash and cash equivalents - end of period
|
|
$ 239,532
|
$ 225,104
|
$ 239,532
|
$ 225,104
|
|
* Acquisitions are net of cash acquired of nil and $2,088 for the quarter and year ended October 31, 2023, respectively and nil and $3,647 for the quarter and year ended October 31, 2022, respectively.
|
Enghouse Systems Limited
Segment Reporting Information
(in thousands of Canadian dollars)
|
For the period ended October 31, 2023
|
|
Three months
|
|
Twelve months
|
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
78,578
|
$
|
44,551
|
$
|
123,129
|
$
|
265,311
|
$
|
188,711
|
$
|
454,022
|
|
Direct costs
|
|
(24,337)
|
|
(16,876)
|
|
(41,213)
|
|
(78,788)
|
|
(71,211)
|
|
(149,999)
|
|
Revenue, net of direct costs
|
|
54,241
|
|
27,675
|
|
81,916
|
|
186,523
|
|
117,500
|
|
304,023
|
|
Operating expenses excluding special charges
|
|
(21,807)
|
|
(10,450)
|
|
(32,257)
|
|
(84,493)
|
|
(45,169)
|
|
(129,662)
|
|
Depreciation
|
|
(485)
|
|
(142)
|
|
(627)
|
|
(1,969)
|
|
(482)
|
|
(2,451)
|
|
Depreciation of right-of-use assets
|
|
(904)
|
|
(587)
|
|
(1,491)
|
|
(4,184)
|
|
(2,580)
|
|
(6,764)
|
|
Segment profit
|
$
|
31,045
|
$
|
16,496
|
$
|
47,541
|
$
|
95,877
|
$
|
69,269
|
$
|
165,146
|
|
Special charges
|
|
|
|
|
|
(117)
|
|
|
|
|
|
(2,477)
|
|
Corporate and shared service expenses
|
|
|
|
|
|
(11,740)
|
|
|
|
|
|
(40,561)
|
|
Results from operating activities
|
|
|
|
|
$
|
35,684
|
|
|
|
|
$
|
122,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the period ended October 31, 2022
|
|
Three months
|
|
Twelve months
|
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
61,759
|
$
|
46,301
|
$
|
108,060
|
$
|
235,925
|
$
|
191,660
|
$
|
427,585
|
|
Direct costs
|
|
(15,815)
|
|
(16,525)
|
|
(32,340)
|
|
(62,079)
|
|
(68,018)
|
|
(130,097)
|
|
Revenue, net of direct costs
|
|
45,944
|
|
29,776
|
|
75,720
|
|
173,846
|
|
123,642
|
|
297,488
|
|
Operating expenses excluding special charges
|
|
(18,394)
|
|
(11,859)
|
|
(30,253)
|
|
(75,272)
|
|
(45,816)
|
|
(121,088)
|
|
Depreciation
|
|
(583)
|
|
(126)
|
|
(709)
|
|
(2,336)
|
|
(463)
|
|
(2,799)
|
|
Depreciation of right-of-use assets
|
|
(1,112)
|
|
(712)
|
|
(1,824)
|
|
(4,742)
|
|
(3,012)
|
|
(7,754)
|
|
Segment profit
|
$
|
25,855
|
$
|
17,079
|
$
|
42,934
|
$
|
91,496
|
$
|
74,351
|
$
|
165,847
|
|
Special charges
|
|
|
|
|
|
(123)
|
|
|
|
|
|
(403)
|
|
Corporate and shared service expenses
|
|
|
|
|
|
(9,662)
|
|
|
|
|
|
(35,777)
|
|
Results from operating activities
|
|
|
|
|
$
|
33,149
|
|
|
|
|
$
|
129,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About-Enghouse
Enghouse is a Canadian publicly traded company (TSX:ENGH) that provides mission-critical vertically focused enterprise software solutions. Our core technologies are used for contact centers, video communications, virtual healthcare, telecommunications networks, public safety and the transit market. The Company's two-pronged growth strategy to grow earnings focuses on organic growth and acquisitions, which, to date, have been funded through operating cash flows as the Company has no outstanding external debt financing. The Company is organized around two business segments, the Interactive Management Group ("IMG") and the Asset Management Group ("AMG") due to their unique customer segments and technology offerings. 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, December 15, 2023 at 8:45 a.m. EST. To participate, please call +1-416-764-8646 or North American Toll-Free +1-888-396-8049. Confirmation code: 44260758 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, Adjusted EBITDA margin and Adjusted EBITDA per diluted share as measures of operating performance. Therefore, these collective Adjusted EBITDA measures 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/December2023/14/c1267.html