MARKHAM, ON, June 10, 2024 /CNW/ - Enghouse Systems Limited (TSX: ENGH) announces second quarter (unaudited) financial results for the period ended April 30, 2024. All figures are denominated in Canadian dollars unless otherwise indicated.
Highlights for the Second Quarter ended April 30, 2024 compared to the same quarter in the prior year:
- Revenue increased 10.9% to $125.8 million.
- Recurring revenue, which includes SaaS and maintenance services, grew 18.6% to $85.0 million, and represents 67.5% of total revenue.
- Operating profits increased 30.5% to $33.5 million, while achieving a 28.4% EBITDA margin.
Financial results for the three and six months ended April 30, 2024, compared to the three and six months ended April 30, 2023, are as follows:
- Revenue increased to $125.8 and $246.3 million, respectively, compared to revenue of $113.5 and $219.9 million;
- Results from operating activities was $33.5 and $66.1 million, respectively, compared to $25.6 and $55.5 million;
- Net income was $20.0 and $38.1 million, respectively, compared to $12.5 and $29.6 million;
- Adjusted EBITDA was $35.7 and $70.4 million, respectively, compared to $30.2 and $62.5 million;
- Cash flow from operating activities, excluding changes in working capital, was $38.6 and $74.2 million, respectively, compared to $28.9 and $61.5 million resulting in record cash and cash equivalents of $263.8 million.
Our strong performance this quarter is demonstrated by double-digit growth in revenue, profitability and operating cash flows. Our proficiency in executing and integrating acquisitions continues to be a crucial profit growth driver. This quarter we completed the acquisition of Mediasite, which expanded our video technology into the education and event market and increased our presence in Japan.
Our business model continues to prioritize operational discipline as the demand for SaaS increases. Operational expenditures have shown improvement when compared to revenue both for the quarter and period to date, despite inflationary pressures and integrating acquisitions. Continued discipline in our business activities has increased our cash and cash equivalents to the record level of $263.8 million, with no external debt, while increasing our dividend, repurchasing shares, and completing and integrating the Mediasite acquisition in the quarter.
Subsequent to quarter-end on May 9, 2024, Enghouse completed its acquisition of substantially all of the assets of SeaChange International, Inc. ("SeaChange") related to its IPTV products and services business, for a net purchase price of approximately US$23 million. This acquisition increases the scale of our IPTV business, augments our product offering and furthers our expansion into the European market. SeaChange will be integrated within the Asset Management Group from the date of acquisition.
Quarterly dividends:
Today, the Board of Directors approved the Company's eligible quarterly dividend of $0.26 per common share payable on August 30, 2024 to shareholders of record at the close of business on August 16, 2024.
Enghouse Systems Limited
Financial Highlights
(unaudited, in thousands of Canadian dollars)
|
For the period ended April 30
|
Three months
|
|
Six months
|
|
2024
|
|
2023
|
Var ($)
|
Var (%)
|
|
|
2024
|
|
2023
|
Var ($)
|
Var (%)
|
|
Revenue
|
$
|
125,813
|
$
|
113,461
|
12,352
|
10.9
|
|
$
|
246,302
|
$
|
219,896
|
26,406
|
12.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
43,201
|
|
38,106
|
5,095
|
13.4
|
|
|
84,783
|
|
72,914
|
11,869
|
16.3
|
|
Revenue, net of direct costs
|
$
|
82,612
|
$
|
75,355
|
7,257
|
9.6
|
|
$
|
161,519
|
$
|
146,982
|
14,537
|
9.9
|
|
As a % of revenue
|
|
65.7 %
|
|
66.4 %
|
|
|
|
|
65.6 %
|
|
66.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
49,031
|
|
47,712
|
1,319
|
2.8
|
|
|
95,211
|
|
89,422
|
5,789
|
6.5
|
|
Special charges
|
|
106
|
|
2,001
|
(1,895)
|
(94.7)
|
|
|
197
|
|
2,029
|
(1,832)
|
(90.3)
|
|
Results from operating activities
|
$
|
33,475
|
$
|
25,642
|
7,833
|
30.5
|
|
$
|
66,111
|
$
|
55,531
|
10,580
|
19.1
|
|
As a % of revenue
|
|
26.6 %
|
|
22.6 %
|
|
|
|
|
26.8 %
|
|
25.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of acquired software and
customer relationships
|
|
(11,146)
|
|
(9,838)
|
(1,308)
|
(13.3)
|
|
|
(21,520)
|
|
(18,670)
|
(2,850)
|
(15.3)
|
|
Foreign exchange losses
|
|
(86)
|
|
(790)
|
704
|
89.1
|
|
|
(1,803)
|
|
(1,843)
|
40
|
2.2
|
|
Interest expense – lease obligations
|
|
(148)
|
|
(192)
|
44
|
22.9
|
|
|
(298)
|
|
(359)
|
61
|
17.0
|
|
Finance income
|
|
2,602
|
|
1,006
|
1,596
|
158.6
|
|
|
4,963
|
|
1,982
|
2,981
|
150.4
|
|
Finance expenses
|
|
(12)
|
|
(124)
|
112
|
90.3
|
|
|
(12)
|
|
(131)
|
119
|
90.8
|
|
Other income (expenses)
|
|
220
|
|
( 528)
|
748
|
141.7
|
|
|
106
|
|
(655)
|
761
|
116.2
|
|
Income before income taxes
|
$
|
24,905
|
$
|
15,176
|
9,729
|
64.1
|
|
$
|
47,547
|
$
|
35,855
|
11,692
|
32.6
|
|
Provision for income taxes
|
|
4,931
|
|
2,640
|
2,291
|
86.8
|
|
|
9,440
|
|
6,296
|
3,144
|
49.9
|
|
Net Income for the period
|
$
|
19,974
|
$
|
12,536
|
7,438
|
59.3
|
|
$
|
38,107
|
$
|
29,559
|
8,548
|
28.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
0.36
|
|
0.23
|
0.13
|
56.5
|
|
|
0.69
|
|
0.53
|
0.16
|
30.2
|
|
Diluted earnings per share
|
|
0.36
|
|
0.23
|
0.13
|
56.5
|
|
|
0.69
|
|
0.53
|
0.16
|
30.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows
|
|
40,256
|
|
18,698
|
21,558
|
115.3
|
|
|
60,155
|
|
47,960
|
12,195
|
25.4
|
|
Operating cash flows excluding changes
in working capital
|
|
38,613
|
|
28,875
|
9,738
|
33.7
|
|
|
74,170
|
|
61,507
|
12,663
|
20.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating activities
|
|
33,475
|
|
25,642
|
7,833
|
30.5
|
|
|
66,111
|
|
55,531
|
10,580
|
19.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
551
|
|
613
|
(62)
|
10.1
|
|
|
1,045
|
|
1,239
|
(194)
|
15.7
|
|
Depreciation of right-of-use assets
|
|
1,570
|
|
1,931
|
(361)
|
18.7
|
|
|
3,076
|
|
3,667
|
(591)
|
16.1
|
|
Special charges
|
|
106
|
|
2,001
|
(1,895)
|
94.7
|
|
|
197
|
|
2,029
|
(1,832)
|
90.3
|
|
Adjusted EBITDA
|
$
|
35,702
|
$
|
30,187
|
5,515
|
18.3
|
|
$
|
70,429
|
$
|
62,466
|
7,963
|
12.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
|
|
28.4 %
|
|
26.6 %
|
|
|
|
|
28.6 %
|
|
28.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per diluted share
|
$
|
0.64
|
$
|
0.54
|
0.10
|
18.5
|
|
$
|
1.27
|
$
|
1.13
|
0.14
|
12.4
|
|
Condensed Consolidated Interim Statements of Financial Position
|
|
(in thousands of Canadian dollars)
(unaudited)
|
|
As at April 30,
2024
|
As at October 31,
2023
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
262,918
|
$
|
239,532
|
|
Short-term investments
|
|
|
854
|
|
827
|
|
Accounts receivable
|
|
|
110,965
|
|
93,383
|
|
Prepaid expenses and other assets
|
|
|
17,369
|
|
15,515
|
|
Income taxes recoverable
|
|
|
-
|
|
114
|
|
|
|
392,106
|
|
349,371
|
|
Non-current assets:
|
|
|
|
|
|
|
Property and equipment
|
|
|
3,328
|
|
3,273
|
|
Right-of-use assets
|
|
|
9,966
|
|
12,242
|
|
Intangible assets
|
|
|
98,253
|
|
109,659
|
|
Goodwill
|
|
|
292,990
|
|
280,241
|
|
Deferred income tax assets
|
|
|
25,422
|
|
28,884
|
|
|
|
429,959
|
|
434,299
|
|
|
$
|
822,065
|
$
|
783,670
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
70,229
|
$
|
67,769
|
|
Income tax payable
|
|
|
1,500
|
|
-
|
|
Dividends payable
|
|
|
14,398
|
|
12,156
|
|
Provisions
|
|
|
1,420
|
|
2,238
|
|
Deferred revenue
|
|
|
130,273
|
|
109,019
|
|
Lease obligations
|
|
|
5,733
|
|
6,322
|
|
|
|
223,553
|
|
197,504
|
|
Non-current liabilities:
|
|
|
|
|
|
|
Income taxes payable
|
|
|
-
|
|
1,333
|
|
Deferred income tax liabilities
|
|
|
11,897
|
|
13,340
|
|
Deferred revenue
|
|
|
7,752
|
|
8,170
|
|
Net employee defined-benefit obligation
|
|
|
1,922
|
|
1,912
|
|
Lease obligations
|
|
|
4,337
|
|
6,080
|
|
|
|
25,908
|
|
30,835
|
|
|
|
249,461
|
|
228,339
|
|
Shareholders' equity:
|
|
|
|
|
|
|
Share capital
|
|
|
113,237
|
|
107,701
|
|
Contributed surplus
|
|
|
10,252
|
|
10,404
|
|
Retained earnings
|
|
|
436,848
|
|
426,397
|
|
Accumulated other comprehensive income
|
|
|
12,267
|
|
10,829
|
|
|
|
572,604
|
|
555,331
|
|
|
$
|
822,065
|
$
|
783,670
|
|
Condensed Consolidated Interim Statements of Operations and Comprehensive Income
|
|
(in thousands of Canadian dollars, except per share amounts)
|
|
|
|
(unaudited)
|
|
Three months
|
Six months
|
|
Periods ended April 30
|
|
2024
|
2023
|
2024
|
2023
|
|
|
|
|
|
|
|
Revenue
Software licenses
|
|
$ 20,492
|
$ 22,016
|
$ 37,467
|
$ 42,751
|
|
SaaS and maintenance services
|
|
84,984
|
71,634
|
169,571
|
138,137
|
|
Professional services
|
|
17,401
|
17,995
|
33,346
|
34,886
|
|
Hardware
|
|
2,936
|
1,816
|
5,918
|
4,122
|
|
|
125,813
|
113,461
|
246,302
|
219,896
|
|
Direct costs
|
|
|
|
|
|
|
Software licenses
|
|
741
|
698
|
1,415
|
1,568
|
|
Services
|
|
40,951
|
36,793
|
80,482
|
69,218
|
|
Hardware
|
|
1,509
|
615
|
2,886
|
2,128
|
|
|
43,201
|
38,106
|
84,783
|
72,914
|
|
Revenue, net of direct costs
|
|
82,612
|
75,355
|
161,519
|
146,982
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
Selling, general and administrative
|
|
24,812
|
23,935
|
47,681
|
44,733
|
|
Research and development
|
|
22,098
|
21,233
|
43,409
|
39,783
|
|
Depreciation
|
|
551
|
613
|
1,045
|
1,239
|
|
Depreciation of right-of-use assets
|
|
1,570
|
1,931
|
3,076
|
3,667
|
|
Special charges
|
|
106
|
2,001
|
197
|
2,029
|
|
|
49,137
|
49,713
|
95,408
|
91,451
|
|
|
|
|
|
|
|
Results from operating activities
|
|
33,475
|
25,642
|
66,111
|
55,531
|
|
|
|
|
|
|
|
Amortization of acquired software and customer relationships
|
|
(11,146)
|
(9,838)
|
(21,520)
|
(18,670)
|
|
Foreign exchange losses
|
|
(86)
|
(790)
|
(1,803)
|
(1,843)
|
|
Interest expense – lease obligations
|
|
(148)
|
(192)
|
(298)
|
(359)
|
|
Finance income
|
|
2,602
|
1,006
|
4,963
|
1,982
|
|
Finance expenses
|
|
(12)
|
(124)
|
(12)
|
(131)
|
|
Other income (expenses)
|
|
220
|
(528)
|
106
|
( 655)
|
|
Income before income taxes
|
|
24,905
|
15,176
|
47,547
|
35,855
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
4,931
|
2,640
|
9,440
|
6,296
|
|
|
|
|
|
|
Net income for the period
|
|
19,974
|
12,536
|
38,107
|
29,559
|
|
Item that may be subsequently reclassified to income:
|
|
|
|
|
|
Cumulative translation adjustment
|
|
9,455
|
11,295
|
1,438
|
21,038
|
|
|
|
|
|
|
|
Other comprehensive income
|
|
9,455
|
11,295
|
1,438
|
21,038
|
|
|
|
|
|
|
|
Comprehensive income
|
|
$ 29,429
|
$ 23,831
|
$ 39,545
|
$ 50,597
|
|
Earnings per share
|
|
|
|
|
|
|
Basic
|
|
$ 0.36
|
$ 0.23
|
$ 0.69
|
$ 0.53
|
|
Diluted
|
|
$ 0.36
|
$ 0.23
|
$ 0.69
|
$ 0.53
|
|
Condensed Consolidated Interim Statements of Cash Flows
|
|
(in thousands of Canadian dollars)
(unaudited)
|
|
Three months
|
Six months
|
|
Periods ended April 30
|
|
2024
|
2023
|
2024
|
2023
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net income for the period
|
|
$ 19,974
|
$ 12,536
|
$ 38,107
|
$ 29,559
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
551
|
613
|
1,045
|
1,239
|
|
Depreciation of right-of-use assets
|
|
1,570
|
1,931
|
3,076
|
3,667
|
|
Interest expense – lease obligations
|
|
148
|
192
|
298
|
359
|
|
Amortization of acquired software and customer relationships
|
|
11,146
|
9,838
|
21,520
|
18,670
|
|
Stock-based compensation expense
|
|
501
|
473
|
778
|
931
|
|
Provision for income taxes
|
|
4,931
|
2,640
|
9,440
|
6,296
|
|
Finance expenses and other (income) expenses
|
|
(208)
|
652
|
(94)
|
786
|
|
|
38,613
|
28,875
|
74,170
|
61,507
|
|
|
|
|
|
|
|
Changes in non-cash operating working capital
|
|
6,651
|
(5,989)
|
(6,489)
|
(3,987)
|
|
Income taxes paid
|
|
(5,008)
|
(4,188)
|
(7,526)
|
(9,560)
|
|
Net cash provided by operating activities
|
|
40,256
|
18,698
|
60,155
|
47,960
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
Net purchase of property and equipment
|
|
(418)
|
(66)
|
(778)
|
(171)
|
|
Acquisitions, net of cash acquired*
|
|
(12,594)
|
(25,617)
|
(12,594)
|
(25,617)
|
|
Purchase consideration for prior-year acquisition
|
|
-
|
233
|
171
|
233
|
|
Purchase of short-term investments
|
|
-
|
-
|
-
|
(69)
|
|
Net cash used in investing activities
|
|
(13,012)
|
(25,450)
|
(13,201)
|
(25,624)
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
Issuance of share capital
|
|
373
|
-
|
4,683
|
604
|
|
Normal course issuer bid share repurchases
|
|
(1,147)
|
-
|
(1,147)
|
|
|
Repayment of lease obligations
|
|
(1,798)
|
(2,470)
|
(3,400)
|
(4,280)
|
|
Dividends paid
|
|
(12,188)
|
(10,225)
|
(24,344)
|
(20,446)
|
|
Net cash used in financing activities
|
|
(14,760)
|
(12,695)
|
(24,208)
|
(24,122)
|
|
Impact of foreign exchange on cash and cash equivalents
|
|
3,682
|
3,797
|
640
|
8,833
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
16,166
|
(15,650)
|
23,386
|
7,047
|
|
Cash and cash equivalents - beginning of period
|
|
246,752
|
247,801
|
239,532
|
225,104
|
|
Cash and cash equivalents - end of period
|
|
$ 262,918
|
$ 232,151
|
$ 262,918
|
$ 232,151
|
|
* Acquisitions are net of cash acquired of $497 for the three and six months ended April 30, 2024 and $2,088 for the three and six months ended April 30, 2023, respectively.
|
Enghouse Systems Limited
Segment Reporting Information
(in thousands of Canadian dollars)
|
Three months ended April 30
|
|
2024
|
|
2023
|
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
80,530
|
$
|
45,283
|
$
|
125,813
|
$
|
64,578
|
$
|
48,883
|
$
|
113,461
|
|
Direct costs
|
|
(26,573)
|
|
(16,628)
|
|
(43,201)
|
|
(19,133)
|
|
(18,973)
|
|
(38,106)
|
|
Revenue, net of direct costs
|
|
53,957
|
|
28,655
|
|
82,612
|
|
45,445
|
|
29,910
|
|
75,355
|
|
Operating expenses excluding special charges
|
|
(23,483)
|
|
(11,751)
|
|
(35,234)
|
|
(23,034)
|
|
(12,596)
|
|
(35,630)
|
|
Depreciation
|
|
(392)
|
|
(159)
|
|
(551)
|
|
(544)
|
|
(69)
|
|
(613)
|
|
Depreciation of right-of-use assets
|
|
(997)
|
|
(573)
|
|
(1,570)
|
|
(941)
|
|
(990)
|
|
(1,931)
|
|
Segment profit
|
$
|
29,085
|
$
|
16,172
|
$
|
45,257
|
$
|
20,926
|
$
|
16,255
|
$
|
37,181
|
|
Special charges
|
|
|
|
|
|
(106)
|
|
|
|
|
|
(2,001)
|
|
Corporate and shared service expenses
|
|
|
|
|
|
(11,676)
|
|
|
|
|
|
(9,538)
|
|
Results from operating activities
|
|
|
|
|
$
|
33,475
|
|
|
|
|
$
|
25,642
|
|
Six months ended April 30
|
|
2024
|
|
2023
|
|
IMG
|
AMG
|
Total
|
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
156,666
|
$
|
89,636
|
$
|
246,302
|
$
|
122,431
|
$
|
97,465
|
$
|
219,896
|
|
Direct costs
|
|
(51,979)
|
|
(32,804)
|
|
(84,783)
|
|
(35,564)
|
|
(37,350)
|
|
(72,914)
|
|
Revenue, net of direct costs
|
|
104,687
|
|
56,832
|
|
161,519
|
|
86,867
|
|
60,115
|
|
146,982
|
|
Operating expenses excluding special charges
|
|
(44,909)
|
|
(23,447)
|
|
(68,356)
|
|
(42,285)
|
|
(23,916)
|
|
(66,201)
|
|
Depreciation
|
|
(769)
|
|
(276)
|
|
(1,045)
|
|
(1,081)
|
|
(158)
|
|
(1,239)
|
|
Depreciation of right-of-use assets
|
|
(1,933)
|
|
(1,143)
|
|
(3,076)
|
|
(2,041)
|
|
(1,626)
|
|
(3,667)
|
|
Segment profit
|
$
|
57,076
|
$
|
31,966
|
$
|
89,042
|
$
|
41,460
|
$
|
34,415
|
$
|
75,875
|
|
Special charges
|
|
|
|
|
|
(197)
|
|
|
|
|
|
(2,029)
|
|
Corporate and shared service expenses
|
|
|
|
|
|
(22,734)
|
|
|
|
|
|
(18,315)
|
|
Results from operating activities
|
|
|
|
|
$
|
66,111
|
|
|
|
|
$
|
55,531
|
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 Tuesday, June 11, 2024 at 8:45 a.m. EST. To participate, please call
+1-289-514-5100 or North American Toll-Free +1-800-717-1738. Confirmation code: 14684. 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/June2024/10/c6090.html