MARKHAM, ONTARIO--(Marketwire - Dec. 14, 2011) - Enghouse Systems Limited (TSX:ESL) today announced its fourth quarter (unaudited) and year end financial results for the period ended October 31, 2011, posting record revenue and net income on the year.
Revenue topped the $100 million mark for the first time in the Company's history at $122.6 million for the fiscal year. This is compared to $94.2 million in the prior year, an increase of 30%, as the Company continues to successfully implement its growth strategy. Net income for the fiscal year was $16.8 million or $0.66 per diluted share compared to $10.2 million or $0.40 per diluted share in the prior year, an increase of approximately 65%, representing a record year for the Company. Operating expenses increased to $57.0 million for the year compared to $45.6 million in the prior year as a result of incremental costs related to acquired operations. As has become the norm, revenue and operating costs were also impacted by the continued volatility of foreign exchange as outlined in the Company's Management's Discussion and Analysis as filed on SEDAR.
For the fourth quarter, revenue was $31.8 million, compared to $27.4 million reported in the same period last year. Net income for the fourth quarter was $5.9 million or $0.23 per diluted share compared to $3.4 million or $0.13 per diluted share in the fourth quarter of last year.
The Company recorded non-cash amortization charges of $2.7 million in the quarter compared to $2.5 million in the prior year's fourth quarter. For the fiscal year, the Company reported amortization charges of $10.3 million compared to $8.5 million in the prior fiscal year.
The Company generated cash flows from operating activities of $8.3 million in the quarter, compared to $2.4 million in the prior year's fourth quarter, an increase of 249%, and $41.1 million in the fiscal year compared to $18.6 million in the prior fiscal year, an increase of 120%. Enghouse closed the year with $99.6 million in cash and short-term investments after having spent $16.8 million in the fiscal year on acquisitions and $4.5 million on dividends.
Enghouse continues to have no long-term debt.
The Board of Directors today authorized an eligible quarterly dividend of $0.05 per common share, payable on February 29, 2012 to shareholders of record at the close of business on February 15, 2012. The Company remains committed to its strategy of seeking further acquisitions to continue to diversify its revenue stream and expand its market presence.
About Enghouse
Enghouse Systems Limited is a leading global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a larger and more diverse software company through strategic acquisitions and managed growth. Enghouse shares are listed on the Toronto Stock Exchange under the symbol "ESL". Further information about Enghouse may be obtained from the Company's web site at www.enghouse.com.
| Enghouse Systems Limited |
| Consolidated Balance Sheets |
| (in thousands of Canadian dollars) |
| (Unaudited) |
| October 31, 2011 | October 31, 2010 | |||||
| Assets | ||||||
| Current | ||||||
| Cash | $ | 65,624 | $ | 46,640 | ||
| Short-term investments | 33,967 | 31,627 | ||||
| Accounts receivable, net | 23,006 | 24,500 | ||||
| Income tax receivable | - | 591 | ||||
| Future income taxes | 1,769 | 447 | ||||
| Prepaid expenses and other assets | 3,479 | 3,360 | ||||
| 127,845 | 107,165 | |||||
| Property and equipment, net | 1,791 | 1,844 | ||||
| Acquired software and other intangibles, net | 28,531 | 34,330 | ||||
| Goodwill | 38,287 | 35,137 | ||||
| Future income taxes | 9,295 | 2,951 | ||||
| $ | 205,749 | $ | 181,427 | |||
| Liabilities | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | $ | 25,128 | $ | 20,115 | ||
| Income taxes payable | 3,579 | - | ||||
| Dividend payable | 1,267 | 1,007 | ||||
| Deferred revenue | 28,933 | 26,040 | ||||
| 58,907 | 47,162 | |||||
| Future income taxes | 10,283 | 12,571 | ||||
| Long-term income taxes payable | 420 | 522 | ||||
| Deferred revenue | 1,404 | 790 | ||||
| 71,014 | 61,045 | |||||
| Shareholders' Equity | ||||||
| Share capital | 52,134 | 50,705 | ||||
| Contributed surplus | 2,613 | 2,429 | ||||
| Retained earnings | 91,613 | 79,606 | ||||
| Accumulated other comprehensive loss | (11,625 | ) | (12,358 | ) | ||
| 134,735 | 120,382 | |||||
| $ | 205,749 | $ | 181,427 | |||
Enghouse Systems Limited |
| Consolidated Statements of Operations and Retained Earnings |
| (in thousands of Canadian dollars except per share amounts) |
| (Unaudited) |
| Three months ended October 31 | Twelve months ended October 31 | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||
| Revenue | ||||||||||||||
| Software licenses | $ | 11,690 | $ | 8,794 | $ | 45,691 | $ | 30,198 | ||||||
| Services | 19,927 | 17,903 | 74,260 | 61,304 | ||||||||||
| Hardware | 219 | 681 | 2,608 | 2,706 | ||||||||||
| 31,836 | 27,378 | 122,559 | 94,208 | |||||||||||
| Cost of sales | ||||||||||||||
| Software licenses | 769 | 920 | 5,208 | 4,363 | ||||||||||
| Services | 6,871 | 6,492 | 26,634 | 22,429 | ||||||||||
| Hardware | 237 | 459 | 1,966 | 1,845 | ||||||||||
| 7,877 | 7,871 | 33,808 | 28,637 | |||||||||||
| Gross margin | 23,959 | 19,507 | 88,751 | 65,571 | ||||||||||
| Operating expenses | ||||||||||||||
| Selling, general and administrative | 11,062 | 9,442 | 40,244 | 31,807 | ||||||||||
| Research and development | 4,213 | 3,487 | 15,672 | 12,477 | ||||||||||
| Amortization of property and equipment | 287 | 356 | 1,110 | 1,331 | ||||||||||
| 15,562 | 13,285 | 57,026 | 45,615 | |||||||||||
| Income before the undernoted | 8,397 | 6,222 | 31,725 | 19,956 | ||||||||||
| Amortization of acquired software and other intangibles | (2,687 | ) | (2,475 | ) | (10,291 | ) | (8,458 | ) | ||||||
| Interest income, net | 274 | 92 | 667 | 387 | ||||||||||
| Other income, net | 631 | 203 | 800 | 1,145 | ||||||||||
| Foreign exchange gain (loss) | 853 | 90 | (511 | ) | 238 | |||||||||
| Income before income taxes | 7,468 | 4,132 | 22,390 | 13,268 | ||||||||||
| Provision for (recovery of) income taxes | ||||||||||||||
| Current | (57 | ) | (1,504 | ) | 4,063 | 635 | ||||||||
| Future | 1,605 | 2,210 | 1,491 | 2,395 | ||||||||||
| Net income for the period | $ | 5,920 | $ | 3,426 | $ | 16,836 | $ | 10,238 | ||||||
| Retained earnings, beginning of period | $ | 86,960 | $ | 77,186 | $ | 79,606 | $ | 73,142 | ||||||
| Dividends | (1,267 | ) | (1,006 | ) | (4,796 | ) | (3,774 | ) | ||||||
| Purchase and cancellation of common shares | - | - | (33 | ) | - | |||||||||
| Retained earnings, end of period | $ | 91,613 | $ | 79,606 | $ | 91,613 | $ | 79,606 | ||||||
| Earnings per share | ||||||||||||||
| Basic | $ | 0.23 | $ | 0.14 | $ | 0.67 | $ | 0.41 | ||||||
| Diluted | $ | 0.23 | $ | 0.13 | $ | 0.66 | $ | 0.40 | ||||||
| Weighted average shares outstanding during period (millions) | ||||||||||||||
| - basic | 25.3 | 25.2 | 25.2 | 25.1 | ||||||||||
| - diluted | 25.6 | 25.4 | 25.5 | 25.3 | ||||||||||
Enghouse Systems Limited |
| Consolidated Statements of Comprehensive Income and Accumulated Other Comprehensive Loss |
| (in thousands of Canadian dollars) |
| (Unaudited) |
| Three months ended October 31 | Twelve months ended October 31 | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| Net income for the period | $ | 5,920 | $ | 3,426 | $ | 16,836 | $ | 10,238 | ||||
| Other comprehensive income (loss): | ||||||||||||
| Unrealized gain (loss) on translating financial statements of self-sustaining foreign operations | 2,800 |
(1,171 |
) | (763 |
) | (4,044 |
) | |||||
| Transfer to net income of realized gains on available for sale investments, net of tax of ($99) (year to date - ($126)) | (532 |
) | (646 |
) | (674 |
) | (1,303 |
) | ||||
| Unrealized gain on available for sale investments, net of tax of $257 (year to date - $395) | 1,377 |
465 |
2,112 |
1,881 |
||||||||
| Unrealized foreign currency translation gain (loss) on available for sale investments, net of tax of $24 (year to date - $11) | 127 |
(22 |
) | 58 |
(133 |
) | ||||||
| Other comprehensive income (loss) | $ | 3,772 | $ | (1,374 | ) | $ | 733 | $ | (3,599 | ) | ||
| Comprehensive income | $ | 9,692 | $ | 2,052 | $ | 17,569 | $ | 6,639 | ||||
| Accumulated other comprehensive loss, beginning of period | $ | (15,397 | ) | $ | (10,984 | ) | $ | (12,358 | ) | $ | (8,759 | ) |
| Other comprehensive income (loss) | 3,772 | (1,374 | ) | 733 | (3,599 | ) | ||||||
| Accumulated other comprehensive loss, end of period | $ | (11,625 | ) | $ | (12,358 | ) | $ | (11,625 | ) | $ | (12,358 | ) |
Enghouse Systems Limited |
| Consolidated Statements of Cash Flows |
| (in thousands of Canadian dollars) |
| (Unaudited) |
| For the three months ended October 31 | For the twelve months ended October 31 | ||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Cash flows from operating activities | |||||||||||||
| Net income for the period | $ | 5,920 | $ | 3,426 | $ | 16,836 | $ | 10,238 | |||||
| Add (deduct) items not involving cash | |||||||||||||
| Amortization of property and equipment | 287 | 356 | 1,110 | 1,331 | |||||||||
| Amortization of acquired software and other intangibles | 2,687 | 2,475 | 10,291 | 8,458 | |||||||||
| Stock-based compensation expense | 123 | 111 | 492 | 382 | |||||||||
| Gain on sale of short-term investments | (631 | ) | (605 | ) | (800 | ) | (1,547 | ) | |||||
| Future income taxes | 1,605 | 2,210 | 1,491 | 2,395 | |||||||||
| Cash flows before changes in operating assets and liabilities | 9,991 | 7,973 | 29,420 | 21,257 | |||||||||
| Changes in operating assets and liabilities | |||||||||||||
| Decrease (increase) in accounts receivable, net | 1,449 | (1,443 | ) | 6,466 | 151 | ||||||||
| Decrease in prepaid expenses and other assets | 171 | 640 | 193 | 194 | |||||||||
| Increase (decrease) in accounts payable and accrued liabilities | 974 | (1,023 | ) | 1,430 | (5,587 | ) | |||||||
| (Decrease) increase in current income taxes payable | (44 | ) | (2,379 | ) | 2,223 | (3,240 | ) | ||||||
| (Decrease) increase in deferred revenue | (2,409 | ) | (2,350 | ) | 1,267 | 6,329 | |||||||
| Unrealized foreign exchange (gain) loss | (1,853 | ) | 954 | 53 | (474 | ) | |||||||
| Cash flows from operating activities | 8,279 | 2,372 | 41,052 | 18,630 | |||||||||
| Cash flows from investing activities | |||||||||||||
| Purchase of property and equipment, net | (317 | ) | (278 | ) | (947 | ) | (887 | ) | |||||
| Acquisitions, net of cash acquired | - | - | (16,842 | ) | (30,131 | ) | |||||||
| Net proceeds (purchase) from sale of short-term investments | 4,406 | (1,623 | ) | 695 | 23,664 | ||||||||
| 4,089 | (1,901 | ) | (17,094 | ) | (7,354 | ) | |||||||
| Cash flows from financing activities | |||||||||||||
| Issuance of share capital | 667 | 20 | 1,131 | 925 | |||||||||
| Payment of cash dividends | (1,262 | ) | (1,007 | ) | (4,536 | ) | (3,514 | ) | |||||
| Purchase and cancellation of common shares | - | - | (43 | ) | - | ||||||||
| (595 | ) | (987 | ) | (3,448 | ) | (2,589 | ) | ||||||
| Effect of foreign exchange rate changes on cash | 1,579 | (303 | ) | (1,526 | ) | (1,323 | ) | ||||||
| Net increase (decrease) in cash during the period | 13,352 | (819 | ) | 18,984 | 7,364 | ||||||||
| Cash - beginning of period | 52,272 | 47,459 | 46,640 | 39,276 | |||||||||
| Cash - end of period | $ | 65,624 | $ | 46,640 | $ | 65,624 | $ | 46,640 | |||||
| Supplementary cash flow information: | |||||||||||||
| Cash paid during the period for income taxes | $ | 669 | $ | 91 | $ | 1,762 | $ | 2,509 | |||||
Note: Cash excludes short-term investments |
| Enghouse Systems Limited |
| Selected Segment Reporting Information |
| (in thousands of Canadian dollars) |
| (Unaudited) |
| Three Months ended | Twelve Months ended | ||||||||||||
| October 31, 2011 |
October 31, 2010 |
October 31, 2011 |
October 31, 2010 |
||||||||||
| Revenue: | |||||||||||||
| Asset Management Group | $ | 3,075 | $ | 3,499 | $ | 12,842 | $ | 13,503 | |||||
| Interactive Management Group | 28,761 | 23,879 | 109,717 | 80,705 | |||||||||
| Total | $ | 31,836 | $ | 27,378 | $ | 122,559 | $ | 94,208 | |||||
| Segment Profit (EBIT): | |||||||||||||
| Asset Management Group | $ | 741 | $ | 843 | $ | 3,033 | $ | 2,910 | |||||
| Interactive Management Group | 6,187 | 3,738 | 21,958 | 11,287 | |||||||||
| Corporate expenses | (1,218 | ) | (834 | ) | (3,557 | ) | (2,699 | ) | |||||
| Foreign exchange gain (loss) | 853 | 90 | (511 | ) | 238 | ||||||||
| Interest and other income, net | 905 | 295 | 1,467 | 1,532 | |||||||||
| Total | $ | 7,468 | $ | 4,132 | $ | 22,390 | $ | 13,268 | |||||
Contact Information:
Stephen Sadler
Chief Executive Officer
(905) 946-3200
investor@enghouse.com
www.enghouse.com