Logibec Groupe Informatique Ltd.
TSX : LGI

Logibec Groupe Informatique Ltd.

May 12, 2008 21:52 ET

Logibec Groupe Informatique Ltd.: American Activities Post Strong Growth

MONTREAL, QUEBEC--(Marketwire - May 12, 2008) - Logibec Groupe Informatique Ltd. (TSX:LGI) announced today the results of its quarter ended March 31, 2008. All monetary amounts are expressed in Canadian dollars.

HIGHLIGHTS

- Revenue up 50% for the second quarter ended March 31, 2008, to stand at $18.5 million compared to $12.3 million for the same period in the previous fiscal year.

- Recurring revenue up 75% for the quarter to stand at $15.5 million or 84% of total revenue.

- Operating earnings up 11% or $6.1 million compared to $5.3 million for the same period in the previous fiscal year.

- Net earnings of $1.8 million, or $0.19 per share ($0.19 per fully-diluted share) compared to net earnings of $2.3 million, or $0.26 per share ($0.26 per fully-diluted share).

- Acquisition of the business activities and assets of QuickCARE Software Services L.P. ("QuickCARE") on January 1, 2008.

OPERATING RESULTS

REVENUE

Revenue for the second quarter of fiscal year 2008 stood at $18.5 million, an increase of 50%, compared to $12.3 million for the same period in the previous fiscal year. Revenue for the fiscal half year ended March 31, 2008 stood at $31.6 million, representing an increase of 42%, compared to $22.3 million for the same period in 2007.

A chart of the Segment Revenue is available at the following address: http://media3.marketwire.com/docs/logapica.jpg

For the quarter ended March 31, 2008, revenue from American activities represented 54% of consolidated revenue compared to 22% of consolidated revenue for the same period in the previous fiscal year. This significant increase in revenue from the American segment is due to the inclusion of two major acquisitions, namely Achieve and QuickCARE, as well as to a decrease in Canadian revenue.

Segment revenue for the first half year of fiscal year 2008, is as follows:

- 52% for Canadian activities

- 48% for American activities

In line with the Company's geographic diversification strategy, the acquisitions of Achieve and QuickCARE strengthen the Company's American presence and sustain its revenue growth.

The Achieve and QuickCARE acquisitions have allowed MDI Achieve, Logibec's American subsidiary, to become the leading supplier, in terms of number of facilities, communities and sites served, of software designed for the eldercare sector in the United States. The Company is currently working on integrating the activities and companies acquired over the last year by focusing on delivering quality customer support, honoring commitments made to acquired clients by previous management teams, upgrading software packages to create an integrated solution and developing significant sales and operating expense synergies.



2008 2007 2008 2007
3 months 3 months Variation 6 months 6 months Variance
-------------------------------------------------------------------------
(in thousands
of dollars,
except for
percentages)
Revenue
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 8,545 9,648 -11% 16,336 17,055 -4%
United States 9,928 2,662 273% 15,299 5,224 193%
-------------------------------------------------------------------------
Consolidated
Revenue 18,473 12,310 50% 31,635 22,279 42%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Recurring
Revenue
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 6,881 6,374 8% 13,144 12,718 3%
United States 8,620 2,678 222% 13,333 5,104 161%
-------------------------------------------------------------------------
Consolidated
Revenue 15,501 9,052 71% 26,477 17,822 49%
-------------------------------------------------------------------------
-------------------------------------------------------------------------


Revenue from Canadian activities

Revenue from Canadian activities for the second quarter of 2008 decreased by 11% compared to the same quarter in the previous fiscal year. This is explained in part by a decrease of $1.6 million in non-recurring revenue, which is primarily due to a $1.2 million decrease in special projects. The second quarter of 2007 was characterized by significant special projects associated with the processing of pay equity measures for the health and social services network in Quebec. On the other hand, recurring revenue from new implementations of our eClinibase, Med-Echo Plus, Espresso Payroll/HRM and Espresso FMS/MMS software increased by 8% in the second quarter of 2008.

For the first half year of fiscal year 2008, revenue from Canadian activities stood at $16.3 million, or a decrease of 4% compared to the same period in the previous fiscal year. Recurring revenue for this six-month period increased 3% to stand at $13.1 million. The strong decrease in non-recurring Canadian revenue during the second quarter explains the over-all decrease in revenue from Canadian activities for the first half of the fiscal year.

As at March 31, 2008, the Company had $1.8 million in current deferred professional services revenue and $3.9 million in Iong-term deferred professional services revenue in accordance with its revenue recognition policy. This revenue as well as the related costs will be recognized over the average term of the related agreements which is generally three years.

Revenue from American activities

During the second quarter of 2008, revenue from American activities tripled to stand at $9.9 million compared to $2.7 million last year. The increase of $7.2 million or 273% is mainly due to the business activities added during the fiscal year following the acquisition of Achieve and QuickCARE and, on a smaller scale, to the activities added following the acquisitions of assets from Choice Systems Enterprise, Inc., and of REPS Software Inc. during fiscal year 2007.

By excluding the activities acquired between the end of the second quarter of 2007 and the second quarter of 2008, namely activities acquired from Choice Systems, REPS Software, Achieve and QuickCARE, organic growth of our American activities can be determined. Between the second quarter of 2007 and the second quarter of 2008, it was 17%. However, the appreciation of the Canadian dollar cancels out this growth when the American operating results are converted into Canadian dollars.

For the first half of fiscal year 2008, revenue from American activities stood at $15.3 million, or an increase of 193% compared to the same period in 2007. Recurring revenue for the first six months of 2008 increased by 160% to stand at $13.3 million.

As at March 31, 2008, the Company had $1.0 million in current deferred software license revenue and $2.1 million in Iong-term deferred software license revenue in accordance with its revenue recognition policy. This revenue as well as the related costs, namely commissions granted to representatives and agents, will be recognized over the term of the related agreements which is generally three or five years.

OPERATING EXPENSES

Operating expenses for the quarter, which are composed of service costs and selling and administrative expenses, stood at $12.4 million, representing an increase of $5.4 million, or 77%, compared to the expenses recorded during the same period in the previous fiscal year. Operating expenses for the fiscal half year stood at $21.1 million compared to $12.9 million recorded for same period in the previous fiscal year. These significant increases are due to the inclusion of activities acquired over the last year from Choice Systems, REPS Software, Achieve and QuickCARE.

It should be noted that operating expenses of the second quarter include non-recurring expenses in the amount of $0.3 million. These expenses are composed of professional services incurred for the analysis of two acquisition opportunities that Management decided to abandon, the optimization of resources throughout our five American offices and the reduction of the dependency of acquired activities on third-party products and services.

Service costs and gross margin. Service costs for the quarter increased by $3.9 million or 83%. The gross margin for the quarter increased 30% to stand at $9.9 million compared to $7.6 million for the gross margin recorded for the same period in the previous fiscal year. Service costs for the fiscal half year increased by $5.7 million, or 65%. The gross margin for the fiscal half year increased by 27% to stand at $17.1 million compared to $13.5 million recorded for the same period in the previous fiscal year. The variance in service costs and gross margin is presented in the following table:



2008 2007 2008 2007
3 months 3 months Variation 6 months 6 months Variance
-------------------------------------------------------------------------
(in thousands
of dollars,
except for
percentages)
Service Costs
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 3,336 3,654 -9% 6,527 6,762 -3%
United States 5,224 1,027 409% 8,003 2,062 288%
-------------------------------------------------------------------------
Consolidated
Service Costs 8,560 4,681 83% 14,530 8,824 65%
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Gross Margin
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Canada 5,209 5,994 -13% 9,809 10,293 -5%
61% 62% 60% 60%
United States 4,704 1,635 188% 7,296 3,162 131%
47% 61% 48% 61%
-------------------------------------------------------------------------
Consolidated
Gross 9,913 7,629 30% 17,105 13,455 27%
Margin 54% 62% 54% 60%
-------------------------------------------------------------------------


Canadian service costs decreased by 9% for the second quarter of 2008 compared to the same period in the previous year. This decrease is 3% for the fiscal half year. This change is mainly due to the decrease in professional service costs recognized and the cost of equipment sold during the quarter.

The significant increase of 409% in American service costs is mainly attributable to the inclusion of previously mentioned activities acquired over the last twelve months. The increase is 288% for the fiscal half year.

Selling, general and administrative expenses. Selling, general and administrative expenses were $3.8 million or 20.7% of revenue for the quarter, compared to $2.3 million or 18.7% of revenue for the same period last year. For the fiscal half year, selling, general and administrative expenses were $6.6 million or 20.7% of revenue compared to $4.1 million or 18.2% of revenue. The increase of $1.5 million for the quarter is explained by a decrease of $0.1 million in selling, general and administrative expenses in Canada and an increase of $1.6 million in these expenses in the United States.

The increase in American selling, general and administrative expenses is explained by activities added following the acquisition of REPS Software, Achieve and QuickCARE and also by a portion of the previously mentioned non-recurring expenses in the amount of $0.3 million.

Stock-based compensation. There are no expenses related to stock-based compensation for the first quarter and the first half of the fiscal year compared to $29,648 and $59,296 respectively for the same periods in the previous fiscal year. These expenses were related to stock options granted on April 1, 2005. Since that date, all these stock options can be exercised and therefore no expenses remain to be recognized. As of the date of this MD&A, Management does not intend to grant any additional stock options.

OPERATING EARNINGS

Operating earnings before depreciation, amortization, income from temporary investments, financial expenses and taxes for the quarter ended March 31, 2008 stood at $6.1 million, representing an increase of $0.8 million or 15% over the same period last year. For the fiscal half year, the operating earnings before depreciation, amortization, income on temporary investments, financial expenses and taxes stood at $10.6 million, representing an increase of $1.2 million or 13% compared to the same period last year.

In the course of the due diligence review conducted for the acquisition of Achieve's assets and business activities, the Company determined a need for a restructuring of that company's financial situation. The restructuring plan implemented by the Company allowed these activities to show positive operating earnings during the second quarter of 2008. Management believes that operating earnings for these activities will continue to improve over the upcoming quarters given the measures that were implemented following the acquisition.

AMORTIZATION OF FIXED ASSETS, INTANGIBLE ASSETS AND OTHER LONG-TERM ASSETS

Amortization of fixed assets, intangible assets and other long-term assets for the quarter ended March 31, 2008 rose to $2.9 million, representing an increase of 77% compared to the same period in the previous fiscal year. For the fiscal half year, the amortization of fixed assets, intangible assets and other long-term assets stood at $4.8 million, or an increase of 50% compared to the same period in the previous fiscal year. These increases are mainly attributable to the amortization of the customer relationships and technologies acquired from Choice Systems, REPS Software, Achieve and QuickCARE.

FINANCIAL EXPENSES

Financial expenses for the quarter increased by $0.6 million compared to financial expenses for the same period last year. For the fiscal half year, financial expenses were $1.2 million. Financial expenses for the second quarter and first half of fiscal year 2008 were mainly composed of interest charges related to Canadian credit facilities obtained to finance the acquisitions of Achieve and QuickCARE, interest charges on the balance of purchase price for these acquisitions and amortization of deferred financing charges.

NET EARNINGS

Net earnings for the second quarter ended March 31, 2008 stood at $1.8 million, or $0.19 per share, compared to $2.3 million, or $0.26 per share, for the same period in the previous fiscal year. For the fiscal half year, the net earnings stood at $3.3 million, or $0.34 per share, compared to $3.8 million, or $0.42 per share, for the same period in the previous fiscal year.

LIQUIDITY AND SOURCES OF FINANCING

OPERATING ACTIVITIES

For the second quarter ended March 31, 2008, operating activities used cash flows of $0.6 million, whereas these activities, for the same period in the previous fiscal year, used cash flows of $1.1 million. This decrease is mainly explained by the changes in non-cash working capital items.

INVESTING ACTIVITIES

The Company used $21.0 million for investing activities during the quarter ended March 31, 2008. Of this amount, $19.5 million was used to acquire QuickCARE and $0.9 million corresponds to capitalized software development costs. The difference, $0.6 million, was used for capital expenditures for both the Canadian and American operations.

FINANCING ACTIVITIES

The Company borrowed $29.2 million through its new Canadian secured credit facilities of $40.0 million mainly to finance the acquisition of QuickCARE and repay a promissory note of $4.0 million bearing interest at 8% and maturing on June 30, 2008. The promissory note was repaid in advance since its interest rate was higher than the interest rate charged on the Canadian credit facilities. During the quarter, the Company also made repayments of $1.3 million on its Canadian credit facilities.

During the second quarter, the Company repurchased 84,100 common shares through a normal course issuer bid announced on February 13, 2008. These shares were repurchased for cash consideration of $1.7 million at an average price per share of $20.43.

Subsequently to the end of the quarter, the Company repaid a second promissory note of $4.0 million bearing interest at 8% and maturing on June 30, 2009. This repayment was made by borrowing on the Canadian credit facilities. After the end of the quarter, the Company also made repayments totaling $11.3 million on its Canadian credit facilities. These repayments were made possible by the collection of amounts invoiced in Canada for annual service contracts.

ABOUT LOGIBEC

Logibec is among the fastest-growing North American companies specializing in the development, marketing, implementation and support of information systems for the health and social services sector. Since its acquisition of MDI Technologies, Inc. (MDI), in June 2005, Logibec has continued to expand its American activities with the recent acquisition of the assets of Achieve Healthcare Technologies and QuickCARE Software Services and is now a leader in the U.S. with a customer base of approximately 7,000 facilities. Its American activities are now managed under the name MDI Achieve. Logibec's services are delivered by an experienced team of approximately 430 employees. The Company has its head office in Montreal as well as offices in Quebec City, Edmonton, St. Louis, Minneapolis, Dallas, Tampa and Smithfield, Virginia.

This news release contains forward-looking statements reflecting Logibec Groupe Informatique Ltd. objectives, estimates and expectations. Such statements may be marked by the use of verbs such as "believe", "anticipate", "estimate" and "expect" as well as the use of the future or conditional tense. By their very nature, such statements involve risks and uncertainty. Actual results may differ significantly from the Company's forecasts or expectations.



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
Three months ended Six months ended
March 31 March 31
-------------------------------------------------------------------------
2008 2007 2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
(As restated)

Revenue 18,472,907 12,309,442 31,635,355 22,279,009
-------------------------------------------------------------------------

Operating expenses
Service costs 8,559,778 4,681,529 14,530,819 8,823,960
Selling and
administrative
expenses 3,825,964 2,296,164 6,553,119 4,062,720
Stock-based
compensation - 29,648 - 59,296
-------------------------------------------------------------------------
12,385,742 7,007,341 21,083,938 12,945,976
-------------------------------------------------------------------------

Earnings before
the following
items 6,087,165 5,302,101 10,551,417 9,333,033

Amortization of
fixed assets 415,644 262,881 718,722 530,083
Amortization of
intangible assets
and other
long-term assets 2,466,645 1,363,226 4,060,586 2,654,420
Loss on disposal
of fixed assets 11,259 120,281 11,259 124,691
Income on temporary
investments (13,867) (9,848) (51,335) (33,549)
Financial expenses 612,401 51,666 1,212,232 32,878
-------------------------------------------------------------------------
Earnings before
income taxes 2,595,083 3,513,895 4,599,953 6,024,510

Income taxes 746,000 1,209,000 1,345,000 2,252,000
-------------------------------------------------------------------------
Net earnings 1,849,083 2,304,895 3,254,953 3,772,510
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net earnings per
share
Basic 0.19 0.26 0.34 0.42
Diluted 0.19 0.26 0.34 0.42
-------------------------------------------------------------------------


Weighted average
number of common
shares outstanding
Basic 9,901,959 8,909,576 9,443,479 8,920,772
Diluted 9,971,951 8,975,504 9,516,974 8,983,090
-------------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
Three months ended Six months ended
March 31 March 31
-------------------------------------------------------------------------
2008 2007 2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
(As restated) (As restated)

Net earnings 1,849,083 2,304,895 3,254,953 3,772,510
Net change in
unrealized losses
on translation of
financial
statements of
self-sustaining
subsidiaries 2,524,705 (291,287) 2,494,458 1,010,677
-------------------------------------------------------------------------
Comprehensive
income 4,373,788 2,013,608 5,749,411 4,783,187
-------------------------------------------------------------------------
-------------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(unaudited)
Three months ended Six months ended
March 31 March 31
-------------------------------------------------------------------------
2008 2007 2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
(As restated) (As restated)

Retained earnings,
beginning of year
as previously
reported 16,674,836 14,107,105 15,268,966 12,436,490
Restatement - (1,506,000) - (1,303,000)
-------------------------------------------------------------------------
Beginning of year,
as restated 16,674,836 12,601,105 15,268,966 11,133,490

Net earnings 1,849,083 2,304,895 3,254,953 3,772,510
-------------------------------------------------------------------------
18,523,919 14,906,000 18,523,919 14,906,000
Premium on
redemption
of common shares (1,289,515) (1,689,957) (1,289,515) (1,689,957)
-------------------------------------------------------------------------
Retained earnings,
end of year 17,234,404 13,216,043 17,234,404 13,216,043
-------------------------------------------------------------------------
-------------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31, September 30,
2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $

Assets
Current assets
Cash and cash equivalents 3,776,012 6,974,398
Accounts receivable 8,279,879 4,820,699
Income tax credits receivable 1,716,218 1,565,451
Income taxes receivable 1,127,549 2,226
Future income taxes 860,620 483,000
Other current assets 2,968,516 1,526,715
-------------------------------------------------------------------------
18,728,794 15,372,489

Fixed assets 4,618,647 3,535,084
Goodwill 61,559,813 33,836,280
Intangible assets and other long lived assets 54,413,435 24,336,051
-------------------------------------------------------------------------
139,320,689 77,079,904
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Liabilities
Current liabilities
Bank overdraft 246,041 -
Accounts payable and accrued liabilities 10,199,774 4,907,036
Income taxes 213,799 2,424,369
Future income taxes 63,000 63,000
Current portion of long-term debt 3,506,975 1,066,406
-------------------------------------------------------------------------
14,229,589 8,460,811

Deferred revenue 8,024,413 14,428,909
-------------------------------------------------------------------------
22,254,002 22,889,720


Long-term deferred revenue 6,899,834 6,072,968
Long-term debt 40,291,660 5,277,742
Future income taxes 5,940,742 5,815,243
-------------------------------------------------------------------------
75,386,238 40,055,673
-------------------------------------------------------------------------
Commitments and contingencies

Shareholders' equity
Share capital 50,230,922 27,780,598
Contributed surplus 474,368 474,368

Retained earnings 17,234,404 15,268,966
Accumulated other comprehensive loss (4,005,243) (6,499,701)
-------------------------------------------------------------------------
13,229,161 8,769,265
-------------------------------------------------------------------------
63,934,451 37,024,231
-------------------------------------------------------------------------
139,320,689 77,079,904
-------------------------------------------------------------------------
-------------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended Six months ended
March 31 March 31
-------------------------------------------------------------------------
2008 2007 2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------
$ $ $ $
(As restated) (As restated)

Operating activities
Net earnings 1,849,083 2,304,895 3,254,953 3,772,510
Adjustments for:
Amortization of
fixed assets 415,644 262,881 718,722 530,083
Amortization of
intangible assets
and other
long-term assets 2,466,645 1,363,226 4,060,586 2,654,420
Amortization of
deferred
financing costs 19,552 - 288,779 -
Stock-based
compensation - 29,648 - 59,296
Loss on disposal
of fixed assets 11,259 120,281 11,259 124,691
Future income
taxes - - (300,115) -
-------------------------------------------------------------------------
4,762,183 4,080,931 8,034,184 7,141,000

Changes in non-cash
operating working
capital items (5,333,530) (5,213,400) (12,400,805) (10,276,881)
-------------------------------------------------------------------------
(571,347) (1,132,469) (4,366,621) (3,135,881)
-------------------------------------------------------------------------

Investing
activities
Business
acquisition (19,556,826) (2,716,380) (39,525,221) (2,716,380)
Proceeds from
disposal of
fixed assets - 17,465 - 17,465
Acquisition of
fixed assets (571,167) (188,763) (665,911) (356,675)
Increase in
intangible assets
and other
long-term assets,
net of investment
tax credits (893,112) (402,204) (1,609,078) (895,573)
-------------------------------------------------------------------------
(21,021,105) (3,289,882) (41,800,210) (3,951,163)
-------------------------------------------------------------------------

Financing
activities
Increase in
long-term debt 29,250,000 7,728,540 56,000,000 7,728,540
Repayment of
long-term debt (5,325,764) (1,981,006) (33,960,802) (1,981,006)
Credit facilities
financing costs (38,802) - (358,483) -
Redemption of
shares (1,718,098) (2,040,473) (1,718,098) (2,040,473)
Issuance of shares - - 22,878,906 -
-------------------------------------------------------------------------
22,167,336 3,707,061 42,841,523 3,707,061
-------------------------------------------------------------------------

Effect of exchange
rate changes
on cash
denominated in
foreign currency 21,693 15,257 (119,119) 5,329

Increase (decrease)
in cash and
cash equivalents 596,577 (700,033) (3,444,427) (3,374,654)
Cash and cash
equivalents,
beginning of year 2,933,394 423,812 6,974,398 3,098,433
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of year 3,529,971 (276,221) 3,529,971 (276,221)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Contact Information

  • LOGIBEC GROUPE INFORMATIQUE LTD.
    Claude Roy
    President and Chief Executive Officer
    514-766-0134
    or
    LOGIBEC GROUPE INFORMATIQUE LTD.
    Marc P. Brunet
    Chief Financial Officer
    514-762-3833