Logibec Groupe Informatique Ltd.
TSX : LGI

Logibec Groupe Informatique Ltd.

April 25, 2007 17:27 ET

Logibec: Strong Growth in Revenue and Earnings

MONTREAL, QUEBEC--(CCNMatthews - April 25, 2007) - Logibec Groupe Informatique Ltd. (TSX:LGI) announced today the results of its quarter ended March 31, 2007. All monetary amounts are expressed in Canadian dollars.

HIGHLIGHTS

- Revenue up 28% for the second quarter ended March 31, 2007, to stand at $12.3 million compared to $9.6 million for the same period in the previous fiscal year. Revenue for the first six months of fiscal year 2007 stands at $22.3 million, representing an increase of 17%, compared to $19.0 million for the same period in the previous fiscal year.

- Net earnings of $2.3 million, up 57% for the quarter, or $0.26 per share, compared to net earnings of $1.5 million, or $0.16 per share. Net earnings increased by 39% to $4.0 million for the six-month period, compared to $2.9 million for the same period in the previous fiscal year.

- Operating margin of $5.3 million or 43% of total revenue, compared to $3.7 million or 39% of total revenue for the same period in the previous fiscal year.

- Net margin increased to 19% of total revenue, compared to 15% of total revenue for the same quarter in the previous fiscal year. The net margin for the six months ended March 31 increased from 15% in 2006 to 18% in 2007.

OPERATING RESULTS

This report compares the operating results for the quarter ended March 31, 2007, with those of the quarter ended March 31, 2006 (restated).

REVENUE

Revenue for the second quarter of fiscal year 2007 stood at $12.3 million, an increase of 28%, compared to $9.6 million for the same period in the previous fiscal year. Revenue for the first six months of fiscal year 2007 stands at $22.3 million, representing an increase of 17%, compared to $19.0 million for the same period in the previous fiscal year.



Geographical Revenue Breakdown

Q2 2006
Canada: 77%
United States: 23%

Q2 2007
Canada: 78%
United States: 22%


Revenue from Canadian activities for the quarter ended March 31, 2007, represents 78% of consolidated revenue compared to 77% of consolidated revenue for the same period in the previous fiscal year. Revenue from American activities decreased from 23% of consolidated revenue for the second quarter of fiscal year 2006 to 22% of consolidated revenue for the current fiscal year. This decrease is due to the significant increase in non-recurring revenue in Canada, as explained below, and does not represent a long-term trend. It should be noted that American activities make up 30% of consolidated recurring revenue. Management still believes that the growth in American activities, whether it be organic or through acquisitions, will result in an increase in the proportion of consolidated revenue from the United States.


Revenue Growth
(in thousands of Canadian dollars)
Q2 2006 Q2 2007 Variation Growth
---------------------------------------------------------------------
---------------------------------------------------------------------
Canada 7,370 9,648 2,278 31%
United States 2,233 2,661 428 19%
---------------------------------------------------------------------
Consolidated
Revenue 9,603 12,309 2,706 28%
---------------------------------------------------------------------


Revenue from Canadian activities

Revenue from Canadian activities for the quarter ended March 31, 2007, stands at $9.6 million, representing an increase of 31% compared to the same quarter in the previous fiscal year. This growth is mainly due to an increase in non-recurring revenue of over $2.1 million or 188%. Activities that contributed to the increase are (i) special work carried out to implement the pay equity measures ordered by the Quebec government for public sector employees and more specifically for employees in health and social services facilities using the Company's payroll services, (ii) professional services provided to clients using our clinical administrative software, (iii) software development services for the I-CLSC software and (iv) the sale and installation of servers.

For the quarter ended March 31, 2007, our recurring revenue from Canadian activities increased by nearly $0.2 million to $6.4 million, representing an increase of 2% compared to $6.2 million for the same period in the previous fiscal year, and this, despite a context that continues to be highly competitive.

As at March 31, 2007, the Company had $2.0 million in current deferred professional services revenue and $3.7 million in long-term deferred professional services revenue in accordance with its revenue recognition policy based on EIC-142. 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

Revenue from American activities increased by $0.4 million for the second quarter to stand at $2.7 million. This increase is due to growth in recurring revenue resulting from the contribution of Monette's activities as well as from organic growth in MDI's activities.

As at March 31, 2007, the Company had $0.8 million in current deferred software license revenue and $1.9 million in long-term deferred software license revenue in accordance with its revenue recognition policy based on EIC-142. This revenue, as well as the related costs, which are commissions granted to sales representatives and agents, are recognized over the average term of the related agreements, which is generally five years.

OPERATING INCOME

Operating income before depreciation and amortization, income from temporary investments, loss on disposal of fixed assets, financial expenses and taxes for the quarter ended March 31, 2007 stood at $5.3 million, representing an increase of $1.6 million or 42% over the same period last year. Operating income before depreciation and amortization, income from temporary investments, loss on disposal of fixed assets, financial expenses and taxes for the first six months ended March 31, 2007 stood at $9.3 million, representing an increase of $2.1 million or 29% over the same period last year.

OPERATING EXPENSES

Operating expenses for the quarter, which are composed of service costs and selling and administrative expenses, stood at $7.0 million, representing an increase of $1.1 million compared to the operating expenses recorded for same period in the previous fiscal year. The operating expenses for the first six months of fiscal year 2007 stood at $12.9 million compared to $11.8 million recorded for same period in the previous fiscal year.

Service costs. Service costs increased by $0.9 million or 22%. The variance in service costs is presented in the following table:



Service Costs Service Costs / Revenue
(in thousands of Canadian dollars)
Q2 2006 Q2 2007 Variance Q2 2006 Q2 2007
---------------------------------------------------------------------
---------------------------------------------------------------------
Canada 3,087 3,654 567 Canada 42% 38%
United States 737 1,028 291 United
States 33% 39%
---------------------------------------------------------------------
Consolidated
Service Costs 3,824 4,682 858 Consolidated 40% 38%
---------------------------------------------------------------------


Canadian service costs increased by 18% for the second quarter of 2007 compared to the same period in the previous year. The $0.6 million increase in this item results from an increase in the previously described professional services revenue and from a decrease in expenses that were capitalized as software development costs. The significant increase of 40% in the service costs for American activities is mainly due to the addition of wage costs for Monette's employees.

Selling, general and administrative expenses. Selling, general and administrative expenses were $2.3 million or 19% of revenue for the quarter compared to $2.0 million or 21% of revenue for the same period last year. The increase of $0.3 million is mainly explained by the increase in the selling, general and administrative expenses of Monette's activities.

Stock-based compensation. Stock-based compensation expense was $29,648 for the second quarter of the fiscal year compared to $88,944 for the same period in the previous fiscal year. This expense is related to stock options granted on April 1, 2005. As of April 1, 2007, all these stock options became exercisable and therefore no expense remains to be recognized for these grants. Given that the Company has not granted any additional stock options since April 1, 2005, no expense for stock-based compensation will be recognized as of the quarter ended June 30, 2007, unless additional options are granted. As of the date of the present MD&A, the Company does not expect to grant additional stock options.

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, 2007 rose to $1.6 million, representing an increase of 6% compared to the same period in the previous fiscal year. This increase is mainly due to the amortization of the customer relationship and technology acquired from Monette and from the acceleration of the amortization of certain elements of the technology developed in-house.

LOSS ON DISPOSITION OF PROPERTY, PLANT AND EQUIPMENT

The Company recognized a loss on disposal of fixed assets of $0.1 million over the second quarter. This loss results from the sale of a commercial printer formerly used by the Company's payroll processing center and no longer required due to the increased use of electronic documents.

FINANCIAL EXPENSES

Financial expenses decreased by $0.1 million, representing a decrease of 74% compared to financial expenses for the same period last year. Financial expenses were mainly composed of interest charges related to the credit facilities initially obtained to finance the bid for MDI and the subsequent merger. As at March 31, 2007, long-term debt outstanding was $5.7 million compared to $12.7 million for March 31, 2006.

NET EARNINGS

Net earnings for the second quarter ended March 31, 2007 increased by 57% to $2.3 million, or $0.26 per share ($0.26 per fully-diluted share), compared to $1.5 million, or $0.16 per share ($0.16 per fully-diluted share), for the same period in the previous fiscal year. For the first six months ended March 31, 2007, net earnings increased by 39% or $1.1 million to stand at $4.0 million, or $0.45 per share ($0.44 per fully-diluted share), compared to $2.9 million, or $0.32 per share ($0.32 per fully-diluted share), for the first six months of the previous fiscal year.

LIQUIDITY AND SOURCES OF FINANCING

OPERATING ACTIVITIES

For the second quarter ended March 31, 2007, operating activities used cash flows of $0.9 million, whereas these activities, for the same period in the previous fiscal year, generated cash flows of $0.8 million. This significant decrease is explained mainly by a change in non-cash working capital items, particularly the increase in receivables following the invoicing of professional services related to the implementation of the previously described pay equity measures.

INVESTING ACTIVITIES

The Company used $3.5 million for investing activities during the quarter ended March 31, 2007. The main investing activity was the acquisition of the business activities of Choice Systems Enterprise, Inc. ("Choice Systems") for cash consideration of US$2.3 million (CA$2.7 million) and a promissory note in the amount of US$0.2 million (CA$0.2 million). The amount of the promissory note is subject to certain adjustments and is payable six months after the acquisition date.

During the second quarter of 2007, the Company invested $0.2 million in fixed assets and $0.4 million in intangible assets, which were mainly capitalized software development costs.

FINANCING ACTIVITIES

The quarter from January to March is the quarter during which the Canadian operating unit generates the least cash flow since most of the recurring revenue is billed annually on April 1. This fact contributed to the Company's need to borrow $7.7 million under its credit facilities during the second quarter in order to finance its operations. These loans were also required to finance stock redemptions and a portion of the consideration paid for the Choice Systems transaction.

During the second quarter, the Company repurchased 110,000 common shares through a normal course issuer bid announced on February 13, 2007. These shares were repurchased for cash consideration of $2.0 million at an average price per share of $18.53. In addition, during the quarter, the Company made regular monthly payments and advance payments on its reducing revolving term loans which totaled $2.0 million. Management believes that the reducing revolving term loans will be repaid in full during the current fiscal year.

Subsequently to the end of the quarter, MDI obtained a credit facility of US$10 million from an American financial institution. Management's decided to put in place the facility in order to finance MDI's acquisitions from American sources.

ABOUT LOGIBEC

Logibec is among the ten largest Canadian companies specializing in the development, marketing, implementation and support of information systems for the health and social services sector. Logibec serves over 200 clients throughout Quebec and the rest of Canada. Since completing its acquisition of MDI Technologies, Inc. ("MDI"), in June 2005, and Monette Information Systems Corporation ("Monette"), in March 2006, Logibec also serves over 800 clients representing approximately 1,900 facilities throughout the United States. Logibec's services are delivered by an experienced team of approximately 250 employees as at March 31, 2007. The Company has its head office in Montreal as well as offices in Quebec City, Edmonton, St. Louis, Missouri, 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
---------------------------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
(As (As
restated) restated)

Revenue 12,309,442 9,603,231 22,279,009 19,032,213
---------------------------------------------------------------------

Operating expenses
Service costs 4,681,529 3,824,210 8,823,960 7,430,710
Selling and
administrative
expenses 2,296,164 1,948,553 4,062,720 4,188,679
Stock-based
compensation 29,648 88,944 59,296 177,888
---------------------------------------------------------------------
7,007,341 5,861,707 12,945,976 11,797,277
---------------------------------------------------------------------

Earnings before
the following items 5,302,101 3,741,524 9,333,033 7,234,936

Amortization of
fixed assets 262,881 268,704 530,083 539,805
Amortization of
intangible assets
and other long-term
assets 1,363,226 1,259,455 2,654,420 2,483,988
Loss on disposal of
fixed assets 120,281 18,493 124,691 18,493
Income on temporary
investments (9,848) (27,053) (33,549) (42,526)
Financial expenses 51,666 195,246 32,878 387,171
---------------------------------------------------------------------
Earnings before
income taxes 3,513,895 2,026,679 6,024,510 3,848,005

Income taxes 1,209,000 555,617 2,049,000 985,110
---------------------------------------------------------------------
Net earnings 2,304,895 1,471,062 3,975,510 2,862,895
---------------------------------------------------------------------
---------------------------------------------------------------------

Net earnings per
share
Basic 0.26 0.16 0.45 0.32
Diluted 0.26 0.16 0.44 0.32
---------------------------------------------------------------------


Weighted average
number of common
shares outstanding
Basic 8,909,576 9,032,335 8,920,772 8,959,766
Diluted 8,975,504 9,068,591 8,983,090 9,054,995
---------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(unaudited)

Three months ended Six months ended
March 31 March 31
---------------------------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
(As (As
restated) restated)
Retained earnings,
beginning of year
Balance carried
forward 14,107,105 10,970,445 12,436,490 9,445,516
Restatement of
prior years'
financial
statements - (2,134,583) - (1,891,114)
---------------------------------------------------------------------
Adjusted balance 14,107,105 8,835,862 12,436,490 7,554,402

Net earnings 2,304,895 1,471,062 3,975,510 2,862,895
---------------------------------------------------------------------
16,412,000 10,306,924 16,412,000 10,417,297

Premium on
redemption of
common shares (1,689,957) (478,424) (1,689,957) (588,797)
---------------------------------------------------------------------
Retained earnings,
end of year 14,722,043 9,828,500 14,722,043 9,828,500
---------------------------------------------------------------------
---------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED BALANCE SHEETS

March 31, September 30,
2007 2006
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $
(unaudited) (audited)
(As restated)
Assets
Current assets
Cash and cash equivalents 654,667 3,098,433
Accounts receivable 6,003,918 4,252,261
Income tax credits receivable 1,797,989 2,025,471
Income taxes receivable 469,774 165,148
Future income taxes 423,440 388,000
Other current assets 2,104,482 1,391,897
---------------------------------------------------------------------
11,454,270 11,321,210

Fixed assets 3,789,254 4,086,812
Goodwill 35,141,252 31,654,862
Intangible assets and other long-term
assets 23,924,332 25,296,737
---------------------------------------------------------------------
74,309,108 72,359,621
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities
Current liabilities
Credit facility 930,888 -
Accounts payable and accrued liabilities 5,635,768 5,677,593
Income taxes 3,024,563 4,083,774
Future income taxes 232,000 232,000
Current portion of long-term debt 4,572,072 -
---------------------------------------------------------------------
Current liabilities, excluding deferred
revenue 14,395,291 9,993,367

Deferred revenue 4,651,197 11,307,157
---------------------------------------------------------------------
19,046,488 21,300,524

Long-term deferred revenue 5,597,197 5,823,432
Long-term debt 1,147,902 -
Future income taxes 7,579,945 7,303,100
---------------------------------------------------------------------
33,371,532 34,427,056
---------------------------------------------------------------------

Shareholders' equity
Share capital 28,084,634 28,435,149
Contributed surplus 474,368 415,072
Retained earnings 14,722,043 12,436,490
Currency translation adjustment (2,343,469) (3,354,146)
---------------------------------------------------------------------
40,937,576 37,932,565
---------------------------------------------------------------------
74,309,108 72,359,621
---------------------------------------------------------------------
---------------------------------------------------------------------



LOGIBEC GROUPE INFORMATIQUE LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended Six months ended
March 31 March 31
---------------------------------------------------------------------
2007 2006 2007 2006
---------------------------------------------------------------------
---------------------------------------------------------------------
$ $ $ $
(As (As
restated) restated)
Operating activities
Net earnings 2,304,895 1,471,062 3,975,510 2,862,895
Adjustments for:
Amortization of
fixed assets 262,881 268,704 530,083 539,805
Amortization of
intangible assets
and other long-term
assets 1,363,226 1,259,455 2,654,420 2,483,988
Stock-based
compensation 29,648 88,944 59,296 177,888
Loss on disposal
of fixed assets 120,281 18,493 124,691 18,493
---------------------------------------------------------------------
4,080,931 3,106,658 7,344,000 6,083,069

Changes in non-cash
operating working
capital items (5,213,400) (2,355,472)(10,479,881) (4,888,445)
---------------------------------------------------------------------
(1,132,469) 751,186 (3,135,881) 1,194,624
---------------------------------------------------------------------

Investing activities
Business acquisition,
net of cash
and cash-equivalents
acquired (2,716,380) (1,442,804) (2,716,380) (1,442,804)
Proceeds from
disposal of fixed
assets 17,465 32,326 17,465 32,326
Acquisition of fixed
assets (188,763) (191,882) (356,675) (295,779)
Increase in
intangible assets
and other long-term
assets, net of
investment tax
credits (402,204) (467,549) (895,573) (949,719)
---------------------------------------------------------------------
(3,289,882) (2,069,909) (3,951,163) (2,655,976)
---------------------------------------------------------------------

Financing activities
Increase in
long-term debt 7,728,540 3,100,000 7,728,540 3,100,000
Repayment of
long-term debt (1,981,006) (1,143,017) (1,981,006) (2,786,037)
Redemption of shares (2,040,473) (662,865) (2,040,473) (811,373)
Issuance of shares - - - 1,001,000
---------------------------------------------------------------------
3,707,061 1,294,118 3,707,061 503,590
---------------------------------------------------------------------

Effect of exchange
rate changes
on cash denominated
in foreign currency 15,257 (13,377) 5,329 (48,122)

Decrease in cash and
cash equivalents (700,033) (37,982) (3,374,654) (1,005,884)
Cash and cash
equivalents,
beginning of year 423,812 2,223,937 3,098,433 3,191,839
---------------------------------------------------------------------
Cash and cash
equivalents,
end of year (276,221) 2,185,955 (276,221) 2,185,955
---------------------------------------------------------------------
---------------------------------------------------------------------

The TSX Venture accepts no responsibility for the truth or accuracy of this press release.

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
    514-766-9237 (FAX)
    www.logibec.com