TECSYS Inc.
TSX : TCS

TECSYS Inc.

July 08, 2010 16:24 ET

TECSYS Achieves 17 Cents EPS in Fiscal 2010

Adds Nine New Clients in Q4

MONTREAL, QUEBEC--(Marketwire - July 8, 2010) - July 8, 2010 - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, announced today its results for the fourth quarter and 2010 fiscal year ended April 30th, 2010. The results of the 2010 fiscal year are audited. All dollar amounts are expressed in Canadian currency and reported in accordance with Canadian Generally Accepted Accounting Principles (GAAP).

Highlights of the Fourth Quarter include:

  • Revenue was $8.8M in Q4 of fiscal 2010 compared to $10.4M in Q4 of fiscal 2009.
  • Earnings from operations in Q4, 2010 were $851K compared to $815K for the same quarter of last year.
  • EBITDA increased 30% to $1,279K in Q4, 2010 compared to $982K for Q4 of last year.
  • Net earnings for Q4, 2010 were $1,266K or basic net earnings of $0.10 per share compared to $572K or basic net earnings of $0.04 per share in Q4, 2009. Net earnings for Q4, 2010 were achieved after accounting for net interest expense of $65K, foreign exchange gain of $10K, a share of net gain and amortization of intangible assets of $17K from a company in which TECSYS has an equity interest, and an income tax recovery of $453K.
  • During the quarter non-refundable tax credits of $1.4M and non-recurring expenses of $539K were booked, positively impacting earnings by a total of $889K.
  • Annualized return-on-equity was 30.6% in Q4 of 2010 compared to 14.5% in Q4 of last fiscal year.
  • At the end of Q4, 2010, annualized recurring revenue was $13.1M, or 36% of 2010 fiscal year revenue. Recurring revenue is principally made-up of annual software maintenance contracts.
  • At the end of the fourth quarter, 2010, backlog was $18.3M compared to $17.8M at the end of Q3, 2010.
  • During the quarter, the Company generated $1,409K cash from operations compared to $930K for the corresponding quarter of fiscal 2009.
  • Cash and cash equivalents, as well as short-term and other investments at the end of Q4, 2010 amounted to $8.1M compared to $7.8M at the end of Q4, 2009, with no long-term debt.

Peter Brereton, President and CEO of TECSYS Inc., commented on the results: "While services and hardware revenue continued to lag, due to lower bookings in prior quarters, Q4 was an excellent quarter for new bookings. After a challenging year, Q4 saw the signing of nine new customers in our core verticals and an improved sales pipeline, signalling the start of the recovery in our customers' economic situations. The full year numbers highlight the continuing shift in our business model toward higher proprietary license sales as a percentage of our business. During a tough year, we were able to grow our license sales by 9% and add 23 new clients. We continued to further penetrate our key verticals, with particularly substantial gains in healthcare. We increased our R&D investment in our new platform, while controlling costs and protecting the bottom line. We believe that we are in an excellent position as we exit the recession to take advantage of the next cycle of growth."

During the quarter, the Company won the business of nine new customers, including:

  • A pharmaceutical products distributor in Missouri
  • A hospital supply network in Indiana
  • A heavy equipment dealer in Louisville, Kentucky
  • An auto parts distributor in Quebec
  • An auto parts distribution network in Canada for a large Japanese auto manufacturer
  • A supplier of corporate supplies & services in Ontario
  • Two industrial distributors in Ontario
  • A welding and supplies distributor in Florida

Furthermore, TECSYS also signed a substantial number of business contracts with existing customers and completed the go-live of sixteen projects for customers across all of the Company's business units.

Highlights of the 2010 Fiscal Year include:

  • Revenue for fiscal 2010 was $36.8M compared to $41M for last fiscal year.
  • Earnings from operations for the year were $2,106K compared to $2,181K for the same period last year.
  • EBITDA increased to $3,312K in 2010 compared to $3,138K in fiscal 2009.
  • Net earnings for the year increased by 37.5% to $2,182K or basic net earnings of $0.18 per share, $0.17 per share on a fully diluted basis, compared to $1,587K or basic and diluted net earnings of $0.12 per share for 2009. Net earnings for fiscal 2010 were achieved after accounting for net interest expense of $69K, foreign exchange losses of $211K, a share of net loss and amortization of intangible assets of $79K from a company in which TECSYS has an equity interest, and an income tax recovery of $435K.
  • In fiscal 2010, non-refundable tax credits of $1.4M and non-recurring expenses of $539K were booked, positively impacting earnings by a total of $889K.
  • Return-on-equity was equal to 13.3% in 2010 compared to 10.2% for fiscal 2009.

TECSYS' Q4 FY2010 Earnings Conference Call:

Date: July 8, 2010
Time: 5:00 pm
Phone number: 800-897-6274 or 416-981-9035

The call can be replayed by calling 800-558-5253 (access code: 21475368 ) or 416-626-4100 (access code: 21475368 ).

About TECSYS

TECSYS is a leading supply chain management software provider that delivers powerful enterprise distribution, warehouse and transportation logistics software solutions. The company's customers include about 600 mid-size and Fortune 1000 corporations in healthcare, third-party logistics, and general wholesale high-volume distribution industries. TECSYS' shares are listed on the Toronto Stock Exchange under the ticker symbol TCS.

The statements in this news release relating to matters that are not historical fact are forward looking statements that are based on management's beliefs and assumptions. Such statements are not guarantees of future performance and are subject to a number of uncertainties, including but not limited to future economic conditions, the markets that TECSYS Inc. serves, the actions of competitors, major new technological trends, and other factors beyond the control of TECSYS Inc., which could cause actual results to differ materially from such statements. More information about the risks and uncertainties associated with TECSYS Inc.'s business can be found in the MD&A section of the Company's annual report and annual information form for the fiscal year ended April 30th, 2009. These documents have been filed with the Canadian securities commissions and are available on our website (www.tecsys.com) and on SEDAR (www.sedar.com).

Copyright © TECSYS Inc. 2010. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

 
 
TECSYS Inc.
Consolidated Balance Sheets
Prepared in Accordance with Canadian Generally Accepted Accounting Principles
     
(in thousands of Canadian dollars)  
  April 30, April 30,
  2010 2009
     
     
Assets    
Current assets    
Cash and cash equivalents 7,256 7,510
Short-term and other investments 850 325
Accounts receivable 7,346 9,307
Work in progress 66 303
Other accounts receivable 425 198
Tax credits receivable 1,914 1,536
Inventory 171 219
Prepaid expenses 879 668
Future tax assets 142 -
  19,049 20,066
     
Restricted cash equivalents and other investments 200 739
Asset-backed commercial paper 3,514 3,535
Long-term receivables 48 77
Investment tax credits 930 -
Long-term investment 211 290
Property and equipment 2,472 1,481
Intangible assets 623 930
Deferred development costs 1,991 1,519
Future tax assets 453 -
Goodwill 2,804 2,829
  32,295 31,466
     
Liabilities    
Current liabilities    
Bank advances 3,951 4,000
Accounts payable and accrued liabilities 5,305 5,154
Current portion of long-term debt 249 133
Deferred revenue 5,827 6,249
  15,332 15,536
     
Long-term debt - 100
     
  15,332 15,636
     
Shareholders' equity    
     
Capital stock 1,386 1,420
Contributed surplus 11,931 12,328
     
Retained earnings 3,646 2,082
  16,963 15,830
     
  32,295 31,466
               
               
               
               
TECSYS Inc.      
Consolidated Statements of Earnings and Comprehensive Earnings  
Prepared in Accordance with Canadian Generally Accepted Accounting Principles      
                 
(in thousands of Canadian dollars, except share and per share data)      
                 
  Three Months Ended   Three Months Ended   Year Ended   Year Ended  
  April 30,   April 30,   April 30,   April 30,  
  2010   2009   2010   2009  
  (unaudited)   (unaudited)          
                 
Revenue                
Products 3,467   3,647   13,333   15,749  
Services 5,197   6,473   22,437   24,137  
Reimbursable expenses 183   300   1,002   1,131  
  8,847   10,420   36,772   41,017  
Cost of revenue              
Products 1,050   1,101   4,585   6,992  
Services 3,637   3,947   14,418   15,169  
Reimbursable expenses 183   300   1,002   1,131  
  4,870   5,348   20,005   23,292  
Gross margin 3,977   5,072   16,767   17,725  
                 
Operating expenses              
Sales and marketing 1,635   1,697   5,902   6,361  
General and administration 834   1,122   3,578   3,607  
Gross research and development 1,719   1,524   6,333   5,548  
Research and development tax credits (1,403 ) (342 ) (2,012 ) (760 )
Deferred development costs (255 ) (167 ) (876 ) (810 )
Stock-based compensation 57   31   149   125  
Amortization of property and equipment 149   147   550   545  
Loss on disposal of property and equipment 153   -   153   -  
Amortization of intangible assets 105   167   480   704  
Amortization of deferred development costs 132   78   404   224  
  3,126   4,257   14,661   15,544  
                 
Earnings from operations 851   815   2,106   2,181  
                 
Interest income 23   5   37   53  
Interest expense (88 ) (8 ) (106 ) (69 )
Foreign exchange gains (losses) 10   (117 ) (211 ) (280 )
Changes in fair value of asset-backed commercial paper -   (115 ) -   (238 )
Share of net profit (loss) and amortization of intangible assets of a company subject to significant influence 17   (8 ) (79 ) (60 )
Earnings before income taxes 813   572   1,747   1,587  
Income taxes recovery (453 ) -   (435 ) -  
Net earnings and comprehensive earnings for the period 1,266   572   2,182   1,587  
                 
Weighted average number of common shares outstanding                
  - basic 12,261,372   12,590,733   12,362,504   12,782,738  
  - diluted 12,485,254   12,591,146   12,550,420   12,785,157  
                 
Basic net earnings per common share $ 0.10   $ 0.04   $ 0.18   $ 0.12  
Diluted net earnings per common share $ 0.10   $ 0.04   $ 0.17   $ 0.12  
   
   
   
   
TECSYS Inc.  
Consolidated Statements of Cash Flows  
Prepared in Accordance with Canadian Generally Accepted Accounting Principles  
                 
(in thousands of Canadian dollars)  
                 
                 
  Three Months Ended   Three Months Ended   Year Ended   Year Ended  
  April 30,   April 30,   April 30,   April 30,  
  2010   2009   2010   2009  
  (unaudited)   (unaudited)          
Cash flows from                
                 
Operating activities                
Net earnings for the period 1,266   572   2,182   1,587  
Adjustments for                
  Amortization of property and equipment 149   147   550   545  
  Amortization of intangible assets 105   167   480   704  
  Amortization of deferred development costs 132   78   404   224  
  Stock-based compensation 57   31   149   125  
  Loss on disposal of property and equipment 153   -   153   -  
  Changes in fair value of asset-backed commercial paper -   115   -   238  
  Unrealized foreign exchange gains (60 ) (883 ) (43 ) (183 )
  Deferred development costs (255 ) (167 ) (876 ) (810 )
  Share of net (profit) loss and amortization of intangible assets of a company subject to significant influence (17 ) 8   79   60  
  Federal non-refundable research and development tax credits (1,428 ) -   (1,428 ) -  
  Income taxes (452 ) -   (452 ) -  
  (350 ) 68   1,198   2,490  
Changes in non-cash working capital items related to operations              
  Decrease (increase) in accounts receivable 699   524   1,961   (74 )
  Decrease in work in progress 34   159   237   140  
  (Increase) decrease in other accounts receivable (274 ) 77   (271 ) 137  
  Decrease (increase) in tax credits receivable 831   (479 ) (23 ) (257 )
  Decrease (increase) in inventory 36   179   48   (3 )
  (Increase) decrease in prepaid expenses (76 ) 71   (211 ) 179  
  Decrease in long-term receivables -   -   -   58  
  Increase (decrease) in accounts payable and accrued liabilities 786   42   (249 ) (290 )
  (Decrease) increase in deferred revenue (277 ) 289   (422 ) 1,419  
  1,409   930   2,268   3,799  
Financing activities                
  Repayment of bank advances (18 ) -   (49 ) (3 )
  Purchase price adjustments on acquisition applied against long-term debt 19   -   36   (174 )
  Repayment of long-term debt (20 ) -   (20 ) -  
  Issuance of common shares -   -   -   20  
  Purchase of common shares for cancellation (191 ) (187 ) (580 ) (667 )
  Payment of dividends (308 ) (253 ) (618 ) (508 )
  (518 ) (440 ) (1,231 ) (1,332 )
Investing activities                
  Decrease (increase) in short-term and other investments and restricted cash equivalents and other investments 215   (365 ) 14   (392 )
  Interest and principal received on asset-backed commercial paper 1   -   125   167  
  Acquisitions of property and equipment (1,002 ) (99 ) (1,313 ) (321 )
  Proceeds on disposal of property and equipment 20   -   20   8  
  Acquisitions of intangible assets (132 ) (26 ) (173 ) (161 )
  Proceeds on disposal of intangible assets -   -   -   7  
  Decrease in goodwill related to the Streamline acquisition 25   -   25   -  
  Decrease in long-term receivables including the current portion from a related party 14   5   11   42  
  (859 ) (485 ) (1,291 ) (650 )
Variation in cash and cash equivalents 32   5   (254 ) 1,817  
Cash and cash equivalents - beginning of period 7,224   7,505   7,510   5,693  
                 
Cash and cash equivalents - end of period 7,256   7,510   7,256   7,510  
   
   
   
   
TECSYS Inc.  
Consolidated Statements of Shareholders' Equity  
Prepared in Accordance with Canadian Generally Accepted Accounting Principles  
                     
                     
(in thousands of Canadian dollars, except number of shares)  
                     
  Capital stock   Contributed   Retained   Total  
  Number   Amount   surplus   earnings      
                     
Balance, April 30, 2009 12,525,884   1,420   12,328   2,082   15,830  
                     
Repurchase of common shares (300,859 ) (34 ) (546 ) -   (580 )
                     
Stock options exercised 281   -   -   -   -  
                     
Stock-based compensation -   -   149   -   149  
                     
Net earnings for the year -   -   -   2,182   2,182  
                     
Dividends -   -   -   (618 ) (618 )
                     
Balance, April 30, 2010 12,225,306   1,386   11,931   3,646   16,963  
                     
                     
  Capital stock   Contributed   Retained   Total  
  Number   Amount   surplus   earnings      
                     
Balance, April 30, 2008 13,003,684   1,444   12,826   1,003   15,273  
                     
Repurchase of common shares (490,300 ) (54 ) (613 ) -   (667 )
                     
Stock options exercised 12,500   20   -   -   20  
                     
Fair value associated with options exercised -   10   (10 ) -   -  
                     
Stock-based compensation -   -   125   -   125  
                     
Net earnings for the year -   -   -   1,587   1,587  
                     
Dividends -   -   -   (508 ) (508 )
                     
Balance, April 30, 2009 12,525,884   1,420   12,328   2,082   15,830  

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