TECSYS Inc.
TSX : TCS

TECSYS Inc.

February 24, 2009 14:42 ET

TECSYS Announces Financial Results for Q3, 2009 - Cites Strong Customer Base Demand

MONTREAL, QUEBEC--(Marketwire - Feb. 24, 2009) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company announced today its results for the third quarter of fiscal year 2009, ended January 31st, 2009. All dollar amounts are expressed in Canadian currency and reported in accordance with Canadian Generally Accepted Accounting Principles (GAAP), and are unaudited.

Highlights of the Third Quarter include:

- Total revenue was $9.6M in Q3 of fiscal 2009 compared to $10.7M in Q3 of fiscal 2008.

- Gross margin percentage was 42% in Q3 of fiscal 2009 compared to 44% in Q3 of last fiscal year.

- Earnings from operations for the third quarter of fiscal 2009 were $329K compared to $842K for the same quarter of last fiscal year.

- EBITDA for Q3 of fiscal 2009 was $480K compared to $1,108K for Q3 of last fiscal year.

- After a loss on exchange of $86K and a further writedown on the Company's Asset Backed Commercial Paper bookings of $123K, net earnings for the third quarter of fiscal 2009 were $97K or $0.01 per share, compared to $723K or $0.06 per share for the third quarter of last fiscal year.

- Annualized return-on-equity was equal to 2.5% in Q3 of fiscal 2009 compared to 18.9% in Q3 of last fiscal year.

- At the end of Q3, 2009 annualized recurring revenue stood at $13.4M up from $13.1M at the end of Q2, 2009. Recurring revenue is principally made up of annual software maintenance contracts.

- At the end of the third quarter, backlog stood at $20.6 M, up from $20.1M at the end of Q2 of this fiscal year.

- During the quarter, the Company generated $1.6M cash from operations.

- At the end of Q3, 2009 cash and cash equivalent amounted to $8.2M compared to $6.7M at the end of Q2, 2009 with no significant long term debt.

In accordance with the company's dividend policy, TECSYS also announced that the Company's Board of Directors has declared a $0.02/share dividend, to be paid on March 31, 2009 to shareholders of record at the close of business on March 12, 2009.

Peter Brereton, President and CEO of TECSYS Inc. commented on the results: "Q3 of last year was a record quarter and this makes for a tough comparison, but in a quarter where the economy slowed significantly, we grew our backlog, our recurring revenue and our cash. Although the economic climate clearly impacted decision making, resulting in slower product sales, the total value of bookings (including products and services) continued at a solid pace; rising to $6.6M."

During the Quarter, the Company signed four new customers, including:

- The Department of Health for a large U.S. City

- A Gas & Welding Supplies distributor in Texas

- An industrial distributor in Saskatchewan

- An industrial distributor in Ontario

Furthermore, TECSYS also signed a substantial number of business contracts with existing customers and completed the go-live of twenty-two projects for customers in Canada and the U.S. Key account go-lives include: VHA and Amerisource in the healthcare sector, 3 heavy equipment dealers, Entertainment One, Canon USA, and Toyota Canada in the high-volume distribution sector.

Year-to-date highlights include:

- Revenue for the first nine months of fiscal 2009 increased 6% to $30.6M from $28.9M in the same period of last fiscal year.

- Earnings from operations for the first nine months of fiscal 2009 were $1,366K compared to $1,960K for the same period in last fiscal year.

- EBITDA reached $2,155K in the first nine months, 2009 compared to $2,162K for the first nine months, 2008.

- Net earnings for the first nine months of fiscal 2009 were $1,015K or $0.08 per share compared to $1,214K or $0.09 per share for the same period of the prior fiscal year.

- Annualized return-on-equity was equal to 8.7% in the first nine months of fiscal 2009 compared to 10.5% for the same period in last fiscal year.



TECSYS' Third Quarter, Fiscal 2009 Earnings Conference Call:

Date: February 24, 2009
Time: 4:30 pm
Phone number: 1-800-633-8761 or 1-416-620-5690
The call can be replayed by calling: 1-800-558-5253 (access code: 21415517)
or 1-416-626-4100 (access code: 21415517)


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 over 500 mid-size and Fortune 1000 corporations in healthcare, heavy equipment, 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, 2008. 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 (C) TECSYS Inc. 2009. 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)
January 31, April 30,
2009 2008
(unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Assets

Current assets
Cash and cash equivalents 7,505 5,693
Accounts receivable 9,831 9,233
Work in progress 462 443
Other accounts receivable 156 204
Tax credits receivable 1,057 1,279
Inventory 398 216
Prepaid expenses 739 847
--------------------------------------------------------------------------
20,148 17,915

Restricted cash equivalents and other investments 699 672
Asset-backed commercial paper 3,755 4,045
Long-term receivables 85 165
Long-term investment 298 350
Property and equipment, net 1,534 1,713
Intangible assets, net 1,066 1,480
Deferred development costs, net 1,429 933
Goodwill 2,829 2,829
--------------------------------------------------------------------------
31,843 30,102
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Liabilities

Current liabilities
Bank advances 4,000 4,003
Accounts payable and accrued liabilities 5,983 5,589
Current portion of long-term debt 133 207
Deferred revenue 5,960 4,830
--------------------------------------------------------------------------
16,076 14,629

Long-term debt 100 200
--------------------------------------------------------------------------

16,176 14,829
--------------------------------------------------------------------------

Shareholders' equity

Capital stock 1,435 1,444
Contributed surplus 12,469 12,826

Retained earnings 1,763 1,003
--------------------------------------------------------------------------
15,667 15,273
--------------------------------------------------------------------------

--------------------------------------------------------------------------
31,843 30,102
--------------------------------------------------------------------------
--------------------------------------------------------------------------



TECSYS Inc.
Consolidated Statements of Earnings
Prepared in Accordance with Canadian Generally Accepted
Accounting Principles
--------------------------------------------------------------------------
(in thousands of Canadian dollars, except share and per share data)

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
January 31, January 31, January 31, January 31,
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Revenue
Products 3,140 5,081 12,102 12,524
Services 6,222 5,327 17,664 15,603
Reimbursable expenses 287 282 831 756
--------------------------------------------------------------------------
9,649 10,690 30,597 28,883
Cost of revenue
Products 1,550 2,342 5,891 5,215
Services 3,789 3,326 11,222 9,680
Reimbursable expenses 287 282 831 756
--------------------------------------------------------------------------
5,626 5,950 17,944 15,651
--------------------------------------------------------------------------
Gross margin 4,023 4,740 12,653 13,232
--------------------------------------------------------------------------

Operating expenses
Sales and marketing 1,502 1,523 4,664 4,438
General and
administration 770 904 2,485 2,542
Gross research and
development 1,409 1,260 4,024 3,789
Research and
development tax
credits (129) (108) (418) (324)
Deferred development
costs (262) (51) (643) (206)
Stock-based
compensation 32 10 94 31
Amortization of
property and equipment 133 147 398 423
Amortization of
intangible assets 167 176 537 492
Amortization of
deferred development
costs 72 37 146 87
--------------------------------------------------------------------------
3,694 3,898 11,287 11,272
--------------------------------------------------------------------------

Earnings from
operations 329 842 1,366 1,960

Interest income 10 23 48 130
Interest expense (6) (33) (61) (37)
Foreign exchange
losses (86) (9) (163) (485)
Changes in fair value
of asset-backed
commercial paper (123) (68) (123) (318)
Share of net loss
and amortization of
intangible assets of
a company subject to
significant influence (27) (32) (52) (36)
--------------------------------------------------------------------------
Net earnings for
the period 97 723 1,015 1,214
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Weighted average
number of common
shares outstanding
- basic 12,699,887 13,130,070 12,844,652 13,429,091
--------------------------------------------------------------------------
- diluted 12,699,996 13,155,623 12,851,358 13,454,055
--------------------------------------------------------------------------
Basic and diluted
net earnings per
common share $0.01 $0.06 $0.08 $0.09
--------------------------------------------------------------------------
--------------------------------------------------------------------------



TECSYS Inc.
Consolidated Statements of Cash Flows
Prepared in Accordance with Canadian Generally Accepted
Accounting Principles
--------------------------------------------------------------------------
(in thousands of Canadian dollars, except share and per share data)

Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
January 31, January 31, January 31, January 31,
2009 2008 2009 2008
(unaudited) (unaudited) (unaudited) (unaudited)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Cash flows from

Operating activities
Net earnings for the
period 97 723 1,015 1,214
Adjustments for
Amortization of property
and equipment 133 147 398 423
Amortization of
intangible assets 167 176 537 492
Amortization of deferred
development costs 72 37 146 87
Stock-based compensation 32 10 94 31
Changes in fair value of
asset-backed commercial
paper 123 68 123 318
Unrealized foreign
exchange losses (gains)(343) 366 700 252
Deferred development
costs (262) (51) (643) (206)
Share of net loss and
amortization of
intangible assets of a
company subject to
significant influence 27 32 52 36
--------------------------------------------------------------------------
46 1,508 2,422 2,647
Changes in non-cash
working capital items
related to operations
Decrease (increase) in
accounts receivable 946 (749) (598) (1,275)
Decrease (increase) in
work in progress 250 81 (19) (118)
(Increase) decrease in
other accounts
receivable(4) 51 60 60
Decrease (increase) in
tax credits receivable 651 (223) 222 (707)
(Increase) decrease in
inventory (170) 57 (182) (16)
Decrease (increase) in
prepaid expenses 167 168 108 (70)
Decrease in long-term
receivables - - 58 -
(Decrease) increase in
accounts payable and
accrued liabilities (773) 328 (332) 614
Increase (decrease) in
deferred revenue 509 (569) 1,130 858
--------------------------------------------------------------------------
1,622 652 2,869 1,993
--------------------------------------------------------------------------
Financing activities
Bank advances - 929 (3) 2,929
Repayment of long-term
debt (133) - (174) -
Issuance of
common shares - - 20 4
Purchase of
common shares
for cancellation (104) (428) (480) (999)
Dividends paid on
common shares - - (255) -
--------------------------------------------------------------------------
(237) 501 (892) 1,934
--------------------------------------------------------------------------
Investing activities
(Increase) decrease in
short-term and other
investments (4) 21 (27) (2,414)
Interest received on
asset-backed commercial
paper 167 - 167 -
Acquisitions of property
and equipment (16) (50) (222) (267)
Proceeds on disposal of
property and equipment - - 8 -
Acquisitions of
intangible assets (50) (8) (135) (33)
Proceeds on disposal of
intangible assets - - 7 -
Decrease (increase) in
long-term receivables
including the current
portion from a related
party 13 17 37 (17)
Increase in long-term
investment of a related
party - (117) - (117)
Business combination, net
of cash and cash
equivalents acquired - (1,167) - (1,167)
--------------------------------------------------------------------------
110 (1,304) (165) (4,015)
--------------------------------------------------------------------------
Variation in cash and
cash equivalents 1,495 (151) 1,812 (88)
Cash and cash equivalents
- beginning of period 6,010 4,554 5,693 4,491

--------------------------------------------------------------------------
Cash and cash equivalents
- end of period 7,505 4,403 7,505 4,403
--------------------------------------------------------------------------
--------------------------------------------------------------------------



TECSYS Inc.
Consolidated Statements of Changes in Shareholders' Equity
Prepared in Accordance with Canadian Generally Accepted
Accounting Principles
-------------------------------------------------------------------------
(in thousands of Canadian dollars, except number of shares)
(unaudited)

Common Shares 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 (350,300) (39) (441) - (480)

Stock options
exercised 12,500 20 - - 20

Fair value
associated with
options exercised - 10 (10) - -

Stock-based
compensation - - 94 - 94

Net earnings for
the period - - - 1,015 1,015

Dividends - - - (255) (255)

-------------------------------------------------------------------------
Balance, January 31,
2009 12,665,884 1,435 12,469 1,763 15,667
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Common Shares Contributed Retained Total
Number Amount surplus earnings
-------------------------------------------------------------------------
Balance,
April 30, 2007 13,678,297 56,133 11,042 (51,941) 15,234

Repurchase of
common shares (670,800) (2,753) 1,754 - (999)

Stock options
exercised 3,000 4 - - 4

Fair value
associated with
options exercised - 2 (2) - -

Stock-based
compensation - - 31 - 31

Net earnings for
the period - - - 1,214 1,214

-------------------------------------------------------------------------
Balance, January 31,
2008 13,010,497 53,386 12,825 (50,727) 15,484
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