TECSYS Inc.
TSX : TCS

TECSYS Inc.

September 09, 2010 11:24 ET

TECSYS Announces Q1, 2011 Results, Declares Dividend

Rolls Out New Visual Warehouse Management System

MONTREAL, QUEBEC--(Marketwire - Sept. 9, 2010) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company announced today its results for the first quarter of fiscal year 2011, ended July 31st, 2010. All dollar amounts are expressed in Canadian currency and reported in accordance with Canadian Generally Accepted Accounting Principles (GAAP) and are unaudited.

Summary of the First Quarter:

  • Revenue was $8.4M in Q1 of fiscal 2011 compared to $9.2M in Q1 of fiscal 2010. Revenue was negatively impacted by $370K due to the strengthening of the Canadian dollar in Q1, 2011. The U.S. dollar averaged CA$1.04 in Q1, 2011 compared to CA$1.13 in Q1, 2010.
  • Investment in marketing was substantially increased in support of the launch of the new Visual Warehouse Logistics Management System.
  • Loss from operations for the first quarter of 2011 was $349K compared to earnings from operations of $300K in Q1, 2010.
  • Negative EBITDA for Q1 of fiscal 2011 was $53K compared to EBITDA of $455K for Q1 of last fiscal year.
  • Net loss for the first quarter of fiscal 2011 was $390K or $0.03 per share, compared to net earnings of $108K or $0.01 per share for the first quarter of last fiscal year.
  • At the end of Q1, 2011, annualized recurring revenue stood at $13.6M up from $12.8M at the end of Q1, 2010. Recurring revenue for Q1, 2011 represents 38% of revenue for the last twelve months and is principally made-up of annual software maintenance contracts.
  • At the end of Q1, 2011, backlog stood at $19.0M compared to $18.4M at the end of Q1, 2010.
  • At the end of Q1, 2011, cash, cash equivalents and short-term investments amounted to $7.3M compared to $8.1M at the end of Q4, 2010 with virtually no long term debt.

TECSYS also announced today that the Company's Board of Directors has declared a semi-annual dividend of $0.025/share, to be paid on October 6, 2010 to shareholders of record on September 22, 2010.

Peter Brereton, President and CEO of TECSYS Inc., commented on the results: "With the release of our new Visual Logistics™, it was time to invest in marketing to get the message out on this exciting new product. The visual approach to warehousing and the supply chain workforce is winning rave reviews and has garnered positive press around the world. As a result, TECSYS is being recognized as one of the world's leading warehouse management systems (WMS) and has been identified by Gartner as a top 3 visionary WMS solution on the global market today. Many of our current customers were able to take the new Visual WMS for a test drive as we rolled it out during our TECSYS user conference held in June in Toronto, Canada. Our client response was overwhelming across all the industries we serve. We also participated in a number of industry events and conferences during the quarter where Visual Logistics was showcased to the public and the press.

Overall revenue was down…recurring and services revenues were up; services revenue by $270K over the prior quarter. The quarter was impacted by delays in decision making on key new prospective business opportunities and by the continuing weakening of the U.S. dollar which impacted revenue by $370K in the quarter. Sales expenses were down; marketing expenses were up due to this new product rollout. Several new contracts were signed in the quarter resulting from the launch of the Visual WMS and this is continuing in Q2. Our recurring revenue continues to rise ending Q1 with $13.6M in recurring revenues on an annualized basis, up from $12.8M a year earlier and now equaling 38% of revenues.

The strength of our balance sheet, combined with the rise in services revenues and improving conditions in our target markets gives us confidence to move ahead with this exciting product launch. Our business development activities are on the rise producing a very healthy sales pipeline, particularly in hospital supply networks, heavy equipment and gas & welding supplies distribution where we are a market-leading provider."

During the quarter, the Company signed agreements with existing clients and new customers including:

  • A leading book distributor in Quebec
  • A packaged gas and welding supplies distributor in California
  • A healthcare third party distributor in Texas
  • A major imaging products manufacturer/distributor across the U.S.
  • A hospital supply network in Mississippi
  • A wine distributor in Florida
  • An industrial distributor in Quebec
  • A lighting distributor in Ontario
  • Two industrial distributors in Ontario
  • One industrial distributor in Saskatchewan
  • An office products distributor in Ontario

Furthermore, TECSYS also deployed its supply chain execution solutions at fifteen customers in Canada and the United States.

TECSYS' First Quarter 2011 Earnings Conference Call:

Subject: First Quarter FY2011 Results Conference Call
Date: September 9, 2010
Time: 4:30 pm
Phone number: 800-732-5617 or 416-981-9017

The call can be replayed by calling 800-558-5253 (access code: 21480484) or 416-626-4100 (access code: 21480484).

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, 2010. 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)    
  July 31, April 30,
  2010 2010
  (unaudited)  
     
     
Assets    
Current assets    
Cash and cash equivalents 6,484 7,256
Short-term and other investments 850 850
Accounts receivable 7,335 7,346
Work in progress 258 66
Other accounts receivable 307 425
Tax credits receivable 2,273 1,914
Inventory 171 171
Prepaid expenses 1,029 879
Future tax assets 142 142
  18,849 19,049
     
Restricted cash equivalents and other investments 200 200
Asset-backed commercial paper 3,510 3,514
Long-term receivables 40 48
Investment tax credits 930 930
Long-term investment 189 211
Property and equipment 2,542 2,472
Intangible assets 578 623
Deferred development costs 2,121 1,991
Future tax assets 453 453
Goodwill 2,804 2,804
  32,216 32,295
     
Liabilities    
Current liabilities    
Bank advances 3,953 3,951
Accounts payable and accrued liabilities 5,621 5,305
Current portion of long-term debt 249 249
Deferred revenue 5,884 5,827
  15,707 15,332
     
Shareholders' equity    
     
Capital stock 1,380 1,386
Contributed surplus 11,873 11,931
     
Retained earnings 3,256 3,646
  16,509 16,963
     
  32,216 32,295
   
   
   
   
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  
  July 31,   July 31,  
  2010   2009  
         
  (unaudited)   (unaudited)  
             
Revenue            
Products   2,713     2,946  
Services   5,467     5,991  
Reimbursable expenses   238     261  
    8,418     9,198  
Cost of revenue            
Products   1,187     1,098  
Services   3,608     3,613  
Reimbursable expenses   238     261  
    5,033     4,972  
Gross margin   3,385     4,226  
             
Operating expenses            
Sales and marketing   1,502     1,385  
General and administration   804     1,077  
Gross research and development   1,556     1,425  
Research and development tax credits   (215 )   (145 )
Deferred development costs   (254 )   (178 )
Stock-based compensation   32     28  
Amortization of property and equipment   130     121  
Amortization of intangible assets   55     122  
Amortization of deferred development costs   124     91  
    3,734     3,926  
             
Earnings (loss) from operations   (349 )   300  
             
Interest income   3     6  
Interest expense   (5 )   (4 )
Foreign exchange losses   (6 )   (168 )
Share of net loss and amortization of intangible assets of a company subject to significant influence   (22 )   (26 )
Earnings (loss) before income taxes   (379 )   108  
Income taxes   11     -  
Net earnings (loss) and comprehensive earnings (loss) for the period   (390 )   108  
             
Weighted average number of common shares outstanding            
  - basic   12,205,946     12,467,119  
  - diluted   12,205,946     12,585,590  
             
Basic and diluted net earnings (loss) per common share $ (0.03 ) $ 0.01  
   
   
   
   
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  
  July 31,   July 31,  
  2010   2009  
         
  (unaudited)   (unaudited)  
Cash flows from        
         
Operating activities        
Net earnings (loss) for the period (390 ) 108  
Adjustments for        
  Amortization of property and equipment 130   121  
  Amortization of intangible assets 55   122  
  Amortization of deferred development costs 124   91  
  Stock-based compensation 32   28  
  Unrealized foreign exchange losses (gains) 100   (455 )
  Deferred development costs (254 ) (178 )
  Share of net loss and amortization of intangible assets of a company subject to significant influence 22   26  
  (181 ) (137 )
Changes in non-cash working capital items related to operations        
  Decrease in accounts receivable 11   699  
  (Increase) decrease in work in progress (192 ) 55  
  Decrease in other accounts receivable 35   2  
  Increase in tax credits receivable (359 ) (90 )
  Decrease in inventory -   14  
  Increase in prepaid expenses (150 ) (406 )
  Increase (decrease) in accounts payable and accrued liabilities 501   (368 )
  Increase in deferred revenue 57   673  
  (278 ) 442  
Financing activities        
  Bank advances 2   -  
  Purchase of common shares for cancellation (96 ) (258 )
  (94 ) (258 )
Investing activities        
  Interest and principal received on asset-backed commercial paper 4   87  
  Acquisitions of property and equipment (407 ) (135 )
  Acquisitions of intangible assets (10 ) (17 )
  Decrease in long-term receivables including the current portion from a related party 13   21  
  (400 ) (44 )
(Decrease) increase in cash and cash equivalents (772 ) 140  
Cash and cash equivalents - beginning of period 7,256   7,510  
         
Cash and cash equivalents - end of period 6,484   7,650  
   
   
   
   
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)                  
(unaudited)                    
  Capital stock   Contributed   Retained      
  Number   Amount   surplus   earnings   Total  
                     
Balance, April 30, 2010 12,225,306   1,386   11,931   3,646   16,963  
                     
Repurchase of common shares (50,753 ) (6 ) (90 ) -   (96 )
                     
Stock-based compensation -   -   32   -   32  
                     
Net loss for the period -   -   -   (390 ) (390 )
                     
Balance, July 31, 2010 12,174,553   1,380   11,873   3,256   16,509  
                     
                     
  Capital stock   Contributed   Retained      
  Number   Amount   surplus   earnings   Total  
                     
Balance, April 30, 2009 12,525,884   1,420   12,328   2,082   15,830  
                     
Repurchase of common shares (144,340 ) (17 ) (241 ) -   (258 )
                     
Stock-based compensation -   -   28   -   28  
                     
Net earnings for the period -   -   -   108   108  
                     
Balance, July 31, 2009 12,381,544   1,403   12,115   2,190   15,708  

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