TECSYS Inc.
TSX : TCS

TECSYS Inc.

November 24, 2010 12:54 ET

TECSYS Announces Q2, 2011 Results, Wins Ten New Clients, Posts 5 Cents Per Share EPS

MONTREAL, QUEBEC--(Marketwire - Nov. 24, 2010) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, announced today its results for the second quarter of fiscal year 2011, ended October 31st, 2010. 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 Second Quarter include:

  • Earnings from operations for the second quarter, 2011 were $697K compared to $813K in Q2, 2010.
  • Net earnings for the second quarter, 2011 were $614K or $0.05 per share compared to $746K or $0.06 per share for the second quarter of last fiscal year.
  • EBITDA for Q2, 2011 was $995K compared to $1,118K for Q2 of last fiscal year.
  • Revenue was $9.4M in Q2, 2011 compared to $9.9M in Q2, 2010 primarily due to a weaker U.S. dollar and lower product revenue.
  • At the end of Q2, 2011 annualized recurring revenue in Canadian currency increased to $14.1M, and represented 40% of the last 12 months revenue. At the end of Q2 of last fiscal year annualized recurring revenue was $13.1M. 
  • At the end of Q2, 2011, backlog increased to $21M compared to $19M at the end of Q1, 2011.
  • Cash, cash equivalents and other short-term investments amounted to $6.4M at the end of Q2, 2011, compared to $7.1M at the end of Q2, 2010 with no significant long-term debt.

Peter Brereton, President and CEO of TECSYS Inc., commented on the results: "Q2 was a good quarter, during which time we saw the pendulum swing in the right direction for us from a decision-making point of view. We won the business of ten new clients and our bookings reached $6.8 million, the highest we have seen in several years. Our backlog increased to an all-time high of $21 million. I am pleased to report that our investment in marketing is helping us attract additional prospective clients and positioning us well with industry analysts who singled out our vertical market knowhow and robust software as a great value proposition. The combination of a good pipeline and a good backlog bodes well for the future."

During the quarter, the Company won the business of ten new clients including:

  • Two med-surg product distributors; one in Canada and one in the U.S.
  • Two packaged gas and welding supplies distributors in the U.S.
  • A home decor product distributor in the U.S.
  • Two industrial distributors in the U.S.
  • Two kitchen and restaurant supplies distributors in Canada
  • A publisher and distributor of leadership and discipleship resources in the U.K.

Furthermore, TECSYS also signed a number of business contracts with existing customers and completed the go-live of 18 projects for customers across its business units.

Highlights of the first half of fiscal year 2011 include:

  • Earnings from operations for the first half, 2011 were $348K compared to $1,113K for the same period in last fiscal year.
  • Net earnings for the first half of fiscal, 2011 were $224K or $0.02 per share compared to $854K or $0.07 per share for the same period of the prior fiscal year.
  • EBITDA for the first half, 2011 was $942K compared to $1,574K for the first half of 2010.
  • Revenue for the first half, 2011 was $17.9M compared to $19.1M for the same period of last fiscal year primarily due to a weaker U.S. dollar.

TECSYS' Second Quarter 2011 Earnings Conference Call:

Subject: Second Quarter FY2011 Results Conference Call

Date: November 24, 2010

Time: 4:30 pm

Phone number: 800-892-9785 or 416-981-9018

The call can be replayed by calling 800-558-5253 (access code: 21489174) or 416-626-4100 (access code: 21489174).

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 more than 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)    
  October 31, April 30,
  2010 2010
  (unaudited)  
     
     
Assets    
Current assets    
Cash and cash equivalents 5,599 7,256
Short-term and other investments 850 850
Accounts receivable 7,535 7,346
Work in progress 308 66
Other accounts receivable 190 425
Tax credits receivable 2,651 1,914
Inventory 192 171
Prepaid expenses 853 879
Future tax assets 142 142
  18,320 19,049
     
Restricted cash equivalents and other investments 200 200
Asset-backed commercial paper 3,505 3,514
Long-term receivables 33 48
Investment tax credits 930 930
Long-term investment 163 211
Property and equipment 2,493 2,472
Intangible assets 521 623
Deferred development costs 2,238 1,991
Future tax assets 453 453
Goodwill 2,804 2,804
  31,660 32,295
     
Liabilities    
Current liabilities    
Bank advances 3,949 3,951
Accounts payable and accrued liabilities 5,463 5,305
Current portion of long-term debt 249 249
Deferred revenue 5,275 5,827
  14,936 15,332
     
Shareholders' equity    
     
Capital stock 1,411 1,386
Contributed surplus 11,748 11,931
     
Retained earnings 3,565 3,646
  16,724 16,963
     
  31,660 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   Six Months Ended   Six Months Ended  
  October 31,   October 31,   October 31,   October 31,  
  2010   2009   2010   2009  
                 
  (unaudited)   (unaudited)   (unaudited)   (unaudited)  
                 
Revenue                
Products 3,621   4,146   6,334   7,092  
Services 5,611   5,509   11,078   11,500  
Reimbursable expenses 215   272   453   533  
  9,447   9,927   17,865   19,125  
Cost of revenue                
Products 1,223   1,234   2,410   2,332  
Services 3,367   3,686   6,975   7,299  
Reimbursable expenses 215   272   453   533  
  4,805   5,192   9,838   10,164  
Gross margin 4,642   4,735   8,027   8,961  
                 
Operating expenses                
Sales and marketing 1,699   1,506   3,201   2,891  
General and administration 920   861   1,724   1,938  
Gross research and development 1,419   1,600   2,975   3,025  
Research and development tax credits (206 ) (202 ) (421 ) (347 )
Deferred development costs (267 ) (214 ) (521 ) (392 )
Stock-based compensation 29   32   61   60  
Amortization of property and equipment 143   127   273   248  
Amortization of intangible assets 58   122   113   244  
Amortization of deferred development costs 150   90   274   181  
  3,945   3,922   7,679   7,848  
                 
Earnings from operations 697   813   348   1,113  
                 
Interest income 5   6   8   12  
Interest expense (7 ) (6 ) (12 ) (10 )
Foreign exchange losses (43 ) (26 ) (49 ) (194 )
Share of net loss and amortization of intangible assets of a company subject to significant influence (26 ) (23 ) (48 ) (49 )
Earnings before income taxes 626   764   247   872  
Income taxes 12   18   23   18  
Net earnings and comprehensive earnings for the period 614   746   224   854  
                 
Weighted average number of common shares outstanding                
  - basic 12,160,993   12,377,124   12,183,470   12,422,122  
  - diluted 12,317,365   12,567,082   12,350,486   12,573,990  
                 
Basic and diluted net earnings per common share $ 0.05   $ 0.06   $ 0.02   $ 0.07  
                 
   
   
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   Six Months Ended   Six Months Ended  
  October 31,   October 31,   October 31,   October 31,  
  2010   2009   2010   2009  
                 
  (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Cash flows from                
                 
Operating activities                
Net earnings for the period 614   746   224   854  
Adjustments for                
  Amortization of property and equipment 143   127   273   248  
  Amortization of intangible assets 58   122   113   244  
  Amortization of deferred development costs 150   90   274   181  
  Stock-based compensation 29   32   61   60  
  Unrealized foreign exchange (gains) losses (32 ) 335   68   (120 )
  Deferred development costs (267 ) (214 ) (521 ) (392 )
  Share of net loss and amortization of intangible assets of a company subject to significant influence 26   23   48   49  
  721   1,261   540   1,124  
Changes in non-cash working capital items related to operations                
  (Increase) decrease in accounts receivable (200 ) (657 ) (189 ) 42  
  (Increase) decrease in work in progress (50 ) 17   (242 ) 72  
  Decrease in other accounts receivable 111   6   146   8  
  Increase in tax credits receivable (378 ) (373 ) (737 ) (463 )
  (Increase) decrease in inventory (21 ) (5 ) (21 ) 9  
  Decrease (increase) in prepaid expenses 176   238   26   (168 )
  Increase (decrease) in accounts payable and accrued liabilities 58   (375 ) 559   (743 )
  (Decrease) increase in deferred revenue (609 ) (312 ) (552 ) 361  
  (192 ) (200 ) (470 ) 242  
Financing activities                
  Bank advances (4 ) (22 ) (2 ) (22 )
  Issuance of common shares 27   -   27   -  
  Purchase of common shares for cancellation (150 ) (31 ) (246 ) (289 )
  Payment of dividends (305 ) (310 ) (305 ) (310 )
  (432 ) (363 ) (526 ) (621 )
Investing activities                
  Increase in short-term and other investments and restricted cash equivalents and other investments -   (201 ) -   (201 )
  Interest and principal received on asset-backed commercial paper 5   8   9   95  
  Acquisitions of property and equipment (288 ) (45 ) (695 ) (180 )
  Acquisitions of intangible assets (1 ) (19 ) (11 ) (36 )
  Decrease (increase) in long-term receivables including the current portion from a related party 23   (40 ) 36   (19 )
  (261 ) (297 ) (661 ) (341 )
Decrease in cash and cash equivalents (885 ) (860 ) (1,657 ) (720 )
Cash and cash equivalents - beginning of period 6,484   7,650   7,256   7,510  
                 
Cash and cash equivalents - end of period 5,599   6,790   5,599   6,790  
   
   
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   Total  
  Number   Amount   surplus   earnings      
                     
Balance, April 30, 2010 12,225,306   1,386   11,931   3,646   16,963  
                     
Repurchase of common shares (123,753 ) (14 ) (232 ) -   (246 )
                     
Stock options exercised 18,043   27   -   -   27  
                     
Fair value associated with options exercised -   12   (12 ) -   -  
                     
Stock-based compensation -   -   61   -   61  
                     
Net earnings for the period -   -   -   224   224  
                     
Dividends -   -   -   (305 ) (305 )
                     
Balance, October 31, 2010 12,119,596   1,411   11,748   3,565   16,724  
                     
                     
  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 (157,340 ) (18 ) (271 ) -   (289 )
                     
Stock options exercised 281   -   -   -   -  
                     
Stock-based compensation -   -   60   -   60  
                     
Net earnings for the period -   -   -   854   854  
                     
Dividends -   -   -   (310 ) (310 )
                     
Balance, October 31, 2009 12,368,825   1,402   12,117   2,626   16,145  
                     

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