TECSYS Inc.
TSX : TCS

TECSYS Inc.

July 08, 2008 13:35 ET

TECSYS Announces Record Q4 With 36% Growth and Ten New Accounts

Fiscal Year Growth Reaches 25%

MONTREAL, QUEBEC--(Marketwire - July 8, 2008) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company announced today its results for the fourth quarter and full 2008 fiscal year ended April 30th, 2008. The results of the full 2008 fiscal year are audited. All dollar amounts are expressed in U.S. currency and reported in accordance with Canadian Generally Accepted Accounting Principles (GAAP).

Highlights of the Fourth Quarter include:

- Revenue increased by 36% to $10.5M in Q4 of fiscal 2008 from $7.6M in Q4 of fiscal 2007.

- Gross margin percentage increased significantly to 47% in Q4 of fiscal 2008 compared to 38% in Q4 of last fiscal year.

- Earnings from operations for the fourth quarter of fiscal 2008 increased substantially to $1,514K. Earnings from operations for the fourth quarter of fiscal 2008 included the recognition of a non-refundable tax credit from a prior fiscal period in the amount of $635K.

- EBITDA for Q4 of fiscal 2008 increased to $1,068K compared to $126K for Q4 of last fiscal year.

- After an adjustment for the fair value of asset backed commercial paper of $717K, and non cash income taxes of $635K net earnings for the fourth quarter of fiscal 2008 were $39K or $0.00 per share, compared to a loss of $125K or $0.01 per share for the fourth quarter of last fiscal year.

- At the end of the fourth quarter, backlog stood at $19.1M, up by 23% from $15.5M at the end of Q4 of last fiscal year.

- The Company generated cash from operations of $732K for the fourth quarter.

Highlights of the full 2008 fiscal year include:

- Revenue increased by 25% to $38.8M from $31M for the prior fiscal year.

- Earnings from operations were $3,742K compared to a loss of $598K for fiscal year 2007. Earnings from operations for fiscal 2008 included the recognition of a non-refundable tax credit from a prior fiscal period in the amount of $635K.

- EBITDA for fiscal year 2008 reached $3,210K compared to $446K for fiscal year 2007.

- Net earnings were $1,255K compared to a net loss of $544K for the prior fiscal year.

- The Company generated cash from operations of $2,706K for the twelve months ended April 30, 2008 compared to $772K for the prior fiscal year.

- Return on equity for the fiscal year was 8.7%.

Peter Brereton, President and CEO of TECSYS Inc. commented on the results: "We have captured a record number of new accounts that helped drive 36% growth in Q4's revenue compared to last year. We continue to execute our plan by focusing on profitable vertical markets while rigorously managing our cost structure, resulting in strong operating profits. Looking at the full fiscal year, in spite of a $1,048K expense related to the ABCP fiasco, and a loss on exchange of $500K, we ended the year with net income of $1,255K and are pleased with these results."

During the quarter, the Company signed a significant number of agreements with existing customers and won a record number of new accounts including:

- Two major hospital supply chain networks

- One major heavy equipment dealer

- Four industrial distributors

- Three import-to-retail distributors

After accounting for an interest expense of $12K, a foreign exchange loss of $37K, a share of net loss of $74K from a company in which TECSYS has an equity interest, an increase of $717K of ABCP provision, and non-cash income taxes of $635K, net earnings for the fourth quarter were $39K. This ABCP provision relates to the asset backed commercial paper market in which TECSYS has an original $5.1M investment against which TECSYS has now taken a 20% provision. TECSYS reassesses the value of its holdings each quarter as additional information is made available, using a combination of long-term fixed interest rate plus expected spreads for similarly rated instruments and an estimated risk factor.

For the twelve months ended April 30th, 2008, revenue increased by 25% to $38.8M compared to $31M for the same period of the prior fiscal year. Earnings from operations for the twelve months of fiscal year 2008 were $3,742K. EBITDA for the twelve months increased substantially to $3,210K compared to $446K for the same period in fiscal year 2007. After accounting for an exchange loss of $500K, net interest income of $76K, a share of net loss of $110K from a company in which TECSYS has an equity interest, and a provision for ABCP holdings of $1,048K, and a non-cash income taxes of $635K, net earnings for the twelve months ended April 30th, 2008 were $1,255K or $0.09 per share compared to net loss of $544K or $0.04 per share for the same period of the prior fiscal year. Return on Equity (ROE) for fiscal year 2008 amounted to 8.7% compared to negative ROE of 4.0% for fiscal year 2007.

TECSYS' Fourth Quarter & Fiscal 2008 Earnings Conference Call:

Date: July 8, 2008

Time: 4:30 pm

Phone number: 800-215-1640 or 416-620-2013

The call can be replayed by calling 800-558-5253 (access code: 21387613) or 416-626-4100 (access code: 21387613).

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, 2007. 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. 2008. 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 U.S. dollars)
April 30, April 30,
2008 2007
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Assets

Current assets
Cash and cash equivalents 5,639 4,058
Short-term and other investments - 2,509
Accounts receivable 9,146 6,242
Work in progress 439 271
Other accounts receivable 202 169
Tax credits receivable 1,267 983
Inventory 214 145
Prepaid expenses 839 500
-------------------------------------------------------------------------
17,746 14,877

Restricted cash equivalents and other investments 666 609
Asset-backed commercial paper 4,007 -
Long-term receivables 163 110
Long-term investment 347 257
Property and equipment, net 1,697 1,672
Intangible assets, net 1,466 1,385
Deferred development costs, net 924 672
Goodwill 2,802 2,068
-------------------------------------------------------------------------

29,818 21,650
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Liabilities

Current liabilities
Bank advances 3,965 -
Accounts payable and accrued liabilities 5,537 4,367
Current portion of long-term debt 205 97
Deferred revenue 4,785 3,420
-------------------------------------------------------------------------
14,492 7,884

Long-term debt 198 -

-------------------------------------------------------------------------

14,690 7,884
-------------------------------------------------------------------------


Shareholders' equity

Capital stock 1,328 38,188
Contributed surplus 8,208 7,293

Accumulated other comprehensive income 4,590 3,279
Retained earnings (deficit) 1,002 (34,994)
-------------------------------------------------------------------------
5,592 (31,715)
-------------------------------------------------------------------------
15,128 13,766
-------------------------------------------------------------------------

-------------------------------------------------------------------------
29,818 21,650
-------------------------------------------------------------------------
-------------------------------------------------------------------------


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

Three Months Three Months Year Year
Ended Ended Ended Ended
April 30, April 30, April 30, April 30,
2008 2007 2008 2007

(unaudited) (unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Revenue
Products 4,565 2,866 16,883 12,127
Services 5,711 4,642 20,914 17,913
Reimbursable expenses 269 251 1,010 1,000
-------------------------------------------------------------------------
10,545 7,759 38,807 31,040
Cost of revenue
Products 1,742 1,599 6,862 6,037
Services 3,600 2,951 13,031 12,059
Reimbursable expenses 269 251 1,010 1,000
-------------------------------------------------------------------------
5,611 4,801 20,903 19,096
-------------------------------------------------------------------------
Gross margin 4,934 2,958 17,904 11,944
-------------------------------------------------------------------------

Operating expenses
Sales and marketing 1,656 1,172 5,998 5,098
General and
administration 973 490 3,455 2,451
Gross research and
development 1,267 1,046 4,955 4,254
Research and
development tax
credits (740) (43) (1,056) (292)
Deferred development
costs (113) (92) (308) (393)
Stock-based
compensation 9 38 40 57
Amortization of
property and equipment 148 150 561 554
Amortization of
intangible assets 184 151 663 579
Amortization of
deferred development
costs 36 - 124 -
Restructuring charges - - - 234
-------------------------------------------------------------------------
3,420 2,912 14,432 12,542
-------------------------------------------------------------------------

Earnings (loss) from
operations 1,514 46 3,472 (598)

Interest income 17 61 142 208
Interest expense (29) (1) (66) (35)
Foreign exchange
losses (37) (258) (500) (95)
Changes in fair value
of asset-backed
commercial paper (717) - (1,048) -
Share of net earnings
(loss) and
amortization of
intangible assets of
a company subject to
significant influence (74) 27 (110) (34)
-------------------------------------------------------------------------
Earnings (loss) before
income taxes 674 (125) 1,890 (554)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Income taxes 635 - 635 -
-------------------------------------------------------------------------
Net earnings (loss)
for the period 39 (125) 1,255 (554)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Weighted average
number of common
shares outstanding
- basic 13,003,056 13,678,297 13,325,209 13,654,369
-------------------------------------------------------------------------
- diluted 13,081,234 13,678,297 13,359,342 13,654,369
-------------------------------------------------------------------------
Basic and diluted
net earnings
(loss) per common
share $0.00 $(0.01) $0.09 $(0.04)
-------------------------------------------------------------------------
-------------------------------------------------------------------------



TECSYS Inc.
Consolidated Statements of Comprehensive Income
Prepared in Accordance with Canadian Generally Accepted Accounting
Principles
-------------------------------------------------------------------------
(in thousands of U.S. dollars)

Three Months Three Months Year Year
Ended Ended Ended Ended
April 30, April 30, April 30, April 30,
2008 2007 2008 2007

(unaudited) (unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Net earnings
(loss) for the
period 39 (125) 1,255 (554)

Other comprehensive
income (loss):
Translation
adjustment (106) 837 1,311 194
-------------------------------------------------------------------------
Comprehensive
income (loss)
for the period (67) 712 2,566 (360)
-------------------------------------------------------------------------



TECSYS Inc.
Consolidated Statements of Cash Flows
Prepared in Accordance with Canadian Generally Accepted Accounting
Principles
-------------------------------------------------------------------------
(in thousands of U.S. dollars)


Three Months Three Months Year Year
Ended Ended Ended Ended
April 30, April 30, April 30, April 30,
2008 2007 2008 2007

(unaudited) (unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flows from

Operating activities
Net earnings (loss)
for the period 39 (125) 1,255 (554)
Adjustments for
Amortization of
property and
equipment 148 150 561 554
Amortization of
intangible assets 184 151 663 579
Amortization of
deferred development
costs 36 - 124 -
Stock-based
compensation 9 38 40 57
Changes in fair value
of asset-backed
commercial paper 717 - 1,048 -
Unrealized foreign
exchange losses
(gains) 11 84 241 (1)
Deferred development
costs (106) (92) (308) (393)
Share of net loss
(earnings) and
amortization of
intangible assets
of a company subject
to significant
influence 74 (27) 110 34
-------------------------------------------------------------------------
1,112 179 3,734 276
-------------------------------------------------------------------------
Changes in non-cash
working capital items
related to operations
(Increase) decrease
in accounts receivable (505) 197 (1,795) 311
(Increase) decrease
in work in progress (45) 93 (95) 184
(Increase) decrease
in other accounts
receivable (59) 61 22 78
Decrease in tax
credits receivable 816 898 127 354
(Increase) decrease
in inventory (33) 44 (42) -
(Increase) decrease
in prepaid expenses (203) 103 (265) 105
Increase in long-term
receivables (57) - (57) -
(Decrease) increase
in accounts payable
and accrued
liabilities (343) 248 355 (686)
Increase in deferred
revenue 49 457 722 150
-------------------------------------------------------------------------
732 2,280 2,706 772
-------------------------------------------------------------------------
Financing activities
Bank advances 831 - 3,767 -
Repayment of long-term
debt and capital
lease obligations - - - (425)
Issuance of common
shares 8 - 11 86
Purchase of common
shares for
cancellation (18) - (1,002) (87)
Dividends paid on
common shares (253) - (253) -
-------------------------------------------------------------------------
568 - 2,523 (426)
-------------------------------------------------------------------------
Investing activities
Decrease (increase)
in short-term and
other investments 4 1,087 (2,683) 2,921
Acquisitions of
property and
equipment (21) (20) (277) (196)
Acquisitions of
intangible assets (5) (10) (36) (18)
Decrease (increase)
in long-term
receivables including
the current portion
from a related party 9 2 (8) (148)
Increase in long-term
investment of a
related party (62) - (185) -
Business combination,
net of cash and cash
equivalents acquired - - (1,166) -
-------------------------------------------------------------------------
(75) 1,059 (4,355) 2,559
-------------------------------------------------------------------------
Effect of foreign
exchange rate
fluctuations on cash
and cash equivalents 21 110 707 (27)
-------------------------------------------------------------------------
Increase in cash and
cash equivalents 1,246 3,449 1,581 2,878
Cash and cash
equivalents -
beginning of period 4,393 609 4,058 1,180

-------------------------------------------------------------------------
Cash and cash
equivalents
- end of period 5,639 4,058 5,639 4,058
-------------------------------------------------------------------------
-------------------------------------------------------------------------



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

Capital Stock Contributed Accumulated Retained Total
Number Amount Surplus Other earnings
Comprehensive (deficit)
Income
--------------------------------------------------------------------------
Balance,
April 30,
2006 13,650,697 38,256 7,169 3,085 (34,440) 14,070
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Repurchase
of common
shares (70,000) (197) 110 - - (87)

Stock
options
exercised 97,600 86 - - - 86

Fair value
associated
with
options
exercised - 43 (43) - - -

Stock-based
compensation - - 57 - - 57

Translation
adjustment - - - 194 - 194

Net loss
for the
period - - - - (554) (554)

--------------------------------------------------------------------------
Balance,
April 30,
2007 13,678,297 38,188 7,293 3,279 (34,994) 13,766
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Reduction
of stated
capital - (34,994) - - 34,994 -

Repurchase
of common
shares (682,800) (1,882) 880 - - (1,002)

Stock
options
exercised 8,187 11 - - - 11

Fair value
associated
with
options
exercised - 5 (5) - - -

Stock-based
compensation - - 40 - - 40

Translation
adjustment - - - 1,311 - 1,311

Net earnings
for the
period - - - - 1,255 1,255

Dividends - - - - (253) (253)

--------------------------------------------------------------------------
Balance,
April 30,
2008 13,003,684 1,328 8,208 4,590 1,002 15,128
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Contact Information