TECSYS Inc.
TSX : TCS

TECSYS Inc.

March 03, 2011 12:19 ET

TECSYS Posts 6% Revenue Growth & 6 Cents EPS For Q3, 2011-Increases Semi-Annual Dividend by 20%

MONTREAL, QUEBEC--(Marketwire - March 3, 2011) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, announced today its results for the third quarter of fiscal year 2011, ended January 31, 2011. 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:

  • Revenue increased 6% to $9.3M in Q3, 2011 from $8.8M in Q3, 2010. The increase is primarily attributable to improvement in license revenue for the Company's proprietary product. During Q3, 2011, the stronger Canadian dollar against the U.S. dollar had a negative revenue impact of about $225K compared to Q3, 2010.

  • Earnings from operations for the third quarter, 2011 reached $417K up from $142K in Q3, 2010.

  • Net earnings were significantly higher in the third quarter, 2011 reaching $750K or $0.06 per share compared to $62K or $0.00 per share for the third quarter of last fiscal year. Net earnings for the quarter include a $302K increase in the valuation of the Asset Backed Commercial Paper (ABCP) being held by the company. 

  • EBITDA for Q3, 2011 also increased to $1,138K from $458K in Q3 of last fiscal year.

  • At the end of Q3, 2011 annualized recurring revenue in Canadian currency increased to $14M compared to $13.2M at the end of Q3, 2010. Annualized recurring revenue at the end of Q3, 2011 represented 39% of the Company's last 12 months revenue.

  • Backlog increased to $20.8M at the end of Q3, 2011, compared to $17.8M at the end of Q3, 2010.

  • Cash from operations amounted to $1.3M during the third quarter, up from $617K, during the same quarter of the prior year.

  • Cash, cash equivalents and other short-term investments amounted to $7.0M at the end of Q3, 2011, compared to $7.5M at the end of Q3, 2010 with no significant long-term debt.

TECSYS also announced today that the Company's Board of Directors has increased the semi-annual dividend by 20% to $0.03/share, to be paid on March 31st, 2011 to shareholders of record on March 17, 2011.

Peter Brereton, President and CEO of TECSYS Inc., commented on the results: "Good growth in our top line through greater revenue contribution by our proprietary software drove overall revenue up by 6%, enabling us to continue with our profitability trend and achieve 6 cents EPS for the quarter. This is in spite of currency headwinds. Our leading position in the healthcare supply chain industry continued to prove to be a key contributor to our growth, with a strategic win of a high profile and sizeable hospital network in United States. Healthcare providers need safe, efficient and cost effective supply chains. Over the past couple of years, we have seen hospital supply network leadership evolve to a new state of readiness for improvement. They are no longer in a "wait and see" mode, but are beginning to take concrete steps to address their supply chain challenges."

During the quarter, the Company signed 30 agreements with new and base account clients across its business units, with significant value coming from the healthcare market; four agreements were signed with existing healthcare clients, and one with a major new client in the hospital supply network space in the United States. The Company also deployed its software at 19 customer sites, 50% of these deployments were at major customers in North America, most notably in healthcare.

Highlights of the first Nine Months of fiscal year 2011 include:

  • Revenue for first nine months, 2011 was $27.2M compared to $27.9 for the same period of last fiscal year. As a result of a stronger Canadian dollar against the U.S. dollar, revenue was negatively impacted by about $870K during the first nine months of 2011 compared to the same period of the last fiscal year.

  • Earnings from operations for the first nine months, 2011 were $765K compared to $1,255K for the same period in last fiscal year.

  • Cash from operations was $845K, compared to $859K for the same period of last year.

  • Net earnings for the first nine months of fiscal, 2011 were $974K or $0.08 per share compared to $916K or $0.07 per share for the same period of the prior fiscal year.

  • EBITDA for first nine months, 2011 was $2,080K compared to $2,032K for the same period in 2010.

TECSYS' Third Quarter 2011 Earnings Conference Call:

Subject: Third Quarter FY2011 Results Conference Call
Date: March 3, 2011
Time: 4:30 pm
Phone number: 800-909-4761 or 416-981-9035

The call can be replayed by calling 800-558-5253 (access code: 21513248) or 416-626-4100 (access code: 21513248).

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. 2011. 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,
  2011 2010
  (unaudited)  
 
Assets    
     
Current assets    
Cash and cash equivalents 6,122 7,256
Short-term and other investments 850 850
Accounts receivable 8,489 7,346
Work in progress 152 66
Other accounts receivable 102 425
Tax credits receivable 1,513 1,914
Inventory 198 171
Prepaid expenses 921 879
Future tax assets 142 142
  18,489 19,049
 
Restricted cash equivalents and other investments 200 200
Asset-backed commercial paper 3,797 3,514
Long-term receivables 27 48
Investment tax credits 930 930
Long-term investment 150 211
Property and equipment 2,382 2,472
Intangible assets 486 623
Deferred development costs 2,310 1,991
Future tax assets 453 453
Goodwill 2,804 2,804
  32,028 32,295
Liabilities    
     
Current liabilities    
Bank advances 3,943 3,951
Accounts payable and accrued liabilities 5,467 5,305
Current portion of long-term debt 107 249
Deferred revenue 5,571 5,827
  15,088 15,332
 
Shareholders' equity    
     
Capital stock 1,485 1,386
Contributed surplus 11,140 11,931
     
Retained earnings 4,315 3,646
  16,940 16,963
 
  32,028 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
January 31,
2011
  Three Months
Ended
January 31,
2010
  Nine Months
Ended
January 31,
2011
  Nine Months
Ended
January 31,
2010
 
   
  (unaudited)   (unaudited)   (unaudited)   (unaudited)  
   
Revenue                
Products 3,609   2,774   9,943   9,866  
Services 5,477   5,740   16,555   17,240  
Reimbursable expenses 213   286   666   819  
  9,299   8,800   27,164   27,925  
Cost of revenue                
Products 1,629   1,203   4,039   3,535  
Services 3,420   3,482   10,395   10,781  
Reimbursable expenses 213   286   666   819  
  5,262   4,971   15,100   15,135  
Gross margin 4,037   3,829   12,064   12,790  
   
Operating expenses                
Sales and marketing 1,362   1,376   4,563   4,267  
General and administration 924   806   2,648   2,744  
Gross research and development 1,465   1,589   4,440   4,614  
Research and development tax credits (342 ) (262 ) (763 ) (609 )
Deferred development costs (222 ) (229 ) (743 ) (621 )
Stock-based compensation 19   32   80   92  
Amortization of property and equipment 216   153   489   401  
Amortization of intangible assets 48   131   161   375  
Amortization of deferred development costs 150   91   424   272  
  3,620   3,687   11,299   11,535  
   
Earnings from operations 417   142   765   1,255  
   
Interest income 15   2   23   14  
Interest expense 15   (8 ) 3   (18 )
Foreign exchange gains (losses) 14   (27 ) (35 ) (221 )
Changes in fair value of asset-backed commercial paper 302   -   302   -  
Share of net loss and amortization of intangible assets of a company subject to significant influence (13 ) (47 ) (61 ) (96 )
Earnings before income taxes 750   62   997   934  
Income taxes -   -   23   18  
Net earnings and comprehensive earnings for the period 750   62   974   916  
   
Weighted average number of common shares outstanding                
  - basic 12,081,013   12,341,102   12,149,318   12,395,115  
  - diluted 12,212,537   12,568,344   12,300,747   12,571,301  
Basic and diluted net earnings per common share $0.06   $-   $0.08   $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
January 31,
2011
  Three Months
Ended
January 31,
2010
  Nine Months
Ended
January 31,
2011
  Nine Months
Ended
January 31,
2010
 
                 
  (unaudited)   (unaudited)   (unaudited)   (unaudited)  
Cash flows from                
   
Operating activities                
Net earnings for the period 750   62   974   916  
Adjustments for                
  Amortization of property and equipment 216   153   489   401  
  Amortization of intangible assets 48   131   161   375  
  Amortization of deferred development costs 150   91   424   272  
  Stock-based compensation 19   32   80   92  
  Changes in fair value of asset-backed commercial paper (302 ) -   (302 ) -  
  Unrealized foreign exchange (gains) losses (32 ) 137   36   17  
  Deferred development costs (222 ) (229 ) (743 ) (621 )
  Share of net loss and amortization of intangible assets of a company subject to                
  significant influence 13   47   61   96  
  640   424   1,180   1,548  
Changes in non-cash working capital items related to operations                
  (Increase) decrease in accounts receivable (954 ) 1,220   (1,143 ) 1,262  
  Decrease (increase) in work in progress 156   131   (86 ) 203  
  Decrease (increase) in other accounts receivable 109   (5 ) 255   3  
  Decrease (increase) in tax credits receivable 1,138   (391 ) 401   (854 )
  (Increase) decrease in inventory (6 ) 3   (27 ) 12  
  (Increase) decrease in prepaid expenses (68 ) 33   (42 ) (135 )
  Increase (decrease) in accounts payable and accrued liabilities 4   (292 ) 563   (1,035 )
  Increase (decrease) in deferred revenue 296   (506 ) (256 ) (145 )
  1,315   617   845   859  
Financing activities                
  Bank advances (6 ) (9 ) (8 ) (31 )
  Purchase price adjustments on acquisition applied against long-term debt -   17   -   17  
  Repayment of long-term debt (142 ) -   (142 ) -  
  Issuance of common shares 77   -   104   -  
  Purchase of common shares for cancellation (630 ) (100 ) (876 ) (389 )
  Payment of dividends -   -   (305 ) (310 )
  (701 ) (92 ) (1,227 ) (713 )
Investing activities                
  Increase in short-term and other investments and restricted cash equivalents and other investments -   -   -   (201 )
  Interest and principal received on asset-backed commercial paper 10   29   19   124  
  Acquisitions of property and equipment (105 ) (131 ) (800 ) (311 )
  Acquisitions of intangible assets (13 ) (5 ) (24 ) (41 )
  Decrease (increase) in long-term receivables including the current portion from a related party 17   16   53   (3 )
  (91 ) (91 ) (752 ) (432 )
Increase (decrease) in cash and cash equivalents 523   434   (1,134 ) (286 )
Cash and cash equivalents - beginning of period 5,599   6,790   7,256   7,510  
   
Cash and cash equivalents - end of period 6,122   7,224   6,122   7,224  
 
 
 
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 (456,553 ) (52 ) (824 ) -   (876 )
   
Stock options exercised 73,718   104   -   -   104  
   
Fair value associated with options exercised -   47   (47 ) -   -  
   
Stock-based compensation -   -   80   -   80  
   
Net earnings for the period -   -   -   974   974  
   
Dividends -   -   -   (305 ) (305 )
Balance, January 31, 2011 11,842,471   1,485   11,140   4,315   16,940  
   
   
   
  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 (207,340 ) (23 ) (366 ) -   (389 )
   
Stock options exercised 281   -   -   -   -  
   
Stock-based compensation -   -   92   -   92  
   
Net earnings for the period -   -   -   916   916  
   
Dividends -   -   -   (310 ) (310 )
Balance, January 31, 2010 12,318,825   1,397   12,054   2,688   16,139  

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