TECSYS Inc.
TSX : TCS

TECSYS Inc.

July 07, 2011 14:05 ET

TECSYS Recurring Revenue Reaches 39% in Fiscal 2011

MONTREAL, QUEBEC--(Marketwire - July 7, 2011) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, announced today its results for the fourth quarter and 2011 fiscal year ended April 30th, 2011. The results of the 2011 fiscal year are audited. All dollar amounts are expressed in Canadian currency and reported in accordance with Canadian Generally Accepted Accounting Principles (GAAP).

Highlights of the Fourth Quarter include:

  • At the end of Q4, 2011, annualized recurring revenue was $14.0M, or 39% of 2011 fiscal year revenue compared to $13.1M, or 36% of 2010 fiscal year revenue. Recurring revenue is principally made-up of annual software maintenance contracts.

  • Revenue was $8.5M in Q4 of fiscal 2011 compared to $8.8M in Q4 of fiscal 2010; the slight decline is primarily due to the impact of the stronger Canadian dollar against the U.S. dollar.

  • Earnings from operations in Q4, 2011 were $652K compared to $851K for the same quarter of last year. During the quarter federal non-refundable tax credits of $300K were booked, compared to $1.4M in the corresponding quarter of last fiscal year.

  • EBITDA was $1.1M in Q4, 2011 compared to $1.3M for Q4 of last year.

  • Net earnings for Q4, 2011 were $469K or basic net earnings of $0.04 per share compared to $1,266K or basic net earnings of $0.10 per share in Q4, 2010. In Q4, 2011, income tax expensed amounted to $219K compared to an income tax recovery of $453K in Q4 of last fiscal year.

  • At the end of the fourth quarter, 2011, backlog was $21.0M compared to $20.8M at the end of Q3, 2011 and $18.3M at the end of Q4, 2010.

  • During the quarter, the Company generated $1.1M cash from operations compared to $1.4M for the corresponding quarter of fiscal 2010.

  • Cash and cash equivalents, as well as short-term and other investments at the end of Q4, 2011 amounted to $7.3M compared to $8.1M at the end of Q4, 2010, with no long-term debt. Shortly after year-end, on May 17, 2011, the Company sold all of its Asset-Backed Commercial Paper (ABCP) holdings for total cash proceeds of $3.6 million and concurrently repaid and terminated the credit facility. As a result, this has improved the Company's working capital by $3.6M.

Peter Brereton, President and CEO of TECSYS Inc., commented on the results: "Our recurring revenue and backlog reached an all-time high; $14M and $21M respectively. We continue to move into larger accounts and this quarter highlights the growing backlog which is now beginning to convert to services, with services revenue rising by 10%. Gross margin percentage increased to 48% in Q4, 2011 compared to 45% in Q4 of 2010. We also saw a great win in the wine and spirits business as our market presence in warehousing grows. Our EBITDA continues to be strong as we continue to shift into more of a pure vertical play, and we are pleased to have been able to return almost $2M to shareholders this year in the form of share buybacks and dividends. Moving forward, our sales pipeline and market position are solid and we are in a unique position to take advantage of the opportunities ahead, particularly in the healthcare supply chain."

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

  • Six customers in healthcare

  • Nine customers in industrial and import-to-retail distribution

  • Nine customers in general high-volume distribution

  • One customer in third party logistics

Furthermore, the Company completed the deployment of its software for the go-lives of a number of customer sites across all of the Company's vertical markets during the quarter.

Highlights of the 2011 Fiscal Year include:

  • Revenue for fiscal 2011 was $35.7M compared to $36.8M for last fiscal year. The stronger Canadian dollar accounted for $1.0M in lower revenue in 2011.

  • Earnings from operations for the year were $1.4M compared to $2.1M for the same period last year, primarily due to the federal non-refundable tax credits outlined earlier in this press release under the fourth quarter highlights.

  • EBITDA was $3.1M in 2011 compared to $3.3M in fiscal 2010.

  • Net earnings for the year were $1.4M or basic earnings per share $0.12 compared to $2.2M or basic earnings per share of $0.18 for 2010, primarily due to the federal non-refundable tax credits and income taxes outlined earlier in this press release under the fourth quarter highlights.

TECSYS' Q4 FY2011 Earnings Conference Call:

Date: July 7, 2011
Time: 4:30 pm EDT
Phone number: 888-225-2703 or 416-981-9070

The call can be replayed by calling 800-558-5253 (access code: 21531023) or 416-626-4100 (access code: 21531023).

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 about 500 mid-size and Fortune 1000 corporations in healthcare, 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)
April 30, April 30,
2011 2010
Assets
Current assets
Cash and cash equivalents 6,404 7,256
Short-term and other investments 850 850
Asset-backed commercial paper 3,584 -
Accounts receivable 6,860 7,346
Work in progress 45 66
Other accounts receivable 303 425
Tax credits receivable 1,737 1,914
Inventory 180 171
Prepaid expenses 850 879
Future tax assets 78 142
20,891 19,049
Restricted cash equivalents and other investments 200 200
Asset-backed commercial paper - 3,514
Long-term receivables 23 48
Investment tax credits 1,123 930
Long-term investment 220 211
Property and equipment 2,333 2,472
Intangible assets 476 623
Deferred development costs 2,448 1,991
Future tax assets 531 453
Goodwill 2,804 2,804
31,049 32,295
Liabilities
Current liabilities
Bank advances 3,720 3,951
Accounts payable and accrued liabilities 4,114 5,305
Current portion of long-term debt 107 249
Deferred revenue 6,344 5,827
14,285 15,332
Shareholders' equity
Capital stock 1,467 1,386
Contributed surplus 10,865 11,931
Retained earnings 4,432 3,646
16,764 16,963
31,049 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 Year Ended Year Ended
April 30, April 30, April 30, April 30,
2011 2010 2011 2010
(unaudited) (unaudited)
Revenue
Products 2,516 3,467 12,459 13,333
Services 5,732 5,197 22,287 22,437
Reimbursable expenses 242 183 908 1,002
8,490 8,847 35,654 36,772
Cost of revenue
Products 706 1,050 4,745 4,585
Services 3,469 3,637 13,864 14,418
Reimbursable expenses 242 183 908 1,002
4,417 4,870 19,517 20,005
Gross margin 4,073 3,977 16,137 16,767
Operating expenses
Sales and marketing 1,523 1,635 6,086 5,902
General and administration 869 834 3,517 3,578
Gross research and development 1,466 1,719 5,906 6,333
Research and development tax credits (497 ) (1,403 ) (1,260 ) (2,012 )
Deferred development costs capitalized (304 ) (255 ) (1,047 ) (876 )
Stock-based compensation 18 57 98 149
Amortization of property and equipment 144 149 633 550
(Gain) loss on disposal of property and equipment (13 ) 153 (13 ) 153
Amortization of intangible assets 49 105 210 480
Amortization of deferred development costs 166 132 590 404
3,421 3,126 14,720 14,661
Earnings from operations 652 851 1,417 2,106
Interest income 3 23 26 37
Interest expense (6 ) (88 ) (3 ) (106 )
Foreign exchange (losses) gains (31 ) 10 (66 ) (211 )
Changes in fair value of asset-backed commercial paper - - 302 -
Share of net earnings (loss) and amortization of intangible assets of a company subject to significant influence 70 17 9 (79 )
Earnings before income taxes 688 813 1,685 1,747
Income tax expense (recovery) 219 (453 ) 242 (435 )
Net earnings and comprehensive earnings for the period 469 1,266 1,443 2,182
Weighted average number of common shares outstanding
- basic 11,765,442 12,261,372 12,055,715 12,362,504
- diluted 11,916,935 12,485,254 12,204,084 12,550,420
Basic net earnings per common share $ 0.04 $ 0.10 $ 0.12 $ 0.18
Diluted net earnings per common share $ 0.04 $ 0.10 $ 0.12 $ 0.17
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 Year Ended Year Ended
April 30, April 30, April 30, April 30,
2011 2010 2011 2010
(unaudited) (unaudited)
Cash flows from
Operating activities
Net earnings for the period 469 1,266 1,443 2,182
Adjustments for
Amortization of property and equipment 144 149 633 550
Amortization of intangible assets 49 105 210 480
Amortization of deferred development costs 166 132 590 404
Stock-based compensation 18 57 98 149
(Gain) loss on disposal of property and equipment (13 ) 153 (13 ) 153
Changes in fair value of asset-backed commercial paper - - (302 ) -
Unrealized foreign exchange gains (155 ) (60 ) (119 ) (43 )
Deferred development costs (304 ) (255 ) (1,047 ) (876 )
Share of net (earnings) loss and amortization of intangible assets of a company subject to significant influence (70 ) (17 ) (9 ) 79
Federal non-refundable research and development tax credits (300 ) (1,428 ) (300 ) (1,428 )
Income taxes 211 (452 ) 211 (452 )
215 (350 ) 1,395 1,198
Changes in non-cash working capital items related to operations
Decrease in accounts receivable 1,629 699 486 1,961
Decrease in work in progress 107 34 21 237
(Increase) decrease in other accounts receivable (51 ) (274 ) 204 (271 )
(Increase) decrease in tax credits receivable (342 ) 831 59 (23 )
Decrease (increase) in inventory 18 36 (9 ) 48
Decrease (increase) in prepaid expenses 71 (76 ) 29 (211 )
(Decrease) increase in accounts payable and accrued liabilities (1,353 ) 786 (790 ) (249 )
Increase (decrease) in deferred revenue 773 (277 ) 517 (422 )
1,067 1,409 1,912 2,268
Financing activities
Repayment of bank advances (223 ) (18 ) (231 ) (49 )
Purchase price adjustments on acquisition applied against long-term debt - 19 - 36
Repayment of long-term debt - (20 ) (142 ) (20 )
Issuance of common shares - - 104 -
Purchase of common shares for cancellation (311 ) (191 ) (1,187 ) (580 )
Payment of dividends (352 ) (308 ) (657 ) (618 )
(886 ) (518 ) (2,113 ) (1,231 )
Investing activities
Decrease in short-term and other investments and restricted cash equivalents and other investments - 215 - 14
Interest and principal received on asset-backed commercial paper 213 1 232 125
Acquisitions of property and equipment (95 ) (1,002 ) (895 ) (1,313 )
Proceeds on disposal of property and equipment 13 20 13 20
Acquisitions of intangible assets (39 ) (132 ) (63 ) (173 )
Decrease in goodwill related to the Streamline acquisition - 25 - 25
Decrease in long-term receivables including the current portion from a related party 9 14 62 11
101 (859 ) (651 ) (1,291 )
Increase (decrease) in cash and cash equivalents 282 32 (852 ) (254 )
Cash and cash equivalents - beginning of period 6,122 7,224 7,256 7,510
Cash and cash equivalents - end of period 6,404 7,256 6,404 7,256
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)
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 (620,353 ) (70 ) (1,117 ) - (1,187 )
Stock options exercised 73,718 104 - - 104
Fair value associated with options exercised - 47 (47 ) - -
Stock-based compensation - - 98 - 98
Net earnings for the year - - - 1,443 1,443
Dividends - - - (657 ) (657 )
Balance, April 30, 2011 11,678,671 1,467 10,865 4,432 16,764
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 (300,859 ) (34 ) (546 ) - (580 )
Stock options exercised 281 - - - -
Stock-based compensation - - 149 - 149
Net earnings for the year - - - 2,182 2,182
Dividends - - - (618 ) (618 )
Balance, April 30, 2010 12,225,306 1,386 11,931 3,646 16,963

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