TECSYS Inc.

TSX : TCS


TECSYS Inc.

February 28, 2013 12:14 ET

TECSYS Reports 14% Year-to-date Revenue Growth, Improved Leadership in Health Systems & Heavy Equipment Markets, Declares 3.5 Cents Dividend

MONTREAL, QUEBEC--(Marketwire - Feb. 28, 2013) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, announced today its results for the third quarter of fiscal year 2013, ended January 31, 2013. All dollar amounts are expressed in Canadian currency and are prepared in accordance with the International Financial Reporting Standards (IFRS) and are unaudited.

Overall highlights:

  • A 26% rise in proprietary license revenue.
  • Strengthened leadership position in healthcare, winning seven new agreements during the quarter with existing and new major clients.
  • Increased market share in the heavy equipment dealer market with the signing of five new agreements with new and existing clients during the quarter.
  • Existing clients from across its business units continued to invest in products and services - thirty two new agreements were concluded in the quarter.
  • Continued to win in the SMB sector, with significant prospecting opportunities for warehouse management systems in this market space.
  • Deployed supply chain execution solutions at fourteen customers in Canada and the United States.

Highlights of the Third Quarter include:

  • Revenue was $10.4M in Q3, 2013 compared to $10.6M in Q3, 2012. The slight decline in revenue masks a 26% rise in proprietary license revenue because it was offset by a 34% decline in third party product revenue resulting in a decrease in product revenue of 12%.
  • Services revenue rose by 4%.
  • For Q3, 2013 EBITDA was negative at $28K compared to EBITDA of $755K in Q3 of last fiscal year.
  • Loss from operations for the third quarter, 2013 was $464K compared to profit from operations of $378K in Q3, 2012.
  • Net loss for the quarter was $543K or $0.05 per share compared to net profit of $305K or $0.03 per share for the third quarter of last fiscal year.
  • Backlog increased to $25.1M at the end of Q3, 2013 from $24.6M at the end of Q3, 2012.
  • At the end of Q3, 2013 annualized recurring revenue in Canadian currency increased 4% to $15.4M from $14.8M at the end of Q3, 2012. Annualized recurring revenue at the end of Q3, 2013 represented 35% of the Company's revenue for the last 12 months.
  • Cash from operations amounted to $540K for the third quarter, 2013 compared to $1.7M for the same quarter of the prior year.
  • Cash, cash equivalents and other short-term investments amounted to $7.7M at the end of Q3, 2013, compared to $5.2M at the end of Q3, 2012.

TECSYS also announced today that the Company's Board of Directors has declared a semi-annual dividend of $0.035/share, to be paid on March 29, 2013 to shareholders of record on March 15, 2013.

Peter Brereton, President and CEO of TECSYS Inc., commented on the results: "In Q3, we were pleased to see a significant number of new contracts from our client base and major wins in the health systems and heavy equipment dealer markets. We continue to be the market leader in health system supply chains in North America. Our year-to-date revenue and profitability are ahead of last year by 14% and 21% respectively. Our license fee sales are up 26% for the quarter and 70% year-to-date. Over the past year we have grown our human capital infrastructure substantially to respond to our growing demand for services. We have added 85 people and ramped up our expenses by $1.1M compared to Q3 of last year. Most of this was done over the summer and fall. It takes some time for this additional expense to generate revenue. Our strong balance sheet has allowed us to make this aggressive move. The opportunities ahead with our sales pipeline and prospecting business initiatives are both solid and continuing to rise. According to the leading industry analysts firm, the supply chain management industry outlook is positive and is expected to remain prosperous in 2013."

Highlights of the first Nine Months of fiscal year 2013 include:

  • Revenue for the first nine months, 2013 increased 14% to $32.6M compared to $28.7M for the same period of last fiscal year.
  • Profit from operations for the first nine months, 2013 was $1,012K compared to $720K for the same period of last fiscal year.
  • EBITDA for the first nine months, 2013 was $2,218K compared to $1,802K for the same period in 2012.
  • Net profit for the first nine months, 2013 was $704K or $0.06 per share compared to $584K or $0.05 per share for the same period of the prior fiscal year.

TECSYS' Third Quarter 2013 Earnings Conference Call:

Subject: Third Quarter FY2013 Results Conference Call
Date: February 28, 2013
Time: 4:30 pm EST
Phone number: 800-734-8583 or 416-981-9023

The call can be replayed by calling 800-558-5253 (access code: 21650148) or 416-626-4100 (access code: 21650148).

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, 2012. 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. 2013. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

TECSYS Inc.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
As at January 31, 2013 and April 30, 2012
(in thousands of Canadian dollars)
January 31, April 30,
2013 2012
Assets
Current assets
Cash and cash equivalents $ 7,214 $ 5,217
Short-term and other investments 342 -
Accounts receivable 6,502 8,207
Work in progress 847 645
Other accounts receivable and derivatives 134 190
Tax credits 4,171 2,070
Inventory 569 696
Prepaid expenses 1,288 1,177
Total current assets 21,067 18,202
Non-current assets
Restricted cash equivalents and other investments 120 160
Non-current receivables 54 99
Tax credits 1,057 1,076
Property and equipment 3,076 2,911
Deferred development costs 2,993 2,514
Other intangible assets 407 362
Goodwill 2,239 2,239
Deferred tax assets 743 587
Total non-current assets 10,689 9,948
Total assets $ 31,756 $ 28,150
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 4,892 $ 5,844
Loans payable 74 85
Term loan 1,000 -
Deferred revenue 6,560 6,665
Total current liabilities 12,526 12,594
Term loan 3,750 -
Total non-current liabilities 3,750 -
Total liabilities 16,276 12,594
Equity
Share capital 1,743 1,688
Contributed surplus 9,588 10,023
Retained earnings 4,149 3,845
Total equity attributable to the owners of the Company 15,480 15,556
Total liabilities and equity $ 31,756 $ 28,150
TECSYS Inc.
Condensed Interim Consolidated Statements of Comprehensive Income
(Unaudited)
Three and nine-month periods ended January 31, 2013 and 2012
(in thousands of Canadian dollars, except per share data)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
January 31, January 31, January 31, January 31,
2013 2012 2013 2012
Revenue:
Products $ 3,715 $ 4,202 $ 11,753 $ 10,050
Services 6,413 6,177 20,082 18,021
Reimbursable expenses 256 216 807 626
Total revenue 10,384 10,595 32,642 28,697
Cost of revenue:
Products 1,190 1,673 3,217 3,860
Services 5,121 4,127 14,840 11,669
Reimbursable expenses 256 216 807 626
Total cost of revenue 6,567 6,016 18,864 16,155
Gross profit 3,817 4,579 13,778 12,542
Operating expenses:
Sales and marketing 2,073 1,820 5,709 4,894
General and administration 870 1,051 2,972 3,043
Research and development, net of tax credits 1,338 1,333 4,085 3,888
Other - (3 ) - (3 )
Total operating expenses 4,281 4,201 12,766 11,822
(Loss) profit from operations (464 ) 378 1,012 720
Finance income 3 6 32 22
Finance costs (95 ) (57 ) (335 ) (143 )
Net finance costs (92 ) (51 ) (303 ) (121 )
Share of net loss of equity-accounted associate - (22 ) - (15 )
(Loss) profit before income taxes (556 ) 305 709 584
Income taxes (13 ) - 5 -
(Loss) profit attributable to the owners of the Company and comprehensive (loss) income for the period $ (543 ) $ 305 $ 704 $ 584
Basic and diluted (loss) earnings per common share $ (0.05 ) $ 0.03 $ 0.06 $ 0.05
TECSYS Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
Three and nine-month periods ended January 31, 2013 and 2012
(in thousands of Canadian dollars)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
January 31, January 31, January 31, January 31,
2013 2012 2013 2012
Cash flows from operating activities:
(Loss) profit for the period $ (543 ) $ 305 $ 704 $ 584
Adjustments for:
Depreciation of property and equipment 221 202 723 557
Depreciation of other intangible assets 41 31 117 86
Depreciation of deferred development costs 236 216 646 571
Share-based compensation - - - 40
Net finance costs 92 51 303 121
Realized foreign exchange gains (losses) and others 19 (102 ) 148 110
Share of net loss of equity-accounted associate - 22 - 15
Federal non-refundable research and development tax credits (75 ) - (225 ) -
Income taxes 23 - 4 -
Operating activities excluding changes in non-cash working
capital items related to operations 14 725 2,420 2,084
Accounts receivable 939 (623 ) 1,705 (1,214 )
Work in progress 1,046 (216 ) (202 ) (391 )
Other accounts receivable 28 (271 ) (57 ) (272 )
Tax credits (792 ) (473 ) (2,015 ) (1,350 )
Inventory 116 (632 ) 127 (617 )
Prepaid expenses (240 ) (249 ) (111 ) (398 )
Accounts payable and accrued liabilities (562 ) 2,526 (1,237 ) 2,540
Deferred revenue (9 ) 909 (105 ) 264
Changes in non-cash working capital items related to operations 526 971 (1,895 ) (1,438 )
Net cash from operating activities 540 1,696 525 646
Cash flows (used in) from financing activities:
Repayment of bank advances - - - (3,720 )
Repayment of loans (5 ) (2 ) (11 ) (19 )
Term loan (250 ) - 4,750 -
Issuance of common shares 9 - 57 190
Purchase of common shares for cancellation - (341 ) (462 ) (398 )
Purchase of share options for cancellation (162 ) (2 ) (243 ) (339 )
Payment of dividends - - (400 ) (349 )
Interest paid (48 ) (3 ) (55 ) (14 )
Net cash (used in) from financing activities (456 ) (348 ) 3,636 (4,649 )
Cash flows (used in) from investing activities:
Short-term and other investments and restricted cash equivalentsand other investments
(342
)
-

(302
)
325
Interest received 18 6 32 22
Proceeds from asset-backed commercial paper - - - 3,584
Acquisitions of property and equipment (73 ) (864 ) (649 ) (1,200 )
Proceeds on disposal of property and equipment - 3 - 3
Acquisitions of other intangible assets (59 ) (45 ) (166 ) (150 )
Deferred development costs (416 ) (161 ) (1,125 ) (545 )
Non-current receivables including the current portionfrom a related party
15

1

46

20
Net cash (used in) from investing activities (857 ) (1,060 ) (2,164 ) 2,059
Net (decrease) increase in cash and cash equivalents during the period (773 ) 288 1,997 (1,944 )
Cash and cash equivalents - beginning of period 7,987 4,172 5,217 6,404
Cash and cash equivalents - end of period $ 7,214 $ 4,460 $ 7,214 $ 4,460
TECSYS Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited)
Nine-month periods ended January 31, 2013 and 2012
(in thousands of Canadian dollars, except number of shares)
Share capital Contributed Retained Total
Number Amount surplus earnings
Balance, April 30, 2012 11,603,271 $ 1,688 $ 10,023 $ 3,845 $ 15,556
Profit and comprehensive income for the period - - - 704 704
Total comprehensive income for the period - - - 704 704
Repurchase of common shares (187,300 ) (27 ) (435 ) - (462 )
Share options exercised 31,450 57 - - 57
Fair value associated with options exercised - 25 - - 25
Dividends to equity owners - - - (400 ) (400 )
Total transactions with owners of the Company (155,850 ) 55 (435 ) (400 ) (780 )
Balance, January 31, 2013 11,447,421 $ 1,743 $ 9,588 $ 4,149 $ 15,480
Balance, April 30, 2011 11,678,671 $ 1,467 $ 10,993 $ 3,486 $ 15,946
Profit and comprehensive income for the period - - - 584 584
Total comprehensive income for the period - - - 584 584
Repurchase of common shares (176,900 ) (22 ) (376 ) - (398 )
Repurchase of share options - - (279 ) - (279 )
Stock options exercised 114,400 190 - - 190
Fair value associated with options exercised - 48 - - 48
Fair value of share options transferred to liabilities - - (319 ) - (319 )
Share-based compensation - - 40 - 40
Dividends to equity owners - - - (349 ) (349 )
Total transactions with owners of the Company (62,500 ) 216 (934 ) (349 ) (1,067 )
Balance, January 31, 2012 11,616,171 $ 1,683 $ 10,059 $ 3,721 $ 15,463

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