TECSYS Inc.
TSX : TCS

TECSYS Inc.

February 27, 2014 12:09 ET

TECSYS Reports 2nd Consecutive Quarter of Record Revenue, Increases Dividend

MONTREAL, QUEBEC--(Marketwired - Feb. 27, 2014) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, today announced its results for the third quarter of fiscal year 2014, ended January 31st, 2014. All dollar amounts are expressed in Canadian currency and are prepared in accordance with the International Financial Reporting Standards (IFRS) and are unaudited.

Third Quarter Highlights:

• Revenue increased by 14% to $11.8M in Q3, 2014, the highest in a decade, compared to $10.4M in Q3, 2013.

• Services revenue grew to $7.9M, a 24% increase from last year, and profit margin improved to 38% from 20% in Q3 2013. The growth and margin improvements are due primarily to increased productivity from the professional services organization.

• Annualized recurring revenue increased to $17.0M at the end of Q3, 2014, compared to $15.4M at the end of Q3, 2013, a 11% increase and represents 38% of the last twelve months trailing revenue.

• Recorded $4.1M of new total contract value bookings in the quarter, including two new customers.

• New go lives of supply chain execution solutions occurred at 12 customer sites, most notably one in health systems and five major WMS sites, one of which is a heavy equipment dealer in South America.

• Partnered with GENCO to expand the reach of its healthcare offerings through third parties.

• EBITDA increased to $1.1M for Q3, 2014 compared to a loss of $28K for Q3, 2013.

• Profit from operations increased to $589K in Q3, 2014 compared to a loss of $464K in Q3, 2013.

• Net profit was $467K or $0.04 per share for Q3, 2014 compared to a net loss of $543K or $0.05 loss per share for Q3, 2013.

• Backlog was $27.4M at the end of Q3, 2014 compared to $25.1M at the end of Q3, 2013.

• Cash and cash equivalents amounted to $5.9M at the end of Q3, 2014 compared to $5.3M at the end of Q4, 2013.

TECSYS also announced that the Company's Board of Directors declared a semi-annual dividend of $0.04 per share, to be paid on March 28th, 2014 to shareholders of record on March 14th, 2014, an increase of 14%.

"We continued to drive top line revenue growth during Q3, led by the contribution from our services business. The investments we made in this group over the past 18 months are paying off with increased productivity and record revenue from the team," said Peter Brereton, President and CEO of TECSYS Inc. "Our sales pipeline is growing and we are seeing good traction across all verticals, particularly from healthcare. Specifically, we believe our leadership position in the healthcare market provides opportunities to expand our client base and drive new product offerings with our proprietary software."

Highlights of the First Nine Months:

  • Revenue increased 4% to $34.1M for the first nine months of fiscal 2014 compared to $32.6M for the same period in last year.
  • Profit from operations was $1.5M for the first nine months of fiscal 2014 compared to $1.0M for the same period last year, a 49% increase.
  • EBITDA was $2.8M for the first nine months of fiscal 2014 compared to $2.2M compared to the same period last year.
  • Net profit was $1.2M or $0.10 per share for the first nine months of fiscal 2014 compared to $0.7M or $0.06 per share for the same period last year.

Third Quarter 2014 Results Conference Call

Date: February 27, 2014
Time: 4:30 pm EST
Phone number: 800-747-0367 or 416-981-9001
The call can be replayed by calling 800-558-5253 (access code: 21709363) or 416-626-4100 (access code: 21709363).

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 600 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, 2013. 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. 2014. 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, 2014 and April 30, 2013
(in thousands of Canadian dollars)
January 31, April 30,
2014 2013
Assets
Current assets
Cash and cash equivalents $ 5,896 $ 5,348
Accounts receivable 9,306 7,959
Work in progress 338 1,291
Other accounts receivable 145 132
Tax credits 4,684 4,675
Inventory 452 545
Prepaid expenses 1,154 1,153
Total current assets 21,975 21,103
Non-current assets
Restricted cash equivalents and other investments 80 120
Non-current receivables - 39
Tax credits 1,444 1,219
Property and equipment 2,736 2,928
Deferred development costs 3,894 3,317
Other intangible assets 545 544
Goodwill 2,239 2,239
Deferred tax assets 569 710
Total non-current assets 11,507 11,116
Total assets $ 33,482 $ 32,219
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 5,710 $ 4,997
Loans payable 58 70
Term loan 1,000 1,000
Deferred revenue 7,581 7,161
Total current liabilities 14,349 13,228
Non-current liabilities
Term loan 2,750 3,500
Other non-current liabilities 271 225
Total non-current liabilities 3,021 3,725
Total liabilities 17,370 16,953
Equity
Share capital 1,852 1,748
Contributed surplus 9,577 9,588
Retained earnings 4,683 3,930
Total equity attributable to the owners of the Company 16,112 15,266
Total liabilities and equity $ 33,482 $ 32,219
TECSYS Inc.
Condensed Interim Consolidated Statements of Comprehensive Income
(Unaudited)
Three and nine-month periods ended January 31, 2014 and 2013
(in thousands of Canadian dollars, except per share data)
Three Months
Ended
January 31,
2014
Three Months
Ended
January 31,
2013
Nine Months
Ended
January 31,
2014
Nine Months
Ended
January 31,
2013
Revenue:
Software products $ 1,359 $ 1,969 $ 5,332 $ 7,321
Third-party hardware and software products 2,140 1,746 5,327 4,432
Services 7,921 6,413 22,369 20,082
Reimbursable expenses 429 256 1,079 807
Total revenue 11,849 10,384 34,107 32,642
Cost of revenue:
Products 1,466 1,190 3,761 3,217
Services 4,943 5,121 14,573 14,840
Reimbursable expenses 429 256 1,079 807
Total cost of revenue 6,838 6,567 19,413 18,864
Gross profit 5,011 3,817 14,694 13,778
Operating expenses:
Sales and marketing 2,100 2,073 6,349 5,709
General and administration 1,006 870 2,970 2,972
Research and development, net of tax credits 1,316 1,338 3,867 4,085
Total operating expenses 4,422 4,281 13,186 12,766
Profit (loss) from operations 589 (464 ) 1,508 1,012
Net finance costs 47 92 203 303
Profit (loss) before income taxes 542 (556 ) 1,305 709
Income taxes 75 (13 ) 150 5
Profit (loss) attributable to the owners of the Companyand comprehensive income (loss) for the period
$

467

$

(543
)
$

1,155

$

704
Basic and diluted earnings (loss) per common share $ 0.04 $ (0.05 ) $ 0.10 $ 0.06
TECSYS Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
Nine-month periods ended January 31, 2014 and 2013
(in thousands of Canadian dollars)
Nine Months Nine Months
Ended Ended
January 31, January 31,
2014 2013
Cash flows from (used in) operating activities:
Profit for the period $ 1,155 $ 704
Adjustments for:
Depreciation of property and equipment 552 723
Depreciation of deferred development costs 741 646
Depreciation of other intangible assets 124 117
Net finance costs 203 303
Realized foreign exchange gains, unrealized foreign exchange losses, and other 423 148
Federal non-refundable research and development tax credits (225 ) (225 )
Income taxes 150 4
Operating activities excluding changes in non-cash workingcapital items related to operations
3,123

2,420
Accounts receivable (1,347 ) 1,705
Work in progress 953 (202 )
Other accounts receivable (29 ) (57 )
Tax credits (9 ) (2,015 )
Inventory 93 127
Prepaid expenses (1 ) (111 )
Accounts payable and accrued liabilities 299 (1,237 )
Deferred revenue 420 (105 )
Changes in non-cash working capital items related to operations 379 (1,895 )
Net cash from operating activities 3,502 525
Cash flows (used in) from financing activities:
Repayment of loans (12 ) (11 )
Term loan - 5,000
Repayment of term loan (750 ) (250 )
Issuance of common shares 40 57
Purchase of common shares for cancellation and related fees (11 ) (462 )
Purchase of share options for cancellation (15 ) (243 )
Payment of dividends (402 ) (400 )
Interest paid (127 ) (55 )
Net cash (used in) from financing activities (1,277 ) 3,636
Cash flows (used in) from investing activities:
Short-term and other investments and restricted cash equivalentsand other investments
40

(302

)
Interest received 31 32
Acquisitions of property and equipment (360 ) (649 )
Acquisitions of other intangible assets (125 ) (166 )
Deferred development costs (1,318 ) (1,125 )
Current and non-current receivables from TECSYS Latin America Inc. 55 46
Net cash used in investing activities (1,677 ) (2,164 )
Net increase in cash and cash equivalents during the period 548 1,997
Cash and cash equivalents - beginning of period 5,348 5,217
Cash and cash equivalents - end of period $ 5,896 $ 7,214
TECSYS Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited)
Nine-month periods ended January 31, 2014 and 2013
(in thousands of Canadian dollars, except number of shares)
Share capital Contributed Retained Total
Number Amount surplus earnings
Balance, April 30, 2013 11,449,421 $ 1,748 $ 9,588 $ 3,930 $ 15,266
Profit and comprehensive income for the period - - - 1,155 1,155
Total comprehensive income for the period - - - 1,155 1,155
Normal course issuer bid fees for repurchase of common shares - - (11 ) - (11 )
Share options exercised 25,000 40 - - 40
Fair value associated with options exercised - 64 - - 64
Dividends to equity owners - - - (402 ) (402 )
Total transactions with owners of the Company 25,000 104 (11 ) (402 ) (309 )
Balance, January 31, 2014 11,474,421 $ 1,852 $ 9,577 $ 4,683 $ 16,112
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

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