TECSYS Inc.
TSX : TCS

TECSYS Inc.

March 01, 2016 17:10 ET

TECSYS Reports Record Recurring Revenue; Signs One of the Largest IDNs in the U.S.

MONTREAL, QUEBEC--(Marketwired - March 1, 2016) - TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, today announced its results for the third quarter of fiscal year 2016, ended January 31st, 2016. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS) and are unaudited.

Third Quarter Highlights:

  • Recurring revenue on an annualized basis grew to $25.3M, a 19% improvement compared to the end of Q3 2015, representing 41% of the last 12 months trailing revenue.
  • Revenue grew 4% to $15.6M in Q3 2016 compared to $15.0M in Q3 2015.
  • Proprietary products revenue declined 24% to $2.5M compared to $3.3M in Q3 2015.
  • Services revenue improved by 25% to $10.5M compared to $8.4M in Q3 2015. Gross margin on services improved to 45% compared to 35% in Q3 2015.
  • Gross margin in Q3 2016 improved to 51% compared to 47% in Q3 2015.
  • Operating expenses continued to be flat for the third consecutive quarter at $7.3M.
  • EBITDA grew 4% to $1.3M for Q3 2016. EBITDA margin remained flat at 9% compared to Q3 2015.
  • Profit from operations was $604K in Q3 2016, compared to $630K in Q3 2015.
  • Net profit for Q3 2016 was $543K, or $0.04 per share, compared to $467K, or $0.04 per share, for the same period of the prior fiscal year.
  • Total contract bookings totaled $9.0M in Q3 2016, compared to $12.0M in Q3 2015.
  • Backlog grew to $50.3M at the end of Q3 2016 from $40.8M at the end of Q3 2015, a 23% increase.
  • Cash and cash equivalents totaled $8.8M at the end of Q3 2016 compared to $10.8M at the end of Q4 2015. Long-term debt was reduced by $1.1M during the first nine months of fiscal 2016.
  • Signed one new IDN contract and one community hospital. The IDN is a large, U.S. Midwest-based hospital network of 90 to 100 hospitals, about twice the size of the Company's next largest IDN under contract. The community hospital signed during the quarter is a not-for-profit hospital located in Ohio.

"We were pleased to see that we grew recurring revenue by 19% this quarter as it is a key driver to value creation," said Peter Brereton, President and CEO of TECSYS Inc. "Our services revenue grew by 25% primarily as a result of the strong backlog at the beginning of the quarter. We were also able to leverage our services organization, improving gross margin to 45% compared to 35% in the corresponding quarter of last year. While this was not a high growth quarter from a revenue standpoint, we were in the final stages of a product build cycle for which we have firm orders for our next generation product line."

"We have significantly ramped up our investment in Sales & Marketing over the last 18 months. We are satisfied with the progress being made with the larger team and expect to see this starting to impact our top line in the coming months. Our backlog hit a new record and we have signed our largest IDN in our history during the quarter after signing another marquee name in Q2. This type of client represents great opportunity for further expansion of the business relationship," Mr. Brereton added.

Highlights of the first nine months:

  • Revenue for the first nine months of fiscal 2016 was $46.3M, up 12% from $41.5M in the first nine months of last fiscal year.
  • EBITDA for the first nine months of fiscal 2016 was $3.3M, compared to $3.4M for the same period of the last fiscal year.
  • Profit from operations for the first nine months of fiscal 2016 was $1.3M compared to $1.6M in the same period of fiscal 2015.
  • Net profit for the first nine months of fiscal 2016 was $979K, or $0.08 per share, compared to $1.2M, or $0.11 per share, for the same period of the prior fiscal year.
  • Total contract bookings for the first nine months of fiscal 2016 totaled $29.1M, which includes nine new accounts signed by the Company with a total contract value of $6.1 million.

TECSYS also announced that the Company's Board of Directors has declared a quarterly dividend of $0.025 per share, to be paid on April 12, 2016 to shareholders of record at the close of business on March 22, 2016.

Third Quarter 2016 Results Conference Call
Date: March 2, 2016
Time: 8:30 am EST
Phone number: 416-359-3130 or 800-670-5957
The call can be replayed by calling 800-558-5253 or 416-626-4100 (access code: 21806779).

About TECSYS

TECSYS provides transformative supply chain solutions that equip our customers to succeed in a rapidly-changing omni-channel world. TECSYS solutions are built on a true enterprise supply chain platform, and include warehouse management, distribution and transportation management, as well as complete financial management and analytics. Customers running on TECSYS' Supply Chain Platform are confident knowing they can execute, day in and day out, regardless of business fluctuations or changes in technology, they can adapt and scale to any business needs or size, and they can expand and collaborate with customers, suppliers and partners as one borderless enterprise. From demand planning to demand fulfillment, TECSYS puts power into the hands of both front line workers and back office planners, and unshackles business leaders so they can see and manage their supply chains like never before.

TECSYS is the market leader in supply chain solutions for health systems and hospitals. Over 600 mid-size and Fortune 1000 customers trust their supply chains to TECSYS in the healthcare, service parts, 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, 2015. 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. 2016. 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, 2016 and April 30, 2015
(in thousands of Canadian dollars)
January 31, April 30,
2016 2015
Assets
Current assets
Cash and cash equivalents$8,778 $10,815
Accounts receivable 13,538 12,570
Work in progress 699 704
Other accounts receivable 658 434
Tax credits 4,314 5,369
Inventory 879 1,059
Prepaid expenses 1,781 1,394
Total current assets 30,647 32,345
Non-current assets
Tax credits 1,763 1,538
Property and equipment 2,423 2,526
Deferred development costs 4,113 4,348
Other intangible assets 1,887 2,184
Goodwill 3,596 3,596
Deferred tax assets 636 840
Total non-current assets 14,418 15,032
Total assets$45,065 $47,377
Liabilities
Current liabilities
Accounts payable and accrued liabilities$8,406 $8,817
Current portion of long-term debt 1,438 1,456
Deferred revenue 9,715 10,098
Total current liabilities 19,559 20,371
Non-current liabilities
Long-term debt 2,265 3,333
Other non-current liabilities 298 311
Total non-current liabilities 2,563 3,644
Total liabilities 22,122 24,015
Equity
Share capital 8,349 8,349
Contributed surplus 9,577 9,577
Retained earnings 5,396 5,341
Accumulated other comprehensive (loss) income (379) 95
Total equity attributable to the owners of the Company 22,943 23,362
Total liabilities and equity$45,065 $47,377
TECSYS Inc.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three and nine-month periods ended January 31, 2016 and 2015
(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,
2016 2015 2016 2015
Revenue:
Proprietary products$2,534 $3,336 $7,682 $8,641
Third-party hardware and software products 2,173 2,798 6,329 6,303
Services 10,502 8,415 30,990 25,254
Reimbursable expenses 420 409 1,321 1,320
Total revenue 15,629 14,958 46,322 41,518
Cost of revenue:
Products 1,492 2,011 5,014 4,633
Services 5,798 5,468 16,858 15,791
Reimbursable expenses 420 409 1,321 1,320
Total cost of revenue 7,710 7,888 23,193 21,744
Gross profit 7,919 7,070 23,129 19,774
Operating expenses:
Sales and marketing 3,601 3,230 10,696 8,776
General and administration 1,387 1,340 4,147 4,288
Research and development, net of tax credits 2,327 1,870 6,974 5,074
Total operating expenses 7,315 6,440 21,817 18,138
Profit from operations 604 630 1,312 1,636
Net finance (income) costs (49) 28 23 106
Profit before income taxes 653 602 1,289 1,530
Income taxes 110 135 310 310
Profit attributable to the owners of the Company$543 $467 $979 $1,220
Other comprehensive loss:
Effective portion of changes in fair value on designated revenue hedges (247) (460) (474) (647)
Comprehensive income attributable to the owners of the Company$296 $7 $505 $573
Basic and diluted earnings per common share$0.04 $0.04 $0.08 $0.11
TECSYS Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
Nine-month periods ended January 31, 2016 and 2015
(in thousands of Canadian dollars)
Nine Months Nine Months
Ended Ended
January 31, January 31,
2016 2015
Cash flows from (used in) operating activities:
Profit for the period$979 $1,220
Adjustments for:
Depreciation of property and equipment 559 557
Depreciation of deferred development costs 1,054 962
Depreciation of other intangible assets 371 316
Gain on disposal of property and equipment (12) -
Net finance costs 23 106
Unrealized foreign exchange and others 532 936
Federal non-refundable research and development tax credits (225) (225)
Income taxes 225 225
Operating activities excluding changes in non-cash working capital items related to operations
3,506

4,097
Accounts receivable (968) (3,085)
Work in progress 5 (792)
Other accounts receivable (440) (236)
Tax credits 1,055 (1,874)
Inventory 180 (163)
Prepaid expenses (387) (127)
Accounts payable and accrued liabilities (1,148) 1,733
Deferred revenue (383) 293
Changes in non-cash working capital items related to operations (2,086) (4,251)
Net cash from (used in) operating activities 1,420 (154)
Cash flows (used in) from financing activities:
Repayment of bank loans - (140)
Repayment of long-term debt (1,086) (795)
Long-term debt - 50
Purchase of share options for cancellation (6) (13)
Payment of dividends (924) (779)
Interest paid (106) (99)
Net cash used in financing activities (2,122) (1,776)
Cash flows (used in) from investing activities:
Restricted cash equivalents - 40
Interest received 52 18
Acquisitions of property and equipment (506) (219)
Proceeds on disposal of property and equipment 12 -
Acquisitions of other intangible assets (74) (255)
Deferred development costs (819) (1,147)
Receivables from TECSYS Latin America Inc. - 26
Business combination, net of cash and cash equivalents acquired - (2,949)
Net cash used in investing activities (1,335) (4,486)
Net decrease in cash and cash equivalents during the period (2,037) (6,416)
Cash and cash equivalents - beginning of period 10,815 8,839
Cash and cash equivalents - end of period$8,778 $2,423
TECSYS Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited)
Nine-month periods ended January 31, 2016 and 2015
(in thousands of Canadian dollars, except number of shares)
Accumulated
Share capitalContributedother Retained Total
NumberAmountsurpluscomprehensive earnings
income (loss)
Balance, April 30, 201512,315,326$8,349$9,577$95 $5,341 $23,362
Profit for the period- - - - 979 979
Other comprehensive loss for the period:
Effective portion of changes in fair value on designated revenue hedges- - - (474) - (474)
Total comprehensive income for the period- - - (474) 979 505
Dividends to equity owners- - - - (924) (924)
Total transactions with owners of the Company- - - - (924) (924)
Balance, January 31, 201612,315,326$8,349$9,577$(379)$5,396 $22,943
Balance, April 30, 201411,524,421$2,153$9,577$- $4,864 $16,594
Profit for the period- - - - 1,220 1,220
Other comprehensive loss for the period:
Effective portion of changes in fair value on designated revenue hedges- - - (647) - (647)
Total comprehensive income for the period- - - (647) 1,220 573
Common shares issued related to purchase of Logi D Holding Inc.15,625 100 - - - 100
Dividends to equity owners- - - - (779) (779)
Total transactions with owners of the Company15,625 100 - - (779) (679)
Balance, January 31, 201511,540,046$2,253$9,577$(647)$5,305 $16,488

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