Record Revenue of $26M as SaaS Bookings Surge
MONTREAL, Dec. 4, 2019 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management software company, today announced its results for the second quarter of fiscal year 2020, ended October 31, 2019. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).
Second Quarter Highlights:
- Recurring cloud, maintenance and subscription revenue increased 47% year-over-year to $10.1 million during Q2 2020, including 13% organic SaaS growth.
- Annual Recurring Revenuei reached $40.5 million at the end of Q2 2020 compared to $27.6 million at the end of Q2 2019. This increase reflects the Company's ongoing focus on the transition to a SaaS revenue and business model which should result in ongoing value creation for shareholders.
- Total revenue was $26.0 million, higher by 43% or $7.8 million over $18.2 million reported for Q2 2019.
- Adjusted EBITDAi was $3.7 million, or 14% of revenue, in Q2 2020 compared to $1.7 million, or 9% of revenue in Q2 2019.
- SaaS subscription bookingsi of $2.4 million were added in Q2 2020 compared to $0.1 million in Q2 2019.
- Professional services revenue was $10.2 million, 47% higher than $6.9 million in Q2 2019.
- Proprietary products revenue decreased 30% to $1.7 million compared to Q2 2019 primarily due to a decrease in proprietary software license revenue as the business continues to transition to SaaS licensing. Perpetual license bookings declined to $1.4 million from $2.1 million for the same period last year.
- Higher service margins increased total gross profit to $13.1 million for Q2 2020, up 37% from $9.5 million in Q2 2019.
- Gross margin was 50% compared to 52% in the prior year, with the slight decline due to lower license revenue from the organic business resulting from the shift to SaaS bookings as well as a higher mix of lower margin hardware due to the PCSYS acquisition.
- Operating expenses increased by $2.2 million to $10.8 million, a 25% increase compared to $8.7 million reported in Q2 fiscal 2019.
- Profit from operations was $2.2 million, compared to a profit of $0.8 million in Q2 2019. Recurring revenue generated by increasing cloud, maintenance, and subscription licensing allows the company to derive higher revenue from stable operations. As our SaaS bookings increase, profit from operations should build predictably over time with fewer quarterly swings.
- Net Profit in Q2 2020 was $1.4 million or $0.11 per share compared to profit of $0.6 million or $0.05 per share for the same period in fiscal 2019.
- Total backlogi at October 31, 2019 was $87.0 million, up sequentially from $76.4 million at July 31, 2019.
- Total contract value bookingsi increased by 72% to $27.9 million in Q2 2020, up from $16.2 million in Q2 2019. During Q2 2020, the Company signed 10 new accounts with a total contract value of $15.6 million compared to 6 new accounts with a total contract value of $1.3 million signed in Q2 2019.
"This was an exciting quarter. The strong results for second quarter fiscal 2020 reflect our successful ongoing transition to SaaS licensing," said Peter Brereton, president and CEO of Tecsys Inc. "We are experiencing strong demand across all lines of business and our recent acquisitions have proven to be effective contributors to growth and earnings. Our healthcare solutions continue to perform well as we added another new hospital network (IDN) during the quarter.
We are particularly pleased with the SaaS bookings during the quarter. We booked $2.35 million of SaaS annual recurring revenue during the second quarter of which $1.5 million was organic. Under the old model, the organic component would have added approximately $3.0 million to revenue and $2.7 million to earnings, whereas, under the new SaaS model, this all drives future stable revenue growth. On the ecommerce front, our Distributed Order Management platform processed more than $60 million worth of orders during the Black Friday period on behalf of our clients, up from $40 million last year. We also held the largest user conference in our history towards the end of September with attendees and partners from a wide range of industry sectors."
Mark Bentler, chief financial officer of Tecsys Inc., added, "As we continue to transition our revenue base to a higher-quality, stable, recurring SaaS licensing model, we are pleased that the operating leverage that we planned for is beginning to be reflected in our results. We also note that our strong Q2 2020 financial results were impacted positively by both of our two recent acquisitions, OrderDynamics and PCSYS."
Results from operations | Trailing 12 | Trailing 12 | ||||||||||
3 months ended | 3 months ended | 6 months ended | 6 months ended | months ended | months ended | |||||||
October 31, 2019 | October 31, 2018 | October 31, 2019 | October 31, 2018 | October 31, 2019 | October 31, 2018 | |||||||
Total Revenue | $ | 26,008 | $ | 18,184 | $ | 50,258 | $ | 34,466 | $ | 92,241 | $ | 70,601 |
Cloud, Maintenance and Subscription Revenue | 10,063 | 6,836 | 19,845 | 13,827 | 37,300 | 27,291 | ||||||
Gross Profit | 13,055 | 9,510 | 24,588 | 17,094 | 44,935 | 34,779 | ||||||
Gross Margin % | 50% | 52% | 49% | 50% | 49% | 49% | ||||||
Operating Expenses | 10,839 | 8,686 | 21,869 | 16,368 | 44,740 | 31,459 | ||||||
Op. Ex. As % of Revenue | 42% | 48% | 44% | 47% | 49% | 45% | ||||||
Profit from Operations | 2,216 | 824 | 2,719 | 726 | 195 | 3,320 | ||||||
Adjusted EBITDA1 | 3,677 | 1,654 | 5,672 | 2,190 | 6,258 | 5,809 | ||||||
EPS | 0.11 | 0.05 | 0.09 | 0.05 | (0.02) | 0.24 | ||||||
Bookings | 27,911 | 16,226 | 41,918 | 26,865 | 78,264 | 53,620 | ||||||
License Booking | 1,413 | 2,138 | 1,806 | 3,101 | 4,639 | 7,201 | ||||||
SAAS ARR Bookings | 2,350 | 83 | 2,730 | 83 | 4,275 | 156 | ||||||
Backlog | 87,017 | 51,657 | 87,017 | 51,657 | 87,017 | 51,657 | ||||||
Annual Recurring Revenue | 40,499 | 27,603 | 40,499 | 27,603 | 40,499 | 27,603 | ||||||
Professional Services Backlog | 22,142 | 20,192 | 22,142 | 20,192 | 22,142 | 20,192 |
First Half Highlights:
- First half recurring cloud, maintenance and subscription revenue increased by 44% to $19.8 million from $13.8 million reported for first half of fiscal 2019.
- Total revenue in the first half of fiscal 2020 increased by 46% to $50.3 million from $34.5 million in the prior period.
- Adjusted EBITDAi for the first half of fiscal 2020 increased by 159% to $5.7 million from $2.2 million in the prior period.
- SaaS subscription bookingsi increased to $2.7 million in the first half of fiscal 2020 from $0.1 million in the first half of fiscal 2019.
- Net profit in the first half of fiscal 2020 increased 87% to $1.1 million compared to $0.6 million in the same period last year.
- Total contract value bookingsi in the first half of fiscal 2020 increased by 56% to $41.9 million, up from $26.9 million in the prior year period. During the first half of fiscal 2020, the Company signed 18 new accounts with a total contract value of $19.0 million compared to 9 new accounts with a total contract value of $3.2 million in the same period last year.
Today the Company declared an increase in the quarterly dividend of $0.005 to $0.06 per share payable on January 10, 2020 to shareholders of record at the close of business on December 19, 2019.
Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be "eligible" dividends.
Second Quarter Fiscal 2020 Results Conference Call
Date: December 5, 2019
Time: 8:30 am
Phone number: (416) – 359 3130 or 1 (800) 659 2165
The call can be replayed until December 12, 2019 by calling (416) 626 4100 or 1 (800) 558 5253 (access code:21933974).
About Tecsys
Tecsys is a global provider of transformative supply chain solutions that equip growing organizations with industry-leading services and tools to achieve operational greatness. Tecsys' solutions are designed to create clarity out of the complex supply chain challenges that organizations face with increases in scale, customer expectations and inventory. Built on an enterprise platform, Tecsys solutions include warehouse management, distribution and transportation management, supply management at point-of-use, retail order management, as well as complete financial management and analytics solutions. Through the co-creation of a more responsive supply chain, Tecsys ensures that growth-minded organizations have the chance to thrive and reach their aspirations. For more information on Tecsys' supply chain solutions, visit: www.tecsys.com
Over 1,000 customers trust their supply chains to Tecsys in the healthcare, retail, 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.
Forward Looking Statements
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, 2019. 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. 2019. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.
Non-IFRS Measures
Reconciliation of EBITDA and adjusted EBITDA
EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before acquisition related costs, fair value adjustment on contingent consideration, stock-based compensation and restructuring costs. The Company believes that these measures are commonly used by investors and analysts to measure a company's performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement.
The EBITDA and Adjusted EBITDA calculations, for the three and six-month periods ending October 31 of fiscal 2020 and 2019, derived from IFRS measures in the Company's condensed interim consolidated financial statements, is as follows:
Three-months October 31, | Three-months October 31, | Six-months October 31, | Six-months October 31, | ||
Profit for the period | $ 1,404 | $ 596 | $ 1,137 | $ 609 | |
Adjustments for: | |||||
Depreciation of property and equipment | 480 | 212 | 957 | 435 | |
Amortization of deferred development costs | 151 | 280 | 313 | 558 | |
Amortization of other intangible assets | 325 | 121 | 738 | 243 | |
Interest expense | 290 | - | 571 | - | |
Interest income | (18) | (64) | (46) | (145) | |
Income taxes | 529 | 277 | 878 | 258 | |
EBITDA | $ 3,161 | $ 1,422 | $ 4,548 | $ 1,958 | |
Adjustments for: | |||||
Stock-based compensation | 345 | 117 | 533 | 117 | |
Restructuring costs | - | - | 420 | - | |
Fair value adjustment on contingent consideration | 171 | - | 171 | - | |
Acquisition-related costs | - | 115 | - | 115 | |
Adjusted EBITDA | $ 3,677 | $ 1,654 | $ 5,672 | $ 2,190 |
Tecsys Inc. | |||||||||
Condensed Interim Consolidated Statements of Financial Position | |||||||||
(Unaudited) | |||||||||
As at October 31, 2019 and April 30, 2019 | |||||||||
(in thousands of Canadian dollars) | |||||||||
October 31, | April 30, | ||||||||
2019 | 2019 | ||||||||
Assets | |||||||||
Current assets | |||||||||
Cash and cash equivalents | $ | 12,153 | $ | 14,913 | |||||
Accounts receivable | 16,243 | 14,986 | |||||||
Work in progress | 474 | 811 | |||||||
Other receivables | 706 | 392 | |||||||
Tax credits | 4,970 | 3,493 | |||||||
Inventory | 835 | 673 | |||||||
Prepaid expenses | 4,313 | 3,223 | |||||||
Total current assets | 39,694 | 38,491 | |||||||
Non-current assets | |||||||||
Other long-term receivables | 453 | 278 | |||||||
Tax credits | 5,568 | 5,260 | |||||||
Property and equipment | 2,623 | 2,714 | |||||||
Right-of-use assets | 7,892 | - | |||||||
Deferred development costs | 1,106 | 1,064 | |||||||
Other intangible assets | 13,908 | 14,706 | |||||||
Goodwill | 17,344 | 17,456 | |||||||
Deferred tax assets | 5,878 | 5,476 | |||||||
Total non-current assets | 54,772 | 46,954 | |||||||
Total assets | $ | 94,466 | $ | 85,445 | |||||
Liabilities | |||||||||
Current liabilities | |||||||||
Accounts payable and accrued liabilities | $ | 12,263 | $ | 11,633 | |||||
Deferred revenue | 14,619 | 14,252 | |||||||
Current portion of long-term debt | 1,172 | 1,022 | |||||||
Lease obligations | 925 | - | |||||||
Other current liabilities | 4,223 | 4,111 | |||||||
Total current liabilities | 33,202 | 31,018 | |||||||
Non-current liabilities | |||||||||
Long-term debt | 10,204 | 10,827 | |||||||
Other non-current liabilities | 2,093 | 2,333 | |||||||
Lease obligations | 8,788 | - | |||||||
Deferred tax liabilities | 1,753 | 1,769 | |||||||
Total non-current liabilities | 22,838 | 14,929 | |||||||
Total liabilities | 56,040 | 45,947 | |||||||
Equity | |||||||||
Share capital | 19,144 | 19,144 | |||||||
Contributed surplus | 10,476 | 9,943 | |||||||
Retained earnings | 9,199 | 10,618 | |||||||
Accumulated other comprehensive income loss | (393) | (207) | |||||||
Total equity attributable to the owners of the Company | 38,426 | 39,498 | |||||||
Total liabilities and equity | $ | 94,466 | $ | 85,445 | |||||
Tecsys Inc. | ||||||||||
Condensed Interim Consolidated Statements of Income and Comprehensive Income | ||||||||||
(Unaudited) | ||||||||||
Three and six-month periods ended October 31, 2019 and 2018 | ||||||||||
(in thousand of Canadian dollars, except per share data) | ||||||||||
Three months | Three | Six months | Six months | |||||||
Ended | Ended | Ended | Ended | |||||||
October 31, | October 31, | October 31, | October 31, | |||||||
2019 | 2018 | 2019 | 2018 | |||||||
Revenue: | ||||||||||
Proprietary products | $ | 1,726 | $ | 2,461 | $ | 2,170 | $ | 3,786 | ||
Third-party products | 3,592 | 1,356 | 7,244 | 2,812 | ||||||
Cloud, maintenance and subscription | 10,063 | 6,836 | 19,845 | 13,827 | ||||||
Professional services | 10,169 | 6,931 | 19,911 | 12,998 | ||||||
Reimbursable expenses | 458 | 600 | 1,088 | 1,043 | ||||||
Total revenue | 26,008 | 18,184 | 50,258 | 34,466 | ||||||
Cost of revenue: | ||||||||||
Products | 2,795 | 1,369 | 5,757 | 2,644 | ||||||
Services | 9,700 | 6,705 | 18,825 | 13,685 | ||||||
Reimbursable expenses | 458 | 600 | 1,088 | 1,043 | ||||||
Total cost of revenue | 12,953 | 8,674 | 25,670 | 17,372 | ||||||
Gross profit | 13,055 | 9,510 | 24,588 | 17,094 | ||||||
Operating expenses: | ||||||||||
Sales and marketing | 4,807 | 4,100 | 9,315 | 7,534 | ||||||
General and administration | 2,437 | 1,931 | 4,821 | 3,511 | ||||||
Research and development, net of tax credit | 3,595 | 2,655 | 7,313 | 5,323 | ||||||
Restructuring costs | - | - | 420 | - | ||||||
Total operating expenses | 10,839 | 8,686 | 21,869 | 16,368 | ||||||
Profit from operations | 2,216 | 824 | 2,719 | 726 | ||||||
Net finance costs (income) | 283 | (49) | 704 | (141) | ||||||
Profit before income taxes | 1,933 | 873 | 2,015 | 867 | ||||||
Income tax expense | 529 | 277 | 878 | 258 | ||||||
Profit attributable to the owners of the Company | $ | 1,404 | $ | 596 | $ | 1,137 | $ | 609 | ||
Other comprehensive (loss) income: | ||||||||||
Effective portion of changes in fair value on designated revenue hedges | (18) | (44) | 118 | 6 | ||||||
Exchange differences on translation of foreign operations | 53 | - | (304) | - | ||||||
Comprehensive income attributable to the owners of the Company | $ | 1,439 | $ | 552 | $ | 951 | $ | 615 | ||
Basic and diluted earnings per common share | $ | 0.11 | $ | 0.05 | $ | 0.09 | $ | 0.05 | ||
Tecsys Inc. | |||||||||||
Condensed Interim Consolidated Statements of Cash Flows | |||||||||||
(Unaudited) | |||||||||||
Three and six-month periods ended October 31, 2019 and 2018 | |||||||||||
(in thousand of Canadian dollars) | |||||||||||
Three months | Three months | Six months | Six months | ||||||||
Ended | Ended | Ended | Ended | ||||||||
October 31, | October 31, | October 31, | October 31, | ||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Cash flow from (used in) operating activities: | |||||||||||
Profit for the period | $ | 1,404 | $ | 596 | $ | 1,137 | $ | 609 | |||
Adjustments for: | |||||||||||
Depreciation of property and equipment and right-of-use assets | 480 | 212 | 957 | 435 | |||||||
Amortization of deferred development costs | 151 | 280 | 313 | 558 | |||||||
Amortization of other intangible assets | 325 | 121 | 738 | 243 | |||||||
Net finance costs (income) | 283 | (49) | 704 | (141) | |||||||
Unrealized foreign exchange and other | (333) | (113) | (585) | 29 | |||||||
Non-refundable tax credits | (510) | (248) | (746) | (475) | |||||||
Stock-based compensation | 345 | 117 | 533 | 117 | |||||||
Income taxes | 207 | 265 | 556 | 265 | |||||||
Net cash from operating activities excluding changes in non-cash working capital items related to operations | 2,352 | 1,181 | 3,607 | 1,640 | |||||||
Accounts receivable | (3,066) | (915) | (1,310) | 454 | |||||||
Work in progress | 191 | 374 | 330 | (283) | |||||||
Other receivables | 253 | 262 | (461) | 78 | |||||||
Tax credits | (347) | (740) | (1,038) | (1,417) | |||||||
Inventory | (177) | 44 | (163) | 267 | |||||||
Prepaid expenses | (421) | (18) | (854) | (429) | |||||||
Accounts payable and accrued liabilities | 1,815 | 35 | 433 | (818) | |||||||
Deferred revenue | 847 | (1,518) | 384 | 139 | |||||||
Changes in non-cash working capital items related to operations | (905) | (2,476) | (2,679) | (2,009) | |||||||
Net cash from (used in) operating activities | 1,447 | (1,295) | 928 | (369) | |||||||
Cash flow (used in) financing activities: | |||||||||||
Repayment of long-term debt | (236) | (11) | (472) | (23) | |||||||
Payment of dividends | (1,439) | (1,308) | (1,439) | (1,308) | |||||||
Payment of lease obligations | (243) | - | (485) | - | |||||||
Interest paid | (248) | - | (489) | - | |||||||
Net cash used in financing activities | (2,166) | (1,319) | (2,885) | (1,331) | |||||||
Cash flows (used in) investing activities: | |||||||||||
Interest received | 17 | 64 | 46 | 145 | |||||||
Acquisition of property and equipment | (232) | (66) | (359) | (103) | |||||||
Acquisition of other intangible assets | (72) | (48) | (135) | (65) | |||||||
Deferred development costs | (189) | (10) | (355) | (65) | |||||||
Net cash used in investing activities | (476) | (60) | (803) | (88) | |||||||
Net decrease in cash and cash equivalents during the period | (1,195) | (2,674) | (2,760) | (1,788) | |||||||
Cash and cash equivalents – beginning of period | 13,348 | 14,382 | 14,913 | 13,496 | |||||||
Cash and cash equivalents – end of period | $ | 12,153 | $ | 11,708 | $ | 12,153 | $ | 11,708 | |||
Tecsys Inc. | ||||||||||||||||||||||
Condensed Interim Consolidated Statements of Changes in Equity | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Six-month periods ended October 31, 2019 and 2018 | ||||||||||||||||||||||
(in thousand of Canadian dollars, except per share data) | ||||||||||||||||||||||
Share capital | Contributed | Accumulated | Retained | Total | ||||||||||||||||||
Number | Amount | |||||||||||||||||||||
Balance, April 30, 2019 | 13,082,376 | $ | 19,144 | $ | 9,943 | $ | (207) | $ | 10,618 | $ | 39,498 | |||||||||||
Adjustment on initial application of IFRS 16 | - | - | - | - | (1,117) | (1,117) | ||||||||||||||||
Adjusted balance, May 1, 2019 | 13,082,376 | 19,144 | 9,943 | (207) | 9,501 | 38,381 | ||||||||||||||||
Profit for the period | - | - | - | - | 1,137 | 1,137 | ||||||||||||||||
Other comprehensive income for the period: | ||||||||||||||||||||||
Effective portion of changes in fair value on designated revenue hedges | - | - | - | 118 | - | 118 | ||||||||||||||||
Exchange difference on translation of foreign operations | - | - | - | (304) | - | (304) | ||||||||||||||||
Stock-based compensation | - | - | 533 | - | - | 533 | ||||||||||||||||
Total comprehensive income (loss) for the period | - | - | 533 | (186) | 1,137 | 1,484 | ||||||||||||||||
Dividends to equity owners | - | - | - | - | (1,439) | (1,439) | ||||||||||||||||
Total transaction with owners of the Company | - | - | - | - | (1,439) | (1,439) | ||||||||||||||||
Balance, October 31, 2019 | 13,082,376 | $ | 19,144 | $ | 10,476 | $ | (393) | $ | 9,199 | $ | 38,426 | |||||||||||
Balance, April 30, 2018 | 13,082,376 | $ | 19,144 | $ | 9,577 | $ | (113) | $ | 14,527 | $ | 43,135 | |||||||||||
Adjustment on initial application of IFRS 15 | - | - | - | - | (421) | (421) | ||||||||||||||||
Adjusted balance, May 1, 2018 | 13,082,376 | 19,144 | 9,577 | (113) | 14,106 | 42,714 | ||||||||||||||||
Profit for the period | - | - | - | - | 609 | 609 | ||||||||||||||||
Other comprehensive income for the period: | ||||||||||||||||||||||
Effective portion of changes in fair value on designated revenue hedges | - | - | - | 6 | - | 6 | ||||||||||||||||
Stock-based compensation | 117 | - | - | 117 | ||||||||||||||||||
Total comprehensive income (loss) for the period | - | - | 117 | 6 | 609 | 732 | ||||||||||||||||
Dividends to equity owners | - | - | - | - | (1,308) | (1,308) | ||||||||||||||||
Total transaction with owners of the Company | - | - | 117 | - | (1,308) | (1,308) | ||||||||||||||||
Balance, October 31, 2018 | 13,082,376 | $ | 19,144 | $ | 9,694 | $ | (107) | $ | 13,407 | $ | 42,138 | |||||||||||
i See Key Performance Indicators and Non-IFRS Performance Measures in Management's Discussion and Analysis of the April 30, 2019 Financial Statements |
SOURCE Tecsys Inc.
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Solutions and General info: info@tecsys.com; Investor Relations: investor@tecsys.com or (514) 866-5800, Media Relations: adam.polka@tecsys.com, By phone: (514) 866-0001 or (800) 922-8649, https://www.tecsys.comCopyright CNW Group 2019