TECSYS Reports Financial Results for Third Quarter of Fiscal 2017

MONTREAL, QUEBEC–(Marketwired – Feb. 28, 2017) – TECSYS Inc. (TSX:TCS), an industry-leading supply chain management software company, today announced its results for the third quarter of fiscal year 2017, ended January 31, 2017. 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:

  • Total revenue for Q3 2017 increased to $17.4M, $1.8M or 11% higher, compared to $15.6M for Q3 2016.
  • Recurring revenue on an annualized basis was $26.1M up 3% compared to $25.3M in Q3 2016.
  • Total gross margin percentage in Q3 2017 was 51%, even with Q3 2016.
  • Operating expenses for Q3 2017 increased to $7.6M, higher by $262K or 4%, compared to $7.3M for the same three-month period last fiscal year.
  • Profit from operations increased to $1.3M in Q3 2017, up by 122% compared to $604K for Q3 2016.
  • EBITDA increased to $1.9M in Q3 2017, 45% higher compared to $1.3M in Q3 2016.
  • Net profit increased to $888K, or $0.07 per share, in Q3 2017 compared to $543K, or $0.04 per share, for Q3 2016.
  • Total contract value bookings increased to $14.6M in Q3 2017 in comparison to $9.0M for Q3 2016.
  • Cash and cash equivalents totalled $10.8M at the end of Q3 2017 compared to $9.7M at the end of fiscal 2016.

“The third quarter of fiscal 2017 showed strong additional sales from our base accounts in healthcare along with two new contracts added by our complex distribution team,” said Peter Brereton, President and CEO of TECSYS Inc. “This momentum drove an 11% increase in revenue, which our continued discipline on operating expenses allowed us to leverage into earnings growth and a 45% increase in EBITDA. While we continue to see some effect from the uncertainty surrounding the Affordable Care Act, we are pleased with the continuing investment from our hospital customers as they expand their utilization of our product suite. We were also successful in winning another government sector project, this time in the UK.”

“We have seen the same positive trends when we look at our progress on a trailing twelve month basis, with a 15% increase in revenue and a 76% increase in EBITDA,” added Berty Ho-Wo-Cheong, VP Finance & Administration and CFO. “We expect further positive results as we continue to penetrate our base accounts and deliver operating leverage.”

TECSYS INC.

Results from Operations3 Months
Ended Jan. 31,
2017
3 Months
Ended Jan. 31,
2016
9 Months
Ended Jan. 31,
2017
9 Months
Ended Jan. 31,
2016
Trailing 12 Months Ended Jan. 31, 2017Trailing 12 Months
Ended Jan. 31, 2016
In thousands of dollars except per share amounts
Total Revenue $17,385 $15,629 $50,000 $46,322 $71,144 $62,088
Gross Margin $8,915 $7,919 $24,812 $23,129 $36,508 $30,928
Gross Margin % 51% 51% 50% 50% 51% 50%
Operating Expenses $7,577 $7,315 $22,911 $21,817 $31,370 $29,305
Op. Ex. As % of Revenue 44% 47% 46% 47% 44% 47%
Profit from Operations $1,338 $604 $1,901 $1,312 $5,138 $1,623
EBITDA $1,941 $1,343 $3,690 $3,327 $7,527 $4,282
EPS $0.07 $0.04 $0.10 $0.08 $0.41 $0.10
Contract Bookings $14,590 $9,029 $31,526 $29,131 $44,590 $45,170

First Nine Months Highlights:

  • Revenue for the first nine months of fiscal 2017 was $50.0M, up 8% from $46.3M in the first nine months of last fiscal year.
  • Profit from operations for the first nine months of fiscal 2017 was $1.9M compared to $1.3M in the same period of fiscal 2016.
  • EBITDA for the first nine months of FY 2017 was $3.7M compared to $3.3M in the same period of fiscal 2016.
  • Net profit for the first nine months of fiscal 2017 was $1.2M, or $0.10 per share, compared to $979K, or $0.08 per share, for the same period of fiscal 2016.
  • Total contract bookings for the first nine months of fiscal 2017 totalled $31.5M, compared to $29.1M for same period of fiscal 2016.

The Company has declared a dividend of $0.045 per share to be paid on April 11, 2017 to shareholders of record at the close of business on March 21, 2017.

Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be “eligible” dividends.

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.

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, 2016. 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. 2017. 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, 2017 and April 30, 2016
(in thousands of Canadian dollars)
January 31,April 30,
20172016
Assets
Current assets
Cash and cash equivalents$10,754$9,704
Accounts receivable14,53218,239
Work in progress903513
Other accounts receivable6521,393
Tax credits4,9684,893
Inventory766744
Prepaid expenses1,8101,622
Total current assets34,38537,108
Non-current assets
Tax credits1,5881,483
Property and equipment2,2842,633
Deferred development costs3,0643,817
Other intangible assets1,5951,831
Goodwill3,5963,596
Deferred tax assets2,2262,222
Total non-current assets14,35315,582
Total assets$48,738$52,690
Liabilities
Current liabilities
Accounts payable and accrued liabilities$8,272$10,399
Current portion of long-term debt1,2251,455
Deferred revenue11,03411,205
Total current liabilities20,53123,059
Non-current liabilities
Long-term debt1,0351,889
Other non-current liabilities285296
Total non-current liabilities1,3202,185
Total liabilities21,85125,244
Equity
Share capital8,3498,349
Contributed surplus9,5779,577
Retained earnings8,8428,913
Accumulated other comprehensive income119607
Total equity attributable to the owners of the Company26,88727,446
Total liabilities and equity$48,738$52,690
TECSYS Inc.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three and nine-month periods ended January 31, 2017 and 2016
(in thousands of Canadian dollars, except per share data)
Three Months
Ended
January 31,
2017
Three Months
Ended
January 31,
2016
Nine Months
Ended
January 31,
2017
Nine Months
Ended
January 31,
2016
Revenue:
Proprietary products$2,728$2,534$8,006$7,682
Third-party hardware and software products2,1922,1736,1936,329
Services11,81210,50234,01230,990
Reimbursable expenses6534201,7891,321
Total revenue17,38515,62950,00046,322
Cost of revenue:
Products1,8661,4925,1425,014
Services5,9515,79818,25716,858
Reimbursable expenses6534201,7891,321
Total cost of revenue8,4707,71025,18823,193
Gross profit8,9157,91924,81223,129
Operating expenses:
Sales and marketing3,6723,60111,02710,696
General and administration1,4541,3874,5134,147
Research and development, net of tax credits2,4512,3277,3716,974
Total operating expenses7,5777,31522,91121,817
Profit from operations1,3386041,9011,312
Net finance costs (income)45(49)19623
Profit before income taxes1,2936531,7051,289
Income taxes405110483310
Profit attributable to the owners of the Company$888$543$1,222$979
Other comprehensive income (loss):
Effective portion of changes in fair value on designated revenue hedges373(247)(488)(474)
Comprehensive income attributable to the owners of the Company$1,261$296$734$505
Basic and diluted earnings per common share$0.07$0.04$0.10$0.08
TECSYS Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
Nine-month periods ended January 31, 2017 and 2016
(in thousands of Canadian dollars)
Nine MonthsNine Months
EndedEnded
January 31,January 31,
20172016
Cash flows from (used in) operating activities:
Profit for the period$1,222$979
Adjustments for:
Depreciation of property and equipment616559
Depreciation of deferred development costs1,0071,054
Depreciation of other intangible assets368371
Gain on disposal of property and equipment(12)
Net finance costs19623
Unrealized foreign exchange and others142532
Non-refundable tax credits(685)(225)
Income taxes361225
Operating activities excluding changes in non-cash working capital items related to operations3,2273,506
Accounts receivable3,707(968)
Work in progress(390)5
Other accounts receivable(75)(440)
Tax credits1441,055
Inventory(22)180
Prepaid expenses(188)(387)
Accounts payable and accrued liabilities(2,158)(1,148)
Deferred revenue(171)(383)
Changes in non-cash working capital items related to operations847(2,086)
Net cash from operating activities4,0741,420
Cash flows used in financing activities:
Repayment of long-term debt(1,084)(1,086)
Purchase of share options for cancellation(6)
Payment of dividends(1,293)(924)
Interest paid(69)(106)
Net cash used in financing activities(2,446)(2,122)
Cash flows (used in) from investing activities:
Interest received7552
Acquisitions of property and equipment(267)(506)
Proceeds on disposal of property and equipment12
Acquisitions of other intangible assets(132)(74)
Deferred development costs(254)(819)
Net cash used in investing activities(578)(1,335)
Net increase (decrease) in cash and cash equivalents during the period1,050(2,037)
Cash and cash equivalents – beginning of period9,70410,815
Cash and cash equivalents – end of period$10,754$8,778
TECSYS Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited)
Nine-month periods ended January 31, 2017 and 2016
(in thousands of Canadian dollars, except number of shares)
Share capital
NumberAmountContributed
surplus
Accumulated
other
comprehensive

income (loss)
Retained
earnings
Total
Balance, April 30, 201612,315,326$8,349$9,577$607$8,913$27,446
Profit for the period1,2221,222
Other comprehensive loss for the period:
Effective portion of changes in fair value on designated revenue hedges(488)(488)
Total comprehensive income (loss) for the period(488)1,222734
Dividends to equity owners(1,293)(1,293)
Total transactions with owners of the Company(1,293)(1,293)
Balance, January 31, 201712,315,326$8,349$9,577$119$8,842$26,887
Balance, April 30, 201512,315,326$8,349$9,577$95$5,341$23,362
Profit for the period979979
Other comprehensive loss for the period:
Effective portion of changes in fair value on designated revenue hedges(474)(474)
Total comprehensive income (loss) for the period(474)979505
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
Solutions and general info: info@tecsys.com
Investor relations: steve.li@tecsys.com,
(514) 866-5800 ext. 4120
Media relations: media@tecsys.com
(514) 866-0001 or (800) 922-8649