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02.12.2020 23:15:00
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Tecsys Reports Financial Results for the Second Quarter of Fiscal 2021
33% growth in recurring revenue drives seventh consecutive quarter of record revenue
MONTREAL, Dec. 2, 2020 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management software company, today announced its results for the second quarter of fiscal year 2021, ended October 31, 2020. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).
Second Quarter Highlights:
- SaaS Revenue in Q2 2021 increased 142% to $5.1 million, up from $2.1 million in Q2 2020.
- Cloud, maintenance and subscription revenue increased 33% year-over-year to $13.4 million in Q2 2021, up from $10.1 million in Q2 2020. The increase was primarily driven by SaaS.
- Annual Recurring Revenue (ARRi) at October 31, 2020 was up 26% to $50.9 million compared to $40.5 million at October 31, 2019 and up 3.9% sequentially from July 31, 2020 on a constant currency basis.
- During Q2 2021, SaaS subscription bookingsi (measured on an ARRi basis) were $2.7 million, a 15% increase over $2.4 million reported in Q2 2020.
- Professional services revenue was up 16% to $11.8 million in Q2 2021 compared to $10.2 million in Q2 2020. Professional services bookingsi were up 19% to $11.5 million in the second quarter of fiscal 2021 compared to $9.7 million in the same period last year.
- Total revenue was a record $30.7 million, 18% higher than $26.0 million reported for Q2 2020.
- Gross margin was 52% compared to 50% in the prior year quarter. Total gross profit increased to $16.0 million, up 23% from $13.1 million in Q2 2020.
- Operating expenses increased to $12.6 million, higher by $1.8 million or 16% compared to $10.8 million in Q2 fiscal 2020 with continuing investment in sales and marketing as well as research and development.
- Profit from operations in Q2 2021 was $3.5 million, compared to $2.2 million in Q2 2020.
- Profit was $2.1 million or $0.14 per share on a fully diluted basis in Q2 2021 compared to a profit of $1.4 million or $0.11 per share for the same period in fiscal 2020.
- Adjusted EBITDAi was a record $4.8 million in Q2 2021, up 31% compared to $3.7 million reported in Q2 2020.
"Our performance for the second quarter of fiscal 2021 represents a continuation of positive business momentum that we have been experiencing," said Peter Brereton, president and CEO of Tecsys Inc. "This is our seventh straight quarter reporting record revenue. The pandemic has had minimal negative effect on our business and solid growth in our pipeline bodes well for our financial performance for the remainder of fiscal 2021 and beyond. Our trailing twelve month SaaS bookings are up 159% compared to prior trailing twelve to a large extent driven by an explosion of business coming from our customer base. Finally, volume on our distributed order management platform was up 140% for the black Friday period compared to last year."
Mark Bentler, chief financial officer of Tecsys Inc., added, "SaaS revenue continues to be our fastest growing revenue stream and in the second quarter of fiscal 2021 represented 38% of total cloud, maintenance and subscription revenues, up from 21% in the prior year period. We continue to see strong demand and the transition to SaaS continues with 81% of our product bookings coming from SaaS in the first half of fiscal 2021 compared to 75% for the same period last year. While we continue to see some demand for perpetual licenses, the longer term trend toward SaaS appears solid."
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, | October 31, | October 31, | October 31, | October 31, | October 31, | ||||||||
Total Revenue | $ | 30 694 | $ | 26 008 | $ | 58 785 | $ | 50 258 | $ | 113 382 | $ | 92 241 | |
Cloud, Maintenance and | 13 432 | 10 063 | 25 685 | 19 845 | 46 898 | 37 300 | |||||||
Gross Profit | 16 010 | 13 055 | 29 500 | 24 588 | 55 230 | 44 935 | |||||||
Gross Margin % | 52% | 50% | 50% | 49% | 49% | 49% | |||||||
Operating Expenses | 12 558 | 10 839 | 24 080 | 21 869 | 47 821 | 44 740 | |||||||
Op. Ex. As % of Revenue | 41% | 42% | 41% | 44% | 42% | 49% | |||||||
Profit from Operations | 3 452 | 2 216 | 5 420 | 2 719 | 7 409 | 195 | |||||||
Adjusted EBITDA | 4 830 | 3 677 | 8 339 | 5 672 | 12 938 | 6 258 | |||||||
EPS basic and diluted | 0.14 | 0.11 | 0.23 | 0.09 | 0.32 | (0.02) | |||||||
License Bookings | 1 904 | 1 413 | 2 365 | 1 806 | 5 277 | 4 639 | |||||||
SAAS ARR Bookings | 2 692 | 2 350 | 5 062 | 2 730 | 11 090 | 4 275 | |||||||
Annual Recurring Revenue | 50 873 | 40 499 | 50 873 | 40 499 | 50 873 | 40 499 | |||||||
Professional Services Backlog | 38 746 | 22 142 | 38 746 | 22 142 | 38 746 | 22 142 |
Year-to-date performance for first half of fiscal 2021
Highlights:
- SaaS revenue in the first half of fiscal 2021 increased 133% to $9.0 million, up from $3.9 million in the first half of fiscal 2020.
- Cloud, maintenance and subscription revenue increased 29% year-over-year to $25.7 million in the first half of fiscal 2021, up from $19.8 million in the prior year. The increase was primarily driven by SaaS.
- SaaS subscription bookingsi increased 85% to $5.1 million in the first six months of fiscal 2021 compared to $2.7 million in the first half of fiscal 2020.
- Professional services revenue was up 15% to $23.0 million the first half of fiscal 2021 compared to $19.9 million in the prior year period. Professional services bookings were up 50% to $25.6 million in the first half of fiscal 2021 compared to $17.1 million in the same period last year.
- Revenue for the first six months of fiscal 2021 was $58.8 million, up 17% from $50.3 million reported in the previous fiscal year period.
- Total gross profit increased to $29.5 million, up $4.9 million or 20% in the first six months of fiscal 2021 compared to $24.6 million in the same prior year period.
- Total gross profit margin increased slightly to 50% compared to 49% reported for the first half of fiscal 2020.
- Net profit for the first six months of fiscal 2021 was $3.3 million, or $0.23 per share, compared to a profit $1.1 million or $0.09 per share, for the same period in fiscal 2020.
- Adjusted EBITDAii for the first six months of fiscal 2021 was $8.3 million, up 47% compared to $5.7 million reported for the same period in fiscal 2020.
On December 2nd, 2020, the Company declared a quarterly dividend of $0.065 per share payable on January 8, 2021 to shareholders of record at the close of business on December 17, 2020.
Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be "eligible" dividends.
Second Quarter Fiscal 2021 Results Conference Call
Date: December 3, 2020
Time: 8:30am EST
Phone number: (800) 931 6427 or (416) 981 0157
The call can be replayed until December 10, 2020 by calling:
(800) 558 5253 or (416) 626 4100 (access code: 21972640)
About Tecsys
Tecsys is a global provider of supply chain solutions that equip the borderless enterprise for growth. Organizations thrive when they have the software, technology and expertise to drive operational greatness and deliver on their brand promise. Spanning healthcare, retail, service parts, third-party logistics, and general wholesale high-volume distribution industries, Tecsys delivers dynamic and powerful solutions for warehouse management, distribution and transportation management, supply management at point of use, retail order management, as well as complete financial management and analytics solutions. Tecsys' shares are listed on the Toronto Stock Exchange under the ticker symbol TCS. For more information on Tecsys, visit www.tecsys.com.
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 30, 2020. 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. 2020. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.
i | See Key Performance Indicators in Management's Discussion and Analysis of the Q2 2021 Financial Statements. | ||||
ii | See Non-IFRS Performance Measures in Management's Discussion and Analysis of the Q2 2021 Financial Staements. | ||||
Non-IFRS Measures
Reconciliation of EBITDA and Adjusted EBITDA
The terms and definitions of the non-GAAP measure used in this MD&A and a reconciliation of the non-GAAP measure to the most directly comparable GAAP measure are provided below. These non-GAAP measures do not have any standardized meanings prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation.
EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before stock-based compensation, fair value adjustment on contingent consideration earnout 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 calculation for three and six months ended October 31, 2020 and October 31, 2019 derived from IFRS measures in the Company's Consolidated financial statements, is as follows:
Three months | Three months | Six months | Six months | |
Profit for the period | $ 2,086 | $ 1,404 | $ 3,321 | $ 1,137 |
Adjustments for: | ||||
Depreciation of property and equipment and | 526 | 480 | 1,059 | 957 |
Amortization of deferred development costs | 58 | 151 | 161 | 313 |
Amortization of other intangible assets | 426 | 325 | 834 | 738 |
Interest expense | 195 | 290 | 471 | 571 |
Interest income | (63) | (18) | (113) | (46) |
Income taxes | 1,235 | 529 | 1,970 | 878 |
EBITDA | $ 4,463 | $ 3,161 | $ 7,703 | $ 4,548 |
Adjustments for: | ||||
Stock based compensation | 367 | 345 | 636 | 533 |
Restructuring costs | - | - | - | 420 |
Fair value adjustment on contingent | - | 171 | - | 171 |
Adjusted EBITDA | $ 4,830 | $ 3,677 | $ 8,339 | $ 5,672 |
Condensed Interim Consolidated Statements of Financial Position | ||
October 31, 2020 | April 30, 2020 | |
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 10,463 | $ 27,528 |
Short-term investments | 20,058 | 10,000 |
Accounts receivable | 23,466 | 18,434 |
Work in progress | 1,383 | 837 |
Other receivables | 2,510 | 1,633 |
Tax credits | 6,260 | 4,162 |
Inventory | 658 | 634 |
Prepaid expenses | 4,385 | 3,778 |
Total current assets | 69,183 | 67,006 |
Non-current assets | ||
Other long-term receivables | 322 | 350 |
Tax credits | 4,854 | 4,624 |
Property and equipment | 2,777 | 2,823 |
Right-of-use assets | 7,757 | 8,234 |
Contract acquisition costs | 2,673 | 2,324 |
Deferred development costs | 1,103 | 1,103 |
Other intangible assets | 13,308 | 13,401 |
Goodwill | 17,738 | 17,540 |
Deferred tax assets | 7,024 | 7,028 |
Total non-current assets | 57,556 | 57,427 |
Total assets | $ 126,739 | $ 124,433 |
Liabilities | ||
Current liabilities | ||
Accounts payable and accrued liabilities | $ 18,345 | $ 19,933 |
Deferred revenue | 19,762 | 16,163 |
Current portion of long-term debt | 1,231 | 1,231 |
Other current liabilities | 2,646 | 4,670 |
Lease obligations | 905 | 922 |
Total current liabilities | 42,889 | 42,919 |
Non-current liabilities | ||
Long-term debt | 9,000 | 9,600 |
Deferred tax liabilities | 1,686 | 1,638 |
Lease obligations | 8,720 | 9,157 |
Total non-current liabilities | 19,406 | 20,395 |
Total liabilities | 62,295 | 63,314 |
Equity | ||
Share capital | 40,960 | 40,901 |
Contributed surplus | 11,577 | 10,964 |
Retained earnings | 10,429 | 8,838 |
Accumulated other comprehensive income | 1,478 | 416 |
Total equity attributable to the owners of the Company | 64,444 | 61,119 |
Total liabilities and equity | $ 126,739 | $ 124,433 |
Condensed Interim Consolidated Statements of Income and Comprehensive Income | |||||
Three months | Three months | Six months | Six months | ||
| |||||
Proprietary products | $ 1,918 | $ 1,726 | $ 2,562 | $ 2,170 | |
Third-party products | 3,515 | 3,592 | 7,497 | 7,244 | |
Cloud, maintenance and subscription | 13,432 | 10,063 | 25,685 | 19,845 | |
Professional services | 11,788 | 10,169 | 22,980 | 19,911 | |
Reimbursable expenses | 41 | 458 | 61 | 1,088 | |
Total revenue | 30,694 | 26,008 | 58,785 | 50,258 | |
| |||||
Products | 2,845 | 2,795 | 6,087 | 5,757 | |
Services | 11,798 | 9,700 | 23,137 | 18,825 | |
Reimbursable expenses | 41 | 458 | 61 | 1,088 | |
Total cost of revenue | 14,684 | 12,953 | 29,285 | 25,670 | |
Gross profit | 16,010 | 13,055 | 29,500 | 24,588 | |
Operating expenses: | |||||
Sales and marketing | 5,265 | 4,807 | 10,262 | 9,315 | |
General and administration | 2,895 | 2,437 | 5,321 | 4,821 | |
Research and development, net of tax credits | 4,398 | 3,595 | 8,497 | 7,313 | |
Restructuring costs | - | - | - | 420 | |
Total operating expenses | 12,558 | 10,839 | 24,080 | 21,869 | |
Profit from operations | 3,452 | 2,216 | 5,420 | 2,719 | |
Net finance costs | 131 | 283 | 129 | 704 | |
Profit before income taxes | 3,321 | 1,933 | 5,291 | 2,015 | |
Income tax expense | 1,235 | 529 | 1,970 | 878 | |
Profit attributable to the owners of the Company | $ 2,086 | $ 1,404 | $ 3,321 | $ 1,137 | |
Other comprehensive income: | |||||
Effective portion of changes in fair value on designated |
(455) |
(18) | 654 | 118 | |
Exchange differences on translation of foreign operations | (145) | 53 | 408 | (304) | |
Comprehensive income attributable to the owners of the Company | $ 1,486 | $ 1,439 | $ 4,383 | $ 951 | |
Basic and diluted earnings per common share | $ 0.14 | $ 0.11 | $ 0.23 | $ 0.09 | |
Condensed Interim Consolidated Statements of Cash Flows | ||||
Three months | Three months | Six months | Six months | |
Cash flows from operating activities: | ||||
Profit for the period | $ 2,086 | $ 1,404 | $ 3,321 | $ 1,137 |
Adjustments for: | ||||
Depreciation of property and equipment and right-of-use-assets | 526 | 480 | 1,059 | 957 |
Amortization of deferred development costs | 58 | 151 | 161 | 313 |
Amortization of other intangible assets | 426 | 325 | 834 | 738 |
Net finance costs | 131 | 283 | 129 | 704 |
Unrealized foreign exchange and other | (233) | (333) | (472) | (585) |
Non-refundable tax credits | (361) | (510) | (670) | (746) |
Stock-based compensation | 367 | 345 | 636 | 533 |
Income taxes | 1,120 | 207 | 1,844 | 556 |
Net cash from operating activities excluding changes in non-cash | ||||
4,120 | 2,352 | 6,842 | 3,607 | |
Accounts receivable | (6,038) | (3,066) | (4,963) | (1,310) |
Work in progress | (234) | 191 | (541) | 330 |
Other receivables | 138 | 253 | (78) | (461) |
Tax credits | (903) | (347) | (1,658) | (1,038) |
Inventory | (61) | (177) | (20) | (163) |
Prepaid expenses | 183 | (313) | (606) | (497) |
Contract acquisition costs | (154) | (108) | (349) | (357) |
Accounts payable and accrued liabilities | 902 | 1,815 | (2,908) | 433 |
Deferred revenue | 1,609 | 847 | 3,578 | 384 |
Changes in non-cash working capital items related to operations | (4,558) | (905) | (7,545) | (2,679) |
Net cash (used in) from operating activities | (438) | 1,447 | (703) | 928 |
Cash flows from (used in) financing activities: | ||||
Repayment of long-term debt | (300) | (236) | (600) | (472) |
Payment of lease obligations | (234) | (243) | (487) | (485) |
Payment of dividends | (1,730) | (1,439) | (1,730) | (1,439) |
Payment of acquired tax liability | (2,191) | - | (2,191) | - |
Common shares issued on exercise of stock options | 36 | - | 36 | - |
Interest paid | (151) | (248) | (319) | (489) |
Net cash used in financing activities | (4,570) | (2,166) | (5,291) | (2,885) |
Cash flows from (used in) investing activities: | ||||
Purchase of short-term investments | - | - | (10,000) | - |
Interest received | 63 | 17 | 113 | 46 |
Acquisitions of property and equipment | (454) | (232) | (503) | (359) |
Acquisitions of other intangible assets | (16) | (72) | (521) | (135) |
Deferred development costs | (54) | (189) | (160) | (355) |
Net cash used in investing activities | (461) | (476) | (11,071) | (803) |
Net decrease in cash and cash equivalents during the period | (5,469) | (1,195) | (17,065) | (2,760) |
Cash and cash equivalents - beginning of period | 15,932 | 13,348 | 27,528 | 14,913 |
Cash and cash equivalents - end of period | $ 10,463 | $ 12,153 | $ 10,463 | $ 12,153 |
Condensed Interim Consolidated Statements of Changes in Equity | |||||||
Share capital | |||||||
Number | Amount | Contributed | Accumulated | Retained | Total | ||
| 14,416,543 | 40,901 | 10,964 | 416 | 8,838 | 61,119 | |
Profit for the period | - | - | - | - | 3,321 | 3,321 | |
Other comprehensive | - | - | - | 654 | - | 654 | |
Exchange difference |
- |
- |
- |
408 |
- |
408 | |
Total comprehensive | - | - | - | 1,062 | 3,321 | 4,383 | |
Stock-based | - | - | 636 | - | - | 636 | |
Dividends to equity owners | - | - | - | - | (1,730) | (1,730) | |
Share options exercised | 2,500 | 59 | (23) | - | - | 36 | |
Total transactions with | 2,500 | 59 | 613 | - | (1,730) | (1,058) | |
Balance, October 31, 2020 | 14,419,043 | $ 40,960 | $ 11,577 | $ 1,478 | $ 10,429 | $ 64,444 | |
Balance, April 30, 2019 | 13,082,376 | $ 19,144 | $ 9,943 | $ (207) | $ 9,501 | $ 38,381 | |
Profit for the period | - | - | - | 1,137 | 1,137 | ||
Other comprehensive | |||||||
Effective portion | |||||||
revenue hedges | - | - | - | 118 | - | 118 | |
Exchange difference | - |
- | - |
(304) |
- |
(304) | |
Totalcomprehensive | - |
- |
- |
(186) |
1,137 |
951 | |
Stock-based | - |
- |
533 |
- |
- |
533 | |
Dividends to equity | - | - | - | - | (1,439) | (1,439) | |
Total transactions with | - | - | 533 | - | (1,439) | (906) | |
Balance, October 31, 2019 | 13,082,376 | $ 19,144 | $ 10,476 | $ (393) | $ 9,199 | $ 38,426 | |
SOURCE Tecsys Inc.
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