Tecsys Reports Financial Results For The Fourth Quarter And Full Year Fiscal 2022

SaaS revenue up 41% for the full year

MONTREAL, June 29, 2022 /CNW/ — Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the fourth quarter and full year of fiscal year 2022, ended April 30, 2022. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).

Fourth Quarter Highlights:

SaaS revenue increased by 40% to $7.7 million, up from $5.5 million in Q4 2021.
Annual Recurring Revenue (ARRi) at April 30, 2022 was up 20% to $62.7 million compared to $52.5 million at April 30, 2021.
SaaS subscription bookingsi (measured on an ARRi basis) were $4.5 million, up 29% compared to $3.5 million in the fourth quarter of 2021.
Professional services revenue was up 6% to $12.9 million compared to $12.2 million in Q4 2021.
Total revenue was $34.3 million, 6% higher than $32.4 million reported for Q4 2021.
Gross margin was 44% compared to 49% in the prior year quarter.
Total gross profit decreased to $15.1 million, down 4% from $15.7 million in Q4 2021.
Operating expenses increased to $13.8 million, higher by $0.7 million or 6% compared to $13.1 million in Q4 fiscal 2021, with continued investment in sales and marketing.
Profit from operations was $1.3 million, down 50% from $2.6 million in Q4 2021.
Net profit was $2.6 million or $0.17 per share on a fully diluted basis compared to a net profit of $2.0 million or $0.14 per share for the same period in fiscal 2021. Net Profit was positively impacted in the three and twelve months ended April 30, 2022 as a result of the recognition of approximately $1.9 million net deferred tax assets and the recognition of approximately $0.6 million gain on remeasurement of lease liability.
Adjusted EBITDAii was $1.7 million, down 56% compared to $3.9 million reported in Q4 2021.
A weaker USD to CAD exchange rate negatively impacted revenue and Profit from operations and Adjusted AEBITDA by approximately $0.7 million compared to the same quarter last year.

“Our solid fourth quarter results cap off a compelling year of top-line growth. SaaS bookings drove our double digit Annual Recurring Revenue growth for the year and resulted in SaaS revenue growth of 47% on a constant currency basis. We are proud of our performance as the pandemic headwinds begin to subside and the potential emergence of tailwinds position us for continued growth well into the future.” said Peter Brereton, president and Chief Executive Officer of Tecsys Inc. “Healthcare continues to be a significant contributor as we added another two networks in the quarter for a total of eight in the fiscal year. The rising adoption of our agile end-to-end SaaS supply chain solutions by leading companies as the vendor of choice cements the important role we play in their digital transformation journeys and validates our strategy as well poised for continued success.”

Mark Bentler, chief financial officer of Tecsys Inc., added, “Looking ahead, we believe our evolution as a SaaS company and our drive to expand our partner ecosystem will continue to have an impact on our revenue mix. From an investment standpoint, we believe our existing professional services capacity is adequate for the near term. We believe that our prior investments in sales and marketing put us in a solid position to grow as productivity continues to improve. Our investment in research and development during the fourth quarter will impact Q1 of fiscal 2023, but we expect investment to moderate beyond that point.”

Results from operations

3 months ended

Fiscal Yearended

April 30, 2022

April 30, 2021

Total Revenue

34,288

32,374

137,200

123,101

Cloud, Maintenance and Subscription Revenue

15,716

13,836

59,627

52,879

Gross Profit

15,130

15,723

60,310

60,630

Gross Margin %

44 %

49 %

Operating Expenses

13,819

13,092

54,934

49,949

Op. Ex. As % of Revenue

40 %

41 %

Profit from Operations

1,311

2,631

5,376

10,681

Adjusted EBITDAii

1,730

3,917

10,130

16,220

EPS basic

0.18

0.14

0.31

0.50

EPS diluted

0.17

0.30

0.49

License Bookings

540

752

2,402

4,288

SAAS ARR Bookings

4,457

3,493

11,920

9,548

Annual Recurring Revenue

62,737

52,485

Professional Services Backlog

33,427

33,639

Fiscal 2022 Highlights:

SaaS revenue increased 41% to $26.9 million, up from $19.2 million in fiscal 2021.
SaaS subscription bookingsi increased 25% to $11.9 million compared to $9.5 million in fiscal 2021.
Professional services revenue was up 9% to $52.0 million compared to $47.5 million in fiscal 2021.
Total revenue was $137.2 million, up 11% from $123.1 million reported in fiscal 2021.
Gross margin was 44% compared to 49% for fiscal 2021.
Total gross profit decreased to $60.3 million, down $0.3 million or 1% compared to $60.6 million in the same period last year.
Operating expenses increased to $54.9 million, higher by $5.0 million or 10% compared to $49.9 million in the same period of fiscal 2021.
Profit from operations was $5.4 million, down from $10.7 million in the same period of fiscal 2021.
Net profit was $4.5 million, or $0.30 per diluted share, compared to a profit $7.2 million or $0.49 per share, for fiscal 2021.
Adjusted EBITDAii was $10.1 million, down 38% compared to $16.2 million for fiscal 2021.
A weaker USD to CAD exchange rate negatively impacted revenue by $6.6 million and Profit from operations and Adjusted AEBITDA by $5.2 million compared to the same period last year.

On June 29, 2022, the Company declared a quarterly dividend of $0.07 per share payable on August 5, 2022 to shareholders of record at the close of business on July 15, 2022.

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

i See Key Performance Indicators in Management’s Discussion and Analysis of the 2022 Financial Statements.ii See Non-IFRS Performance Measures in Management’s Discussion and Analysis of the 2022 Financial Statements.

Fourth Quarter and Full Year Fiscal 2022 Results Conference CallDate: June 30, 2022Time: 8:30am EDTPhone number: (800) 758-5606 or (416) 641-6662 The call can be replayed until July 7, 2022 by calling:(800) 558-5253 or (416) 626-4100 (access code: 22019359)

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 the most recently filed annual information form. 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).

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 stock-based compensation, fair value adjustment on contingent consideration earnout, restructuring costs, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods. The exclusion of interest expense, interest income, income taxes and restructuring costs eliminates the impact on earnings derived from non-operational activities, and the exclusion of depreciation, amortization, and share-based compensation, fair value adjustments, gains and losses on remeasurement of lease liabilities and recognition of tax credits generated in prior years eliminates the non-cash impact of these items. For the year ended April 30, 2022, we amended the definition of Adjusted EBITDA to include adjustments for the gain on remeasurement of lease liability and the recognition of tax credits generated in prior periods as a result of new significant non-cash transactions.

The Company believes that these measures are useful measures of financial performance without the variation caused by the impacts of the items described above and that could potentially distort the analysis of trends in our operating performance. In addition, they 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. Excluding these items does not imply that they are necessarily non-recurring. Management believes these non-GAAP financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company’s operating results, underlying performance and future prospects in a manner similar to management. Although EBITDA and Adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, it has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company’s results as reported under IFRS.The EBITDA and Adjusted EBITDA calculation for fiscal 2022, 2021 and 2020 derived from IFRS measures in the Company’s Consolidated financial statements, is as follows:

Year ended April 30,

(in thousands of CAD)

2022

2021

2020

Profit for the period

$ 4,478

$ 7,188

$ 2,346

Adjustments for:

Depreciation of property and equipment and right-of-use assets

2,162

2,180

2,004

Amortization of deferred development costs

290

269

536

Amortization of other intangible assets

1,612

1,663

1,530

Interest expense

622

787

1,080

Interest income

(474)

(174)

(74)

Income taxes

946

3,169

1,234

EBITDA

$ 9,636

$ 15,082

8,656

Stock based compensation

1,684

1,138

1,024

Fair value adjustment on contingent consideration earnout – Tecsys A/S

–

171

Restructuring costs

420

Gain on remeasurement of lease liability

(573)

Recognition of tax credits generated in prior periods

(617)

Adjusted EBITDA

$ 10,130

$ 16,220

$ 10,271

Consolidated Statements of Financial Position

As at April 30, 2022 and April 30, 2021

(in thousands of Canadian dollars)

Assets

Current assets

Cash and cash equivalents

$ 23,004

$ 25,752

Short-term investments

20,239

20,100

Accounts receivable

16,962

16,840

Work in progress

1,579

182

Other receivables

234

2,034

Tax credits

5,224

5,359

Inventory

806

628

Prepaid expenses

6,392

4,897

Total current assets

74,440

75,792

Non-current assets

192

303

Other long-term receivables

3,782

3,904

Property and equipment

2,064

2,682

Right-of-use assets

4,547

7,245

Contract acquisition costs

3,177

2,678

Deferred development costs

1,870

1,088

Other intangible assets

10,301

12,194

Goodwill

16,863

17,417

Deferred tax assets

8,608

6,006

Total non-current assets

51,404

53,517

Total assets

$ 125,844

$ 129,309

Liabilities

Current liabilities

Accounts payable and accrued liabilities

$ 16,971

$ 19,417

Deferred revenue

24,689

22,044

Current portion of long-term debt

1,200

1,216

Other current liabilities

500

Lease obligations

662

848

Total current liabilities

43,522

44,025

Non-current liabilities

Long-term debt

7,200

8,400

Deferred tax liabilities

1,258

1,499

5,181

8,295

Total non-current liabilities

13,639

18,194

Total liabilities

57,161

62,219

Contingencies and other commitments

Equity

Share capital

43,973

42,700

Contributed surplus

13,176

11,745

Retained earnings

12,968

12,419

Accumulated other comprehensive income

(1,434)

226

Total equity attributable to the owners of the Company

68,683

67,090

Total liabilities and equity

Consolidated Statements of Income and Comprehensive Income

Three and twelve-month periods ended April 30, 2022 and 2021

(in thousands of Canadian dollars, except per share data)

Three months ended

Twelve months ended

Revenue:

SaaS

$ 7,708

$ 5,492

$ 26,929

$ 19,164

Maintenance and Support

8,008

8,344

32,698

33,715

Professional Services

12,896

12,175

52,040

47,530

License

558

1,026

2,806

4,921

Hardware

5,118

5,337

22,727

17,771

Total revenue

Cost of revenue

19,158

16,651

76,890

62,471

Gross profit

Operating expenses:

Sales and marketing

6,388

5,649

24,294

20,985

General and administration

2,652

2,427

10,865

10,396

Research and development, net of tax credits

4,779

5,016

19,775

18,568

Total operating expenses

Profit from operations

Net finance (income) costs

(164)

(48)

324

Profit before income taxes

1,475

2,536

5,424

10,357

Income tax expense

(1,111)

516

Net profit, attributable to the owners of the Company

$ 2,586

$ 2,020

$ 4,478

$ 7,188

Other comprehensive income:

Effective portion of changes in fair value on designated revenue

hedges

(52)

(300)

(693)

(77)

Exchange differences on translation of foreign operations

(375)

(632)

(967)

(113)

Comprehensive income attributable to the owners of the Company

$ 2,159

$ 1,088

$ 2,818

$ 6,988

Basic earnings per common share

$ 0.18

$ 0.14

$ 0.31

$ 0.50

Diluted earnings per common share

$ 0.17

$ 0.30

$ 0.49

Consolidated Statements of Cash Flows

Three months ended

April 30, 2022

April 30, 2021

Cash flows from operating activities:

$ 2,586

$ 2,020

$ 4,478

$ 7,188

Depreciation of property and equipment and right-of-use-assets

515

567

Amortization of deferred development costs

Amortization of other intangible assets

382

404

Interest expense (income) and foreign exchange (gain) loss

409

525

Gain on lease remeasurement

Unrealized foreign exchange and other

(103)

(184)

1,117

(1,130)

Non-refundable tax credits

(992)

(392)

(2,332)

(1,395)

Stock-based compensation

340

210

(1,455)

215

402

2,545

Net cash from operating activities excluding changes in non-cash working capital items related to operations

1,196

2,995

9,365

12,782

Accounts Receivable

4,365

(1,516)

(270)

1,552

Work in progress

(194)

364

(1,410)

652

Other receivables

376

219

289

Tax credits

2,233

1,841

(397)

(724)

Inventory

142

320

(186)

Prepaid expenses

330

(243)

(1,502)

(1,120)

Contract acquisition costs

(389)

(90)

(499)

(354)

Accounts payable and accrued liabilities

(757)

645

(3,171)

137

Deferred revenue

1,352

3,426

2,700

5,894

Changes in non-cash working capital items related to operations

7,162

5,123

(4,516)

6,331

Net cash from operating activities

8,358

8,118

4,849

19,113

Cash flows from (used in) financing activities:

Repayment of long-term debt

(312)

(1,216)

(1,215)

Payment of lease obligations

(225)

(233)

(859)

(929)

Payment of dividends

(1,022)

(940)

(3,929)

(3,607)

Refund (payment) of acquired tax liability

299

(2,191)

Common shares issued on exercise of stock options

630

1,020

1,442

Interest paid

(178)

(150)

(622)

(638)

Net cash used in financing activities

(1,725)

(1,005)

(5,307)

(7,138)

Cash flows from (used in) investing activities:

Purchase of short-term investments

(10,000)

Interest received

175

174

Acquisitions of property and equipment

(19)

(185)

(962)

Acquisitions of other intangible assets

(226)

(9)

(255)

(569)

Deferred development costs

(162)

(51)

(1,072)

(254)

Payments related to prior business acquisitions

(672)

(500)

(2,140)

Net cash used in investing activities

(350)

(899)

(2,290)

(13,751)

Net increase (decrease) in cash and cash equivalents during the period

6,283

6,214

(2,748)

(1,776)

Cash and cash equivalents – beginning of period

16,721

19,538

25,752

27,528

Cash and cash equivalents – end of period

$ 23,004

$ 25,752

Consolidated Statements of Changes in Equity

For the year-ended April 30, 2022 and 2021

(in thousands of Canadian dollars, except number of shares)

Share capital

Number

Amount

Contributed

surplus

Accumulated other comprehensive

income (loss)

Retained earnings

Total

Balance, May 1, 2021

14,505,095

$ 42,700

$ 11,745

$ 226

$ 12,419

$ 67,090

Net profit

4,478

Other comprehensive income:

Effective portion of changes in fair value on designated revenue hedges

Exchange difference

on translation of

foreign operations

Total comprehensive income

(1,660)

2,818

Stock-based compensation

Dividends to equity

owners

Share options exercised

57,800

1,273

(253)

Total transactions with owners of the Company

1,431

(1,225)

Balance, April 30, 2022

14,562,895

$ 43,973

$ 13,176

$ (1,434)

$ 12,968

$ 68,683

Balance, May 1, 2020

14,416,543

$ 40,901

$ 10,964

$ 416

$ 8,838

$ 61,119

Net profit

7,188

Other comprehensive income:

Effective portion of changes in fair value on designated

revenue hedges –

Exchange difference

on translation of

foreign operations –

Total comprehensive

income –

(190)

6,998

Stock-based compensation

Dividends to equity owners

Share options exercised

88,552

1,799

(357)

Total transactions with

owners of the Company 88,552

781

(1,027)

Balance, April 30, 2021 14,505,095

$ 42,700

$ 226

$ 12,419

$ 67,090

SOURCE Tecsys Inc.

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