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Press release from CNW Group

Softchoice Announces Second Quarter Earnings, Reinstates Quarterly Dividend

Wednesday, August 08, 2012

Softchoice Announces Second Quarter Earnings, Reinstates Quarterly Dividend19:36 EDT Wednesday, August 08, 2012Softchoice reinstates quarterly dividend, commencing at CAD $0.07 per common share.Services revenues grow 112 percent year-over-year.Gross margins improve 40 basis points compared to the second quarter of 2011.TORONTO, Aug. 8, 2012 /CNW/ - Softchoice Corporation (TSX: SO), a North American provider of technology solutions and services, today reported earnings for the second quarter of 2012.For the three-month period ended June 30th 2012, Softchoice reported net earnings of US$8.6 million compared to net earnings of US$10.9 million for the same period the prior year. Eliminating the impact of foreign exchange gains and losses, adjusted earnings amounted to US$9.5 million, or US$0.48 per share (basic and fully diluted), compared to adjusted net earnings of US$10.6 million, or US$0.54 per share (basic and fully diluted) recorded for the second quarter of 2011. The decline in net earnings is largely attributable to investments in services headcount, expanded sales coverage of the small-and-medium-size business segment and improvements to core systems infrastructure.Softchoice's second quarter revenues increased to US$254.2 million compared to US$252.9 million reported for the same period in 2011, while gross profit increased 2 percent to US$56.7 million. Net revenues generated from the Company's Canadian operations, increased 21 percent year-over-year, reflecting the positive impact of the acquisition of UNIS LUMIN."Given the strength of our balance sheet and the superior cash generating capabilities of our business model, we are very pleased to reinstate a quarterly dividend," said David MacDonald, President and CEO of Softchoice. "This announcement reflects our commitment to shareholder value and our ability to continue investing in the future growth and success of Softchoice."At the end of the quarter, Softchoice had cash on hand of US$46.8 million, with cash flow generated from operations of approximately US$7 million during the quarter, and total debt of nil."Despite the anticipated effect of Microsoft fees changes in the quarter, we continue to make steady progress in the execution of our growth strategy," said Mr. MacDonald. "Sales of enterprise software, server, storage and networking solutions increased as a proportion of our overall revenue mix while growth in our services business helped strengthen our gross margin performance in the period."Revenues from the Company's Services business increased 112 percent compared to the same quarter the year prior, while sales of enterprise software, servers, storage and networking solutions grew by 17 percent."While the most significant impact of the Microsoft fee changes for fiscal year 2012 are largely behind us, we continue to take a prudent outlook going forward," added Mr. MacDonald. "This includes focusing on productivity and limiting our expense growth over the coming quarters to allow top line growth to drive improved earnings performance."Operating HighlightsSoftchoice formally launches Softchoice Cloud - a secure online platform that simplifies the purchase, deployment, management and support of Software-as-a-Service (SaaS) applications.During the quarter, Softchoice launched Keystone Essentials, a Managed Services offering designed to improve network performance and reliability while allowing organizations to devote more time to driving their IT strategy.Out of a global field of 3,000 Microsoft partners, Softchoice was named the 2012 Microsoft Outstanding Sales Operations Partner of the Year at the annual World Wide Partner Conference in Toronto.Softchoice successfully met the criteria to become a Master Unified Communications Specialist, placing the Company among the top one percent of North American Cisco partners to achieve this designation.Softchoice Second Quarter Earnings Call DetailsSoftchoice will host its second-quarter earnings call on August 9th at 8:00 a.m. ET. The call will be moderated by David MacDonald, Softchoice's President and CEO and Chief Financial Officer, David Long. The conference call will begin with a brief web presentation followed by a question-and-answer session.Participant Dial in Numbers:416 800 1066 - North AmericanToll 866 212 4491 - North American Toll FreeWebcast URL:http://www.snwebcastcenter.com/custom_events/softchoice-20120809/site/To ensure participation, please dial in at least 10 minutes prior to the start of the conference at 8:00 a.m. ET.For those unable to attend the call, a link will be made available on the Softchoice website to an archived web and audio version on August 10th, 2012.About Softchoice As a leading North American provider of technology solutions and services, Softchoice combines the efficiency and reliability of a national IT supplier with the personal touch and technical expertise of a local solutions provider. Softchoice's holistic approach to technology includes solution design, implementation and asset management services, as well as access to one of the most comprehensive and cost-effective technology distribution networks in North America. With over 1,100 employees, Softchoice manages the technology needs of thousands of corporate and public sector organizations across the United States and Canada.Softchoice stock is listed on the Toronto Stock Exchange (TSX) under the trading symbol "SO." The common shares of Softchoice are not registered under the U.S. Securities Act of 1933 and are not publicly traded in the United States.Forward-Looking StatementsThis press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to expectations, intentions and plans contained in this press release that are not historical fact. When used in this press release, the words "anticipate", "expect", "will" and similar expressions generally identify forward-looking statements. These statements reflect our current expectations and are subject to a number of risks and uncertainties including, but not limited to, change in technology and general market conditions, many of which are set out or incorporated by reference in the Company's latest Annual Information Form. Due to the many risks and uncertainties, Softchoice cannot assure that the forward-looking statements contained in this press release will be realized.Interim Consolidated Financial Statements(Expressed in U.S. dollars)SOFTCHOICE CORPORATIONThree-month and six-month periods endedJune 30, 2012 and 2011(Unaudited)SOFTCHOICE CORPORATIONInterim Condensed Consolidated Statements of Financial Position(In thousands of U.S. dollars)(Unaudited)              June 30  December 31,     2012  2011Assets                Current assets:        Cash  $46,764 $32,993 Trade and other receivables    260,773  306,434 Inventory   2,566  8,407 Work-in-progress   535  465 Deferred costs   651  2,591 Prepaid expenses and other assets   7,420  6,158Total current assets   318,709  357,048         Non-current assets:        Long-term accounts receivable    194  643 Long-term prepaid expenses   1,847  1,821 Property and equipment   6,287  6,309 Goodwill    16,417  16,441 Intangible assets    43,710  46,203 Deferred tax assets   19,312  19,224Total non-current assets   87,767  90,641Total assets  $406,476 $447,689         Liabilities and Shareholders' Equity                Current liabilities:        Trade and other payables   $236,937 $290,267 Deferred lease inducements   227  243 Deferred revenue   9,426  10,627 Income taxes payable   1,965  2,279 Total current liabilities   248,555  303,416         Non-current liabilities:        Deferred lease inducements   542  648 Deferred revenue   2,863  3,307 Total non-current liabilities   3,405  3,955Total liabilities   251,960  307,371         Shareholders' equity:        Capital stock    26,275  26,548 Contributed surplus   4,168  3,274 Retained earnings   125,455  111,689 Accumulated other comprehensive loss   (1,382)  (1,193) Total shareholders' equity   154,516  140,318Total liabilities and shareholders' equity  $406,476 $447,689 SOFTCHOICE CORPORATIONInterim Condensed Consolidated Statements of Comprehensive Income(In thousands of U.S. dollars, except per share information)(Unaudited)         Three-month periods endedJune 30, Six month periods endedJune 30,   2012  2011  2012  2011             Net sales$254,168 $252,946 $513,283 $502,664             Cost of sales 197,495  197,434  407,742  403,238             Gross profit 56,673  55,512  105,541  99,426             Operating expenses            Selling and marketing 29,766  26,367  59,674  52,999 Administrative 12,480  11,579  24,866  21,912   42,246  37,946  84,540  74,911             Income from operating activities 14,427  17,566  21,001  24,515             Finance costs 1,350  1,033  539  2,080Finance income (5)  (373)  (14)  (1,639)Other income (266)  -  (222)  (78)   1,079  660  303  363             Earnings before income taxes 13,348  16,906  20,698  24,152             Income tax expense 4,724  5,958  6,932  8,044             Net earnings 8,624  10,948  13,766  16,108             Other comprehensive loss:            Foreign currency translation            adjustment (117)  (57)  (189)  (411)Total comprehensive income$8,507 $10,891 $13,577 $15,697             Net earnings per common share:            Basic (note 7)$0.43 $0.55 $0.69 $0.81 Diluted (note 7)$0.43 $0.55 $0.69 $0.81             SOFTCHOICE CORPORATIONInterim Condensed Consolidated Statements of Changes in Equity(In thousands of U.S. dollars)(Unaudited)                       Cumulative   TotalSix-month period endedNumber Capital Contributed translation Retained shareholders'June 30, 2011of shares stock surplus account earnings equity              Balance, January 1, 201119,780,039$26,016$2,054$(1,142)$89,569$116,497              Total comprehensive income (loss):            Net earnings- - - - 16,108 16,108 Other comprehensive loss:             Foreign currency translation             adjustment- - - (411) - (411)Total comprehensive income (loss)- - - (411) 16,108 15,697              Transactions with shareholders           recorded directly in equity:            Contributions by and            distributions to owners:             Share options exercised1,250 26 (6) - - 20  Share-based payment             transactions- - 1,038 - - 1,038  Transfer from contributed             surplus 52,573 461 (461) - - -   53,823 487 571 - - 1,058              Balance, June 30, 201119,833,862$26,503$2,625$(1,553)$105,677$133,252                                     Cumulative    Total Six-month period endedNumber Capital Contributed translation  Retained  shareholders' June 30, 2012of shares stock surplus account  earnings  equity               Balance, January 1, 2012  19,837,211   $26,548   $3,274   $(1,193)   $111,689  $140,318              Total comprehensive income (loss):            Net earnings- - - - 13,766 13,766 Other comprehensive loss:             Foreign currency translation             adjustment- - - (189) - (189)Total comprehensive income (loss)- - - (189) 13,766 13,577              Transactions with shareholders           recorded directly in equity:            Contributions by and            distributions to owners:             Share options exercised22,589 292 (108) - - 184  Share repurchase (46,300) (565) - - - (565)  Share-based payment             transactions- - 1,002 - - 1,002   (23,711) (273) 894 - - 621              Balance, June 30, 201219,813,500$26,275$4,168$(1,382)$125,455$154,516SOFTCHOICE CORPORATIONInterim Condensed Consolidated Statements of Cash Flows(In thousands of U.S. dollars)(Unaudited)                  Three-month periods ended Six month periodsended    June 30, June 30,    2012  2011  2012  2011              Cash provided by (used in):                         Operating activities:            Net earnings$8,624 $10,948 $13,766 $16,108 Adjustments for:             Depreciation of property             and equipment 808  1,047  1,556  1,729  Share-based payment             transactions 478  676  1,002  1,038  Income tax expense 4,724  5,958  6,932  8,044  Amortization of intangible             assets 2,111  1,180  4,236  2,777  Unrealized foreign              currency loss (gain) 1,214  (262)  210  (1,307)  Amortization of contract             related assets -  370  -  727  Interest expense on             financial liabilities 18  486  50  1,008 Change in non-cash operating            working capital (note 9) (7,460)  (17,141)  (2,822)  (11,126)    10,517  3,262  24,930  18,998 Interest paid (19)  (479)  (50)  (1,001) Income taxes paid (3,511)  (3,988)  (7,346)  (6,972) Cash provided (used) by             operating activities 6,987  (1,205)  17,534  11,025              Financing activities:            Repayment of loans and borrowings -  (1,142)  -  (2,418) Repurchase of common shares (note 5) (519)  -  (565)  - Proceeds from issuance of            common shares 184  10  184  10 Cash used in financing activities (335)  (1,132)  (381)  (2,408)              Investing activities:            Purchase of property and equipment (541)  (839)  (1,550)  (1,417) Purchase of intangible assets (1,162)  (541)  (1,776)  (1,015) Cash used in investing activities  (1,703)  (1,380)  (3,326)  (2,432)              Increase (decrease) in cash 4,949  (3,717)  13,827  6,185              Cash, beginning of period 42,089  46,096  32,993  35,752              Effect of exchange rate changes on cash (274)  131  (56)  573              Cash, end of period$46,764 $42,510 $46,764 $42,510 SOURCE: Softchoice CorporationFor further information: Media Contact Eric Gardiner Manager of Communications 416.588.9002 Ext. 2358 eric.gardiner@softchoice.com