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Press release from Marketwire

Enghouse Releases First Quarter Results

Tuesday, March 05, 2013

Enghouse Releases First Quarter Results16:30 EST Tuesday, March 05, 2013MARKHAM, ONTARIO--(Marketwire - March 5, 2013) - Enghouse Systems Limited (TSX:ESL) today announced its unaudited first quarter financial results for the period ended January 31, 2013.First quarter revenue was $42.0 million, an increase of 37% over revenue of $30.5 million in the first quarter last year. The increase in revenue was primarily the result of incremental revenue contributions from acquisitions. Revenue reflects hosted and maintenance services contributions of $20.6 million in the quarter, an increase of 29% over last year. Adjusted EBITDA for the quarter was $9.6 million or $0.36 per diluted share compared to $7.9 million or $0.30 per diluted share in last year's first quarter. Results from operating activities for the quarter were $7.3 million compared to $7.6 million in the prior year's first quarter as a result of special charges booked on acquisitions of $1.8 million in the quarter. Excluding special charges related to restructuring of acquisitions, results from operating activities would be $9.1 million, an increase of 20% over the prior year. Net income for the first quarter was $3.4 million or $0.13 per diluted share compared to the prior year's first quarter net income of $4.1 million or $0.16 per share.Operating expenses increased to $23.0 from $14.9 million in the prior year's first quarter and include incremental operating costs related to acquisitions as well as special charges related to restructuring of acquired operations. Non-cash amortization charges in the quarter were $3.6 million and include amortization charges for acquired software and customer relationships from acquired operations. Enghouse closed the quarter with $80.1 million in cash, cash equivalents and short-term investments, compared to $83.7 million at October 31, 2012. This reflects cash paid of nearly $10.0 million for the acquisitions of Visionutveckling AB and Albatross Scandinavia AB completed in the quarter. It also reflects a cash dividend paid of $1.7 million. The Company continues to have no long-term debt.On March 1, 2013 the Company completed the acquisition of Locus Holdings AS ("Locus") of Norway for a cash purchase price of approximately $14.0 million, subject to certain price adjustments. Locus is a leading supplier of fleet management solutions for the Public Safety and Transport & Logistics (including Security) sectors in the Scandinavian market and has a dominant position in the Norwegian Public Safety sector. Its products are installed in police cars, ambulances, rescue helicopters and fire brigades. Locus's transportation, logistics and M2M products are also well established in these markets. The Board of Directors also has approved a 23% increase in its eligible quarterly dividend to $0.08 per common share, payable on May 31, 2013 to shareholders of record at the close of business on May 17, 2013. Enghouse has increased its dividend in each of the past five years.Enghouse remains committed to diversifying its revenue stream and accelerating its expansion into new markets and continues to seek further acquisitions to grow its market share.About Enghouse Enghouse Systems Limited is a leading global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a larger and more diverse software company through strategic acquisitions and managed growth. Enghouse shares are listed on the Toronto Stock Exchange under the symbol "ESL". Further information about Enghouse may be obtained from the Company's web site at www.enghouse.com. Non-IFRS Measures The Company uses non-IFRS measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses results from operating activities and Adjusted EBITDA as a measure of operating performance. Therefore, results from operating activities and Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Results from operating activities are calculated as net income before amortization of acquired software and customer relationships, finance income, finance expenses, other income, and the provision for income taxes. Results from Adjusted EBITDA are calculated as net income before depreciation of property, plant and equipment, amortization of acquired software and customer relationships, finance income, finance expenses, other income, the provision of income tax and special charges for acquisition related restructuring and transaction costs. Management uses results from operating activities and Adjusted EBITDA to evaluate operating performance as they exclude amortization of software and intangibles (which is an accounting allocation of the cost of software and intangible assets arising on acquisition), any impact of finance and tax related activities, asset depreciation, other income and restructuring costs primarily related to acquisitions.The table below reconciles Adjusted EBITDA to net income:Three Months endedJanuary 31, 2013January 31, 2012Total Revenue$41,957$30,533Net income for the period3,4354,060Provision for income taxes9131,282Depreciation of property, plant and equipment468278Amortization of acquired software and customer relationships3,5842,438Finance income(333)(243)Finance expenses8141Other (income) expense(361)2Special charges1,815-Adjusted EBITDA$9,602$7,860Adjusted EBITDA margin23%26%Adjusted EBITDA per diluted share$0.36$0.30Enghouse Systems LimitedConsolidated Statements of Financial Position(in thousands of Canadian dollars)(Unaudited)January 31, 2013October 31, 2012AssetsCurrent assets:Cash and cash equivalents$50,535$59,544Short-term investments29,51624,108Accounts receivable, net38,11431,368Income tax receivable151-Prepaid expenses and other assets4,6103,853122,926118,873Non-current assets:Property, plant and equipment3,5123,365Intangibles117,073106,995Deferred income taxes8,31810,477Total assets$251,829$239,710LiabilitiesCurrent liabilities:Trade payables$29,419$26,053Income taxes payable-2,008Dividends payable1,6801,676Accrued provisions2,8761,621Deferred revenue41,59035,93575,56567,293Non-current liabilities:Deferred income tax liabilities13,43313,241Deferred revenue1,3031,236Total liabilities90,30181,770Shareholders' EquityShare capital56,46055,751Contributed surplus2,8002,847Retained earnings101,12699,371Accumulated other comprehensive gain (loss)1,142(29)Total shareholders' equity161,528157,940Total liabilities and shareholders' equity$251,829$239,710Enghouse Systems LimitedConsolidated Interim Statements of Operations and Comprehensive Income(in thousands of Canadian dollars, except per share amounts)(Unaudited)Quarter ended January 31,20132012RevenueSoftware licenses$15,064$10,518Hosted and maintenance services20,56315,979Professional services5,4913,740Hardware83929641,95730,533Direct costsSoftware licenses1,429909Services9,5846,896Hardware59320611,6068,011Revenue, net of direct costs30,35122,522Operating expensesSelling, general and administrative13,4069,861Research and development7,3434,803Depreciation of property, plant and equipment468278Special charges1,815-23,03214,942Results from operating activities7,3197,580Amortization of acquired software and customer relationships(3,584)(2,438)Finance income333243Finance expenses(81)(41)Other income (expense)361(2)Income before income taxes4,3485,342Provision for income taxes9131,282Net income for the period$3,435$4,060 Items that may be reclassified subsequently to profit or loss: Foreign currency translation differences from foreign operations861(582)Transfer to net income of realized gains on available for sale investments, net of tax of ($56); Q1/2012 - $- (369) -Unrealized gain (loss) on available for sale investments, net of tax of $103; Q1/2012 - ($194) 679 (614)Unrealized foreign currency translation gain on available for sale investments, net of tax of $-; Q1/2012 - $3 - 8Other comprehensive income (loss)1,171(1,188)Comprehensive income$4,606$2,872Earnings per shareBasic and diluted$0.13$0.16Enghouse Systems LimitedConsolidated Statements of Changes in Equity(in thousands of Canadian dollars)(Unaudited)Share Capital -numberShare capital $Contributed surplus $Accumulated other comprehensive income (loss) $Retained earnings $Total $Balance - November 1, 201225,780,56255,7512,847(29)99,371157,940Net income----3,4353,435Other Comprehensive Income (net of tax):Cumulative Translation Adjustment---861-861Transfer to net income of realized gains on available-for-sale investments, net of tax--- (369)- (369)Unrealized gain (loss) on available-for-sale investments, net of tax--- 679- 679Comprehensive income (loss) for the period---1,1713,4354,606Employee share options:Value of services recognized--137--137Proceeds on issuing shares70,400709(184)--525Dividends----(1,680)(1,680)Balance - January 31, 201325,850,96256,4602,8001,142101,126161,528Balance - November 1, 201125,337,26252,1342,9701,03584,782140,921Net income----4,0604,060Other Comprehensive Income (net of tax):Cumulative Translation Adjustment---(582)-(582)Unrealized gain (loss) on available-for-sale investments, net of tax - - - (614) - (614)Unrealized foreign currency translation gain (loss) on available-for-sale investments, net of tax - - - 8 - 8Comprehensive income (loss) for the period---(1,188)4,0602,872Employee share options:Value of services recognized--166--166Proceeds on issuing shares163,3001,435(308)--1,127Dividends----(1,275)(1,275)Balance - January 31, 201225,500,56253,5692,828(153)87,657143,811Enghouse Systems LimitedConsolidated Interim Statements of Cash Flows(in thousands of Canadian dollars)(Unaudited) Quarter ended January 31,20132012Cash flows from operating activitiesNet income$3,435$4,060Adjustments for:Depreciation of property, plant and equipment468278Amortization of acquired software and customer relationships3,5842,438Stock-based compensation expense137166Income tax expense9131,282Finance expenses and other income(280)438,2578,267Changes in non-cash operating working capital747(4,952)Income tax paid(2,185)(533)Net cash flows from operating activities6,8192,782Cash flows from investing activitiesPurchase of property, plant and equipment, net(294)(491)Acquisitions, net of cash acquired of $196(9,985)(243)Net purchase of short-term investments(4,102)(976)Net cash flows used in investing activities(14,381)(1,710)Cash flows from financing activitiesIssuance of share capital5251,127Payment of cash dividend(1,676)(1,267)Net cash flows used in financing activities(1,151)(140)Effect of currency translation adjustments on cash and cash equivalents(296)415Net (decrease) increase in cash and cash equivalents during the period(9,009)1,347Cash and cash equivalents- beginning of period59,54465,624Cash and cash equivalents - end of period$50,535$66,971Enghouse Systems LimitedSelected Segment Reporting Information(in thousands of Canadian dollars)(Unaudited)For the three months ended January 3120132012Revenue:Asset Management Group$5,245$3,071Interactive Management Group36,71227,462Total$41,957$30,533Segment Profit (EBIT):Asset Management Group$803$709Interactive Management Group3,7985,279Corporate expenses(866)(846)Finance income333243Finance expenses(81)(41)Other income (expense)361(2)Total$4,348$5,342FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: Enghouse Systems LimitedStephen SadlerChief Executive Officer(905) 946-3236investor@enghouse.comwww.enghouse.com