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Press release from CNW Group

NexJ Systems Reports Fourth Quarter and Full Year 2012 Financial Results

Wednesday, March 06, 2013

NexJ Systems Reports Fourth Quarter and Full Year 2012 Financial Results17:35 EST Wednesday, March 06, 2013TORONTO, March 6, 2013 /CNW/ - NexJ Systems Inc., (TSX: NXJ), a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance, and healthcare industries, today announced financial results for its fourth quarter and year-ended December 31, 2012.Financial Highlights for Q4 2012Revenue was $6.9 million, down 6% Y/YAdjusted EBITDA (as defined below) was a loss of $4.2 million or $0.21 per share (basic and diluted) for the quarter ended December 31, 2012 as compared to an adjusted EBITDA loss of $2.3 million or $0.12 per share (basic and diluted) for the comparative period in 2011Net loss was $4.2 million or $0.21 per share (basic and diluted) for the quarter ended December 31, 2012, as compared to a net loss of $3 million or $0.15 per share (basic and diluted) for the comparative period in 2011Financial Highlights for Fiscal Year 2012Revenue was $26.2 million, down 13% Y/YAdjusted EBITDA (as defined below) was a loss of $14.8 million or $0.74 per share (basic and diluted) for the year ended December 31, 2012 as compared to an adjusted EBITDA loss of $5.9 million or $0.33 per share (basic and diluted) for the comparative period in 2011Net loss was $16.4 million or $0.83 per share (basic and diluted) for the year ended December 31, 2012, as compared to a net loss of $7.5 million or $0.42 per share (basic and diluted) for the comparative period in 2011Completed the acquisition of Broadstreet Data Solutions Inc. ("Broadstreet")"The integration of Broadstreet went well and we are already seeing the benefits of the management strength we acquired and the expansion of our offerings to the market," said William M. Tatham, Chief Executive Officer of NexJ.  "The restructuring of sales has led to dramatically increased sales activity which I am confident will translate in to a year of strong growth in 2013."Recent Business HighlightsAnnounced an agreement with Orion Health, a global leader in eHealth technology, to distribute joint capabilities and technologies such as NexJ Connected Wellness and the Rhapsody Integration EngineDeployed NexJ Scheduling and NexJ Assessments through MyChart - Sunnybrook's personal health record (PHR) in support of Sunnybrook's Family Practice team.Expanded the capability of NexJ Connected Wellness with the addition of an embedded terminology engineRanked in the top 5 of the Deloitte Technology Fast 50™ Program for third consecutive yearBroadstreet, now a part of NexJ, received the 2013 SAP® Canada Top Partner award: SAP Business IntelligenceConference Call InformationNexJ will be hosting an earnings report conference call today at 5:00 p.m. ET. The call can be accessed via webcast or by phone by dialing 647-427-7450 (Toronto local or international) or 1-888-231-8191 (North America Toll Free).  Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin.A replay of the call will be available beginning today at 8:00 p.m. ET through 11:59 p.m. on March 13, 2013 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 13742884.Non-IFRS MeasuresThis news release includes certain measures that have not been prepared in accordance with International Financial Reporting Standards ("IFRS") such as Adjusted EBITDA and Adjusted EBITDA margin which are used to evaluate the Company's operating performance as a complement to results provided in accordance with IFRS.  The Company believes that Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental information as they provide an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and the other items listed below.The term "Adjusted EBITDA" refers to net income/loss before deducting share-based payment expense, earn-out expense, finance income, finance costs, foreign exchange gain/loss, depreciation and income taxes.  "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.The term Adjusted EBITDA and Adjusted EBITDA margin are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS.  Therefore, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similar measures presented by other issuers.  Investors are cautioned that Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an alternative to net income (loss) as determined in accordance with IFRS.The following table reconciles Adjusted EBITDA to net loss: Three months endedDecember 31,Year EndedDecember 31,2012201120122011 (in thousands of dollars,except percentages)(in thousands of dollars,except percentages)     Total revenue $6,852$7,296$ 26,189$ 30,249     Net loss (4,186)(2,977)(16,435)(7,543)Adjust for:    Share-based payment expense 2333581,0652,012Depreciation and amortization 4062821,256847Earn-out expense 384-384-Foreign exchange loss (gain) (202)187213(788)Finance income (161)(178)(612)(418)Finance costs 2137Income tax recovery 669-669-     Adjusted EBITDA (4,193)(2,327)(14,795)(5,883)Adjusted EBITDA margin (61)%(32)%(56)%(19)%About NexJ Systems Inc.NexJ is a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance and healthcare industries. Our next-generation, people-centered software combines industry-specific functionality with information from multiple applications and data stores to provide comprehensive knowledge of the individual.Through the acquisition of Broadstreet Data Solutions Inc., NexJ has added expertize in data governance and master data management, data conversion and integration, data analytics and business intelligence, and mobile solution development.NexJ is named as Canada's fastest growing company in the 24th Annual PROFIT 200 ranking by PROFIT Magazine, and ranks in the top 5 of the Deloitte Technology Fast 50™ for the third consecutive year. Based in Toronto, NexJ has clients throughout North America and in Europe. For more information about NexJ Systems visit www.nexj.com, e-mail info@nexj.com, or call 416-222-5611NexJ Forward-looking StatementCertain statements in this press release, including statements about the financial conditions, and results of operations and earnings, may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of NexJ; (ii) the ability of NexJ to protect, maintain and enforce its intellectual property rights; (iii) the acceptance by the Company's customers and the marketplace of new technologies and solutions; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the CRM market; (vi) the Company's competitive position in the CRM market and its ability to take advantage of future opportunities in this market; (vii) the Company's ability to attract new customers and develop and maintain existing customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the CRM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances.The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our dependence on a limited number of customers and large project size; (ii) fluctuation in our quarterly operating results; (iii) our dependence on key personnel and our compensation structure; (iv) risks associated with managing large and complex software implementation projects; (v) uncertainties and assumptions in our sales forecasts, including the extent to which sales proposals are converted into sales; (vi) risks associated with our ability to design, develop, test, market, license and support our software products on a timely basis; (vii) market acceptance of our products and services; (viii) commercial success of products resulting from our investment in research and development; (ix) our success in expanding sales into new international markets; * risks associated with expansion into healthcare and other new industry verticals; (xi) competition in our industry; (xii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiii) reliance upon a limited number of third-party software products to develop our products; (xiv) defects or disruptions in our products and services; (xv) currency exchange rate fluctuations; (xvi) lengthy sales cycles for our software; (xvii) global financial market conditions; (xviii) failure to manage our growth successfully; (xix) failure to successfully manage and integrate acquisitions, including the business acquired from Broadstreet .For additional information with respect to risks and other factors which could occur, see the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2012 dated March 6, 2013, and other securities filings with the Canadian securities regulators available on www.sedar.com.  Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.NEXJ SYSTEMS INC.     Consolidated Statements of Financial Position     (Expressed in thousands of Canadian dollars)           December 31, 2012 and 2011             2012  2011      Assets           Current assets:       Cash and cash equivalents$46,263 $56,218  Short-term investments  -   4,068  Accounts receivable 9,513  4,128  Investment tax credits receivable  -   2,479  Income taxes receivable 146   -   Prepaid expenses and other assets  992  1,645  Total current assets 56,914  68,538      Non-current assets:       Property and equipment 3,869  4,596  Intangible assets  2,400   -   Goodwill  3,640   -   Other assets  260  260  Total non-current assets 10,169  4,856      Total assets$67,083 $73,394      Liabilities and Shareholders' Equity           Current liabilities:       Accounts payable and accrued liabilities $7,318 $4,805  Current portion of obligations under capital leases  -   41  Deferred revenue 5,069  2,097  Total current liabilities 12,387  6,943      Non-current liabilities:       Accrued liabilities 801  1,053  Provisions 428   -   Deferred revenue 268   -   Total non-current liabilities 1,497  1,053      Total liabilities 13,884  7,996      Shareholders' equity:       Share capital  83,061  79,831  Share purchase loans  (3,622)  (3,803)  Contributed surplus  4,859  4,034  Deficit (31,099)  (14,664)  Total shareholders' equity 53,199  65,398            Total liabilities and shareholders' equity$67,083 $73,394 NEXJ SYSTEMS INC.     Consolidated Statements of Comprehensive Loss       (Expressed in thousands of Canadian dollars, except per share amounts)           Years ended December 31, 2012 and 2011             2012  2011      Revenue:       License fees$4,102 $8,542  Net license reseller fees 219   -   Professional services 16,770  18,259  Maintenance and support 5,098  3,448  26,189  30,249      Expenses*:       Professional service costs 11,523  10,007  Research and development, net 14,900  13,364  Sales and marketing 8,398  7,812  General and administrative 8,868  7,808  43,689  38,991      Loss from operations (17,500)  (8,742)      Foreign exchange gain (loss) (213)  788Finance income  612  418Finance costs (3)  (7)  396  1,199      Loss before income taxes (17,104)  (7,543)      Income tax recovery:       Current -   -   Deferred (669)   -   (669)   -       Loss and comprehensive loss for the year$(16,435) $(7,543)      Loss per share:       Basic and diluted$(0.83) $(0.42)            Weighted average number of common shares      outstanding:       Basic and diluted 19,880  17,751            *Share-based payment expense has been included      in expenses as follows:       Professional service costs$241 $293  Research and development, net 389  535  Sales and marketing 60  595  General and administrative 375  589       $1,065 $2,012 NEXJ SYSTEMS INC.     Consolidated Statements of Cash Flows     (Expressed in thousands of Canadian dollars)           Years ended December 31, 2012 and 2011             2012  2011      Cash flows from operating activities:      Loss for the year$(16,435) $(7,543) Adjustments for:       Depreciation and amortization 1,256  847  Share-based payment expense 1,065  2,012  Finance income (612)  (418)  Finance costs 3  7  Deferred tax recovery (669)   -   Foreign exchange loss (gain) 85  (714) Change in non-cash operating working capital:       Accounts receivable (2,612)  2,363  Investment tax credits receivable 2,479  940  Prepaid expenses and other assets 668  (568)  Accounts payable and accrued liabilities and provisions 879  (334)  Deferred revenue 3,233  (3,630) Net cash flows used in operating activities (10,660)  (7,038)      Cash flows from financing activities:      Obligations under capital leases (41)  (67) Proceeds from exercise of employee stock options 70  34 Proceeds from exercise of agent stock options 635  564 Proceeds from repayment of share purchase loans 143  39 Repayment of bank indebtedness of Broadstreet Data Solutions Inc. (1,083)   -  Issuance of common shares  -   43,650 Financing costs, net  -   (3,888) Interest paid (3)  (7) Net cash flows from (used in) financing activities (279)  40,325      Cash flows from investing activities:      Purchase of property and equipment (358)  (3,192) Acquisition of Broadstreet Data Solutions Inc., net of cash acquired (3,297)   -  Redemption of short-term investments 4,005  1,136 Interest received 612  418 Decrease in other non-current assets  -   47 Net cash flows from (used in) investing activities 962  (1,591)      Effects of exchange rates on cash and cash equivalents 22  580      Increase (decrease) in cash and cash equivalents (9,955)  32,276      Cash and cash equivalents, beginning of year 56,218  23,942      Cash and cash equivalents, end of year$46,263 $56,218      Supplemental cash flow information:      Acquisition of property and equipment not yet paid for$ -  $393   SOURCE: NexJ Systems Inc.For further information: Media Contact: Matthew Bogart 416-227-3708 matthew.bogart@nexj.com