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Enghouse Releases First Quarter Results

CNW Group - Thu Mar 7, 5:37PM CST

Enghouse Systems Limited (TSX:ENGH.TO) today announced its first quarter (unaudited) and financial results for the period ended January 31, 2019.

First quarter revenue increased to $86.0 million, compared to revenue of $85.1 million in the first quarter of the prior year. The revenue increase primarily reflects contributions from acquisitions, which were offset by a decline in license revenue in the Interactive Management Group. Income from operating activities was $25.8 million compared to $24.5 million in the prior year's first quarter, an increase of 5.2%. Net income for the quarter was $15.0 million or $0.27 per diluted share compared to $6.8 million or $0.12 per diluted share in the prior year's first quarter. Last year's first quarter included a one-time charge of U.S. $6.2 million to reflect the impact of United States Tax Reform.

Adjusted EBITDA for the first quarter was $26.3 million or $0.48 per diluted share, compared to $25.3 million or $0.46 per diluted share last year, with the increase being attributable to contributions from acquisitions and operating cost synergies.

Operating expenses before special charges related to restructuring of acquired operations were $33.0 million compared to $33.9 million in the prior year's first quarter and reflect incremental operating costs related to acquisitions, net of operating cost synergies. Non-cash amortization charges on acquired software and customer relationships from acquired operations were $7.1 million for the quarter compared to $7.2 million in the prior year's first quarter.

The Company generated cash flows from operating activities of $24.2 million compared to $23.1 million in the first quarter of fiscal 2018, a 4.5% increase. As a result, Enghouse closed the quarter with $190.5 million in cash, cash equivalents and short-term investments, compared to $193.9 million at October 31, 2018. The cash balance was achieved after payments of $4.9 million for cash dividends and $22.4 million (net of cash acquired) for acquisitions concluded in the current fiscal year and $1.1 million for acquisitions closed in prior years.

On December 21, 2018, the Company declared a stock dividend payable on the basis of one common share for each common share held as at January 22, 2019, which was paid on January 25, 2019. This dividend doubled the number of shares outstanding to 54,638,024 as at January 31, 2019 and effectively achieved a two-for-one stock split. Today, the Board of Directors approved a 22% increase to the Company's eligible quarterly dividend from $0.09 per common share to $0.11 per common share, payable on May 31, 2019 to shareholders of record at the close of business on May 17, 2019. Enghouse has now increased its dividend in each of the past eleven years, by over 10% each year.

A conference call to discuss the results will be held on Friday, March 8, 2019 at 8:45 a.m. EST. To participate, please call +1-647-792-1278 or North American Toll-Free +1-888-504-7961. No PIN required.

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 diverse software company through strategic acquisitions targeting the Contact Center, Networks (OSS/BSS) and Transportation/Public Safety sectors. Enghouse shares are listed on the Toronto Stock Exchange under the symbol "ENGH". Further information about Enghouse may be obtained from the Company's website at www.enghouse.com.

Non-GAAP Measures

The Company uses non-GAAP measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than GAAP 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 Adjusted EBITDA as a measure of operating performance. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is calculated as results from operating activities adjusted for depreciation of property, plant and equipment, foreign exchange gains and losses, and special charges for acquisition related restructuring costs. Management uses Adjusted EBITDA to evaluate operating performance as it excludes 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, property plant and equipment depreciation, foreign exchange gains and losses, other income and restructuring costs primarily related to acquisitions.

Adjusted EBITDA:

The table below reconciles Adjusted EBITDA to the most directly comparable IFRS measure, Results from operating activities:

Three months ended


                           January 31,                    January 31,
                            2019                            2018




                Total
                Revenue                     $

            86,045  $

       85,075




                Results
                from
                operating
                activities                  $

            25,795  $

       24,512


     Depreciation
     of
     property,
     plant
     and
     equipment                     530                             670


     Special
     charges                                                      129



                Adjusted
                EBITDA                      $

            26,325  $

       25,311



                Adjusted
                EBITDA
                margin           30.6%                          29.8%


                Adjusted
                EBITDA
                per
                diluted
                share                         $

            0.48    $

       0.46

Enghouse Systems Limited Condensed Consolidated Interim Statements of Financial Position(in thousands of Canadian dollars)(Unaudited)

January 31         October 31
                                                    2019                2018






                Assets


                   Current assets:


         Cash and cash equivalents                           $
         178,001      $
      187,551


         Short-term investments                   12,536               6,386


         Accounts receivable, net                 72,003              62,085


         Prepaid expenses and other
          assets                                  10,572               8,951



                                                 273,112             264,973


                   Non-current assets:


         Property, plant and equipment,
          net                                      5,032               5,279


         Intangible assets, net                   71,361              59,895



        Goodwill                                168,339             155,419


         Deferred income tax assets                8,598               9,634





                   Total assets                          $

           526,442  $

        495,200





                           Liabilities


                   Current liabilities:


         Accounts payable and accrued
          liabilities                                         $
         41,473       $
      44,271


         Income taxes payable                      5,634               4,904


         Dividends payable                         4,917               4,912



        Provisions                                  141                 268



        Deferred revenue                         78,084              64,020


         Current portion of long-term
          loans                                                         122



                                                 130,249             118,497


                   Non-current liabilities:


         Non-current portion of income
          taxes payable                            6,818               7,466


         Deferred income tax
          liabilities                             17,752              13,115



        Deferred revenue                          2,691               2,169


         Net employee defined benefit
          obligation                               2,397               2,354



        Long-term loans                             760               1,475





                   Total liabilities             160,667             145,076



                      Shareholders' Equity





     Share capital                               79,852              78,997



     Contributed surplus                          5,138               4,866



     Retained earnings                          271,362             260,506


      Accumulated other
       comprehensive income                        9,423               5,755



                   Total shareholders' equity    365,775             350,124


                   Total liabilities and
                    shareholders' equity                 $

           526,442  $

        495,200

Enghouse Systems Limited Condensed Consolidated Interim Statements of Operations and Comprehensive Income(in thousands of Canadian dollars, except per share amounts)(Unaudited)

Three months ended
                                                       January 31


                                       2019                     2018


                     Revenue


              Software
              licenses                           $
              18,728     $
       22,097


             Hosted
              and
              maintenance
              services               50,813                   46,307


              Professional
              services               13,501                   14,377


             Hardware                 3,003                    2,294



                                     86,045                   85,075



                     Direct
                      costs


              Software
              licenses                1,361                    2,035


             Services                23,545                   23,184


             Hardware                 2,306                    1,425



                                     27,212                   26,644





                      Revenue,
                      net of
                      direct
                      costs          58,833                   58,431




                       Operating
                       expenses


              Selling,
              general
              and
              administrative         20,456                   21,429


              Research
              and
              development            12,052                   11,691


              Depreciation
              of
              property,
              plant
              and
              equipment                 530                      670


             Special
              charges                                           129


                                     33,038                   33,919





                     Results
                      from
                      operating
                      activities     25,795                   24,512




         Amortization
         of
         acquired
         software
         and
         customer
         relationships              (7,116)                 (7,162)


        Foreign
         exchange
         losses                       (110)                 (2,531)


        Finance
         income                         498                      122


        Finance
         expenses                      (31)                    (60)


        Other
         income                          28                      742




                     Income
                      before
                      income
                      taxes          19,064                   15,623




                      Provision
                      for
                      income
                      taxes           4,100                    8,810





                     Net
                      income
                      for
                      the
                      period                $

                14,964  $

         6,813





                     Items
                      that
                      are or
                      may be
                      reclassified
                      subsequently
                      to
                      profit
                      or
                      loss:

    ---

        Foreign
         currency
         translation
         gain
         from
         foreign
         operations                   2,887                    1,464


         Unrealized
         gain
         on
         investments
         in
         equity
         securities
         designated
         at
         FVOCI                                                  324


         Deferred
         income
         tax
         expense                                               (43)




                     Other
                      comprehensive
                      income          2,887                    1,745





                      Comprehensive
                      income                $

                17,851  $

         8,558

    ===

                      Earnings
                      per
                      share


        Basic                                      $
              0.27       $
       0.13


        Diluted                                    $
              0.27       $
       0.12

    ---

Enghouse Systems Limited Condensed Consolidated Interim Statements of Changes in Shareholders' Equity (in thousands of Canadian dollars)(Unaudited)

Accumulated
                                                                                                                                       other


           Share                  Contributed       comprehensive
                                                                                                                 surplus              income
                                                                                    capital       Share                                    $        Retained
                                                                                                capital

               $                            earnings


           # **                                                                            Total


           $

            $


           $






                As at November 1, 2018 as previously presented

                                                                                 54,580,024       78,997             4,866                5,755          260,506          350,124



              IFRS 9 Transition adjustment                                                                                              781            (781)



              IFRS 15 Transition adjustment                                                                                                           1,590            1,590

    ---



                Adjusted balance as at November 1, 2018              54,580,024       78,997             4,866                6,536          261,315          351,714





              Net income for the period                                                                                                              14,964           14,964



              Other comprehensive income (net of tax):



              Cumulative translation adjustment                                                                                       2,887                            2,887




                Comprehensive income for the period                                                                        2,887           14,964           17,851




              Employee share options:



                 Value of services recognized                                                                       408                                                  408



                 Proceeds on issuing shares                                         58,000          855             (136)                                                 719



              Dividends declared                                                                                                                    (4,917)         (4,917)





                As at January 31, 2019                               54,638,024       79,852             5,138                9,423          271,362          365,775









                As at November 1, 2017                               53,986,424       71,422             4,715                8,487          221,775          306,399





              Net income for the period                                                                                                               6,813            6,813



              Other comprehensive income (net of tax):



              Cumulative translation adjustment                                                                                       1,464                            1,464



              Unrealized gain on investments in equity
    securities designated at FVOCI*
                                                                                                                                         324                              324



              Deferred income tax expense                                                                                              (43)                            (43)




                Comprehensive income for the period                                                                        1,745            6,813            8,558




              Employee share options:



                 Value of services recognized                                                                       399                                                  399



                 Proceeds on issuing shares                                         70,400          890             (146)                                                 744



              Dividends declared                                                                                                                    (4,323)         (4,323)





                As at January 31, 2018                               54,056,824       72,312             4,968               10,232          224,265          311,777
*
                Unrealized gain on
                             investments in equity securities
                             designated at FVOCI were originally
                             referred to as available-for-sale
                             investments in the 2018 consolidated
                             financial statements




                            ** On January 25, 2019, the Company
                             completed a share split whereby each
                             issued and outstanding common share
                             has been effectively doubled.  All
                             references to capital stock, options
                             and per share data have been
                             adjusted retrospectively to reflect
                             the Company's two for one share
                             split for the periods ended January
                             31, 2019 and 2018.

Enghouse Systems Limited Condensed Consolidated Interim Statements of Cash Flows(in thousands of Canadian dollars)(Unaudited)

Three months ended
                                                                                                        January 31


                                                                                                2019                             2018




                Cash flows from operating activities



       Net income                                                                                                $
              14,964       $
       6,813






                Adjustments for:



         Depreciation of property, plant and equipment                                          530                              670



         Amortization of acquired software and customer relationships                         7,116                            7,162



         Stock-based compensation expense                                                       408                              399



         Provision for income taxes                                                           4,100                            8,810



         Finance expenses and other income                                                        3                            (682)


                                                                                              27,121                           23,172





       Changes in non-cash operating working capital                                          1,423                            2,913



       Income taxes paid                                                                    (4,390)                         (2,980)





                Net cash flows from operating activities                                 24,154                           23,105






                Cash flows from investing activities



       Purchase of property, plant and equipment, net                                         (209)                           (600)



       Acquisitions, net of cash acquired of $6,139 (2018 - $1,068)                        (22,396)                         (2,991)



       Purchase consideration for prior period acquisitions                                 (1,105)                         (1,926)



       Net (purchase) sale of short-term investments                                        (6,108)                             985

    ---



                Net cash flows used in investing activities                            (29,818)                         (4,532)






                Cash flows from financing activities



       Issuance of share capital                                                                719                              744



       Repayment of loans                                                                     (957)                           (368)



       Payment of cash dividend                                                             (4,912)                         (4,319)




                Net cash flows used in financing activities                             (5,150)                         (3,943)


                                                                                               1,264


       Effect of currency translation adjustments on cash and cash equivalents                                                  698

    ---





                Net (decrease) increase in cash and cash equivalents during the period  (9,550)                          15,328



       Cash and cash equivalents - beginning of period                                      187,551                          120,608

    ---





                Cash and cash equivalents - end of period                                       $

                178,001  $

        135,936

    ===

Enghouse Systems LimitedSelected Segment Reporting Information(In thousands of Canadian dollars)(Unaudited)

For the three months
                                                                      ended
                                                       January 31



                                               2019                             2018





                  Revenue:


         Asset Management
          Group                                                  $
              42,581      $
     36,680


         Interactive
          Management Group                   43,464                           48,395



                  Total                             $

                86,045  $

       85,075









         Asset Management
          Group:


                           -Segment profit
                            before special
                            charges         $14,599                          $11,542


                           -Special charges                                   (129)



         Asset Management
          Group profit                              $

                14,599  $

       11,413





         Interactive
          Management Group:


                           -Segment profit
                            before special
                            charges                              $
              13,445      $
     15,597


        Interactive
         Management Group
         profit                                     $

                13,445  $

       15,597





         Corporate expenses                 (2,249)                         (2,498)



                  Results from
                   operating activities             $

                25,795  $

       24,512





     Amortization of
      acquired software
      and customer
      relationships

                                            (7,116)                         (7,162)


     Foreign exchange loss                    (110)                         (2,531)


     Finance income                             498                              122


     Finance expenses                          (31)                            (60)


     Other income                                28                              742


                  Income before income
                   taxes                            $

                19,064  $

       15,623

SOURCE Enghouse Systems Limited

View original content: http://www.newswire.ca/en/releases/archive/March2019/07/c2887.html

SOURCE: Enghouse Systems Limited

Sam Anidjar, Vice President, Corporate Development, Enghouse Systems Limited, Tel:
(905) 946-3200, Email: investor@enghouse.com

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