MARKHAM, ONTARIO -- (Marketwired) -- 03/09/17 -- Enghouse Systems Limited (TSX: ENGH) today announced its first quarter (unaudited) financial results for the period ended January 31, 2017.
First quarter revenue increased to $78.8 million, compared to revenue of $74.4 million in the first quarter of the prior year. Increased revenue in the quarter reflects incremental revenue from acquisitions net of the unfavourable impact of foreign exchange estimated at $5.2 million. Income from operating activities was $22.4 million compared to $17.8 million in prior year's first quarter, an increase of 25.8%. Net income for the quarter was $11.7 million or $0.43 per diluted share compared to $8.5 million or $0.31 per diluted share in the prior year's first quarter. Adjusted EBITDA for the first quarter was $23.2 million or $0.85 per diluted share compared to $19.1 million or $0.70 per diluted share last year, an increase of 21.4%.
Operating expenses before special charges related to restructuring of acquired operations were $30.9 million compared to $32.4 million in the prior year's first quarter and reflect incremental operating costs related to acquisitions and the positive impact of foreign exchange. Operating costs reflect continued efficiencies related to measures undertaken late in the last fiscal year to scale operating costs to revenues. Non-cash amortization charges in the quarter were $7.5 million compared to $6.8 million in the prior year's first quarter and include amortization charges for acquired software and customer relationships from acquired operations.
Enghouse closed the quarter with $88.3 million in cash, cash equivalents and short-term investments, compared to $85.9 million at October 31, 2016. The cash balance was achieved after payment of $3.8 million in cash dividends and $1.7 million to partially settle loans inherited with the Presence Technology, S.L. acquisition, completed on October 28, 2016.
The Board of Directors also approved a 14% increase in its eligible quarterly dividend to $0.16 per common share, payable on May 31, 2017 to shareholders of record at the close of business on May 17, 2017. Enghouse has now increased its dividend in each of the past nine years.
A conference call to discuss the results will be held on Friday March 10, 2017 at 8:45 a.m. EST. To participate, please call 416-640-5946 or North American Toll-Free 1-866-233-4585. 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, 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, asset depreciation, 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, 2017 January 31, 2016
Total Revenue $ 78,840 $ 74,370
Results from operating activities 22,448 17,843
Depreciation of property, plant and
equipment 614 826
Special charges 98 407
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Adjusted EBITDA $ 23,160 $ 19,076
Adjusted EBITDA margin 29.4% 25.7%
Adjusted EBITDA per diluted share $ 0.85 $ 0.70
Enghouse Systems Limited
Condensed Consolidated Interim Statements of Financial Position
(in thousands of Canadian dollars)
(Unaudited)
January 31, 2017 October 31, 2016
Assets
Current assets:
Cash and cash equivalents $ 80,644 $ 78,436
Short-term investments 7,609 7,423
Accounts receivable, net 83,489 73,588
Prepaid expenses and other assets 9,436 9,720
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181,178 169,167
Non-current assets:
Long-term deposits and accounts
receivable, net 1,179 1,357
Property, plant and equipment 5,476 5,696
Intangible assets 77,564 86,632
Goodwill 141,741 144,578
Deferred income tax assets 9,691 11,765
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Total assets $ 416,829 $ 419,195
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Liabilities
Current liabilities:
Accounts payable and accrued
liabilities $ 49,176 $ 55,440
Income taxes payable 3,353 5,139
Dividends payable 3,771 3,767
Provisions 1,280 2,111
Deferred revenue 63,345 54,300
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120,925 120,757
Non-current liabilities:
Deferred income tax liabilities 18,384 21,053
Deferred revenue 4,728 4,788
Long-term loans 2,500 4,049
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Total liabilities 146,537 150,647
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Shareholders' Equity
Share capital 70,013 69,555
Contributed surplus 3,969 3,875
Retained earnings 195,611 187,649
Accumulated other comprehensive income 699 7,469
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Total shareholders' equity 270,292 268,548
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Total liabilities and shareholders'
equity $ 416,829 $ 419,195
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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,
2017 2016
Revenue
Software licenses $ 24,208 $ 20,770
Hosted and maintenance services 39,166 37,806
Professional services 13,968 14,435
Hardware 1,498 1,359
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78,840 74,370
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Direct costs
Software licenses 2,109 1,157
Services 22,243 21,790
Hardware 1,001 805
------------------------------------
25,353 23,752
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Revenue, net of direct costs 53,487 50,618
Operating expenses
Selling, general and administrative 19,491 20,141
Research and development 10,836 11,401
Depreciation of property, plant and
equipment 614 826
Special charges 98 407
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31,039 32,775
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Results from operating activities 22,448 17,843
Amortization of acquired software and
customer relationships (7,457) (6,840)
Finance income 39 33
Finance expenses (107) (81)
Other income 170 33
------------------------------------
Income before income taxes 15,093 10,988
Provision for income taxes 3,360 2,527
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Net income for the period $ 11,733 $ 8,461
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------------------------------------
Items that are or may be reclassified
subsequently to profit or loss:
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Foreign currency translation (loss)
gain from foreign operations (6,689) 8,799
Transfer to net income of realized
gains on available for sale
investments - (14)
Unrealized loss on available for sale
investments (93) (139)
Deferred income tax recovery 12 20
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Other comprehensive (loss) income (6,770) 8,666
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Comprehensive income $ 4,963 $ 17,127
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Earnings per share
Basic $ 0.44 $ 0.32
Diluted $ 0.43 $ 0.31
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Enghouse Systems Limited
Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars)
(Unaudited)
Share Contributed
Capital Share capital surplus
-number $ $
Balance - November 1, 2016 26,906,962 69,555 3,875
Net income - - -
Other Comprehensive Income (net
of tax):
Cumulative Translation
Adjustment - - -
Transfer to net income of
realized gains on available
for- sale investments - - -
Unrealized loss on available-
for-sale investments - - -
Deferred income tax recovery - - -
---------------------------------------------
Comprehensive income for the
period - - -
---------------------------------------------
---------------------------------------------
Employee share options:
Value of services recognized - 188
Proceeds on issuing shares 29,500 458 (94)
Dividends - - -
---------------------------------------------
Balance - January 31, 2017 26,936,462 70,013 3,969
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---------------------------------------------
Balance - November 1, 2015 26,587,262 64,203 4,029
Net income - - -
Other Comprehensive Income (net
of tax):
Cumulative Translation
Adjustment - - -
Transfer to net income of
realized gains on available
for- sale investments - - -
Unrealized loss on available-
for-sale investments - - -
Deferred income tax recovery - - -
---------------------------------------------
Comprehensive income for the
period - - -
---------------------------------------------
---------------------------------------------
Employee share options:
Value of services recognized - - 325
Proceeds on issuing shares 224,200 3,083 (586)
Dividends - - -
---------------------------------------------
Balance - January 31, 2016 26,811,462 67,286 3,768
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Enghouse Systems Limited
Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars)
(Unaudited)
Accumulated
other
comprehensive Retained
income (loss) earnings Total
$ $ $
Balance - November 1, 2016 7,469 187,649 268,548
Net income - 11,733 11,733
Other Comprehensive Income (net
of tax):
Cumulative Translation
Adjustment (6,689) - (6,689)
Transfer to net income of
realized gains on available
for- sale investments - - -
Unrealized loss on available-
for-sale investments (93) - (93)
Deferred income tax recovery 12 - 12
---------------------------------------------
Comprehensive income for the
period (6,770) 11,733 4,963
---------------------------------------------
---------------------------------------------
Employee share options:
Value of services recognized - - 188
Proceeds on issuing shares - - 364
Dividends - (3,771) (3,771)
---------------------------------------------
Balance - January 31, 2017 699 195,611 270,292
---------------------------------------------
---------------------------------------------
Balance - November 1, 2015 20,254 154,866 243,352
Net income - 8,461 8,461
Other Comprehensive Income (net
of tax):
Cumulative Translation
Adjustment 8,799 - 8,799
Transfer to net income of
realized gains on available
for- sale investments (14) - (14)
Unrealized loss on available-
for-sale investments (139) - (139)
Deferred income tax recovery 20 - 20
---------------------------------------------
Comprehensive income for the
period 8,666 8,461 17,127
---------------------------------------------
---------------------------------------------
Employee share options:
Value of services recognized - - 325
Proceeds on issuing shares - - 2,497
Dividends - (3,217) (3,217)
---------------------------------------------
Balance - January 31, 2016 28,920 160,110 260,084
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Enghouse Systems Limited
Condensed Consolidated Interim Statements of Cash Flows
(in thousands of Canadian dollars)
(Unaudited)
Three months ended January 31,
2017 2016
Cash flows from operating activities
Net income for the period $ 11,733 $ 8,461
Adjustments for:
Depreciation of property, plant and
equipment 614 826
Amortization of acquired software and
customer relationships 7,457 6,840
Stock-based compensation expense 188 325
Provision for income tax 3,360 2,527
Finance expenses and other income (63) 48
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23,289 19,027
Changes in non-cash operating working
capital (8,018) (10,623)
Income tax paid (4,596) (1,497)
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Net cash flows from operating activities 10,675 6,907
Cash flows from investing activities
Purchase of property, plant and
equipment, net (565) (1,318)
Purchase of other software (489) (134)
Acquisitions, net of cash acquired of
nil (2016 $1,723) - (26,019)
Purchase consideration for prior period
acquisitions (393) (690)
Net purchase of short-term investments (608) (1,045)
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Net cash flows used in investing
activities (2,055) (29,206)
Cash flows from financing activities
Issuance of share capital 364 2,497
Repayment of loans (1,667) -
Payment of cash dividend (3,767) (3,190)
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Net cash flows used in financing
activities (5,070) (693)
Effect of currency translation
adjustments on cash and cash
equivalents (1,342) 3,175
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Net increase (decrease) in cash and cash
equivalents during the period 2,208 (19,817)
Cash and cash equivalents - beginning of
period 78,436 94,131
Cash and cash equivalents - end of
period $ 80,644 $ 74,314
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Enghouse Systems Limited
Selected Segment Reporting Information
(In thousands of Canadian dollars)
(Unaudited)
For the three months ended
January 31
2017 2016
------------------------------------
Revenue:
Asset Management Group $ 31,286 $ 25,758
Interactive Management Group 47,554 48,612
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Total $ 78,840 $ 74,370
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Asset Management Group:
- Segment profit before special
charges $ 8,525 $ 5,889
- Special charges 96 (225)
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Asset Management Group profit $ 8,621 $ 5,664
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Interactive Management Group:
- Segment profit before special
charges $ 15,768 $ 14,741
- Special charges (194) (182)
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Interactive Management Group profit $ 15,574 $ 14,559
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Corporate expenses (1,747) (2,380)
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Results from operating activities $ 22,448 $ 17,843
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Amortization of acquired software and
customer relationships (7,457) (6,840)
Finance income 39 33
Finance expenses (107) (81)
Other income 170 33
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Income before income taxes $ 15,093 $ 10,988
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Contacts:
Sam Anidjar
Vice President, Corporate Development
Enghouse Systems Limited
Tel: (905) 946-3200
Email: investor@enghouse.com
