Tecsys Reports Financial Results for the Second Quarter of Fiscal 2022

·15 min read

Eleventh consecutive quarter of record revenue; SaaS revenue up 28% year-over-year

MONTREAL, Dec. 1, 2021 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the second quarter of fiscal year 2022, ended October 31, 2021. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).

TECSYS (PRNewsfoto/TECSYS)
TECSYS (PRNewsfoto/TECSYS)

Second Quarter Highlights:

  • SaaS revenue increased by 28% to $6.6 million in Q2 2022, up from $5.1 million in Q2 2021.

  • Annual Recurring Revenue (ARRi) at October 31, 2021 was up 12% to $56.9 million compared to $50.9 million at October 31, 2020.

  • During Q2 2022, SaaS subscription bookingsi (measured on an ARRi basis) were $4.0 million, up 50% compared to $2.7 million in the second quarter of fiscal 2021.

  • Professional services revenue was up 11% to $13.1 million in Q2 2022 compared to $11.8 million in Q2 2021.

  • Total revenue was a record $34.3 million, 12% higher than $30.7 million reported for Q2 2021.

  • Gross margin was 45% compared to 52% in the prior year quarter, negatively impacted by a weaker US dollar, investment in our key growth initiatives and revenue mix. Total gross profit decreased to $15.5 million, down 3% from $16.0 million in Q2 2021.

  • Operating expenses increased to $13.9 million, higher by $1.3 million or 11% compared to $12.6 million in Q2 fiscal 2021 with continuing investment in sales and marketing as well as research and development.

  • Profit from operations in Q2 2022 was $1.6 million, down from $3.5 million in Q2 2021.

  • Net profit was $0.7 million or $0.05 per share on a fully diluted basis in Q2 2022 compared to a net profit of $2.1 million or $0.14 per share on a fully diluted basis for the same period in fiscal 2021.

  • Adjusted EBITDAii was $3.2 million in Q2 2022, down 34% compared to $4.8 million reported in Q2 2021

"We continue our momentum into yet another quarter of record revenue and solid sequential and year-over-year growth. We are supporting that performance with excellent strides in building out our sales team, strengthening our delivery capacity, investing in our platform, and developing our pipeline," said Peter Brereton, president and CEO of Tecsys, Inc. "Our three target verticals are all performing or outperforming expectations, with notable wins in healthcare with three new major hospital networks, and an expanding customer base in global retail and our distribution market. We are confident that we are favorably positioned as the heightened focus on supply chains turns into greater investment in supply chain agility and the specialized technologies that underpin it."

Mark Bentler, chief financial officer of Tecsys Inc., added, "We are pleased with another quarter of solid revenue growth in spite of significant foreign currency headwinds. On a constant currency basis, our second quarter fiscal 2022 revenue grew by about 18% compared to the same period last year, with SaaS revenue once again being a key driver. Currency fluctuations knocked about $2 million off of revenue and $1.5 million off of adjusted EBITDA compared to the same quarter last year. Considering the general trajectory of our SaaS revenue, within a few quarters we are likely to see SaaS revenue overtaking maintenance and support as our leading source of recurring revenue."

Results from operations











Trailing 12


Trailing 12


3 months ended


3 months ended


6 months ended


6 months ended



months ended


months ended


October 31, 2021


October 31, 2020


October 31, 2021


October 31, 2020



October 31, 2021


October 31, 2020















Total Revenue

$

34 269

$

30 694

$

67 501

$

58 785


$

131 817

$

113 382

SaaS Revenue


6 565


5 120


12 218


8 964



22 418


14 109

Maintenance and Support
Revenue


8 200


8 312


16 526


16 721



33 520


32 789

Gross Profit


15 518


16 010


29 947


29 500



61 077


55 230

Gross Margin %


45%


52%


44%


50%



46%


49%

Operating Expenses


13 891


12 558


27 232


24 080



53 101


47 821

Op. Ex. As % of Revenue


41%


41%


40%


41%



40%


42%

Profit from Operations


1 627


3 452


2 715


5 420



7 976


7 409

Adjusted EBITDA


3 206


4 830


5 662


8 339



13 543


12 938

EPS basic


0.05


0.14


0.07


0.23



0.34


0.32

EPS diluted


0.05


0.14


0.06


0.23



0.34


0.32















License Bookings


1 061


1 904


1 347


2 365



3 270


5 277

SAAS ARR Bookings


4 050


2 692


5 149


5 062



9 635


11 090















Annual Recurring Revenue


56 939


50 873


56 939


50 873



56 939


50 873

Professional Services Backlog


33 124


38 746


33 124


38 746



33 124


38 746

Year-to-date performance for first half of fiscal 2022:

  • SaaS revenue increased by 36% to $12.2 million in the first half of fiscal 2022, up from $9.0 million the same period of fiscal 2021.

  • SaaS subscription bookingsi (measured on an ARRi basis) were $5.1 million for both the first half of fiscal 2022 and 2021.

  • Professional services revenue was up 14% to $26.2 million in the first half of fiscal 2022 compared to $23.0 million in the same period of fiscal 2021.

  • Total revenue was a record $67.5 million, 15% higher than $58.8 million reported for the same period of fiscal 2021.

  • Gross margin was 44% compared to 50% in the same period of fiscal 2021, negatively impacted by a weaker US dollar, investment in our key growth initiatives and revenue mix.

  • Total gross profit increased to $29.9 million, up 2% from $29.5 million in the same period fiscal 2021.

  • Operating expenses increased to $27.2 million, higher by $3.2 million or 13% compared to $24.0 million in the same period of fiscal 2021 with continuing investment in sales and marketing as well as research and development.

  • Profit from operations in the first half of fiscal 2022 was $2.7 million, down from $5.4 million in the same period of fiscal 2021.

  • Net profit was $1.0 million or $0.06 per share on a fully diluted basis in the first half of fiscal 2022 compared to a net profit of $3.3 million or $0.23 per share on a fully diluted basis for the same period in fiscal 2021.

  • Adjusted EBITDAii was $5.7 million in the first half of fiscal 2022, down 32% compared to $8.3 million reported in the same period in fiscal 2021.

On December 1, 2021, the Company's Board of Directors declared a quarterly dividend of $0.07 per share to be paid on January 7, 2022 to shareholders of record on December 16, 2021.

Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be "eligible" dividends.

Second Quarter of Fiscal 2022 Results Conference Call

Date: December 2, 2021
Time: 8:30 a.m. EST
Phone number: (800) 582-4087 or (416) 981-9018

The call can be replayed until December 9, 2021 by calling (800) 558-5253 or (416) 626-4100 (access code: 21999394).

About Tecsys

Tecsys is a global provider of supply chain solutions that equip the borderless enterprise for growth. Organizations thrive when they have the software, technology and expertise to drive operational greatness and deliver on their brand promise. Spanning healthcare, retail, service parts, third-party logistics, and general wholesale high-volume distribution industries, Tecsys delivers dynamic and powerful solutions for warehouse management, distribution and transportation management, supply management at point of use, retail order management, as well as complete financial management and analytics solutions. Tecsys' shares are listed on the Toronto Stock Exchange under the ticker symbol TCS. For more information on Tecsys, visit www.tecsys.com

Forward-Looking Statements

The statements in this news release relating to matters that are not historical fact are forward looking statements that are based on management's beliefs and assumptions. Such statements are not guarantees of future performance and are subject to a number of uncertainties, including but not limited to future economic conditions, the markets that Tecsys Inc. serves, the actions of competitors, major new technological trends, and other factors beyond the control of Tecsys Inc., which could cause actual results to differ materially from such statements. More information about the risks and uncertainties associated with Tecsys Inc.'s business can be found in the MD&A section of the Company's annual report and annual information form for the fiscal year ended April 30, 2021. These documents have been filed with the Canadian securities commissions and are available on our website (www.tecsys.com) and on SEDAR (www.sedar.com).

Copyright © Tecsys Inc. 2021. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

Non-IFRS Measures

Reconciliation of EBITDA and Adjusted EBITDA

EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation, and amortization. Adjusted EBITDA is calculated as EBITDA before stock-based compensation. The Company believes that these measures are commonly used by investors and analysts to measure a company's performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement.

The EBITDA and Adjusted EBITDA calculation for the three and six months ended October 31, 2021 and October 31, 2020 derived from IFRS measures in the Company's Consolidated financial statements, is as follows:



Three months ended
October 31,


Six months ended
October 31,

(in thousands of CAD)

2021

2020


2021

2020








Profit for the period

$708

$ 2,086


$ 952

$ 3,321

Adjustments for:







Depreciation of property and equipment and right-of-use assets

553

526


1,096

1,059


Amortization of deferred development costs

69

58


123

161


Amortization of other intangible assets

411

426


822

834


Interest expense

145

195


306

471


Interest income

(40)

(63)


(80)

(113)


Income taxes

791

1,235


1,520

1,970

EBITDA

$ 2,637

$ 4,463


$ 4,739

$ 7,703

Adjustments for:







Stock based compensation

569

367


923

636

Adjusted EBITDA

$ 3,206

$ 4,830


$ 5,662

$ 8,339


i

See Key Performance Indicators in Management's Discussion and Analysis of the Q2 2022 Financial Statements.

ii

See Non-IFRS Performance Measures in Management's Discussion and Analysis of the Q2 2022 Financial Statements.


Condensed Interim Consolidated Statements of Financial Position

As at October 31, 2021 and April 30, 2021

(Unaudited)

(in thousands of Canadian dollars)



October 31, 2021

April 30, 2021

Assets



Current assets



Cash and cash equivalents

$ 17,978

$ 25,752

Short-term investments

20,155

20,100

Accounts receivable

19,487

16,840

Work in progress

1,999

182

Other receivables

962

2,034

Tax credits

7,645

5,359

Inventory

688

628

Prepaid expenses

5,802

4,897

Total current assets

74,716

75,792

Non-current assets



Other long-term receivables

213

303

Tax credits

4,171

3,904

Property and equipment

2,567

2,682

Right-of-use assets

6,775

7,245

Contract acquisition costs

2,776

2,678

Deferred development costs

1,646

1,088

Other intangible assets

11,185

12,194

Goodwill

17,207

17,417

Deferred tax assets

6,006

6,006

Total non-current assets

52,546

53,517




Total assets

$ 127,262

$ 129,309

Liabilities



Current liabilities



Accounts payable and accrued liabilities

$ 16,196

$ 19,417

Deferred revenue

23,963

22,044

Current portion of long-term debt

1,200

1,216

Other current liabilities

500

500

Lease obligations

812

848

Total current liabilities

42,671

44,025

Non-current liabilities



Long-term debt

7,800

8,400

Deferred tax liabilities

1,452

1,499

Lease obligations

7,853

8,295

Total non-current liabilities

17,105

18,194

Total liabilities

59,776

62,219




Equity



Share capital

43,973

42,700

Contributed surplus

12,415

11,745

Retained earnings

11,482

12,419

Accumulated other comprehensive (loss) income

(384)

226

Total equity attributable to the owners of the Company

67,486

67,090




Total liabilities and equity

$ 127,262

$ 129,309

Condensed Interim Consolidated Statements of Income and Comprehensive Income

For the three and six-month periods ended October 31, 2021 and 2020

(Unaudited)

(in thousands of Canadian dollars, except per share data)




Three months
ended
October 31,
2021

Three months
ended
October 31,
2020

Six months
ended
October 31,
2021

Six months
ended
October 31,
2020


Revenue:






SaaS

$ 6,565

$ 5,120

$ 12,218

$ 8,964

Maintenance and Support

8,200

8,312

16,526

16,721

Professional Services

13,076

11,829

26,202

23,041

License

982

1,988

1,333

2,705

Hardware

5,446

3,445

11,222

7,354

Total revenue

34,269

30,694

67,501

58,785


Cost of revenue

18,751

14,684

37,554

29,285

Gross profit

15,518

16,010

29,947

29,500

Operating expenses:





Sales and marketing

6,022

5,265

11,704

10,262

General and administration

2,801

2,895

5,660

5,321

Research and development, net of tax credits

5,068

4,398

9,868

8,497

Total operating expenses

13,891

12,558

27,232

24,080






Profit from operations

1,627

3,452

2,715

5,420






Net finance costs

128

131

243

129

Profit before income taxes

1,499

3,321

2,472

5,291

Income tax expense

791

1,235

1,520

1,970

Net profit, attributable to the owners of the Company

$ 708

$ 2,086

$ 952

$ 3,321

Other comprehensive income:

Effective portion of changes in fair value on designated revenue

Hedges

233

(455)

(125)

654

Exchange differences on translation of foreign operations

(452)

(145)

(485)

408


Comprehensive income attributable to the owners of the Company

$ 489

$ 1,486

$ 342

$ 4,383

Basic earnings per common share

$ 0.05

$ 0.14

$ 0.07

$ 0.23

Diluted earnings per common share

$ 0.05

$ 0.14

$ 0.06

$ 0.23






Condensed Interim Consolidated Statements of Cash Flows

For the three and six-month periods ended October 31, 2021 and 2020

(Unaudited)

(in thousands of Canadian dollars)



Three months
ended
October 31,
2021

Three months
ended
October 31,
2020

Six months
ended
October 31,
2021

Six months
ended
October 31,
2020






Cash flows from operating activities:





Net profit for the period

$ 708

$ 2,086

$ 952

$ 3,321

Adjustments for:





Depreciation of property and equipment and right-of-use-assets

553

526

1,096

1,059

Amortization of deferred development costs

69

58

123

161

Amortization of other intangible assets

411

426

822

834

Net finance costs

128

131

243

129

Unrealized foreign exchange and other

(333)

(233)

928

(472)

Non-refundable tax credits

(366)

(361)

(732)

(670)

Stock-based compensation

569

367

923

636

Income taxes

680

1,120

1,373

1,844


Net cash from operating activities excluding changes in non-cash
working capital items related to operations





2,419

4,120

5,728

6,842


Accounts receivable

(223)

(6,038)

(2,715)

(4,963)

Work in progress

(1,275)

(234)

(1,822)

(541)

Other receivables

106

138

72

(78)

Tax credits

(911)

(903)

(1,821)

(1,658)

Inventory

(53)

(61)

(65)

(20)

Prepaid expenses

(443)

183

(908)

(606)

Contract acquisition costs

(226)

(154)

(98)

(349)

Accounts payable and accrued liabilities

(750)

902

(4,683)

(2,908)

Deferred revenue

2,000

1,609

1,941

3,578

Changes in non-cash working capital items related to operations

(1,775)

(4,558)

(10,099)

(7,545)






Net cash from (used in) operating activities

644

(438)

(4,371)

(703)

Cash flows from financing activities:

Repayment of long-term debt

(304)

(300)

(616)

(600)

Payment of lease obligations

(224)

(234)

(455)

(487)

Payment of dividends

(1,889)

(1,730)

(1,889)

(1,730)

Payment of acquired tax liability

-

(2,191)

-

(2,191)

Common shares issued on exercise of stock options

1,020

36

1,020

36

Interest paid

(145)

(151)

(306)

(319)

Net cash used in financing activities

(1,542)

(4,570)

(2,246)

(5,291)


Cash flows from investing activities:
Purchase of short-term investments

-

-

-

(10,000)

Interest received

40

63

80

113

Acquisitions of property and equipment

(304)

(454)

(534)

(503)

Acquisitions of other intangible assets

(7)

(16)

(22)

(521)

Deferred development costs

(195)

(54)

(681)

(160)

Net cash used in investing activities

(466)

(461)

(1,157)

(11,071)

Net decrease in cash and cash equivalents during the period

(1,364)

(5,469)

(7,774)

(17,065)

Cash and cash equivalents - beginning of period

19,342

15,932

25,752

27,528

Cash and cash equivalents - end of period

17,978

$ 10,463

17,978

$ 10,463

Condensed Interim Consolidated Statements of Changes in Equity

For the six-month periods ended October 31, 2021 and 2020

(Unaudited)

(in thousands of Canadian dollars, except number of shares)



Share Capital






Number

Amount

Contributed
surplus

Accumulated
other com-
prehensive
income (loss)

Retained
earnings

Total









Balance, April 30, 2021

14,505,095

42,700

11,745

226

12,419

67,090

Net profit

-

-

-

-

952

952

Other comprehensive
loss for the
period:







Effective portion
of changes in fair
value on designated
revenue hedges

-

-

-

(125)

-

(125)

Exchange difference
on translation of
foreign operations

-

-

-

(485)

-

(485)

Total comprehensive (loss)
income for the period

-

-

-

(610)

952

342

Stock-based
Compensation

-

-

923

-

-

923

Dividends to equity
owners

-

-

-

-

(1,889)

(1,889)

Share Options exercised

57,800

1,273

(253)

-

-

1,020

Total transactions with
owners of the Company

57,800

1,273

670

-

(1,889)

54








Balance, October 31, 2021

14,562,895

$ 43,973

$ 12,415

$ (384)

$ 11,482

$ 67,486








Balance, April 30, 2020

14,416,543

$ 40,901

$ 10,964

$ 416

$ 8,838

$ 61,119

Net profit

-

-

-


3,321

3,321

Other comprehensive
income for the period:







Effective portion of
changes in fair
value on designated
revenue hedges

-

-

-

654

-

654

Exchange difference
on translation of
foreign operations

-

-

-

408

-

408

Total comprehensive
income for the
period

-

-

-

1,062

3,321

4,383

Stock-based
Compensation

-

-

636

-

-

636

Dividends to equity
owners

-

-

-

-

(1,730)

(1,730)

Share options exercised

2,500

59

(23)



36

Total transactions with
owners of the Company

2,500

59

613

-

(1,730)

(1,058)








Balance, October 31, 2020

14,419,043

$ 40,960

$ 11,577

$ 1,478

$ 10,429

$ 64,444

SOURCE Tecsys Inc.

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