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Sylogist Fiscal 2018 and Fourth Quarter Results: Material increases in Revenue, Profit and Cash Flow; Executive Appointment.

/THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES ./

CALGARY , Jan. 17, 2019 /CNW/ - Sylogist Ltd. (SYZ.V) ("Sylogist" or the "Company"), a provider of enterprise information management solutions, is pleased to announce its audited financial results for the fiscal year ended September 30, 2018 and the appointment of Ms. Donna Smiley , Vice President, Operations.

Fiscal 2018 Highlights (Comparisons are to fiscal 2017, unless otherwise noted)

  • Revenues were $38.2 million , compared to $32.9 million , up 16%.

  • Gross profit margins improved to 73% of revenue, compared to 71%.

  • Reported earnings were $13.2 million ( $0.59 per share) compared to $7.2 million ( $0.32 per share), an 84% increase.

  • Recorded a gain from a bargain purchase associated with the K12 Enterprise and Sunpac Systems acquisition of $2.7 million .

  • Adjusted EBITDA(1) was $17 million ( $0.76 per share), compared to $13.4 million ( $0.59 per share), an increase of 29%.

  • Adjusted EBITDA Margin (1) was 44%, compared to 41%.

  • Cash from operating activities (before non-cash changes in working capital) was $15.7 million ( $0.70 per share), compared to $11.5 million ( $0.51 per share), an increase of 36% and a per share increase of 37%.

  • Cash as at September 30, 2018 totalled $31.4 million . Sylogist has no debt.

  • Combined tax pools at the end of the fiscal year 2018 were approximately $14.8 million (CAD).

  • The Company paid regular and special dividends to shareholders totalling $8.3 million in fiscal 2018, compared to $7.5 million in fiscal 2017.

  • For the fiscal year ended September 30, 2018 , the Company repurchased a total of 260,000 common shares at an average price of $10.92 for a total cost of $2.8 million .

  • There are currently 22 million Sylogist shares outstanding.


Q4 2018 Summary (Comparisons are to Q4 2017, unless otherwise noted)

  • Revenues were $9.1 million , compared to $8 million , an increase of 13%.

  • Reported earnings were $4.5 million (including a gain from bargain purchase associated with the K12 Enterprise and Sunpac Systems acquisition of $2.7 million ) compared to $1.9 million in Q4 2017, an increase of 131%.

  • Earnings per fully diluted common share increased 122% to $0.20 per share, up from $0.09 per share.

  • Adjusted EBITDA(1) was $3.4 million , an increase of 5%, or $0.15 per fully diluted common share, up 7%.

  • Adjusted EBITDA Margin(1) was 37%, compared to 40%.

  • Cash from operating activities (before non-cash changes in working capital) totalled $3 million ( $0.13 per share), up from $2.6 million ( $0.12 per share) in Q4 2017.

  • The Company paid regular dividends to shareholders totalling $1.8 million during the quarter.

  • Adjusted Working Capital(1) was $33.1 million , or $1.49 per share, compared to $31.8 million , or $1.42 per share, in Q4 2017.

  • For the quarter ended September 30, 2018 , the Company repurchased 63,500 common shares at an average price of $12.69 for a total cost of $806 thousand .


Impact of Purchase Accounting on Annual and Q4 Results of Operations

Purchase accounting adjustments associated with the acquisition of Sunpac/K12 had a one-time impact on annual and Q4 reported results.  For our investors' benefit, the following tables present selected historical consolidated financial data comparing reported results with "normalized results" that exclude the impact of the one-time purchase accounting adjustments, providing information that facilitates comparison of operating results.

(Amounts are in thousands of Canadian dollars, except percentages and per share amounts.)











Twelve months ended September 30,




Reported

Purchase
Accounting
Adjustments (2)

Normalized

Reported

2018 Normalized vs
2017 Reported

 Period-Over-Period
Change


2018


2018

2017

$

%








Revenue

38,192

482

38,674

32,928

5,746

17%


Subscription and maintenance revenue

24,028

482

24,510

21,564

2,946

14%


Amortization of intangible assets

3,859

(651)

3,208

2,516

692

28%


Gain from bargain purchase

(2,697)

2,697

-

-

-

n/m


Profit for the period

13,172

(2,491)

10,681

7,219

3,462

48%








Adjusted EBITDA (1)

16,989

376

17,365

13,375

3,990

30%








Profit per share














Basic

0.59

(0.11)

0.48

0.32

0.16

50%








Diluted

0.58

(0.11)

0.47

0.32

0.15

47%








Adjusted EBITDA per share














Basic

0.76

0.02

0.78

0.59

0.19

32%








Diluted

0.75

0.02

0.77

0.59

0.18

31%

 







Three months ended September 30,




Reported

Purchase
Accounting
Adjustments (2)

Normalized

Reported

2018 Normalized vs
2017 Reported

 Period-Over-Period
Change


2018


2018

2017

$

%








Revenue

9,095

482

9,577

8,045

1,532

19%








Subscription and maintenance revenue

5,732

482

6,214

5,279

935

18%








Amortization of intangible assets

1,425

(651)

774

630

144

23%








Gain from bargain purchase

(2,697)

2,697

-

-

-

n/m








Profit for the period

4,473

(2,491)

1,982

1,933

49

3%








Adjusted EBITDA (1)

3,383

376

3,759

3,210

549

17%








Profit per share














Basic

0.20

(0.11)

0.09

0.09

-

n/m








Diluted

0.20

(0.11)

0.09

0.09

-

n/m








Adjusted EBITDA per share














Basic

0.15

0.02

0.17

0.14

0.03

21%








Diluted

0.15

0.01

0.16

0.14

0.02

14%

 

n/m - "Not Meaningful"



1)

Adjusted EBITDA is a non-IFRS measure, defined as: profit for the period before stock based compensation, foreign exchange gains or losses, interest expense, bargain purchase price on acquisition, income taxes, acquisition-related costs, depreciation and amortization.



2)

In accordance with the fair value provisions applicable to the accounting for business combinations, acquired deferred revenue relating to acquisitions was recorded on the opening balance sheet at an amount that was lower than the historical carrying value. In addition, the estimated fair values of the acquired net assets of K12 Enterprise & Sunpac Systems as of the acquisition date was greater than the cash consideration paid resulting in a one-time gain on bargain purchase. Although the purchase accounting adjustments have no impact on the Company's business or cash flow, they had an impact on the Company's "reported" IFRS financial statements in the reporting periods following the acquisition. In order to provide investors with financial information that facilitates comparison of results, the Company provides "normalized" non-IFRS financial measures which exclude the impact of the purchase accounting adjustments. Purchase accounting adjustments for the year-ended September 30, 2018, relate to the October 2017 acquisition of K12 Enterprise & Sunpac Systems.

 

Jim Wilson , President & Chief Executive Officer of Sylogist, stated, "We're pleased with the progress achieved in fiscal 2018. Our reported revenues increased to $38.2 million ( $38.7 million , normalized), which was above the top-end range of our 2018 guidance provided in November 2017 . Reported earnings per share were up 84% (50% on a normalized basis) from the previous year. With attractive opportunities in the educational space, we enhanced our investment by $850 thousand to develop resources, improve products and solidify customer relationships in the U.S. K12 market. Our Adjusted EBITDA per share increased 29% (32% when normalized for purchase accounting) and EBITDA margins improved from 41% to 44% compared to the prior year, while cash from operating activities improved by 36% over fiscal 2017.  The bargain purchase gain of $2.7 million recorded on the Sunpac/K12E acquisition substantiated the opportunities we see ahead in the US educational market.  

In November, Sylogist announced an 18.75% dividend increase that speaks to the growth opportunities we envision in fiscal 2019 and beyond. The outlook, given our solid foundation and strategic focus on near term organic and non-organic growth initiatives remains very positive." concluded Mr. Wilson.

Executive Appointment

Sylogist is pleased to announce the appointment of Donna Smiley , as its Vice President, Operations.  Donna, who currently manages the Company's Serenic Software division, has 25 years of experience providing Enterprise solutions in the NPO/NGO, Education, and Municipal markets, which was built upon her 10 years of accounting and financial management experience in Environmental Engineering, Non-Profit, and Software companies.  Donna's Enterprise resource planning ("ERP") background covers a breadth of functional areas within the software industry including Accounting, Support, Professional Services, Product Management and Development, all of which give her a holistic perspective on the best way to serve our Customers, Partners, and Employees. Most recently, Donna served as the Company's Managing Director, Operations.  Concurrent with her appointment, the board of directors of the Company granted Ms. Smiley 15,000 additional stock options to acquire common shares, at the current market price and in accordance with its Stock Option Plan.

About Sylogist

Sylogist is a software company that, through strategic acquisitions, investments and operations management, provides comprehensive, mission-critical ERP solutions, including fund accounting, grant management and payroll to public service organizations.  Sylogist's public service customers include local governments, nonprofit organizations, non-governmental organizations, educational institutions and government agencies, as well as public compliance driven and funded. Our Company delivers highly scalable, multi-language, multi-currency software solutions, which serve the needs of an international clientele.

Full financial statements together with Management's Discussion and Analysis are available on SEDAR at www.sedar.com.

The Company's stock is traded on the TSX Venture Exchange under the symbol SYZ. Information about Sylogist can be found at http://www.sylogist.com.

Forward-looking Statements

Certain statements in this news release may be forward-looking statements within the meaning of applicable securities laws and regulations.  These statements typically use words such as expect, believe, estimate, project, anticipate, plan, may, should, could and would, or the negative of these terms, variations thereof or similar terminology. Forward-looking information in this news release includes statements with respect to the Company being encouraged by its 2019 and beyond positive outlook given its solid foundation and strategic focus on near term organic and non-organic growth initiatives. By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature.  It is therefore possible that the beliefs and plans and other forward-looking expectations expressed herein will not be achieved or will prove inaccurate.  Although Sylogist believes that the expectations reflected in these forward-looking statements are reasonable, it provides no assurance that these expectations will prove to have been correct. Forward-looking information involves risks, uncertainties and other factors that could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Additional information regarding some of these risks, uncertainties and other factors may be found under in the management's discussion and analysis for the year ended September 30, 2018 , and other documents available on the Company's profile at www.sedar.com.  Material assumptions and factors that could cause actual results to differ materially from such forward-looking information include Sylogist's ability to attract and retain customers and to realize on its investments. Although Sylogist believes that the material assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur. Sylogist disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.

Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Sylogist's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

Non-GAAP Financial Measures

(1) Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Working Capital are non-GAAP financial measures: Adjusted EBITDA is defined as: profit for the period before stock based compensation, foreign exchange gains or losses, interest expense, bargain purchase price on acquisition, income taxes, acquisition-related costs, depreciation and amortization. Adjusted EBITDA Margin refers to Adjusted EBITDA as a percentage of revenue. Adjusted Working Capital is defined as current assets less current liabilities adjusted for deferred revenue. 

This news release makes reference to certain non-GAAP measures.  These measures are not recognized measures under Canadian GAAP, do not have a standardized meaning prescribed by Canadian GAAP and are therefore may not be comparable to similar measures presented by other issuers. These measures are provided as additional information to complement measures under GAAP by providing further understanding of the Company's expected results of operations from management's perspective. Accordingly, such measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under Canadian GAAP.

Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Working Capital are provided to investors as alternative methods for assessing the Company's operating results in a manner that is focused on the Company's ongoing operations and to provide a more consistent basis for comparison between periods. These measures should not be construed as alternatives to net profit (loss) or cash flow from operating activities determined in accordance with GAAP as an indicator of the Company's performance.

- Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release-

SOURCE Sylogist Ltd.


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