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Tecsys Reports Financial Results for the First Quarter of Fiscal 2023

·13 min read

SaaS revenue up 42%

MONTREAL, Sept. 8, 2022 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the first quarter of fiscal year 2023, ended July 31, 2022. 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)

First Quarter Highlights:

  • SaaS revenue increased by 42% to $8.0 million, up from $5.7 million in Q1 2022.

  • SaaS subscription bookingsi (measured on an ARRi basis) were $3.9 million, up 256% compared to $1.1 million in the first quarter of 2022.

  • SaaS Remaining Performance Obligation (RPOi) increased by 58% to $102.5 million at July 31, 2022, up from $65.0 million at the same time last year.

  • Annual Recurring Revenue (ARRi) at July 31, 2022 was up 21% to $65.1 million compared to $53.7 million at July 31, 2021.

  • Professional services revenue was up 4% to $13.6 million compared to $13.1 million in Q1 2022.

  • Total revenue excluding hardware revenue was $30.4 million, 11% higher than $27.5 million reported for Q1 2022.

  • Gross margin was 43% compared to 43% in the same period in fiscal 2022.

  • Total gross profit increased to $14.8 million, up 2% from $14.4 million in Q1 2022.

  • Operating expenses increased to $14.7 million, higher by $1.3 million or 10% compared to $13.3 million in Q1 2022.

  • Profit from operations was $0.1 million, down from $1.1 million in Q1 2022.

  • Net profit was $40 thousand or $0.00 per share on a fully diluted basis compared to a net profit of $0.2 million or $0.02 per share for the same period in fiscal 2022.

  • Adjusted EBITDAii was $1.5 million, down 40% compared to $2.5 million reported in Q1 2022.

"We are pleased to report a very strong start to Fiscal 2023. Our solid bookings for the quarter span our vertical markets and included three new hospital networks.  We believe this serves as a testament that our SaaS solution suite is well-suited to the demands of a market ripe for transformation," said Peter Brereton, president and CEO of Tecsys, Inc. "Supply chain organizations around the world have been facing tough challenges when it comes to consumer expectations, labor shortages and legacy software unable to manage modern fulfillment complexity. With supply chain gaining so much mindshare as a strategic lever in organizations, we are seeing demand signals and buyer intent for more robust supply chain software. And we are fully prepared with the right software and the right market position to deliver customer and shareholder value."

Mark Bentler, chief financial officer of Tecsys Inc., added, "With another record quarter of SaaS revenue representing a 42% increase over last year, solid revenue growth and substantial SaaS ARR bookings, we are pleased with our topline growth. Our SaaS ARR bookings are up 256% over last year, which translates into a positive impact on RPO up 58% year over year. As we continue to see rapid growth in bookings and RPO, we continue to invest in cloud infrastructure, R&D, and Sales and marketing to take advantage of this evolving market opportunity."

 

Results from operations


Three months
ended


Three months
ended


Trailing 12
months
ended


Trailing 12
months ended



July 31, 2022


July 31, 2021


July 31, 2022


July 31, 2021

Total Revenue

$

34,204

$

33,232

$

138,172

$

128,242

Total Revenue Excluding
Hardware


30,359


27,456


117,376


108,604

SaaS, Maintenance and
Support Revenue


16,269


13,979


61,917


54,605

Gross Profit


14,758


14,429


60,639


61,569

Gross Margin %


43 %


43 %


44 %


48 %

Operating Expenses


14,668


13,341


56,261


51,768

Op. Ex. As % of Revenue


43 %


40 %


41 %


40 %

Profit from Operations


90


1,088


4,378


9,801

Adjusted EBITDA 


1,484


2,456


9,158


15,167

EPS basic


0.00


0.02


0.29


0.43

EPS diluted


0.00


0.02


0.28


0.42

License Bookings


249


286


2,365


4,114

SAAS ARR Bookings


3,908


1,099


14,730


8,277

SAAS RPO






102,540


64,997

Annual Recurring Revenue






65,074


53,656

Professional Services Backlog






30,674


35,124

 

On September 8, 2022, the Company declared a quarterly dividend of $0.07 per share payable on October 7, 2022 to shareholders of record at the close of business on September 23, 2022.

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

i See Key Performance Indicators in Management's Discussion and Analysis of the Q1 2023 Financial Statements. 
ii See Non-IFRS Performance Measures in Management's Discussion and Analysis of the Q1 2023 Financial Statements

First Quarter Fiscal 2023 Results Conference Call
Date: September 9, 2022
Time: 8:30am EDT
Phone number: (800) 768-6727 or (416) 620-9188
The call can be replayed until September 16, 2022 by calling:
(800) 558-5253 or (416) 626-4100 (access code:22020336)

About Tecsys

Tecsys is a global provider of cloud-based supply chain solutions that equip the borderless enterprise for growth and competitive advantage. Serving healthcare, distribution and converging commerce industries, and spanning multiple complex, regulated and high-volume markets, Tecsys delivers dynamic and powerful solutions for warehouse management, distribution and transportation management, supply management at point of use, order management and fulfillment, as well as 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 the most recently filed annual information form. 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. 2022. 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, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods. The exclusion of interest expense, interest income and income taxes eliminates the impact on earnings derived from non-operational activities, and the exclusion of depreciation, amortization, share-based compensation, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods eliminates the non-cash impact of these items.

The Company believes that these measures are useful measures of financial performance without the variation caused by the impacts of the items described above and that could potentially distort the analysis of trends in our operating performance. In addition, they 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. Excluding these items does not imply that they are necessarily non-recurring. Management believes these non-GAAP financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and future prospects in a manner similar to management. Although EBITDA and Adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, they have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under IFRS.

The reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable IFRS measure is provided below.

 

(in thousands of CAD)

Three months ended

 July 31


Trailing 12 months ended

 July 31




2022


2021



2022


2021












Profit for the period

$

40

$

244



4,274


6,197

Adjustments for:











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


430


543



2,049


2,190


Amortization of deferred development costs


102


54



338


220


Amortization of other intangible assets


396


411



1,597


1,666


Interest expense


119


161



580


672


Interest income


(104)


(40)



(538)


(164)


Income taxes


25


729



242


3,163

EBITDA

$

1,008

$

2,102



8,542


13,944

Adjustments for:











Stock based compensation


476


354



1,806


1,223


Gain on remeasurement of lease liability


-


-



(573)


-


Recognition of tax credits generated in prior
periods


-


-



(617)


-

Adjusted EBITDA

$

1,484

$

2,456



9,158


15,167

 

Consolidated Statements of Financial Position
As at July 31, 2022 and April 30, 2022

(Unaudited)
(In thousands of Canadian dollars)          



July 31, 2022

April 30, 2022

Assets






Current assets






Cash and cash equivalents


$

17,215

$

23,004

Short-term investments



20,331


20,239

Accounts receivable



17,447


16,962

Work in progress



2,526


1,579

Other receivables



622


234

Tax credits



6,542


5,224

Inventory



1,059


806

Prepaid expenses



6,949


6,392

Total current assets



72,691


74,440

Non-current assets






Other long-term receivables



165


192

Tax credits



3,933


3,782

Property and equipment



1,864


2,064

Right-of-use assets



4,568


4,547

Contract acquisition costs



3,430


3,177

Deferred development costs



1,977


1,870

Other intangible assets



9,710


10,301

Goodwill



16,651


16,863

Deferred tax assets



8,605


8,608

Total non-current assets



50,903


51,404

Total assets


$

123,594

$

125,844

Liabilities






Current liabilities






Accounts payable and accrued liabilities


$

14,490

$

16,971

Deferred revenue



25,909


24,689

Current portion of long-term debt



1,200


1,200

Lease obligations



675


662

Total current liabilities



42,274


43,522

Non-current liabilities






Long-term debt



6,900


7,200

Deferred tax liabilities



1,215


1,258

Lease obligations



5,114


5,181

Total non-current liabilities



13,229


13,639

Total liabilities


$

55,503

$

57,161

Equity






Share capital


$

44,049

$

43,973

Contributed surplus



13,638


13,176

Retained earnings



11,988


12,968

Accumulated other comprehensive income



(1,584)


(1,434)

Total equity attributable to the owners of the Company



68,091


68,683

Total liabilities and equity


$

123,594

$

125,844

 







Consolidated Statements of Income and Comprehensive Income
Three-month periods ended July 31, 2022 and 2021

(Unaudited)
(In thousands of Canadian dollars, except per share data)



July 31, 2022

July 31, 2021

Revenue:






SaaS


$

8,001

$

5,653

Maintenance and Support



8,268


8,326

Professional Services



13,631


13,126

License



459


351

Hardware



3,845


5,776

Total revenue



34,204


33,232

Cost of revenue



19,446


18,803

Gross profit



14,758


14,429

Operating expenses:






Sales and marketing



6,250


5,682

General and administration



2,734


2,859

Research and development, net of tax credits



5,684


4,800

Total operating expenses



14,668


13,341

Profit from operations



90


1,088

Financing Costs



25


115

Profit before income taxes



65


973

Income tax expense



25


729

Net profit, attributable to the owners of the Company


$

40

$

244

Other comprehensive income (loss):






Effective portion of changes in fair value on designated revenue
hedges



154


(358)

Exchange differences on translation of foreign operations



(304)


(33)

Comprehensive loss, attributable to the owners of the Company


$

(110)

$

(147)

Basic and Diluted earnings per common share


$

0.00

$

0.02

 







Consolidated Statements of Cash Flows
Three-month periods ended July 31, 2022 and 2021

(Unaudited)
(In thousands of Canadian dollars)



July 31, 2022

July 31, 2021

Cash flows from operating activities:






Net profit


$

40

$

244

Adjustments for:






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



430


543

Amortization of deferred development costs



102


54

Amortization of other intangible assets



396


411

Interest expense (income) and foreign exchange (gain) loss



25


115

Unrealized foreign exchange and other



(372)


1,261

Non-refundable tax credits



(421)


(366)

Stock-based compensation



476


354

Income taxes



25


693

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



701


3,309

Accounts receivable



(543)


(2,492)

Work in progress



(954)


(547)

Other receivables



(335)


(34)

Tax credits



(1,048)


(910)

Inventory



(255)


(12)

Prepaid expenses



(562)


(465)

Contract acquisition costs



(253)


128

Accounts payable and accrued liabilities



(3,012)


(3,933)

Deferred revenue



1,238


(59)

Changes in non-cash working capital items related to operations



(5,724)


(8,324)

Net cash used in operating activities



(5,023)


(5,015)

Cash flows from financing activities:






Repayment of long-term debt



(300)


(312)

Payment of lease obligations



(244)


(231)

Interest paid



(119)


(161)

Issuance of common shares on exercise of stock options



62


-

Net cash used in financing activities



(601)


(704)

Cash flows from investing activities:






Interest received



104


40

Acquisitions of property and equipment



(60)


(230)

Acquisitions of other intangible assets



-


(15)

Deferred development costs



(209)


(486)

Net cash used in investing activities



(165)


(691)

Net decrease in cash and cash equivalents during the period



(5,789)


(6,410)

Cash and cash equivalents - beginning of period



23,004


25,752

Cash and cash equivalents - end of period


$

17,215

$

19,342

 

Consolidated Statements of Changes in Equity

Three-month periods ended July 31, 2022 and 2021

(Unaudited)
(In thousands of Canadian dollars, except number of shares)




Share capital

Contributed

surplus

Accumulated
other 
comprehensive
income (loss)

Retained
earnings

Total



Number


Amount

Balance, May 1, 2022


14,562,895

$

43,973

$

13,176

$

(1,434)

$

12,968

$

68,683

Net profit


-


-


-


-


40


40

Other comprehensive income:













Effective portion of changes in fair
value on designated revenue
hedges


-


-


-


154


-


154

 

Exchange difference on translation
of foreign operations


-


-


-


(304)


-


(304)

Total comprehensive income








(150)


40


(110)

 

Stock-based Compensation


-


-


476


-


-


476

Dividends to equity owners


-


-


-


-


(1,020)


(1,020)

Share options exercised


3,994


76


(14)


-


-


62

Total transactions with owners of
the Company


3,994


76


462


-


(1,020)


(482)

Balance, July 31, 2022


14,566,889

$

44,049

$

13,638

$

(1,584)

$

11,988

$

68,091














Balance, May 1, 2021


14,505,095

$

42,700

$

11,745

$

226

$

12,419

$

67,090

Net profit


-


-


-


-


244


244

Other comprehensive income:


-


-


-


-


-



Effective portion of changes in fair
value on designated revenue
hedges


-


-


-


(358)


-


(358)

 

Exchange difference on translation
of foreign operations


-


-


-


(33)


-


(33)

Total comprehensive income


-


-


-


(391)


244


(147)

 

Stock-based Compensation




-


354


-


-


354

Dividends to equity owners


-


-


-


-


(943)


(943)

Total transactions with owners of
the Company


-


-


354


-


(943)


(589)

Balance, July 31, 2021


14,505,095

$

42,700

$

12,099

$

(165)

$

11,720

$

66,354

 

 

SOURCE Tecsys Inc.

Cision
Cision

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