Enghouse Releases First Quarter Results
/EINPresswire.com/ -- MARKHAM, ONTARIO -- (Marketwired) -- 03/09/16 -- Enghouse Systems Limited (TSX: ESL) today announced its first quarter (unaudited) financial results for the period ended January 31, 2016.
First quarter revenue increased by 18.0% to $74.4 million, compared to revenue of $63.0 million in the first quarter of the prior year. Increased revenue in the quarter reflects incremental revenue from acquisitions and the favourable impact of foreign exchange. Income from operating activities was $17.8 million compared to $15.6 million in prior year's first quarter, an increase of 14.6%. Net income for the quarter was $8.5 million or $0.31 per diluted share compared to $2.5 million or $0.09 per diluted share in the prior year's first quarter, which reflected the final settlement of a litigation matter. Adjusted EBITDA for the first quarter was $19.1 million or $0.70 per diluted share compared to $16.2 million or $0.60 per diluted share last year, an increase of 17.8%.
Operating expenses before special charges related to restructuring of acquired operations were $32.4 million compared to $27.6 million in the prior year's first quarter and reflect incremental operating costs related to acquisitions and the negative impact of foreign exchange. Non-cash amortization charges in the quarter were $6.8 million compared to $5.4 million in the prior year's first quarter and include amortization charges for acquired software and customer relationships from acquired operations. Operating expenses in the quarter also include $11.4 million or 15.3% of revenue in research and development related expenses compared to $9.9 million or 15.7% in prior year's first quarter. The Company's continued investment in research and development was recently recognized with two product awards from industry analysts.
Enghouse closed the quarter with $80.0 million in cash, cash equivalents and short-term investments, compared to $98.4 million at October 31, 2015. The cash balance was achieved after payment of $26.0 million (net of cash acquired) for CTI Group (Holdings) Inc., acquired on December 7, 2015 and cash dividends of $3.2 million. The Company continues to have no long-term debt.
The Board of Directors also approved a 17% increase in its eligible quarterly dividend to $0.14 per common share, payable on May 31, 2016 to shareholders of record at the close of business on May 17, 2016. Enghouse has now increased its dividend in each of the past eight years.
On March 4, 2016, Enghouse announced the acquisition of CellVision AS ("CellVision"). CellVision expands the Asset Management Group's footprint in the Nordic region and extends its product offerings aimed at the telecommunications service provider market. Enghouse continues to seek acquisitions that will augment its operations in the networks, transportation and call center markets and further diversify its revenue stream.
A conference call to discuss the results will be held on Thursday March 10, 2016 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 "ESL". 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, 2016 January 31, 2015
Total Revenue $ 74,370 $ 63,019
Results from operating activities 17,843 15,575
Depreciation of property, plant and
equipment 826 592
Special charges 407 24
---------------------------------
Adjusted EBITDA $ 19,076 $ 16,191
Adjusted EBITDA margin 25.7% 25.7%
Adjusted EBITDA per diluted share $ 0.70 $ 0.60
Enghouse Systems Limited
Condensed Consolidated Interim Statements of Financial Position
(in thousands of Canadian dollars)
(Unaudited)
January 31, 2016 October 31, 2015
Assets
Current assets:
Cash and cash equivalents $ 74,314 $ 94,131
Short-term investments 5,694 4,306
Accounts receivable, net 73,674 60,765
Prepaid expenses and other assets 10,387 8,330
---------------------------------
164,069 167,532
Non-current assets:
Property, plant and equipment 6,247 5,039
Intangible assets 85,608 68,976
Goodwill 143,997 123,868
Deferred income tax assets 9,945 10,600
---------------------------------
Total assets $ 409,866 $ 376,015
---------------------------------
---------------------------------
Liabilities
Current liabilities:
Accounts payable and accrued liabilities $ 50,985 $ 51,284
Income taxes payable 2,146 2,680
Dividends payable 3,217 3,190
Provisions 4,398 3,335
Deferred revenue 59,586 48,694
---------------------------------
120,332 109,183
Non-current liabilities:
Deferred income tax liabilities 25,227 20,022
Deferred revenue 4,223 3,458
---------------------------------
Total liabilities 149,782 132,663
---------------------------------
Shareholders' Equity
Share capital 67,286 64,203
Contributed surplus 3,768 4,029
Retained earnings 160,110 154,866
Accumulated other comprehensive income 28,920 20,254
---------------------------------
Total shareholders' equity 260,084 243,352
---------------------------------
Total liabilities and shareholders' equity $ 409,866 $ 376,015
---------------------------------
---------------------------------
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,
2016 2015
Revenue
Software licenses $ 20,770 $ 19,612
Hosted and maintenance services 37,806 32,259
Professional services 14,435 8,921
Hardware 1,359 2,227
---------------------------------
74,370 63,019
---------------------------------
Direct costs
Software licenses 1,157 1,677
Services 21,790 16,784
Hardware 805 1,333
---------------------------------
23,752 19,794
---------------------------------
Revenue, net of direct costs 50,618 43,225
Operating expenses
Selling, general and administrative 20,141 17,144
Research and development 11,401 9,890
Depreciation of property, plant and
equipment 826 592
Special charges 407 24
---------------------------------
32,775 27,650
---------------------------------
Results from operating activities 17,843 15,575
Amortization of acquired software and
customer relationships (6,840) (5,354)
Litigation settlements - (8,774)
Finance income 33 113
Finance expenses (81) (117)
Other income 33 17
---------------------------------
Income before income taxes 10,988 1,460
Provision for (recovery of) income taxes 2,527 (1,079)
---------------------------------
Net income for the period $ 8,461 $ 2,539
---------------------------------
---------------------------------
Items that are or may be reclassified
subsequently to profit or loss:
Foreign currency translation gain from
foreign operations 8,799 9,406
Transfer to net income of realized gains
on available for sale investments (14) -
Unrealized (loss) gain on available for
sale investments (139) 188
Deferred income tax recovery (expense) 20 (25)
---------------------------------
Other comprehensive income 8,666 9,569
---------------------------------
Comprehensive income $ 17,127 $ 12,108
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Earnings per share
Basic $ 0.32 $ 0.10
Diluted $ 0.31 $ 0.09
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Enghouse Systems Limited
Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars)
(Unaudited)
Accumulated
other
Share Share Contributed comprehensive Retained
Capital capital surplus income (loss) earnings Total
-number $ $ $ $ $
Balance -
November 1,
2015 26,587,262 64,203 4,029 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 - - 325
Proceeds on
issuing
shares 224,200 3,083 (586) - - 2,497
Dividends - - - - (3,217) (3,217)
-------------------------------------------------------------
Balance -
January 31,
2016 26,811,462 67,286 3,768 28,920 160,110 260,084
-------------------------------------------------------------
-------------------------------------------------------------
Balance -
November 1,
2014 26,163,962 59,746 3,782 9,173 135,554 208,255
Net income - - - - 2,539 2,539
Other
Comprehensive
Income (net
of tax):
Cumulative
Translation
Adjustment - - - 9,406 - 9,406
Unrealized
gain on
available-
for-sale
investments - - - 188 - 188
Deferred
income tax
expense - - - (25) - (25)
-------------------------------------------------------------
Comprehensive
income for
the period - - - 9,569 2,539 12,108
-------------------------------------------------------------
-------------------------------------------------------------
Employee share
options:
Value of
services
recognized - - 305 - - 305
Proceeds on
issuing
shares 38,500 335 (70) - - 265
Dividends - - - - (2,620) (2,620)
-------------------------------------------------------------
Balance -
January 31,
2015 26,202,462 60,081 4,017 18,742 135,473 218,313
-------------------------------------------------------------
-------------------------------------------------------------
Enghouse Systems Limited
Condensed Consolidated Interim Statements of Cash Flows
(in thousands of Canadian dollars)
(Unaudited)
Three months ended January 31,
2016 2015
Cash flows from operating activities
Net income for the period $ 8,461 $ 2,539
Adjustments for:
Depreciation of property, plant and
equipment 826 592
Amortization of acquired software and
customer relationships 6,840 5,354
Stock-based compensation expense 325 305
Provision for (recovery of) income tax 2,527 (1,079)
Finance expenses and other income 48 100
---------------------------------
19,027 7,811
Changes in non-cash operating working
capital (10,623) 11,806
Income tax paid (1,497) (1,975)
----------------------------------------------------------------------------
Net cash flows from operating activities 6,907 17,642
Cash flows from investing activities
Purchase of property, plant and equipment,
net (1,318) (1,062)
Purchase of other software (134) -
Acquisitions, net of cash acquired of
$1,723 (2015 $Nil) (26,019) -
Purchase consideration for prior period
acquisitions (690) (412)
Net purchase of short-term investments (1,045) (2,075)
----------------------------------------------------------------------------
Net cash flows used in investing
activities (29,206) (3,549)
Cash flows from financing activities
Issuance of share capital 2,497 265
Payment of cash dividend (3,190) (2,616)
----------------------------------------------------------------------------
Net cash flows used in financing
activities (693) (2,351)
Effect of currency translation adjustments
on cash and cash equivalents 3,175 2,369
----------------------------------------------------------------------------
Net (decrease) increase in cash and cash
equivalents during the period (19,817) 14,111
Cash and cash equivalents - beginning of
period 94,131 72,780
Cash and cash equivalents - end of period $ 74,314 $ 86,891
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Enghouse Systems Limited
Selected Segment Reporting Information
(In thousands of Canadian dollars)
(Unaudited)
For the three months ended
January 31
---------------------------------
2016 2015
---------------------------------
Revenue:
Asset Management Group $ 25,758 $ 19,457
Interactive Management Group 48,612 43,752
---------------------------------
Total $ 74,370 $ 63,019
---------------------------------
---------------------------------
Asset Management Group:
- Segment profit before special
charges $ 5,889 $ 5,084
- Special charges (225) (24)
---------------------------------
Asset Management Group profit $ 5,664 $ 5,060
---------------------------------
Interactive Management Group:
- Segment profit before special
charges $ 14,741 $ 12,298
- Special charges (182) -
---------------------------------
Interactive Management Group profit $ 14,559 $ 12,298
---------------------------------
Corporate expenses (2,380) (1,783)
---------------------------------
Results from operating activities $ 17,843 $ 15,575
---------------------------------
Amortization of acquired software and
customer relationships (6,840) (5,354)
Litigation settlements - (8,774)
Finance income 33 113
Finance expenses (81) (117)
Other income 33 17
---------------------------------
Income before income taxes $ 10,988 $ 1,460
---------------------------------
---------------------------------
Contacts:
Enghouse Systems Limited
Sam Anidjar
Vice President, Corporate Development
(905) 946-3200
investor@enghouse.com
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