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Enghouse Releases Fourth Quarter ResultsMARKHAM, ONTARIO, Dec 13, 2012 (Marketwire via COMTEX) -- Enghouse Systems Limited (TSX:ESL) today announced its fourth quarter (unaudited) and year-end financial results for the period ended October 31, 2012. Revenue increased by 11% to $136.4 million for the fiscal year, compared to revenue of $122.6 million in the previous fiscal year, as the Company continues to execute against its acquisition strategy. Results from operating activities were $33.2 million compared to $29.3 million last year. Net income for the fiscal year was $20.9 million or $0.80 per diluted share compared to $23.1 million or $0.90 per diluted share in the prior year, which reflected tax credits of $7.9 million booked on transition to International Financial Reporting Standards. Adjusted EBITDA for the fiscal year was $35.1 million or $1.35 per diluted share compared to $32.2 million or $1.26 per diluted share last year. Revenue for the quarter was $39.0 million, an increase of 22% over last year's fourth quarter revenue of $31.8 million. Results from operating activities for the quarter were $9.7 million compared to $9.3 million last year. Net income for the quarter was $8.3 million or $0.32 per diluted share. Adjusted EBITDA for the quarter was $10.2 million or $0.39 per diluted share compared to $9.6 million or $0.37 per diluted share last year. Increased revenue in the quarter reflects incremental revenue from acquisitions including Zeacom and CustomCall acquired earlier in the fiscal year. Revenue also includes hosted and maintenance services revenue of $20.1 million in the quarter, an increase of 24% over last year's fourth quarter. In fiscal 2012, hosted and services revenue was $71.6 million reflecting an increase of $13.1 million over fiscal 2011 attributable to contributions from recent acquisitions and solid performance in organic hosted and maintenance services revenue. Operating expenses were $18.4 million for the quarter and $66.5 million for the fiscal year compared to $14.7 million and $59.4 million respectively last year. This includes research and development costs of $5.9 million and $21.5 million in the quarter and year, respectively, consistent with the Company's investment in software. Non-cash amortization charges for the year were $11.0 million compared to $10.3 million in the prior fiscal year and relate to amortization of acquired software and customer relationships. The Company closed the year with $83.7 million in cash, cash equivalents and short-term investments, which is after the payment of approximately $32.5 million related to the acquisitions and $5.9 million to dividends. The Company generated operating cash flows before non-cash working capital items of $36.2 million in the year compared to $31.8 million in 2011. Enghouse continues to have no long-term debt and did not repurchase any shares in the year. The Board of Directors also announced today an eligible quarterly dividend of $0.065 per common share, payable on February 28, 2013 to shareholders of record at the close of business on February 14, 2013. As previously announced, the Company completed two acquisitions subsequent to year end. On November 1, 2012 the Company acquired 100% of the issued and outstanding common shares of Visionutveckling AB and acquired 100% of the issued and outstanding common shares of Albatross Scandinavia AB on December 1, 2012. Both acquisitions expand the Company's presence in the Nordic region. The Company continues to seek further acquisitions to continue to grow its market share globally. 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 larger and more diverse software company through strategic acquisitions and managed growth. Enghouse shares are listed on the Toronto Stock Exchange under the symbol "ESL". Further information about Enghouse may be obtained from the Company's web site at www.enghouse.com. Non-IFRS Measures The Company uses non-IFRS measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS 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 results from operating activities and Adjusted EBITDA as a measure of operating performance. Therefore, results from operating activities and Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Results from operating activities are calculated as net income before amortization of acquired software and customer relationships, finance income, finance expenses, other income, and the provision for income taxes. Results from Adjusted EBITDA are calculated as net income before depreciation of property, plant and equipment, amortization of acquired software and customer relationships, finance income, finance expenses, other income, the provision of income tax and special charges for acquisition related restructuring and transaction costs. Management uses results from operating activities and Adjusted EBITDA to evaluate operating performance as they exclude 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. The table below reconciles Adjusted EBITDA to net income: Three Months ended Year ended October October October October 31, 31, 31, 31, 2012 2011 2012 2011 Total Revenue $ 38,952 $ 31,836 $ 136,368 $ 122,559 Net income for the period $ 8,345 13,345 20,873 23,065 Provision for income taxes (1,639) (5,884) 2,234 (2,575) Depreciation of property, plant and equipment 444 285 1,386 1,102 Amortization of acquired software and customer relationships 3,204 2,687 10,974 10,291 Finance income (289) (278) (987) (692) Finance expenses 86 49 269 201 Other income 23 (629) (145) (956) Special charges 53 - 544 1,775 -------------------------------------------- Adjusted EBITDA $ 10,227 $ 9,575 $ 35,148 $ 32,211 Adjusted EBITDA margin 26% 30% 26% 26% Adjusted EBITDA per diluted share $ 0.39 $ 0.37 $ 1.35 $ 1.26 Enghouse Systems Limited Consolidated Statements of Financial Position (in thousands of Canadian dollars) (Unaudited) October 31, October 31, November 1, 2012 2011 2010 Assets Current assets: Cash and cash equivalents $ 59,544 $ 65,624 $ 46,640 Short-term investments 24,108 33,967 31,627 Accounts receivable, net 31,368 23,006 24,500 Income tax receivable - - 591 Prepaid expenses and other assets 3,853 3,479 3,360 ------------------------------------------ 118,873 126,076 106,718 Non-current assets: Property, plant and equipment 3,365 1,543 1,588 Acquired software and customer relationships 42,637 29,709 34,330 Goodwill 64,358 44,242 35,137 Deferred income taxes 10,477 9,548 3,478 ------------------------------------------ Total assets $ 239,710 $ 211,118 $ 181,251 ------------------------------------------ ------------------------------------------ Liabilities Current liabilities: Trade payables $ 26,053 $ 22,686 $ 18,808 Income taxes payable 2,008 3,520 - Dividends payable 1,676 1,267 1,007 Accrued provisions 1,621 2,442 1,307 Deferred revenue 35,935 28,933 26,040 ------------------------------------------ 67,293 58,848 47,162 Non-current liabilities: Deferred income tax liabilities 13,241 9,525 12,571 Long-term income taxes payable - 420 522 Deferred revenue 1,236 1,404 790 ------------------------------------------ Total liabilities 81,770 70,197 61,045 ------------------------------------------ Shareholders' Equity Share capital 55,751 52,134 50,705 Contributed surplus 2,847 2,970 2,653 Retained earnings 99,371 84,782 66,546 Accumulated other comprehensive (loss) gain (29) 1,035 302 ------------------------------------------ Total equity 157,940 140,921 120,206 ------------------------------------------ Total liabilities and equity $ 239,710 $ 211,118 $ 181,251 ------------------------------------------ ------------------------------------------ Enghouse Systems Limited Consolidated Interim Statements of Operations and Comprehensive Income (in thousands of Canadian dollars, except per share amounts) (Unaudited) Three months ended October 31 Year ended October 31 2012 2011 2012 2011 Revenue Software licenses $ 13,107 $ 11,386 $ 45,108 $ 45,691 Hosted and maintenance services 20,114 16,182 71,608 58,526 Professional services 5,210 4,049 18,083 15,734 Hardware 521 219 1,569 2,608 ---------------------------------------------------- 38,952 31,836 136,368 122,559 ---------------------------------------------------- Direct costs Software licenses 1,532 769 4,115 5,208 Services 8,861 6,871 31,410 26,635 Hardware 408 237 1,134 1,966 ---------------------------------------------------- 10,801 7,877 36,659 33,809 ---------------------------------------------------- Revenue, net of direct costs 28,151 23,959 99,709 88,750 Operating expenses Selling, general and administrative 11,977 10,171 43,069 40,861 Research and development 5,947 4,213 21,492 15,678 Depreciation of property, plant and equipment 444 285 1,386 1,102 Special charges 53 - 544 1,775 ---------------------------------------------------- 18,421 14,669 66,491 59,416 ---------------------------------------------------- Results from operating activities 9,730 9,290 33,218 29,334 Amortization of acquired software and customer relationships (3,204) (2,687) (10,974) (10,291) Finance income 289 278 987 692 Finance expenses (86) (49) (269) (201) Other income (23) 629 145 956 ---------------------------------------------------- Income before income taxes 6,706 7,461 23,107 20,490 Provision for (recovery of) income taxes (1,639) (5,884) 2,234 (2,575) ---------------------------------------------------- Net income for the period $ 8,345 $ 13,345 $ 20,873 $ 23,065 ---------------------------------------------------- ---------------------------------------------------- Foreign currency translation differences from foreign operations 285 2,800 (1,379) (763) Transfer to net income of realized gains on available for sale investments, net of tax of ($nil); 2012 - ($24) - (532) (132) (674) Unrealized (loss) gain on available for sale investments, net of tax of ($7); 2012 - ($173) (37) 1,377 (928) 2,112 Unrealized foreign currency translation gain on available for sale investments, net of tax of $nil; 2012 - $1 - 127 8 58 ---------------------------------------------------- Other comprehensive income (loss) 248 3,772 (2,431) 733 ---------------------------------------------------- Comprehensive income $ 8,593 $ 17,117 $ 18,442 $ 23,798 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Earnings per share Basic $ 0.32 $ 0.53 $ 0.82 $ 0.91 Diluted $ 0.32 $ 0.52 $ 0.80 $ 0.90 ---------------------------------------------------------------------------- Enghouse Systems Limited Consolidated Statements of Changes in Equity (in thousands of Canadian dollars) (Unaudited) Accum- ulated other Contri- compre- Share Share buted hensive Retained Capital capital surplus income earnings Total -number $ $ $ $ $ Balance - November 1, 2011 25,337,262 52,134 2,970 1,035 84,782 140,921 Net income - - - - 20,873 20,873 Other Comprehensive Income (net of tax): Cumulative Translation Adjustment - - - (12) - (12) Transfer to net income of realized gains on available- for-sale investments, net of tax - - - (132) - (132) Unrealized loss on available- for-sale investments, net of tax - - - (928) - (928) Unrealized foreign currency translation gain on available- for-sale investments, net of tax - - - 8 - 8 ----------------------------------------------------------- Comprehensive income (loss) for the period - - - (1,064) 20,873 19,809 ----------------------------------------------------------- ----------------------------------------------------------- Employee share options: Value of services recognized - - 621 - - 621 Proceeds on issuing shares 443,300 3,617 (744) - - 2,873 Purchase and cancellation of common shares - - - Dividends - - - - (6,284) (6,284) ----------------------------------------------------------- Balance - October 31, 2012 25,780,562 55,751 2,847 (29) 99,371 157,940 ----------------------------------------------------------- ----------------------------------------------------------- Balance - November 1, 2010 25,171,662 50,705 2,653 302 66,546 120,206 Net income - - - - 23,065 23,065 Other Comprehensive Income (net of tax): Cumulative Translation Adjustment - - - (763) - (763) Transfer to net income of realized gains on available- for-sale investments, net of tax - - - (674) - (674) Unrealized gain on available- for-sale investments, net of tax - - - 2,112 - 2,112 Unrealized foreign currency translation gain on available- for-sale investments, net of tax - - - 58 - 58 ----------------------------------------------------------- Comprehensive income (loss) for the period - - - 733 23,065 23,798 ----------------------------------------------------------- ----------------------------------------------------------- Employee share options: Value of services recognized - - 625 - - 625 Proceeds on issuing shares 170,400 1,439 (308) - - 1,131 Purchase and cancellation of common shares (4,800) (10) - - (33) (43) Dividends - - - - (4,796) (4,796) ----------------------------------------------------------- Balance - October 31, 2011 25,337,262 52,134 2,970 1,035 84,782 140,921 ----------------------------------------------------------- ----------------------------------------------------------- Enghouse Systems Limited Consolidated Interim Statements of Cash Flows (in thousands of Canadian dollars) (Unaudited) Three months ended October 31 Year ended October 31 2012 2011 2012 2011 Cash flows from operating activities Net income $ 8,345 $ 13,345 $ 20,873 $ 23,065 Adjustments for: Depreciation of property, plant and equipment 444 285 1,386 1,102 Amortization of acquired software and customer relationships 3,204 2,687 10,974 10,291 Stock-based compensation expense 119 132 621 625 Income tax (recovery) expense (1,639) (5,884) 2,234 (2,575) Finance expenses and other income 109 (580) 124 (755) ---------------------------------------------------- 10,582 9,985 36,212 31,753 Changes in non-cash operating working capital (4,071) (843) (8,245) 11,061 Income tax paid (1,304) (669) (4,492) (1,762) ---------------------------------------------------------------------------- Net cash flows from operating activities 5,207 8,473 23,475 41,052 Cash flows from investing activities Purchase of property, plant and equipment, net (402) (317) (2,295) (947) Acquisitions, net of cash acquired of $810 (2011 - $2,497) - (194) (32,453) (16,842) Net proceeds from sale of short-term investments 16,698 4,406 8,704 695 ---------------------------------------------------------------------------- Net cash flows used in investing activities 16,296 3,895 (26,044) (17,094) Cash flows from financing activities Issuance of share capital 556 667 2,873 1,131 Payment of cash dividend (1,669) (1,262) (5,875) (4,536) Purchase and cancellation of common shares - - - (43) ---------------------------------------------------------------------------- Net cash flows used in financing activities (1,113) (595) (3,002) (3,448) Effect of currency translation adjustments on cash and cash equivalents (709) 1,579 (509) (1,526) ---------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents during the period 19,681 13,352 (6,080) 18,984 Cash and cash equivalents- beginning of period 39,863 52,272 65,624 46,640 Cash and cash equivalents - end of period $ 59,544 $ 65,624 $ 59,544 $ 65,624 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Enghouse Systems Limited Selected Segment Reporting Information (in thousands of Canadian dollars) (Unaudited) For the three months For the year ended ended October 31 October 31 ------------------------------------------------ 2012 2011 2012 2011 ------------------------------------------------ Revenue: Asset Management Group $ 5,789 $ 3,075 $ 17,308 $ 12,842 Interactive Management Group 33,163 28,761 119,060 109,717 ------------------------------------------------ Total $ 38,952 $ 31,836 $ 136,368 $ 122,559 ------------------------------------------------ ------------------------------------------------ Segment Profit (EBIT): Asset Management Group $ 1,910 $ 747 $ 3,828 $ 2,683 Interactive Management Group 5,472 7,077 21,902 19,977 Corporate expenses (856) (1,221) (3,486) (3,617) Finance income 289 278 987 692 Finance expenses (86) (49) (269) (201) Other income (23) 629 145 956 ------------------------------------------------ ------------------------------------------------ Total $ 6,706 $ 7,461 $ 23,107 $ 20,490 ------------------------------------------------ ------------------------------------------------ FOR FURTHER INFORMATION PLEASE CONTACT: Enghouse Systems Limited Stephen Sadler Chief Executive Officer (905) 946-3236 [email protected] www.enghouse.com SOURCE: Enghouse Systems Limited |