Le Lézard
Classified in: Science and technology, Business
Subjects: ERN, DIV, FVT

Enghouse Releases Second Quarter Results


MARKHAM, ON, June 7, 2018 /CNW/ - Enghouse Systems Limited (TSX: ENGH) today announced its second quarter (unaudited) financial results for the period ended April 30, 2018.

Second quarter revenue increased to $85.2 million, compared to revenue of $79.5 million in the second quarter of the prior year. Income from operating activities was $24.7 million compared to $21.9 million in the prior year's second quarter, a 12.8% increase. Net income for the quarter was $15.3 million, or $0.56 per diluted share, compared to $9.0 million, or $0.33 per diluted share, in the prior year's second quarter, an increase of 70%.

Adjusted EBITDA for the second quarter was $25.4 million, or $0.93 per diluted share, compared to $22.8 million, or $0.84 per diluted share, last year, with the increase primarily being attributable to contributions from acquisitions.

On a year-to-date basis, revenue was $170.3 million, compared to revenue of $158.4 million in the prior year. Income from operating activities was $49.2 million compared to $44.0 million in the prior year-to-date, an increase of 11.8%.

Operating expenses before special charges related to restructuring of acquired operations were $34.4 million compared to $32.6 million in the prior year's second quarter and include incremental operating costs related to acquisitions. Non-cash amortization charges in the quarter were $7.4 million compared to $7.5 million in the prior year's second quarter and include amortization charges for acquired software and customer relationships from acquired operations. On a year-to-date basis, operating expenses before special charges were $68.2 million, or 40.0% of revenue, compared to $63.9 million, or 40.3% of revenue last year.

The Company generated strong cash flows from operating activities of $21.8 million compared to $18.4 million in the second quarter of 2017. On a year-to-date basis, cash flows from operating activities were $44.9 million compared to $29.0 million in the prior year, an increase of 54.8%. As a result, Enghouse closed the quarter with $155.3 million in cash, cash equivalents and short-term investments, compared to $130.3 million at October 31, 2017. The cash balance was achieved after year-to-date payments of $8.6 million in cash dividends, $9.7 million (net of cash acquired) for acquisitions concluded in the current fiscal year, and $5.1 million for acquisitions closed in prior periods.

Today, the Board of Directors approved the Company's quarterly dividend of $0.18 per common share, payable on August 31, 2018 to shareholders of record at the close of business on August 17, 2018.

A conference call to discuss the results will be held on Friday, June 8, 2018 at 8:45 a.m. EST. To participate, please call +1-416-640-5947 or North American Toll-Free +1-888-504-7961. 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 "ENGH". 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, foreign exchange gains and losses, 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, foreign exchange gains and losses, 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

Six Months ended

April 30, 2018

April 30, 2017

April 30, 2018

April 30, 2017



Total Revenue

$

85,205

$

79,543

$

170,280

$

158,383



Results from operating activities

24,665

21,861

49,177

43,975

Depreciation of property, plant and equipment

659

595

1,329

1,209

Special charges

52

383

181

481

Adjusted EBITDA

$

25,376

$

22,839

$

50,687

$

45,665

Adjusted EBITDA margin

29.8%

28.7%

29.8%

28.8%

Adjusted EBITDA per diluted share

$

0.93

$

0.84

$

1.86

$

1.68

 

Enghouse Systems Limited
Consolidated Statements of Financial Position
(in thousands of Canadian dollars)
(Unaudited)

April 30,
2018

October 31,
2017

Assets

Current assets:


Cash and cash equivalents

$

145,615

$

120,608

Short-term investments

9,704

9,737

Accounts receivable, net

78,009

71,894

Prepaid expenses and other assets

9,824

8,528

243,152

210,767

Non-current assets:


Long-term deposits and accounts receivable, net

1,249

1,002

Property, plant and equipment

5,175

5,322

Intangible assets

74,639

79,714

Goodwill

157,685

150,687

Deferred income tax assets

6,070

14,345

Total assets

$

487,970

$

461,837

Liabilities

Current liabilities:


Accounts payable and accrued liabilities

$

46,838

$

54,656

Income taxes payable

1,509

6,018

Dividends payable

4,880

4,319

Provisions

357

1,521

Deferred revenue

71,240

59,104

Current portion of long-term loans

533

468

125,357

126,086

Non-current liabilities:


Non-current portion of income taxes payable

9,026

-

Deferred income tax liabilities

16,306

21,449

Deferred revenue

5,189

3,337

Net employee defined benefit obligation

2,424

2,328

Long-term loans

1,822

2,238

Total liabilities

160,124

155,438

Shareholders' Equity

Share capital

74,009

71,422

Contributed surplus

5,191

4,715

Retained earnings

234,703

221,775

Accumulated other comprehensive income

13,943

8,487

Total shareholders' equity                    

327,846

306,399

Total liabilities and shareholders' equity

$

487,970

$

461,837

 

Enghouse Systems Limited
Consolidated Interim Statements of Operations and Comprehensive Income
(in thousands of Canadian dollars, except per share amounts)
(Unaudited)

Three months ended
April 30

Six months ended
April 30

2018

2017

2018

2017

Revenue




Software licenses

$

24,703

$

23,781

$

50,511

$

47,989

Hosted and maintenance services

43,940

39,910

86,536

79,076

Professional services

14,472

14,852

28,849

28,820

Hardware

2,090

1,000

4,384

2,498

85,205

79,543

170,280

158,383

Direct costs




Software licenses

1,692

1,453

3,727

3,562

Services

23,161

22,606

46,345

44,849

Hardware

1,244

625

2,669

1,626

26,097

24,684

52,741

50,037



Revenue, net of direct costs

59,108

54,859

117,539

108,346



Operating expenses




Selling, general and administrative

21,119

20,949

42,548

40,774

Research and development

12,613

11,071

24,304

21,907

Depreciation of property, plant and equipment

659

595

1,329

1,209

Special charges

52

383

181

481

34,443

32,998

68,362

64,371



Results from operating activities

24,665

21,861

49,177

43,975



Amortization of acquired software and customer






relationships

(7,356)

(7,511)

(14,518)

(14,968)

Foreign exchange gains and (losses)

1,407

(2,463)

(1,124)

(2,221)

Finance income

66

60

188

99

Finance expenses

(24)

(57)

(84)

(72)

Other income (expense)

694

(19)

1,436

151



Income before income taxes

19,452

11,871

35,075

26,964



Provision for income taxes

4,134

2,844

12,944

6,204



Net income for the period

$

15,318

$

9,027

$

22,131

$

20,760



Items that are or may be reclassified subsequently to






profit or loss:



Foreign currency translation gain from foreign operations

4,052

14,667

5,516

7,978

Unrealized loss on available for sale investments

(393)

(2,352)

(69)

(2,445)

Deferred income tax recovery

52

312

9

324



Other comprehensive income

3,711

12,627

5,456

5,857



Comprehensive income

$

19,029

$

21,654

$

27,587

$

26,617

Earnings per share



Basic

$

0.57

$

0.34

$

0.82

$

0.77

Diluted

$

0.56

$

0.33

$

0.81

$

0.76

                       

Enghouse Systems Limited
Consolidated Statements of Changes in Equity
(in thousands of Canadian dollars)
(Unaudited)

Share

Capital

-number

Share
capital
$

Contributed
surplus
$

Retained
earnings
$

Accumulated
other
comprehensive
income
(loss)
$

Total

$





Balance ? November 1, 2017

26,993,212

71,422

4,715

221,775

8,487

306,399





Net income

-

-

-

22,131

-

22,131

Other comprehensive income (net of tax):





Cumulative translation adjustment

-

-

-

-

5,516

5,516

Unrealized loss on available-for-sale investments

-

-

-

-

(69)

(69)

Deferred income tax recovery

-

-

-

-

9

9

Comprehensive income for the period

-

-

-

22,131

5,456

27,587

Employee share options:






Value of services recognized

-

935

-

-

935

Proceeds on issuing shares

117,400

2,587

(459)

-

-

2,128

Dividends

-

-

-

(9,203)

-

(9,203)

Balance ? April 30, 2018

27,110,612

74,009

5,191

234,703

13,943

327,846












Balance ? November 1, 2016

26,906,962

69,555

3,875

187,649

7,469

268,548





Net income

-

-

-

20,760

-

20,760

Other comprehensive income (net of tax):





Cumulative translation adjustment

-

-

-

-

7,978

7,978

Unrealized loss on available-for-sale investments

-

-

-

-

(2,445)

(2,445)

Deferred income tax recovery

-

-

-

-

324

324

Comprehensive income for the period

-

-

-

20,760

5,857

26,617

Employee share options:






Value of services recognized

-

-

544

-

-

544

Proceeds on issuing shares

45,500

716

(147)

-

-

569

Dividends

-

-

-

(8,083)

-

(8,083)

Balance ? April 30, 2017

26,952,462

70,271

4,272

200,326

13,326

288,195

 

Enghouse Systems Limited
Consolidated Interim Statements of Cash Flows
(in thousands of Canadian dollars)
(Unaudited)

Three months ended
April 30

Six months ended
April 30

2018

2017

2018

2017

Cash flows from operating activities



Net income

$

15,318

$

9,027

$

22,131

$

20,760



Adjustments for:




Depreciation of property, plant and equipment

659

595

1,329

1,209

Amortization of acquired software and customer relationships

7,356

7,511

14,518

14,968

Stock-based compensation expense

536

356

935

544

Provision for income taxes

4,134

2,844

12,944

6,204

Finance expenses and other income

(670)

76

(1,352)

(79)

27,333

20,409

50,505

43,606



Changes in non-cash operating working capital

(2,346)

1,041

567

(6,885)

Income taxes paid

(3,145)

(3,090)

(6,125)

(7,686)

Net cash flows from operating activities

21,842

18,360

44,947

29,035



Cash flows from investing activities



Purchase of property, plant and equipment, net

(331)

(354)

(931)

(919)

Purchase of other software

-

(731)

-

(1,220)

Acquisitions, net of cash acquired of $1,235 (2017 - $3,637)

(6,684)

(16,170)

(9,675)

(16,170)

Purchase consideration for prior period acquisitions

(3,153)

(51)

(5,079)

(444)

Net (purchase) sale of short-term investments

(253)

(722)

732

(1,330)

Net cash flows used in investing activities

(10,421)

(18,028)

(14,953)

(20,083)



Cash flows from financing activities



Issuance of share capital

1,384

205

2,128

569

Repayment of loans

(33)

-

(401)

(1,667)

Payment of cash dividend

(4,324)

(3,771)

(8,643)

(7,538)

Net cash flows used in financing activities

(2,973)

(3,566)

(6,916)

(8,636)



Effect of currency translation adjustments on cash and cash






equivalents

1,231

3,494

1,929

2,152



Net increase in cash and cash equivalents during the
period

9,679

260

25,007

2,468

Cash and cash equivalents - beginning of period

135,936

80,644

120,608

78,436



Cash and cash equivalents - end of period

$

145,615

$

80,904

$

145,615

$

80,904

 

Enghouse Systems Limited
Selected Segment Reporting Information
(In thousands of Canadian dollars)
(Unaudited)

For the three months
ended April 30

For the six months
ended April 30


2018

2017

2018

2017

Revenue:


Asset Management Group

$

37,651

$

32,466

$

74,331

$

63,752

Interactive Management Group

47,554

47,077

95,949

94,631

Total

$

85,205

$

79,543

$

170,280

$

158,383








Asset Management Group:





- Segment profit before special charges

$

13,015

$

9,680

$

24,557

$

18,016

- Special charges

(52)

(440)

(181)

(344)

Asset Management Group profit

$

12,963

$

9,240

$

24,376

$

17,672


Interactive Management Group:



- Segment profit before special charges

$

14,600

$

14,218

$

30,197

$

29,841

- Special charges

-

57

-

(137)

Interactive Management Group profit

$

14,600

$

14,275

$

30,197

$

29,704


Corporate expenses

(2,898)

(1,654)

(5,396)

(3,401)

Results from operating activities

$

24,665

$

21,861

$

49,177

$

43,975


Amortization of acquired software and customer relationships

(7,356)

(7,511)

(14,518)

(14,968)

Foreign exchange gains and (losses)

1,407

(2,463)

(1,124)

(2,221)

Finance income

66

60

188

99

Finance expenses

(24)

(57)

(84)

(72)

Other income (expense)

694

(19)

1,436

151

Income before income taxes

$

19,452

$

11,871

$

35,075

$

26,964

 

SOURCE Enghouse Systems Limited


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