Le Lézard
Classified in: Science and technology, Business
Subject: ERN

Enghouse Releases First Quarter Results



MARKHAM, ON, March 8, 2018 /CNW/ - Enghouse Systems Limited (TSX:ENGH) today announced its first quarter (unaudited) financial results for the period ended January 31, 2018.

First quarter revenue increased to $85.1 million, compared to revenue of $78.8 million in the first quarter of the prior year. Income from operating activities was $22.0 million, which includes a foreign exchange balance sheet loss of $2.5 million, compared to $22.4 million in prior year's first quarter, which had a foreign exchange gain of $0.2 million. Net income for the quarter was $6.8 million or $0.25 per diluted share compared to $11.7 million or $0.43 per diluted share in the prior year's first quarter, with the decrease being attributable to tax charges related to the enactment of the United States Tax Cuts and Jobs Act on December 22, 2017 and the foreign exchange balance sheet loss.

Adjusted EBITDA for the first quarter was $25.3 million or $0.93 per diluted share compared to $22.8 million or $0.84 per diluted share last year, with the increase being attributable to contributions from acquisitions and stronger license sales in certain regions. To normalize results for the significant volatility in foreign exchange rates over the past couple of years, the definition of Adjusted EBITDA has been revised this quarter to exclude foreign exchange balance sheet gains and losses. Both current quarter and prior period comparatives figures have been restated accordingly.

Operating expenses before special charges related to restructuring of acquired operations were $36.3 million compared to $31.0 million in the prior year's first quarter and reflect incremental operating costs related to acquisitions and foreign exchange losses on assets and liabilities including intercompany accounts. Non-cash amortization charges in the quarter were $7.2 million compared to $7.5 million in the prior year's first quarter, and include amortization charges for acquired software and customer relationships from acquired operations.

The Company generated strong cash flows from operating activities of $23.1 million compared to $10.7 million in the first quarter of 2017, an increase of 116%. As a result, Enghouse closed the quarter with $145.0 million in cash, cash equivalents and short-term investments, compared to $130.3 million at October 31, 2017. The cash balance was achieved after payment of $4.3 million in cash dividends and $4.9 million for acquisitions.

In January, Enghouse named Vince Mifsud as President with responsibility for the Company's worldwide sales, operating and finance units. Mr. Mifsud has established an impressive track record in the SaaS and enterprise software industry, helping grow technology companies in Canada.

Today, the Board of Directors approved an increase to the Company's eligible quarterly dividend to $0.18 per common share, payable on May 31, 2018 to shareholders of record at the close of business on May 17, 2018. Enghouse has now increased its dividend in each of the past ten years, by over 10% each year.

A conference call to discuss the results will be held on Friday, March 9, 2018 at 8:45 a.m. EST. To participate, please call +1-416-204-9269 or North American Toll-Free +1-800-499-4035. 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



January 31, 2018


January 31, 2017






Total Revenue

$

85,075

$

78,840






Results from operating activities


21,981


22,356

Depreciation of property, plant and equipment


670


614

Foreign exchange losses and (gains)


2,531


(242)

Special charges


129


98

Adjusted EBITDA

$

25,311

$

22,826

Adjusted EBITDA margin


29.8%


29.0%

Adjusted EBITDA per diluted share

$

0.93

$

0.84

 

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



January 31,
2018


October 31,
2017





Assets





Current assets:






Cash and cash equivalents

$

135,936

$

120,608


Short-term investments


9,031


9,737


Accounts receivable, net


73,269


71,894


Prepaid expenses and other assets


9,853


8,528



228,089


210,767

Non-current assets:






Long-term deposits and accounts receivable, net


1,207


1,002


Property, plant and equipment


5,473


5,322


Intangible assets


75,457


79,714


Goodwill


151,393


150,687


Deferred income tax assets


10,065


14,345






Total assets

$

471,684

$

461,837




Liabilities





Current liabilities:






Accounts payable and accrued liabilities

$

51,471

$

54,656


Income taxes payable


6,253


6,018


Dividends payable


4,323


4,319


Provisions


924


1,521


Deferred revenue


65,889


59,104


Current portion of long-term loans


452


468



129,312


126,086

Non-current liabilities:






Non-current portion of income taxes payable


7,917


-


Deferred income tax liabilities


15,501


21,449


Deferred revenue


2,907


3,337


Net employee defined benefit obligation


2,377


2,328


Long-term loans


1,893


2,238






Total liabilities


159,907


155,438

Shareholders' Equity







Share capital


72,312


71,422

Contributed surplus


4,968


4,715

Retained earnings


224,265


221,775

Accumulated other comprehensive income


10,232


8,487

Total shareholders' equity                    


311,777


306,399

Total liabilities and shareholders' equity

$

471,684

$

461,837

 

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


Three months ended January 31,



2018



2017

Revenue







Software licenses

$

25,808


$

24,208


Hosted and maintenance services


42,596



39,166


Professional services


14,377



13,968


Hardware


2,294



1,498



85,075



78,840

Direct costs







Software licenses


2,035



2,109


Services


23,184



22,243


Hardware


1,425



1,001



26,644



25,353







Revenue, net of direct costs


58,431



53,487







Operating expenses







Selling, general and administrative


21,429



19,825


Research and development


11,691



10,836


Depreciation of property, plant and equipment


670



614


Foreign exchange losses and (gains)


2,531



(242)


Special charges


129



98



36,450



31,131







Results from operating activities


21,981



22,356








Amortization of acquired software and customer relationships


(7,162)



(7,457)


Finance income


122



39


Finance expenses


(60)



(15)


Other income


742



170







Income before income taxes


15,623



15,093







Provision for income taxes


8,810



3,360







Net income for the period

$

6,813


$

11,733

Items that are or may be reclassified subsequently to profit or loss:







Foreign currency translation gain (loss) from foreign operations


1,464



(6,689)


Unrealized gain (loss) on available for sale investments


324



(93)


Deferred income tax (expense) recovery


(43)



12







Other comprehensive income (loss)


1,745



(6,770)







Comprehensive income

$

8,558


$

4,963

Earnings per share






Basic

$

0.25


$

0.44

Diluted

$

0.25


$

0.43

                       

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


 

 

Share

Capital

-number

Share capital

$

Contributed surplus

$

Accumulated
other
comprehensive
income
(loss) 

$

Retained
earnings
$

Total

$








Balance ? November 1, 2017

26,993,212

71,422

4,715

8,487

221,775

306,399








Net income

-

-

-

-

6,813

6,813

Other Comprehensive Income (net of tax):







Cumulative Translation Adjustment

-

-

-

1,464

-

1,464

Unrealized loss on available-for-sale investments

-

-

-

324

-

324

Deferred income tax expense

-

-

-

(43)

-

(43)

Comprehensive income  for the period

-

-

-

1,745

6,813

8,558

Employee share options:








Value of services recognized

-


399

-

-

399


Proceeds on issuing shares

35,200

890

(146)

-

-

744

Dividends

-

-

-

-

(4,323)

(4,323)

Balance ? January 31, 2018

27,028,412

72,312

4,968

10,232

224,265

311,777















Balance ? November 1, 2016

26,906,962

69,555

3,875

7,469

187,649

268,548








Net income

-

-

-

-

11,733

11,733

Other Comprehensive Income (net of tax):







Cumulative Translation Adjustment

-

-

-

(6,689)

-

(6,689)

Unrealized loss on available-for-sale investments

-

-

-

(93)

-

(93)

Deferred income tax recovery

-

-

-

12

-

12

Comprehensive income  for the period

-

-

-

(6,770)

11,733

4,963

Employee share options:








Value of services recognized

-


188

-

-

188


Proceeds on issuing shares

29,500

458

(94)

-

-

364

Dividends

-

-

-

-

(3,771)

(3,771)

Balance ? January 31, 2017

26,936,462

70,013

3,969

699

195,611

270,292

 

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




Three months ended January 31,



2018


2017

Cash flows from operating activities





Net income for the period

$

6,813

$

11,733






Adjustments for:






Depreciation of property, plant and equipment


670


614


Amortization of acquired software and customer relationships


7,162


7,457


Stock-based compensation expense


399


188


Provision for income tax


8,810


3,360


Finance expenses and other income


(682)


(155)



23,172


23,197






Changes in  non-cash operating working capital


2,913


(7,926)

Income tax paid


(2,980)


(4,596)

Net cash flows from operating activities


23,105


10,675






Cash flows from investing activities





Purchase of property, plant and equipment, net


(600)


(565)

Purchase of other software


-


(489)

Acquisitions, net of cash acquired $1,068 (2017-$Nil)


(2,991)


-

Purchase consideration for prior period acquisitions


(1,926)


(393)

Net purchase of short-term investments


985


(608)

Net cash flows used in investing activities


(4,532)


(2,055)






Cash flows from financing activities





Issuance of share capital


744


364

Repayment of loans


(368)


(1,667)

Payment of cash dividend


(4,319)


(3,767)

Net cash flows used in financing activities


(3,943)


(5,070)






Effect of currency translation adjustments on cash and cash equivalents


698


(1,342)






Net increase in cash and cash equivalents during the period


15,328


2,208

Cash and cash equivalents - beginning of period


120,608


78,436






Cash and cash equivalents - end of period

$

135,936

$

80,644

 

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


For the three months ended
January 31



2018


2017






Revenue:






Asset Management Group

$

36,680

$

31,286


Interactive Management Group


48,395


47,554

Total

$

85,075

$

78,840

















Asset Management Group:







- Segment profit before special charges

$

10,414

$

8,433



- Special charges


(129)


96


Asset Management Group profit

$

10,285

$

8,529







Interactive Management Group:







- Segment profit before special charges

$

14,194

$

15,768



- Special charges


-


(194)


Interactive Management Group profit

$

14,194

$

15,574







Corporate expenses


(2,498)


(1,747)

Results from operating activities

$

21,981

$

22,356







Amortization of acquired software and customer relationships


(7,162)


(7,457)


Finance income


122


39


Finance expenses


(60)


(15)


Other income


742


170

Income before income taxes

$

15,623

$

15,093

 

SOURCE Enghouse Systems Limited


These press releases may also interest you

at 09:30
Sunshine, the brand & entertainment consultancy and production studio, has secured investment from entrepreneurs Mike Dolan and Adam Zhu and the Chinese brand consultancy, Shunya. The London and Los Angeles based company...

at 09:30
Chemtrade Logistics Income Fund today announced that it has declared a cash distribution of $0.10 per unit for the month of September 2018 payable on October 31, 2018 to unitholders of record at the close of business on September 28, 2018. Holders...

at 09:30
The Conference Board Leading Economic Index® (LEI) for France decreased 0.1 percent in July 2018 to 102.8 (2016=100). The Conference Board Coincident Economic Index® (CEI) for France increased 0.1 percent in July 2018 to...

at 09:29
The following issues have been halted by IIROC: Company: DMD Digital Health Connections Group Inc. TSX-Venture Symbol: DMG.H Reason: At the Request of the Company Pending News Halt Time (ET): 9:22 AM IIROC can make a decision to impose a temporary...

at 09:26
Captain D's, the nation's leading fast casual seafood restaurant, announced today the signing of franchise development agreements that will expand its presence in key markets throughout the Midwest and the Southeast. This growth will bring three new...

at 09:25
Trading resumes in: Company: Australis Capital Inc. CSE Symbol: AUSA, AUSA.WT Resumption (ET): 10:00 AM IIROC can make a decision to impose a temporary suspension (halt) of trading in a security of a publicly-listed company. Trading halts are...




News published on 8 march 2018 at 17:00 and distributed by: