MARKHAM,
ON, March 9, 2023 /CNW/ - Enghouse Systems
Limited (TSX: ENGH) today announced its first quarter unaudited
financial results for the period ended January 31, 2023. All the financial
information is in Canadian dollars unless otherwise indicated.
Financial and operational highlights for the three months ended
January 31, 2023 compared to the
three months ended January 31, 2022
are as follows:
- Revenue achieved was $106.4 million compared to revenue of
$111.1 million;
- Results from operating activities was $29.9 million compared to $35.7 million;
- Net income was $17.0 million
compared to $21.6 million;
- Adjusted EBITDA was $32.3 million compared to $38.6 million;
- Cash flows from operating activities excluding changes in
working capital were $32.6 million
compared to $38.7 million.
Over the last four quarters, revenue in both the Asset and
Interactive Management Groups has stabilized significantly,
particularly in comparison to the revenue fluctuations that were
driven by changing demands throughout the COVID-19 pandemic.
Despite the ongoing shift to the cloud, inflation, rising interest
rates, economic uncertainty and some competitors experiencing
significant financial distress announcing restructuring and
employee layoffs, Enghouse continues to operate consistently with
positive income and operating cashflows. Enghouse remains well
positioned to complete and fund future acquisitions. Subsequent to
quarter end, we announced the acquisitions of Qumu and Navita with
integrations progressing according to plan.
Net income for the quarter was $0.31 per diluted share, compared to $0.39 per diluted share in the same period last
year. The decrease in net income is primarily a result of a
reduction in software licenses alongside lower gross margins from
professional services relating to our large public transportation
projects. Adjusted EBITDA was $32.3
million or $0.58 per diluted
share, compared to $38.6 million or
$0.69 per diluted share in the first
quarter of 2022.
Enghouse closed the quarter with $250.7
million in cash, cash equivalents and short-term
investments, compared to $228.1
million at October 31, 2022
with no external debt financing. The cash balance was achieved
after making payments of $10.2
million for dividends in the quarter. Enghouse remains
focused on its long-term growth strategy, investing in products
while ensuring profitability and maximizing operating cashflows. As
a result, Enghouse continues to replenish its acquisition capital
while annually increasing its eligible quarterly dividend.
Quarterly dividends:
Today, the Board of
Directors approved the Company's eligible quarterly dividend of
$0.22 per common share, an increase
of 18.9% over the prior dividend, payable on May 31, 2023 to shareholders of record at
the close of business on May 17,
2023. This represents the 15th consecutive year in which the
Company increased its dividend by over 10%.
Enghouse Systems Limited
Financial
Highlights
(unaudited, in thousands of Canadian
dollars)
|
For the periods
ended January 31
|
|
|
Three
months
|
|
|
|
|
|
|
|
|
2023
|
|
2022
|
Var
($)
|
Var
(%)
|
|
Revenue
|
|
|
|
|
|
|
|
$
|
106,435
|
$
|
111,102
|
(4,667)
|
(4.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
|
|
|
|
|
|
|
34,808
|
|
32,828
|
1,980
|
6.0
|
|
Revenue, net of
direct costs
|
|
|
|
|
|
|
|
$
|
71,627
|
$
|
78,274
|
(6,647)
|
(8.5)
|
|
As a % of
revenue
|
|
|
|
|
|
|
|
|
67.3 %
|
|
70.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
41,710
|
|
42,551
|
(841)
|
(2.0)
|
|
Special
charges
|
|
|
|
|
|
|
|
|
28
|
|
18
|
10
|
55.6
|
|
Results from
operating activities
|
|
|
|
|
|
|
|
$
|
29,889
|
$
|
35,705
|
(5,816)
|
(16.3)
|
|
As a % of
revenue
|
|
|
|
|
|
|
|
|
28.1 %
|
|
32.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired software and customer relationships
|
|
|
|
|
|
|
|
|
(8,832)
|
|
(9,657)
|
825
|
8.5
|
|
Foreign exchange
losses
|
|
|
|
|
|
|
|
|
(1,053)
|
|
(336)
|
(717)
|
(213.4)
|
|
Interest expense –
lease obligations
|
|
|
|
|
|
|
|
|
(167)
|
|
(202)
|
35
|
17.3
|
|
Finance
income
|
|
|
|
|
|
|
|
|
976
|
|
129
|
847
|
656.6
|
|
Finance
expenses
|
|
|
|
|
|
|
|
|
(7)
|
|
(23)
|
16
|
69.6
|
|
Other (expenses)
income
|
|
|
|
|
|
|
|
|
(127)
|
|
1,000
|
(1,127)
|
(112.7)
|
|
Income before income
taxes
|
|
|
|
|
|
|
|
$
|
20,679
|
$
|
26,616
|
(5,937)
|
(22.3)
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
3,656
|
|
5,019
|
(1,363)
|
(27.2)
|
|
Net income for the
period
|
|
|
|
|
|
|
|
$
|
17,023
|
$
|
21,597
|
(4,574)
|
(21.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
0.31
|
|
0.39
|
(0.08)
|
(20.5)
|
|
Diluted earnings per
share
|
|
|
|
|
|
|
|
|
0.31
|
|
0.39
|
(0.08)
|
(20.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flows
|
|
|
|
|
|
|
|
|
29,262
|
|
24,342
|
4,920
|
20.2
|
|
Operating cash flows
excluding changes in working capital
|
|
|
|
|
|
|
|
|
32,632
|
|
38,743
|
(6,111)
|
(15.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating
activities
|
|
|
|
|
|
|
|
|
29,889
|
|
35,705
|
(5,816)
|
(16.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
626
|
|
720
|
(94)
|
13.1
|
|
Depreciation of
right-of-use assets
|
|
|
|
|
|
|
|
|
1,736
|
|
2,112
|
(376)
|
17.8
|
|
Special
charges
|
|
|
|
|
|
|
|
|
28
|
|
18
|
10
|
(55.6)
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
$
|
32,279
|
$
|
38,555
|
(6,276)
|
(16.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
|
|
|
|
|
|
|
30.3 %
|
|
34.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per
diluted share
|
|
|
|
|
|
|
|
$
|
0.58
|
$
|
0.69
|
( 0.11)
|
(15.9)
|
|
Condensed Consolidated Interim Statements of
Financial Position
|
|
(in thousands of
Canadian dollars)
(unaudited)
|
|
As at
January 31,
2023
|
As at October
31,
2022
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
247,801
|
$
|
225,104
|
|
Short-term
investments
|
|
|
2,863
|
|
2,950
|
|
Accounts
receivable
|
|
|
106,461
|
|
93,104
|
|
Prepaid
expenses and other assets
|
|
|
14,567
|
|
12,848
|
|
Income
taxes recoverable
|
|
|
-
|
|
492
|
|
|
|
371,692
|
|
334,498
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property
and equipment
|
|
|
3,802
|
|
4,186
|
|
Right-of-use assets
|
|
|
18,469
|
|
20,063
|
|
Intangible
assets
|
|
|
78,343
|
|
85,902
|
|
Goodwill
|
|
|
234,101
|
|
230,002
|
|
Deferred
income tax assets
|
|
|
31,499
|
|
30,347
|
|
|
|
366,214
|
|
370,500
|
|
|
$
|
737,906
|
$
|
704,998
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
57,906
|
$
|
60,525
|
|
Income
taxes payable
|
|
|
32
|
|
-
|
|
Dividends
payable
|
|
|
10,224
|
|
10,221
|
|
Provisions
|
|
|
2,640
|
|
3,183
|
|
Deferred
revenue
|
|
|
103,535
|
|
83,122
|
|
Lease
obligations
|
|
|
7,495
|
|
6,822
|
|
|
|
181,832
|
|
163,873
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Income
taxes payable
|
|
|
1,283
|
|
2,576
|
|
Deferred
income tax liabilities
|
|
|
12,672
|
|
12,038
|
|
Deferred
revenue
|
|
|
3,717
|
|
3,470
|
|
Net
employee defined benefit obligation
|
|
|
1,960
|
|
1,821
|
|
Lease
obligations
|
|
|
10,673
|
|
13,055
|
|
|
|
30,305
|
|
32,960
|
|
|
|
212,137
|
|
196,833
|
|
Shareholders'
equity
|
|
|
|
|
|
|
Share
capital
|
|
|
107,728
|
|
107,007
|
|
Contributed surplus
|
|
|
9,223
|
|
8,882
|
|
Retained
earnings
|
|
|
408,046
|
|
401,247
|
|
Accumulated other comprehensive income (loss)
|
|
|
772
|
|
(8,971)
|
|
|
|
525,769
|
|
508,165
|
|
|
$
|
737,906
|
$
|
704,998
|
|
Condensed Consolidated Interim Statements of
Operations and Comprehensive Income
|
|
(in thousands of
Canadian dollars, except per share amounts)
|
|
|
|
(unaudited)
|
|
|
Three
months
|
|
Periods ended
January 31
|
|
|
|
2023
|
2022
|
|
|
|
|
|
|
|
Revenue
Software licenses
|
|
|
|
$ 20,735
|
$ 23,778
|
|
SaaS and maintenance
services
|
|
|
|
66,503
|
66,427
|
|
Professional
services
|
|
|
|
16,891
|
17,952
|
|
Hardware
|
|
|
|
2,306
|
2,945
|
|
|
|
|
106,435
|
111,102
|
|
Direct
costs
|
|
|
|
|
|
|
Software licenses
|
|
|
|
870
|
1,327
|
|
Services
|
|
|
|
32,425
|
29,594
|
|
Hardware
|
|
|
|
1,513
|
1,907
|
|
|
|
|
34,808
|
32,828
|
|
Revenue, net of
direct costs
|
|
|
|
71,627
|
78,274
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
|
20,798
|
22,407
|
|
Research and
development
|
|
|
|
18,550
|
17,312
|
|
Depreciation
|
|
|
|
626
|
720
|
|
Depreciation of right-of-use
assets
|
|
|
|
1,736
|
2,112
|
|
Special charges
|
|
|
|
28
|
18
|
|
|
|
|
41,738
|
42,569
|
|
|
|
|
|
|
|
Results from
operating activities
|
|
|
|
29,889
|
35,705
|
|
|
|
|
|
|
|
Amortization of
acquired software and customer
relationships
|
|
|
|
(8,832)
|
(9,657)
|
|
Foreign exchange
losses
|
|
|
|
(1,053)
|
(336)
|
|
Interest expense –
lease obligations
|
|
|
|
(167)
|
(202)
|
|
Finance
income
|
|
|
|
976
|
129
|
|
Finance
expenses
|
|
|
|
(7)
|
(23)
|
|
Other (expenses)
income
|
|
|
|
(127)
|
1,000
|
|
Income before income
taxes
|
|
|
|
20,679
|
26,616
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
3,656
|
5,019
|
|
|
|
|
|
|
Net income for the
period
|
|
|
|
$
17,023
|
$
21,597
|
|
Items that may be
subsequently reclassified to income:
|
|
|
|
|
|
Cumulative translation
adjustment
|
|
|
|
9,743
|
4,126
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
9,743
|
4,126
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
$
26,766
|
$
25,723
|
|
Earnings per
share
|
|
|
|
|
|
|
Basic
|
|
|
|
$ 0.31
|
$ 0.39
|
|
Diluted
|
|
|
|
$ 0.31
|
$ 0.39
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
(in thousands of
Canadian dollars)
(unaudited)
|
|
|
Three
months
|
|
Periods ended
January 31
|
|
|
|
2023
|
2022
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
Net income for the
period
|
|
|
|
$
17,023
|
$
21,597
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
626
|
720
|
|
Depreciation of right-of-use assets
|
|
|
|
1,736
|
2,112
|
|
Interest
expense – lease obligations
|
|
|
|
167
|
202
|
|
Amortization of acquired software and customer
relationships
|
|
|
|
8,832
|
9,657
|
|
Stock-based compensation expense
|
|
|
|
458
|
413
|
|
Provision
for income taxes
|
|
|
|
3,656
|
5,019
|
|
Finance
and other expenses (income)
|
|
|
|
134
|
(977)
|
|
|
|
|
32,632
|
38,743
|
|
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
|
|
|
2,002
|
(11,202)
|
|
Income taxes
paid
|
|
|
|
(5,372)
|
(3,199)
|
|
Net cash provided by
operating activities
|
|
|
|
29,262
|
24,342
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
Net (purchase) sale of
property and equipment
|
|
|
|
(105)
|
235
|
|
|
|
|
|
|
|
Purchase of short-term
investments
|
|
|
|
(69)
|
-
|
|
Net cash (used in)
provided by investing activities
|
|
|
|
(174)
|
235
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
Issuance of share
capital
|
|
|
|
604
|
-
|
|
Repayment of lease
obligations
|
|
|
|
(1,810)
|
(2,093)
|
|
Dividends
paid
|
|
|
|
(10,221)
|
(8,889)
|
|
Net cash used in
financing activities
|
|
|
|
(11,427)
|
(10,982)
|
|
Impact of foreign
exchange on cash and cash equivalents
|
|
|
|
5,036
|
1,414
|
|
|
|
|
|
|
|
Increase in cash and
cash equivalents
|
|
|
|
22,697
|
15,009
|
|
Cash and cash
equivalents ─ beginning of period
|
|
|
|
225,104
|
195,890
|
|
Cash and cash
equivalents ─ end of period
|
|
|
|
$
247,801
|
$
210,899
|
Enghouse Systems Limited
Segment Reporting
Information
(in thousands of Canadian dollars)
|
Three months ended
January 31
|
|
2023
|
|
2022
|
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
57,852
|
$
|
48,583
|
$
|
106,435
|
$
|
61,871
|
$
|
49,231
|
$
|
111,102
|
|
Direct costs
|
|
(16,431)
|
|
(18,377)
|
|
(34,808)
|
|
(15,444)
|
|
(17,384)
|
|
(32,828)
|
|
Revenue, net of
direct costs
|
|
41,421
|
|
30,206
|
|
71,627
|
|
46,427
|
|
31,847
|
|
78,274
|
|
Operating expenses
excluding special charges
|
|
(19,250)
|
|
(11,321)
|
|
(30,571)
|
|
(19,551)
|
|
(11,172)
|
|
(30,723)
|
|
Depreciation
|
|
(537)
|
|
(89)
|
|
(626)
|
|
(596)
|
|
(124)
|
|
(720)
|
|
Depreciation of
right-of-use assets
|
|
(1,100)
|
|
(636)
|
|
(1,736)
|
|
(1,327)
|
|
(785)
|
|
(2,112)
|
|
Segment
profit
|
$
|
20,534
|
$
|
18,160
|
$
|
38,694
|
$
|
24,953
|
$
|
19,766
|
$
|
44,719
|
|
Special
charges
|
|
|
|
|
|
(28)
|
|
|
|
|
|
(18)
|
|
Corporate and shared
service expenses
|
|
|
|
|
|
(8,777)
|
|
|
|
|
|
(8,996)
|
|
Results from
operating activities
|
|
|
|
|
$
|
29,889
|
|
|
|
|
$
|
35,705
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Enghouse
Enghouse is a Canadian publicly traded company (TSX: ENGH) that
provides vertical enterprise software solutions focused on contact
centers, video communications, healthcare, telecommunications
networks, public safety and the transit market. The Company's
two-pronged strategy to grow earnings focuses on internal growth
and acquisitions, which, to date, have been funded through
operating cash flows. The Company has no external debt
financing and is organized around two business segments: the
Interactive Management Group and the Asset Management Group.
Further information about Enghouse may be obtained from the
Company's website at www.enghouse.com.
Conference Call and Webcast
A conference call to discuss the results will be held on
Friday, March 10, 2023 at
8:45 a.m. EST. To participate, please
call
+1-416-764-8646 or North American Toll-Free 1-888-396-8049.
Confirmation code: 09140113. A webcast is also available at:
https://www.enghouse.com/investors.php.
****
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 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
based on results from operating activities adjusted for
depreciation of property and equipment and right-of-use assets, 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.
SOURCE Enghouse Systems Limited