TECSYS Reports Financial Results for Second Quarter of Fiscal 2018

MONTREAL, QUEBEC--(Marketwired - Nov 30, 2017) - TECSYS Inc. (TCS.TO), an industry-leading supply chain management software company, today announced its results for the second quarter of fiscal year 2018, ended October 31, 2017. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS) and are unaudited.

Second Quarter Highlights:

• Total revenue was $18.1 million, 9% higher than $16.5 million for Q2 2017.

• Proprietary products revenue decreased 8% to $1.6 million, compared to Q2 2017.

• Cloud, maintenance and subscription revenue increased to $6.4 million, 4% higher than $6.2 million for Q2 2017.

• Professional services revenue was $7.9 million, 22% higher than $6.5 million in Q2 2017.

• Total gross profit margin was 52%, compared to 50% in Q2 2017.

• Operating expenses decreased to $7.8 million, compared to $8.0 million for Q2 2017.

• Profit from operations was $1.6 million, compared to $320,000 for the same period in fiscal 2017.

• Profit was $1.4 million or $0.10 per share in Q2 2018 compared to $206,000 or $0.02 per share for Q2 2017.

• EBITDA was $2.2 million, compared to $935,000 for Q2 2017.

• Total contract value bookings amounted to $11.5 million, compared to $10.9 million for Q2 2017.

• Cash and cash equivalents, as well as redeemable long-term investments, totaled $22.5 million at the end of Q2 2018 compared to $13.5M at the end of Q4 2017.

"In the second quarter of fiscal 2018, solid bookings and revenue growth combined with flat to declining expenses led to a surge in profitability." said Peter Brereton, President and CEO of TECSYS Inc. "The quarter was also a validation of our strategy to deploy one common technology platform that is robust and versatile into two diverse sectors where each has a different sales cycle and is affected differently by external events. In the quarter, our complex distribution business achieved solid growth in terms of both new contract and base account sales and added accounts in floor finishing products, heavy equipment and MRO. Our healthcare business continued to be constrained in the quarter by uncertainty around U.S. healthcare legislation, however this situation seems to be improving based on orders signed early in the third quarter. Our pipeline and general business activity in healthcare remains strong. The board has approved an increase of the quarterly dividend of 11% to $0.05."

Results from Operations	Q2 2018		Q2 2017		6 months ended Oct. 31, 2017		6 months ended Oct. 31, 2016		Trailing 12 months ended Oct. 31, 2017		Trailing 12 months ended Oct. 31, 2016
In thousands of dollars except per share amounts
Total Revenue	$18,072		$16,518		$34,583		$32,615		$70,415		$69,388
Gross Margin	$9,438		$8,291		$17,190		$15,897		$35,489		$35,512
Gross Margin %	52%		50%		50%		49%		50%		51%
Operating Expenses	$7,843		$7,971		$15,530		$15,334		$26,441		$31,108
Op. Ex. As % of Revenue	43%		48%		45%		47%		38%		45%
Profit from Operations	$1,595		$320		$1,660		$563		$9,048		$4,404
EBITDA	$2,184		$935		$2,871		$1,749		$11,486		$6,929
EPS	$0.10		$0.02		$0.11		$0.03		$0.57		$0.38
Contract Bookings	$11,453		$10,920		$21,345		$16,936		$47,037		$39,029

First Half Fiscal 2018 Highlights:

• Total revenue was $34.6 million, 6% higher than $32.6 million for H1 2017.

• Proprietary products revenue decreased 4% to $2.9 million, compared to H1 2017.

• Cloud, maintenance and subscription revenue increased to $13.5 million, 5% higher than $12.8 million for H1 2017.

• Professional services revenue was $14.0 million, 11% higher than $12.6 million in H1 2017.

• Total gross profit margin was 50%, compared to 49% in H1 2017.

• Operating expenses were flat year-over-year at $15.5 million, compared to $15.3 million for H1 2017.

• Profit from operations was $1.7 million, compared to $563,000 for the same period in fiscal 2017.

• Profit was $1.4 million or $0.11 per share for H1 2018 compared to $334,000 or $0.03 per share for H1 2017.

• EBITDA was $2.9 million, compared to $1.7 million for H1 2017.

• Total contract value bookings amounted to $21.3 million, compared to $16.9 million for H1 2017.

The Company has declared a dividend of $0.05 per share to be paid on January 11, 2018 to shareholders of record at the close of business on December 21, 2017.

Second Quarter 2018 Results Conference Call

Date: December 1, 2017 Time: 8:30 am EST

Phone number: (416) 359-3126 or (800) 672-2065

The call can be replayed until December 8, 2017 by calling (416) 626-4100 or (800) 558-5253 (access code: 21862899).

About TECSYS

TECSYS provides transformative supply chain solutions that equip our customers to succeed in a rapidly-changing omni-channel world. TECSYS solutions are built on a true enterprise supply chain platform, and include warehouse management, distribution, transportation management, supply management at point-of-use as well as complete financial management and analytics solutions. Customers running on TECSYS' Supply Chain Platform are confident knowing they can execute, day in and day out, regardless of business fluctuations or changes in technology, they can adapt and scale to any business needs or size, and they can expand and collaborate with customers, suppliers and partners as one borderless enterprise. From demand planning to demand fulfillment, TECSYS puts power into the hands of both front-line workers and back office planners, and unshackles business leaders so they can see and manage their supply chains like never before.

TECSYS is the market leader in supply chain solutions for health systems and hospitals. Over 600 mid-size and Fortune 1000 customers trust their supply chains to TECSYS in the healthcare, service parts, third-party logistics, and general wholesale high-volume distribution industries. TECSYS' shares are listed on the Toronto Stock Exchange under the ticker symbol TCS.

The statements in this news release relating to matters that are not historical fact are forward looking statements that are based on management's beliefs and assumptions. Such statements are not guarantees of future performance and are subject to a number of uncertainties, including but not limited to future economic conditions, the markets that TECSYS Inc. serves, the actions of competitors, major new technological trends, and other factors beyond the control of TECSYS Inc., which could cause actual results to differ materially from such statements. More information about the risks and uncertainties associated with TECSYS Inc.'s business can be found in the MD&A section of the Company's annual report and annual information form for the fiscal year ended April 30th, 2017. These documents have been filed with the Canadian securities commissions and are available on our website (www.tecsys.com) and on SEDAR (www.sedar.com).

Copyright © TECSYS Inc. 2017. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

TECSYS Inc.
Condensed Interim Consolidated Statements of Financial Position
(Unaudited)
As at October 31, 2017 and April 30, 2017
(in thousands of Canadian dollars)
			October 31,			April 30,
			2017			2017
Assets
Current assets
	Cash and cash equivalents	$	12 458		$	13 476
	Accounts receivable		11 347			14 218
	Work in progress		525			612
	Other receivables		705			370
	Tax credits		4 562			3 126
	Inventory		875			914
	Prepaid expenses		1 659			1 899
Total current assets			32 131			34 615
Non-current assets
	Long-term investments		10 007			-
	Other long-term receivables		249			-
	Tax credits		5 252			5 407
	Property and equipment		2 292			2 444
	Deferred development costs		2 224			2 751
	Other intangible assets		1 415			1 523
	Goodwill		3 596			3 596
	Deferred tax assets		2 402			2 201
Total non-current assets			27 437			17 922
Total assets		$	59 568		$	52 537
Liabilities
Current liabilities
	Accounts payable and accrued liabilities	$	8 348		$	9 265
	Current portion of long-term debt		55			69
	Deferred revenue		9 259			12 094
Total current liabilities			17 662			21 428
Non-current liabilities
	Long-term debt		98			121
	Other non-current liabilities		256			277
Total non-current liabilities			354			398
Total liabilities			18 016			21 826
Equity
	Share capital		18 803			8 349
	Contributed surplus		9 577			9 577
	Retained earnings		13 311			13 064
	Accumulated other comprehensive loss		(139	)		(279	)
Total equity attributable to the owners of the Company			41 552			30 711
Total liabilities and equity		$	59 568		$	52 537

TECSYS Inc.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three and six-month periods ended October 31, 2017 and 2016
(in thousands of Canadian dollars, except per share data)
			Three Months			Three Months			Six Months			Six Months
			Ended			Ended			Ended			Ended
			October 31,			October 31,			October 31,			October 31,
			2017			2016			2017			2016
Revenue:
	Proprietary products	$	1 645		$	1 779		$	2 893		$	3 003
	Third-party products		1 447			1 505			2 969			2 998
	Cloud, maintenance and subscription		6 446			6 193			13 536			12 837
	Professional services		7 884			6 457			14 028			12 641
	Reimbursable expenses		650			584			1 157			1 136
Total revenue			18 072			16 518			34 583			32 615
Cost of revenue:
	Products		1 372			1 350			2 732			2 613
	Services		6 612			6 293			13 504			12 969
	Reimbursable expenses		650			584			1 157			1 136
Total cost of revenue			8 634			8 227			17 393			16 718
Gross profit			9 438			8 291			17 190			15 897
Operating expenses:
	Sales and marketing		3 851			3 769			7 484			7 355
	General and administration		1 611			1 719			3 187			3 059
	Research and development, net of tax credits		2 381			2 483			4 859			4 920
Total operating expenses			7 843			7 971			15 530			15 334
Profit from operations			1 595			320			1 660			563
Net finance (income) costs			(33	)		55			(67	)		151
Profit before income taxes			1 628			265			1 727			412
Income taxes			272			59			302			78
Profit attributable to the owners of the Company		$	1 356		$	206		$	1 425		$	334
Other comprehensive (loss) income:
	Effective portion of changes in fair value on designated revenue hedges		(655	)		(136	)		140			(861	)
Comprehensive income (loss) attributable to the owners of the Company		$	701		$	70		$	1 565		$	(527	)
Basic and diluted earnings per common share		$	0,10		$	0,02		$	0,11		$	0,03

TECSYS Inc.
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited)
Six-month periods ended October 31, 2017 and 2016
(in thousands of Canadian dollars)
			Six Months			Six Months
			Ended			Ended
			October 31,			October 31,
			2017			2016
Cash flows from (used in) operating activities:
Profit for the period		$	1 425		$	334
Adjustments for:
	Depreciation of property and equipment		405			413
	Depreciation of deferred development costs		599			683
	Depreciation of other intangible assets		235			247
	Net finance (income) costs		(67	)		151
	Unrealized foreign exchange and other		(556	)		575
	Non-refundable tax credits		(368	)		(457	)
	Income taxes		210			78
	Operating activities excluding changes in non-cash working capital items related to operations		1 883			2 024
	Accounts receivable		2 871			4 735
	Work in progress		87			(1 331	)
	Other receivables		(327	)		(598	)
	Tax credits		(1 329	)		934
	Inventory		39			(164	)
	Prepaid expenses		240			204
	Accounts payable and accrued liabilities		(522	)		(1 839	)
	Deferred revenue		(2 835	)		(395	)
	Changes in non-cash working capital items related to operations		(1 776	)		1 546
Net cash from operating activities			107			3 570
Cash flows (used in) from financing activities:
	Repayment of long-term debt		(37	)		(717	)
	Issuance of common shares		10 454			-
	Payment of dividends		(1 178	)		(739	)
	Interest paid		(1	)		(49	)
Net cash from (used in) financing activities			9 238			(1 505	)
Cash flows (used in) from investing activities:
	Long-term investments		(10 007	)		-
	Interest received		96			55
	Acquisitions of property and equipment		(253	)		(233	)
	Acquisitions of other intangible assets		(127	)		(90	)
	Deferred development costs		(72	)		(27	)
Net cash used in investing activities			(10 363	)		(295	)
Net (decrease) increase in cash and cash equivalents during the period			(1 018	)		1 770
Cash and cash equivalents - beginning of period			13 476			9 704
Cash and cash equivalents - end of period		$	12 458		$	11 474

TECSYS Inc.
Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited)
Six-month periods ended October 31, 2017 and 2016
(in thousands of Canadian dollars, except number of shares)

				Share capital
				Number		Amount		Contributed surplus		Accumulated other comprehensive (loss) income			Retained earnings			Total
Balance, April 30, 2017				12 315 326	$	8 349	$	9 577	$	(279	)	$	13 064		$	30 711
	Profit for the period			-		-		-		-			1 425			1 425
	Other comprehensive income for the period:
		Effective portion of changes in fair value on designated revenue hedges		-		-		-		140			-			140
Total comprehensive income for the period				-		-		-		140			1 425			1 565
	Common shares issued under bought deal financing			767 050		10 454		-		-			-			10 454
	Dividends to equity owners			-		-		-		-			(1 178	)		(1 178	)
Total transactions with owners of the Company				767 050		10 454		-		-			(1 178	)		9 276
Balance, October 31, 2017				13 082 376	$	18 803	$	9 577	$	(139	)	$	13 311		$	41 552
Balance, April 30, 2016				12 315 326	$	8 349	$	9 577	$	607		$	8 913		$	27 446
	Profit for the period			-		-		-		-			334			334
	Other comprehensive loss for the period:
		Effective portion of changes in fair value on designated revenue hedges		-		-		-		(861	)		-			(861	)
Total comprehensive (loss) income for the period				-		-		-		(861	)		334			(527	)
	Dividends to equity owners			-		-		-		-			(739	)		(739	)
Total transactions with owners of the Company				-		-		-		-			(739	)		(739	)
Balance, October 31, 2016				12 315 326	$	8 349	$	9 577	$	(254	)	$	8 508		$	26 180