Canada markets closed
  • S&P/TSX

    15,580.64
    -90.06 (-0.57%)
     
  • S&P 500

    3,269.96
    -40.15 (-1.21%)
     
  • DOW

    26,501.60
    -157.51 (-0.59%)
     
  • CAD/USD

    0.7508
    -0.0001 (-0.01%)
     
  • CRUDE OIL

    35.72
    -0.45 (-1.24%)
     
  • BTC-CAD

    18,310.63
    -107.40 (-0.58%)
     
  • CMC Crypto 200

    265.42
    +1.78 (+0.68%)
     
  • GOLD FUTURES

    1,878.80
    +10.80 (+0.58%)
     
  • RUSSELL 2000

    1,538.48
    -23.10 (-1.48%)
     
  • 10-Yr Bond

    0.8600
    +0.0250 (+2.99%)
     
  • NASDAQ

    10,911.59
    -274.00 (-2.45%)
     
  • VOLATILITY

    38.02
    +0.43 (+1.14%)
     
  • FTSE

    5,577.27
    -4.48 (-0.08%)
     
  • NIKKEI 225

    22,977.13
    -354.81 (-1.52%)
     
  • CAD/EUR

    0.6444
    +0.0018 (+0.28%)
     

Enghouse Releases Third Quarter Results

·13 mins read

MARKHAM, ON, Sept. 10, 2020 /CNW/ - Enghouse Systems Limited (TSX: ENGH) today announced its third quarter (unaudited) financial results for the period ended July 31, 2020. All of the financial information is in Canadian dollars unless otherwise indicated.

Key financial and operational highlights for the three months ended July 31, 2020 (compared to the same period in 2019) are as follows:

  • Revenue grew 29.7% to $131.3 million;

  • Results from operating activities increased 56.2% to $42.2 million;

  • Net income increased 77.3% to $26.0 million or $0.46 per diluted share;

  • Adjusted EBITDA increased 62.4% to $45.6 million;

  • Cash flows from operating activities excluding changes in working capital increased 58.8% to $45.3 million;

  • Cash, cash equivalents and short-term investments were $228.9 million, an increase from $150.3 million at October 31, 2019, which was achieved after making payments of $19.5 million for dividends and $43.9 million for acquisitions;

  • The Company has no long-term debt other than a nominal amount that is non-interest bearing.

In the quarter, the Company experienced growth from both internal sources and from acquisitions. Internal growth includes the expansion of the acquired businesses, particularly Vidyo, since acquisition.

To date, COVID-19 continues to have an overall positive impact on revenue. Although the initial surge of customers requiring immediate remote-work and visual computing solutions upon the initial outbreak of the pandemic was primarily served in the second quarter of 2020, demand for these solutions remains above historic averages.

The pandemic has tested Enghouse's ability and capacity to respond to significantly altered circumstances. Enghouse's results continue to demonstrate the resiliency of its business model, which is based on significant recurring revenue streams, positive operating cash flows, large cash reserves with nominal debt and a disciplined cost management and value for money philosophy.

Quarterly Dividend:
Today, the Board of Directors approved the Company's eligible quarterly dividend of $0.135 per common share, payable on November 30, 2020 to shareholders of record at the close of business on November 16, 2020.

Enghouse Systems Limited
Financial Highlights
(Unaudited, in thousands of Canadian dollars)

For the period ended July 31

Three months

Nine months

2020 $

2019

$

Variance

2020

$

2019

$

Variance

$

%

$

%

Revenue

131,324

101,274

30,050

29.7

382,880

276,522

106,358

38.5










Direct costs

39,740

31,749

7,991

25.2

111,916

86,421

25,495

29.5

Revenue, net of direct costs

91,584

69,525

22,059

31.7

270,964

190,101

80,863

42.5

As a % of revenue

69.7%

68.7%



70.8%

68.7%












Operating expenses

49,351

42,038

7,313

17.4

150,157

110,142

40,015

36.3

Special charges

35

470

(435)

(92.6)

1,490

526

964

183.3

Results from operating activities

42,198

27,017

15,181

56.2

119,317

79,433

39,884

50.2

As a % of revenue

32.1%

26.7%



31.2%

28.7%












Amortization of acquired software and customer relationships

(11,502)

(8,453)

(3,049)

(36.1)

(33,182)

(22,453)

(10,729)

(47.8)

Foreign exchange (losses) gains

(1,102)

( 131)

(971)

(741.2)

(1,148)

433

(1,581)

(365.1)

Interest expense – lease obligations

(302)

-

(302)

-

(864)

-

(864)

-

Finance income

209

469

(260)

(55.4)

691

1,474

(783)

(53.1)

Finance expenses

(5)

(11)

6

54.5

(39)

(66)

27

40.9

Other income

3,827

( 64)

3,891

6079.7

4,224

411

3,813

927.7

Income before income taxes

33,323

18,827

14,496

77.0

88,999

59,232

29,767

50.3

Provision for income taxes

7,330

4,166

3,164

75.9

19,781

13,070

6,711

51.3

Net Income for the period

25,993

14,661

11,332

77.3

69,218

46,162

23,056

49.9










Basic earnings per share

0.47

0.27

0.20

74.1

1.26

0.84

0.42

50.0

Diluted earnings per share

0.46

0.27

0.19

70.4

1.25

0.84

0.41

48.8










Operating cash flows

55,690

13,862

41,828

301.7

133,156

59,646

73,510

123.2

Operating cash flows excluding changes in working capital

45,294

28,531

16,763

58.8

130,510

84,662

45,848

54.2










Adjusted EBITDA


















Results from operating activities

42,198

27,017

15,181

56.2

119,317

79,433

39,884

50.2










Depreciation

801

570

231

40.5

2,446

1,599

847

53.0

Depreciation of right-of-use asset

2,534

-

2,534

-

6,925

-

6,925

-

Special charges

35

470

(435)

(92.6)

1,490

526

964

183.3

Adjusted EBITDA

45,568

28,057

17,511

62.4

130,178

81,558

48,620

59.6










Adjusted EBITDA margin

34.7%

27.7%



34.0%

29.5%












Adjusted EBITDA per diluted share

0.81

0.51

0.30

58.8

2.35

1.48

0.87

58.8

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



As at July 31,

2020

As at October
31, 2019

ASSETS






Current assets:






Cash and cash equivalents


$

219,423

$

144,764

Short-term investments



9,515


5,505

Accounts receivable



98,360


84,982

Prepaid expenses and other assets



12,346


11,147




339,644


246,398

Non-current assets:






Property and equipment



6,554


6,280

Right-of-use assets



38,457


-

Intangible assets



135,831


121,885

Goodwill



221,540


203,298

Deferred income tax assets



16,073


12,739




418,455


344,202



$

758,099

$

590,600






LIABILITIES AND SHAREHOLDERS' EQUITY






Current liabilities:






Accounts payable and accrued liabilities


$

74,288

$

62,813

Income taxes payable



15,459


6,953

Dividends payable



7,463


6,021

Provisions



6,139


6,536

Deferred revenue



106,033


78,405

Lease obligations



8,370


-

Current portion of long-term loans



269


249




218,021


160,977

Non-current liabilities:






Non-current portion of income taxes payable



3,854


4,434

Deferred income tax liabilities



15,868


16,197

Deferred revenue



6,304


3,665

Net employee defined benefit obligation



2,896


2,380

Lease obligations



28,969


-

Long-term loans



875


874




58,766


27,550




276,787


188,527

Shareholders' equity






Share capital



98,527


81,576

Contributed surplus



5,366


6,677

Retained earnings



357,478


309,198

Accumulated other comprehensive income



19,941


4,622




481,312


402,073



$

758,099

$

590,600

Enghouse Systems Limited
Condensed Consolidated Interim Statements of Operations and Comprehensive Income
(Unaudited, in thousands of Canadian dollars)



Three months

Nine months

Periods ended July 31


2020

2019

2020

2019

Revenue






Software licenses


$ 29,438

$ 22,081

$ 106,629

$ 62,328

Hosted and maintenance services


77,356

58,416

213,733

158,699

Professional services


16,059

15,281

47,329

43,927

Hardware


8,471

5,496

15,189

11,568



131,324

101,274

382,880

276,522

Direct costs






Software licenses


2,058

1,327

8,445

4,058

Services


30,417

26,399

91,843

74,125

Hardware


7,265

4,023

11,628

8,238



39,740

31,749

111,916

86,421







Revenue, net of direct costs


91,584

69,525

270,964

190,101







Operating expenses






Selling, general and administrative


25,812

24,890

80,106

66,786

Research and development


20,204

16,578

60,680

41,757

Depreciation


801

570

2,446

1,599

Depreciation of right-of-use assets


2,534

-

6,925

-

Special charges


35

470

1,490

526



49,386

42,508

151,647

110,668







Results from operating activities


42,198

27,017

119,317

79,433







Amortization of acquired software and customer

relationships


(11,502)

(8,453)

(33,182)

(22,453)

Foreign exchange (losses) gains


(1,102)

(131)

(1,148)

433

Interest expense – lease obligations


(302)

-

(864)

-

Finance income


209

469

691

1,474

Finance expenses


(5)

(11)

(39)

(66)

Other income (expense)


3,827

(64)

4,224

411







Income before income taxes


33,323

18,827

88,999

59,232







Provision for income taxes


7,330

4,166

19,781

13,070






Net income for the period


$ 25,993

$ 14,661

$ 69,218

$ 46,162

Items that may be subsequently reclassified to income:





Cumulative translation adjustment


2,868

(9,947)

15,319

(3,966)







Other comprehensive income (loss)


2,868

(9,947)

15,319

(3,966)







Comprehensive income


$ 28,861

$ 4,714

$ 84,537

$ 42,196

Earnings per share






Basic


$ 0.47

$ 0.27

$ 1.26

$ 0.84

Diluted


$ 0.46

$ 0.27

$ 1.25

$ 0.84

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


Three months

Nine months

Periods ended July 31

2020

2019

2020

2019

OPERATING ACTIVITIES





Net income for the period

$ 25,993

$ 14,661

$ 69,218

$ 46,162

Adjustments to reconcile net income to net cash provided by operating activities









Depreciation

801

570

2,446

1,599

Depreciation of right-of-use assets

2,534

-

6,925

-

Interest expense – lease obligations

302

-

864

-

Amortization of acquired software and customer

relationships

11,502

8,453

33,182

22,453

Stock-based compensation expense

654

606

2,279

1,723

Provision for income taxes

7,330

4,166

19,781

13,070

Finance expenses and other (income) expenses

(3,822)

75

(4,185)

(345)


45,294

28,531

130,510

84,662






Changes in non-cash operating working capital

17,614

(10,174)

18,150

(10,801)

Income taxes paid

(7,218)

(4,495)

(15,504)

(14,215)

Net cash provided by operating activities

55,690

13,862

133,156

59,646






INVESTING ACTIVITIES





Purchase of property and equipment

(458)

(559)

(1,902)

(1,340)

Acquisitions, net of cash acquired*

1,103

(68,667)

(46,561)

(94,233)

Purchase consideration for prior-year acquisitions

3,201

-

2,655

(1,105)

Purchase of short-term investments

233

743

(1,569)

(1,110)

Net cash provided by (used in) investing activities

4,079

(68,483)

(47,377)

(97,788)






FINANCING ACTIVITIES





Interest paid on lease obligations

(302)

-

(864)

-

Issuance of share capital

7,789

563

13,361

1,348

Repayment of loans

-

-

(62)

(957)

Repayment of lease obligations

(2,181)

-

(6,071)

-

Dividends paid

(7,427)

(6,011)

(19,496)

(15,840)

Net cash used in financing activities

(2,121)

(5,448)

(13,132)

(15,449)

Effect of currency translation adjustments on cash and cash equivalents

(555)

(3,393)

2,012

(538)






Increase (decrease) in cash and cash equivalents

57,093

(63,462)

74,659

(54,129)

Cash and cash equivalents - beginning of period

162,330

196,884

144,764

187,551






Cash and cash equivalents - end of period

$ 219,423

$ 133,422

$ 219,423

$ 133,422


* Acquisitions are net of cash acquired of nil and $6,906 for the three and nine months ended July 31, 2020, respectively, and $27,683 and $33,965 for the three and nine months ended July 31, 2019, respectively.

Enghouse Systems Limited
Segment Reporting Information
(Unaudited, in thousands of Canadian dollars)


Three months ended July 31, 2020

IMG

AMG

Total

Revenue

$

75,151

$

56,173

$

131,324

Direct costs


(18,152)


(21,588)


(39,740)

Revenue, net of direct costs


56,999


34,585


91,584

Operating expenses excluding special charges


(22,871)


(12,735)


(35,606)

Depreciation of property and equipment


(646)


(155)


(801)

Depreciation of right-of-use assets


(1,447)


(1,087)


(2,534)

Segment profit

$

32,035

$

20,608

$

52,643

Special charges






(35)

Corporate and shared service expenses






(10,410)

Results from operating activities





$

42,198


Three months ended July 31, 2019

IMG

AMG

Total

Revenue

$

56,869

$

44,405

$

101,274

Direct costs


(14,838)


(16,911)


(31,749)

Revenue, net of direct costs


42,031


27,494


69,525

Operating expenses excluding special charges


(20,163)


(12,506)


(32,669)

Depreciation of property and equipment


(404)


(166)


(570)

Segment profit

$

21,464

$

14,822

$

36,286

Special charges






(470)

Corporate and shared service expenses






(8,799)

Results from operating activities





$

27,017


Nine months ended July 31, 2020

IMG

AMG

Total

Revenue

$

227,949

$

154,931

$

382,880

Direct costs


(54,240)


(57,676)


(111,916)

Revenue, net of direct costs


173,709


97,255


270,964

Operating expenses excluding special charges


(69,722)


(40,815)


(110,537)

Depreciation of property and equipment


(1,619)


(827)


(2,446)

Depreciation of right-of-use assets


(3,891)


(3,034)


(6,925)

Segment profit

$

98,477

$

52,579

$

151,056

Special charges






(1,490)

Corporate and shared service expenses






(30,249)

Results from operating activities





$

119,317


Nine months ended July 31, 2019

IMG

AMG

Total

Revenue

$

144,863

$

131,659

$

276,522

Direct costs


(37,877)


(48,544)


(86,421)

Revenue, net of direct costs


106,986


83,115


190,101

Operating expenses excluding special charges


(51,642)


(34,363)


(86,005)

Depreciation of property and equipment


(1,184)


(415)


(1,599)

Segment profit

$

54,160

$

48,337

$

102,497

Special charges






(526)

Corporate and shared service expenses






(22,538)

Results from operating activities





$

79,433

About Enghouse

Enghouse is a Canadian publicly traded company (TSX:ENGH), which provides enterprise software solutions focusing on remote work, visual computing and communications for next-generation software-defined networks. The Company's two-pronged growth strategy focuses on internal growth and acquisitions, which, to date, have been funded through operating cash flows. The Company is well capitalized, has nominal long-term debt 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, September 11, 2020 at 8:45 a.m. EST. To participate, please call +1-647-490-5367 or North American Toll-Free +1-800-367-2403. Confirmation code: 9567603. 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

Cision
Cision

View original content: http://www.newswire.ca/en/releases/archive/September2020/10/c4385.html