MARKHAM,
ON, March 13, 2024 /CNW/ - Enghouse Systems
Limited (TSX: ENGH) announces its first quarter
(unaudited) financial results for the period ended January 31, 2024. All figures are denominated in
Canadian dollars unless otherwise indicated.
Highlights for the First Quarter ended January 31, 2024 compared to the same period in
the prior year:
- Revenue increased 13.2% to $120.5
million compared to revenue of $106.4
million.
- Recurring revenue, which includes SaaS and maintenance
services, grew 27.2% to $84.6 million
and now represents 70.2% of total revenue.
- Results from operating activities improved to $32.6 million from $29.9
million, while achieving a 28.8% EBITDA margin.
Adjusted EBITDA was $34.7 million
compared to $32.3 million.
- Cash flows from operating activities, excluding changes in
working capital, were $35.6 million
compared to $32.6 million.
- Net income was $18.1 million
compared to $17.0 million.
As the software markets continues its transitions towards SaaS
offerings, we are generating an increasing proportion of recurring
revenue streams within our overall revenue model, which now
represents 70.2% of our total revenue in the first quarter of
2024.
Our operational expenditure has declined as a percentage of
revenue, consistent with our objective of generating operational
efficiencies despite the inflationary pressure on operating costs.
This focus on efficiency is part of our broader objective of
maintaining a lean operational model that supports our growth
ambitions without compromising the bottom line. Despite these
challenges, our cash position has increased in the quarter,
providing the resources necessary to continue to pursue new
acquisition opportunities that we believe will enhance our market
position and offer long-term shareholder value.
A key advantage Enghouse has in this high-interest-rate
operating environment is our debt-free status and a closing cash,
cash equivalents and short-term investments balance of $247.4 million, affording us the flexibility and
agility to make investments without the burden of external
financial constraints. This positions us uniquely in the market,
enabling us to pursue acquisitions and invest in further expanding
our product suite.
Subsequent to quarter end, on February
12, 2024, Enghouse completed the acquisition of Mediasite
assets, which offer a suite of SaaS video solutions as well as
expanding Enghouse's presence in the Japanese market. The
acquisition was completed for a cash purchase price of US
$15.5 million.
Quarterly dividends:
Today, the Board of Directors
approved an increase in the Company's eligible quarterly dividend
to $0.26 per common share, an
increase of 18.2% over the prior dividend, payable on May 31, 2024 to shareholders of record at
the close of business on May 17,
2024. This represents the 16th consecutive year in which the
Company increased its dividend by over 10%.
Enghouse Systems Limited
Financial
Highlights
(unaudited, in thousands of Canadian
dollars)
|
For the periods
ended January 31
|
|
|
Three
months
|
|
|
|
|
|
|
|
|
2024
|
|
2023
|
Var
($)
|
Var
(%)
|
|
Revenue
|
|
|
|
|
|
|
|
$
|
120,489
|
$
|
106,435
|
14,054
|
13.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
|
|
|
|
|
|
|
41,582
|
|
34,808
|
6,774
|
19.5
|
|
Revenue, net of
direct costs
|
|
|
|
|
|
|
|
$
|
78,907
|
$
|
71,627
|
7,280
|
10.2
|
|
As a % of
revenue
|
|
|
|
|
|
|
|
|
65.5 %
|
|
67.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
46,180
|
|
41,710
|
4,470
|
10.7
|
|
Special
charges
|
|
|
|
|
|
|
|
|
91
|
|
28
|
63
|
225.0
|
|
Results from
operating activities
|
|
|
|
|
|
|
|
$
|
32,636
|
$
|
29,889
|
2,747
|
9.2
|
|
As a % of
revenue
|
|
|
|
|
|
|
|
|
27.1 %
|
|
28.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired software and customer relationships
|
|
|
|
|
|
|
|
|
(10,374)
|
|
(8,832)
|
(1,542)
|
(17.5)
|
|
Foreign exchange
losses
|
|
|
|
|
|
|
|
|
(1,717)
|
|
(1,053)
|
(664)
|
(63.1)
|
|
Interest expense –
lease obligations
|
|
|
|
|
|
|
|
|
(150)
|
|
(167)
|
17
|
10.2
|
|
Finance
income
|
|
|
|
|
|
|
|
|
2,361
|
|
976
|
1,385
|
141.9
|
|
Finance
expenses
|
|
|
|
|
|
|
|
|
-
|
|
(7)
|
7
|
100.0
|
|
Other
expenses
|
|
|
|
|
|
|
|
|
(114)
|
|
(127)
|
13
|
10.2
|
|
Income before income
taxes
|
|
|
|
|
|
|
|
$
|
22,642
|
$
|
20,679
|
1,963
|
9.5
|
|
Provision for income
taxes
|
|
|
|
|
|
|
|
|
4,509
|
|
3,656
|
853
|
23.3
|
|
Net income for the
period
|
|
|
|
|
|
|
|
$
|
18,133
|
$
|
17,023
|
1,110
|
6.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
|
|
|
|
|
|
|
0.33
|
|
0.31
|
0.02
|
6.5
|
|
Diluted earnings per
share
|
|
|
|
|
|
|
|
|
0.33
|
|
0.31
|
0.02
|
6.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flows
|
|
|
|
|
|
|
|
|
19,899
|
|
29,262
|
(9,363)
|
(32.0)
|
|
Operating cash flows
excluding changes in working capital
|
|
|
|
|
|
|
|
|
35,557
|
|
32,632
|
2,925
|
9.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating
activities
|
|
|
|
|
|
|
|
|
32,636
|
|
29,889
|
2,747
|
9.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
|
|
|
|
494
|
|
626
|
(132)
|
21.1
|
|
Depreciation of
right-of-use assets
|
|
|
|
|
|
|
|
|
1,506
|
|
1,736
|
(230)
|
13.2
|
|
Special
charges
|
|
|
|
|
|
|
|
|
91
|
|
28
|
63
|
(225.0)
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
$
|
34,727
|
$
|
32,279
|
2,448
|
7.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
|
|
|
|
|
|
|
28.8 %
|
|
30.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per
diluted share
|
|
|
|
|
|
|
|
$
|
0.63
|
$
|
0.58
|
0.05
|
8.6
|
|
Condensed Consolidated Interim Statements of
Financial Position
|
|
(in thousands of
Canadian dollars)
(unaudited)
|
|
As at
January 31,
2024
|
As at October
31,
2023
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
246,752
|
$
|
239,532
|
|
Short-term
investments
|
|
|
671
|
|
827
|
|
Accounts
receivable
|
|
|
121,391
|
|
93,383
|
|
Prepaid
expenses and other assets
|
|
|
16,941
|
|
15,515
|
|
Income
taxes recoverable
|
|
|
-
|
|
114
|
|
|
|
385,755
|
|
349,371
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property
and equipment
|
|
|
3,128
|
|
3,273
|
|
Right-of-use assets
|
|
|
10,686
|
|
12,242
|
|
Intangible
assets
|
|
|
96,693
|
|
109,659
|
|
Goodwill
|
|
|
276,902
|
|
280,241
|
|
Deferred
income tax assets
|
|
|
26,906
|
|
28,884
|
|
|
|
414,315
|
|
434,299
|
|
|
$
|
800,070
|
$
|
783,670
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
64,862
|
$
|
67,769
|
|
Income
taxes payable
|
|
|
3,158
|
|
-
|
|
Dividends
payable
|
|
|
12,188
|
|
12,156
|
|
Provisions
|
|
|
1,417
|
|
2,238
|
|
Deferred
revenue
|
|
|
127,916
|
|
109,019
|
|
Lease
obligations
|
|
|
5,548
|
|
6,322
|
|
|
|
215,089
|
|
197,504
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Income
taxes payable
|
|
|
-
|
|
1,333
|
|
Deferred
income tax liabilities
|
|
|
12,772
|
|
13,340
|
|
Deferred
revenue
|
|
|
7,167
|
|
8,170
|
|
Net
employee defined benefit obligation
|
|
|
1,878
|
|
1,912
|
|
Lease
obligations
|
|
|
5,318
|
|
6,080
|
|
|
|
27,135
|
|
30,835
|
|
|
|
242,224
|
|
228,339
|
|
Shareholders'
equity
|
|
|
|
|
|
|
Share
capital
|
|
|
112,867
|
|
107,701
|
|
Contributed surplus
|
|
|
9,825
|
|
10,404
|
|
Retained
earnings
|
|
|
432,342
|
|
426,397
|
|
Accumulated other comprehensive income
|
|
|
2,812
|
|
10,829
|
|
|
|
557,846
|
|
555,331
|
|
|
$
|
800,070
|
$
|
783,670
|
|
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
|
|
|
|
2024
|
2023
|
|
|
|
|
|
|
|
Revenue
Software licenses
|
|
|
|
$
16,975
|
$
20,735
|
|
SaaS and maintenance
services
|
|
|
|
84,587
|
66,503
|
|
Professional
services
|
|
|
|
15,945
|
16,891
|
|
Hardware
|
|
|
|
2,982
|
2,306
|
|
|
|
|
120,489
|
106,435
|
|
Direct
costs
|
|
|
|
|
|
|
Software licenses
|
|
|
|
674
|
870
|
|
Services
|
|
|
|
39,531
|
32,425
|
|
Hardware
|
|
|
|
1,377
|
1,513
|
|
|
|
|
41,582
|
34,808
|
|
Revenue, net of
direct costs
|
|
|
|
78,907
|
71,627
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
|
22,869
|
20,798
|
|
Research and
development
|
|
|
|
21,311
|
18,550
|
|
Depreciation
|
|
|
|
494
|
626
|
|
Depreciation of right-of-use
assets
|
|
|
|
1,506
|
1,736
|
|
Special charges
|
|
|
|
91
|
28
|
|
|
|
|
46,271
|
41,738
|
|
|
|
|
|
|
|
Results from
operating activities
|
|
|
|
32,636
|
29,889
|
|
|
|
|
|
|
|
Amortization of
acquired software and customer
relationships
|
|
|
|
(10,374)
|
(8,832)
|
|
Foreign exchange
losses
|
|
|
|
(1,717)
|
(1,053)
|
|
Interest expense –
lease obligations
|
|
|
|
(150)
|
(167)
|
|
Finance
income
|
|
|
|
2,361
|
976
|
|
Finance
expenses
|
|
|
|
-
|
(7)
|
|
Other
expenses
|
|
|
|
(114)
|
( 127)
|
|
Income before income
taxes
|
|
|
|
22,642
|
20,679
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
|
|
4,509
|
3,656
|
|
|
|
|
|
|
Net income for the
period
|
|
|
|
$
18,133
|
$
17,023
|
|
Items that may be
subsequently reclassified to income:
|
|
|
|
|
|
Cumulative translation
adjustment
|
|
|
|
(8,017)
|
9,743
|
|
|
|
|
|
|
|
Other comprehensive
(loss) income
|
|
|
|
(8,017)
|
9,743
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
$
10,116
|
$
26,766
|
|
Earnings per
share
|
|
|
|
|
|
|
Basic
|
|
|
|
$ 0.33
|
$ 0.31
|
|
Diluted
|
|
|
|
$ 0.33
|
$ 0.31
|
|
Condensed Consolidated Interim Statements of Cash
Flows
|
|
(in thousands of
Canadian dollars)
(unaudited)
|
|
|
Three
months
|
|
Periods ended
January 31
|
|
|
|
2024
|
2023
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
Net income for the
period
|
|
|
|
$
18,133
|
$
17,023
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
494
|
626
|
|
Depreciation of right-of-use assets
|
|
|
|
1,506
|
1,736
|
|
Interest
expense – lease obligations
|
|
|
|
150
|
167
|
|
Amortization of acquired software and customer
relationships
|
|
|
|
10,374
|
8,832
|
|
Stock-based compensation expense
|
|
|
|
277
|
458
|
|
Provision
for income taxes
|
|
|
|
4,509
|
3,656
|
|
Finance
and other expenses
|
|
|
|
114
|
134
|
|
|
|
|
35,557
|
32,632
|
|
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
|
|
|
(13,140)
|
2,002
|
|
Income taxes
paid
|
|
|
|
(2,518)
|
(5,372)
|
|
Net cash provided by
operating activities
|
|
|
|
19,899
|
29,262
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
Net purchase of
property and equipment
|
|
|
|
(360)
|
(105)
|
|
Recovery of purchase
consideration for prior-year acquisitions
|
|
|
|
171
|
-
|
|
|
|
|
|
|
|
Purchase of short-term
investments
|
|
|
|
-
|
(69)
|
|
Net cash used in
investing activities
|
|
|
|
(189)
|
(
174)
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
Issuance of share
capital
|
|
|
|
4,310
|
604
|
|
Repayment of lease
obligations
|
|
|
|
(1,602)
|
(1,810)
|
|
Dividends
paid
|
|
|
|
(12,156)
|
(10,221)
|
|
Net cash used in
financing activities
|
|
|
|
(9,448)
|
(11,427)
|
|
Impact of foreign
exchange on cash and cash equivalents
|
|
|
|
(3,042)
|
5,036
|
|
|
|
|
|
|
|
Increase in cash and
cash equivalents
|
|
|
|
7,220
|
22,697
|
|
Cash and cash
equivalents ─ beginning of period
|
|
|
|
239,532
|
225,104
|
|
Cash and cash
equivalents ─ end of period
|
|
|
|
$
246,752
|
$
247,801
|
Enghouse Systems Limited
Segment Reporting
Information
(in thousands of Canadian dollars)
|
Three months ended
January 31
|
|
2024
|
|
2023
|
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
76,137
|
$
|
44,352
|
$
|
120,489
|
$
|
57,852
|
$
|
48,583
|
$
|
106,435
|
|
Direct costs
|
|
(25,406)
|
|
(16,176)
|
|
(41,582)
|
|
(16,431)
|
|
(18,377)
|
|
(34,808)
|
|
Revenue, net of
direct costs
|
|
50,731
|
|
28,176
|
|
78,907
|
|
41,421
|
|
30,206
|
|
71,627
|
|
Operating expenses
excluding special charges
|
|
(21,425)
|
|
(11,697)
|
|
(33,122)
|
|
(19,250)
|
|
(11,321)
|
|
(30,571)
|
|
Depreciation
|
|
(377)
|
|
(117)
|
|
(494)
|
|
(537)
|
|
(89)
|
|
(626)
|
|
Depreciation of
right-of-use assets
|
|
(936)
|
|
(570)
|
|
(1,506)
|
|
(1,100)
|
|
(636)
|
|
(1,736)
|
|
Segment
profit
|
$
|
27,993
|
$
|
15,792
|
$
|
43,785
|
$
|
20,534
|
$
|
18,160
|
$
|
38,694
|
|
Special
charges
|
|
|
|
|
|
(91)
|
|
|
|
|
|
(28)
|
|
Corporate and shared
service expenses
|
|
|
|
|
|
(11,058)
|
|
|
|
|
|
(8,777)
|
|
Results from
operating activities
|
|
|
|
|
$
|
32,636
|
|
|
|
|
$
|
29,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Enghouse
Enghouse is a Canadian publicly traded company (TSX:ENGH) that
provides mission-critical vertically focused enterprise software
solutions. Our core technologies are used for contact centers,
video communications, virtual healthcare, telecommunications
networks, public safety and the transit market. The Company's
two-pronged growth strategy to grow earnings focuses on organic
growth and acquisitions, which, to date, have been funded through
operating cash flows as the Company has no outstanding external
debt financing. The Company is organized around two business
segments, the Interactive Management Group ("IMG") and the Asset
Management Group ("AMG") due to their unique customer segments and
technology offerings. 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
Thursday, March 14, 2024 at
8:45 a.m. EST. To participate, please
call Local
+1-289-514-5100 or North American Toll-Free 1-800-717-1738.
Confirmation code: 74715. 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
