MARKHAM,
ON, June 12, 2023 /CNW/ - Enghouse Systems
Limited (TSX: ENGH) today announced its second quarter unaudited
financial results for the period ended April
30, 2023. All the financial information is in Canadian
dollars unless otherwise indicated.
Financial and operational highlights for the three and six
months ended April 30, 2023 compared
to the three and six months ended April 30,
2022 are as follows:
- Revenue achieved was $113.5 and
$219.9 million, respectively,
compared to revenue of $106.3 and
$217.4 million;
- Results from operating activities was $25.6 and $55.5
million, respectively, compared to $31.1 and $66.8
million;
- Net income was $12.5 and
$29.6 million, respectively, compared
to $17.9 and $39.5 million;
- Adjusted EBITDA was $30.2 and
$62.5 million, respectively, compared
to $33.8 and $72.3 million;
- Cash flow from operating activities excluding changes in
working capital was $28.9 and
$61.5 million, respectively,
compared to $34.5 and
$73.3 million.
Revenue for the second quarter reflects an increase of
6.7% compared to the same period in the prior year and was
positively impacted by $3.6 million
as a result of foreign exchange, which also adversely impacted cost
of revenue and operating expenses by $2.2
million. Consistent with our strategy, revenue growth was
largely driven by recent acquisitions.
Net income for the quarter was $0.23 per diluted share compared to $0.32 per diluted share last year. The decrease
was primarily a result of incremental operating costs related to
acquisitions as we integrate them into Enghouse combined with
higher third-party costs and special charges related to
acquisitions. Adjusted EBITDA was $0.54 per diluted share, compared to $0.61 per diluted share in the second
quarter of 2022.
Year-to-date revenue was positively impacted by foreign
exchange, which also increased costs. Year-to-date results from
operating activities reflect increased revenue and costs related to
acquisitions as well as increased third-party costs of providing
services. Year-to-date Adjusted EBITDA was $1.13 per diluted share compared to $1.30 per diluted share last year as a result of
the initial margin compression related to increased acquisition
activity as well as increased third-party costs of providing
services.
As previously announced, Enghouse completed two acquisitions,
purchasing Qumu Corporation ("Qumu") (Nasdaq:QUMU) on February 8, 2023 and Mobi All Technologies S.A
("Navita") on February 9, 2023.
Qumu's video Engagement platform provides video creation, content
management and highly scalable delivery solutions that complement
Enghouse's enterprise video suite of products. Navita offers a
comprehensive suite of products focused on managing and controlling
critical mobile assets as well as telecom and IT expense
management. The results from both acquisitions are included in the
Interactive Management Group. The efforts to integrate and onboard
these acquisitions were substantially completed in the
quarter.
Quarterly dividends:
Today, the Board of
Directors approved the Company's eligible quarterly dividend of
$0.22 per common share, payable
on August 31, 2023 to shareholders of
record at the close of business on August
17, 2023.
Enghouse Systems Limited
Financial Highlights
(unaudited, in
thousands of Canadian dollars)
For the period ended
April 30
|
Three
months
|
|
Six
months
|
|
2023
|
|
2022
|
Var
($)
|
Var
(%)
|
|
|
2023
|
|
2022
|
Var
($)
|
Var
(%)
|
Revenue
|
$
|
113,461
|
$
|
106,312
|
7,149
|
6.7
|
|
$
|
219,896
|
$
|
217,414
|
2,482
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
38,106
|
|
33,581
|
4,525
|
13.5
|
|
|
72,914
|
|
66,409
|
6,505
|
9.8
|
Revenue, net of
direct costs
|
$
|
75,355
|
$
|
72,731
|
2,624
|
3.6
|
|
$
|
146,982
|
$
|
151,005
|
(4,023)
|
(2.7)
|
As a % of
revenue
|
|
66.4 %
|
|
68.4 %
|
|
|
|
|
66.8 %
|
|
69.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
47,712
|
|
41,629
|
6,083
|
14.6
|
|
|
89,422
|
|
84,180
|
5,242
|
6.2
|
Special
charges
|
|
2,001
|
|
46
|
1,955
|
4250.0
|
|
|
2,029
|
|
64
|
1,965
|
3070.3
|
Results from
operating activities
|
$
|
25,642
|
$
|
31,056
|
(5,414)
|
(17.4)
|
|
$
|
55,531
|
$
|
66,761
|
(11,230)
|
(16.8)
|
As a % of
revenue
|
|
22.6 %
|
|
29.2 %
|
|
|
|
|
25.3 %
|
|
30.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired software and
customer relationships
|
|
(9,838)
|
|
(9,207)
|
(631)
|
(6.9)
|
|
|
(18,670)
|
|
(18,864)
|
194
|
1.0
|
Foreign exchange
(losses) gains
|
|
(790)
|
|
314
|
(1,104)
|
(351.6)
|
|
|
(1,843)
|
|
(22)
|
(1,821)
|
(8277.3)
|
Interest expense –
lease obligations
|
|
(192)
|
|
(196)
|
4
|
2.0
|
|
|
(359)
|
|
(398)
|
39
|
9.8
|
Finance
income
|
|
1,006
|
|
122
|
884
|
724.6
|
|
|
1,982
|
|
251
|
1,731
|
689.6
|
Finance
expenses
|
|
(124)
|
|
(21)
|
(103)
|
(490.5)
|
|
|
(131)
|
|
(44)
|
(87)
|
(197.7)
|
Other (expenses)
income
|
|
(528)
|
|
23
|
(551)
|
(2395.7)
|
|
|
(655)
|
|
1,023
|
(1,678)
|
(164.0)
|
Income before income
taxes
|
$
|
15,176
|
$
|
22,091
|
(6,915)
|
(31.3)
|
|
$
|
35,855
|
$
|
48,707
|
(12,852)
|
(26.4)
|
Provision for income
taxes
|
|
2,640
|
|
4,220
|
(1,580)
|
(37.4)
|
|
|
6,296
|
|
9,239
|
(2,943)
|
(31.9)
|
Net Income for the
period
|
$
|
12,536
|
$
|
17,871
|
(5,335)
|
(29.9)
|
|
$
|
29,559
|
$
|
39,468
|
(9,909)
|
(25.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
0.23
|
|
0.32
|
(0.09)
|
(28.1)
|
|
|
0.53
|
|
0.71
|
(0.18)
|
(25.4)
|
Diluted earnings per
share
|
|
0.23
|
|
0.32
|
(0.09)
|
(28.1)
|
|
|
0.53
|
|
0.71
|
(0.18)
|
(25.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flows
|
|
18,698
|
|
31,142
|
(12,444)
|
(40.0)
|
|
|
47,960
|
|
55,484
|
(7,524)
|
(13.6)
|
Operating cash flows
excluding changes
in working capital
|
|
28,875
|
|
34,510
|
(5,635)
|
(16.3)
|
|
|
61,507
|
|
73,253
|
(11,746)
|
(16.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating
activities
|
|
25,642
|
|
31,056
|
(5,414)
|
(17.4)
|
|
|
55,531
|
|
66,761
|
(11,230)
|
(16.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
613
|
|
705
|
(92)
|
13.0
|
|
|
1,239
|
|
1,425
|
(186)
|
13.1
|
Depreciation of
right-of-use assets
|
|
1,931
|
|
1,969
|
(38)
|
1.9
|
|
|
3,667
|
|
4,081
|
(414)
|
10.1
|
Special
charges
|
|
2,001
|
|
46
|
1,955
|
(4250.0)
|
|
|
2,029
|
|
64
|
1,965
|
(3070.3)
|
Adjusted
EBITDA
|
$
|
30,187
|
$
|
33,776
|
(3,589)
|
(10.6)
|
|
$
|
62,466
|
$
|
72,331
|
(9,865)
|
(13.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
26.6 %
|
|
31.8 %
|
|
|
|
|
28.4 %
|
|
33.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per
diluted share
|
$
|
0.54
|
$
|
0.61
|
(0.07)
|
(11.5)
|
|
$
|
1.13
|
$
|
1.30
|
(0.17)
|
(13.1)
|
Condensed
Consolidated Interim Statements of Financial
Position
|
(in thousands of
Canadian dollars)
(unaudited)
|
|
As at
April 30,
2023
|
As at October
31,
2022
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
232,151
|
$
|
225,104
|
Short-term
investments
|
|
|
2,337
|
|
2,950
|
Accounts
receivable
|
|
|
109,320
|
|
93,104
|
Prepaid
expenses and other assets
|
|
|
16,267
|
|
12,848
|
Income
taxes recoverable
|
|
|
739
|
|
492
|
|
|
|
360,814
|
|
334,498
|
Non-current
assets:
|
|
|
|
|
|
Property
and equipment
|
|
|
3,658
|
|
4,186
|
Right-of-use assets
|
|
|
17,461
|
|
20,063
|
Intangible
assets
|
|
|
101,804
|
|
85,902
|
Goodwill
|
|
|
258,992
|
|
230,002
|
Deferred
income tax assets
|
|
|
32,820
|
|
30,347
|
|
|
|
414,735
|
|
370,500
|
|
|
$
|
775,549
|
$
|
704,998
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
67,842
|
$
|
60,525
|
Dividends
payable
|
|
|
12,159
|
|
10,221
|
Provisions
|
|
|
3,171
|
|
3,183
|
Deferred
revenue
|
|
|
113,137
|
|
83,122
|
Lease
obligations
|
|
|
7,314
|
|
6,822
|
|
|
|
203,623
|
|
163,873
|
Non-current
liabilities:
|
|
|
|
|
|
Income
taxes payable
|
|
|
1,305
|
|
2,576
|
Deferred
income tax liabilities
|
|
|
17,049
|
|
12,038
|
Deferred
revenue
|
|
|
3,976
|
|
3,470
|
Net
employee defined-benefit obligation
|
|
|
2,027
|
|
1,821
|
Lease
obligations
|
|
|
9,655
|
|
13,055
|
|
|
|
34,012
|
|
32,960
|
|
|
|
237,635
|
|
196,833
|
Shareholders'
equity:
|
|
|
|
|
|
Share
capital
|
|
|
107,728
|
|
107,007
|
Contributed surplus
|
|
|
9,696
|
|
8,882
|
Retained
earnings
|
|
|
408,423
|
|
401,247
|
Accumulated other comprehensive income (loss)
|
|
|
12,067
|
|
(8,971)
|
|
|
|
537,914
|
|
508,165
|
|
|
$
|
775,549
|
$
|
704,998
|
Condensed
Consolidated Interim Statements of Operations and Comprehensive
Income
|
(in thousands of
Canadian dollars, except per share amounts)
|
|
|
(unaudited)
|
|
Three
months
|
Six
months
|
Periods ended April
30
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
|
Revenue
Software licenses
|
|
$
22,016
|
$
21,420
|
$
42,751
|
$
45,198
|
SaaS and maintenance
services
|
|
71,634
|
63,745
|
138,137
|
130,172
|
Professional
services
|
|
17,995
|
17,879
|
34,886
|
35,831
|
Hardware
|
|
1,816
|
3,268
|
4,122
|
6,213
|
|
|
113,461
|
106,312
|
219,896
|
217,414
|
Direct
costs
|
|
|
|
|
|
Software licenses
|
|
698
|
1,286
|
1,568
|
2,613
|
Services
|
|
36,793
|
30,560
|
69,218
|
60,154
|
Hardware
|
|
615
|
1,735
|
2,128
|
3,642
|
|
|
38,106
|
33,581
|
72,914
|
66,409
|
Revenue, net of
direct costs
|
|
75,355
|
72,731
|
146,982
|
151,005
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Selling, general and
administrative
|
|
23,935
|
19,897
|
44,733
|
42,304
|
Research and
development
|
|
21,233
|
19,058
|
39,783
|
36,370
|
Depreciation
|
|
613
|
705
|
1,239
|
1,425
|
Depreciation of right-of-use
assets
|
|
1,931
|
1,969
|
3,667
|
4,081
|
Special charges
|
|
2,001
|
46
|
2,029
|
64
|
|
|
49,713
|
41,675
|
91,451
|
84,244
|
|
|
|
|
|
|
Results from
operating activities
|
|
25,642
|
31,056
|
55,531
|
66,761
|
|
|
|
|
|
|
Amortization of
acquired software and customer
relationships
|
|
(9,838)
|
(9,207)
|
(18,670)
|
(18,864)
|
Foreign exchange
(losses) gains
|
|
(790)
|
314
|
(1,843)
|
(22)
|
Interest expense –
lease obligations
|
|
(192)
|
(196)
|
(359)
|
(398)
|
Finance
income
|
|
1,006
|
122
|
1,982
|
251
|
Finance
expenses
|
|
(124)
|
(21)
|
(131)
|
(44)
|
Other (expenses)
income
|
|
(528)
|
23
|
( 655)
|
1,023
|
Income before income
taxes
|
|
15,176
|
22,091
|
35,855
|
48,707
|
|
|
|
|
|
|
Provision for income
taxes
|
|
2,640
|
4,220
|
6,296
|
9,239
|
|
|
|
|
|
Net income for the
period
|
|
12,536
|
17,871
|
29,559
|
39,468
|
Item that may be
subsequently reclassified to income:
|
|
|
|
|
Cumulative translation
adjustment
|
|
11,295
|
(9,198)
|
21,038
|
(5,072)
|
|
|
|
|
|
|
Other comprehensive
income (loss)
|
|
11,295
|
(9,198)
|
21,038
|
(5,072)
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
23,831
|
$
8,673
|
$
50,597
|
$
34,396
|
Earnings per
share
|
|
|
|
|
|
Basic
|
|
$
0.23
|
$ 0.32
|
$ 0.53
|
$ 0.71
|
Diluted
|
|
$
0.23
|
$ 0.32
|
$ 0.53
|
$ 0.71
|
Condensed
Consolidated Interim Statements of Cash Flows
|
(in thousands of
Canadian dollars)
(unaudited)
|
|
Three
months
|
Six
months
|
Periods ended April
30
|
|
2023
|
2022
|
2023
|
2022
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
Net income for the
period
|
|
$
12,536
|
$
17,871
|
$
29,559
|
$
39,468
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
613
|
705
|
1,239
|
1,425
|
Depreciation of right-of-use assets
|
|
1,931
|
1,969
|
3,667
|
4,081
|
Interest
expense – lease obligations
|
|
192
|
196
|
359
|
398
|
Amortization of acquired software and customer
relationships
|
|
9,838
|
9,207
|
18,670
|
18,864
|
Stock-based compensation expense
|
|
473
|
344
|
931
|
757
|
Provision
for income taxes
|
|
2,640
|
4,220
|
6,296
|
9,239
|
Finance
and other expenses (income)
|
|
652
|
(2)
|
786
|
(979)
|
|
|
28,875
|
34,510
|
61,507
|
73,253
|
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
|
(5,989)
|
1,513
|
(3,987)
|
(9,689)
|
Income taxes
paid
|
|
(4,188)
|
(4,881)
|
(9,560)
|
(8,080)
|
Net cash provided by
operating activities
|
|
18,698
|
31,142
|
47,960
|
55,484
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Net purchase of
property and equipment
|
|
(66)
|
(593)
|
(171)
|
(358)
|
Acquisitions, net of
cash acquired*
|
|
(25,617)
|
-
|
(25,617)
|
-
|
Purchase consideration
for prior-year acquisition
|
|
233
|
(408)
|
233
|
(408)
|
Purchase of short-term
investments
|
|
-
|
(60)
|
(69)
|
(60)
|
Net cash used in
investing activities
|
|
(25,450)
|
(1,061)
|
(25,624)
|
(
826)
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Issuance of share
capital
|
|
-
|
970
|
604
|
970
|
Repayment of lease
obligations
|
|
(2,470)
|
(2,148)
|
(4,280)
|
(4,241)
|
Dividends
paid
|
|
(10,225)
|
(8,889)
|
(20,446)
|
(17,778)
|
Net cash used in
financing activities
|
|
(12,695)
|
(10,067)
|
(24,122)
|
(21,049)
|
Impact of foreign
exchange on cash and cash equivalents
|
|
3,797
|
(3,536)
|
8,833
|
(2,122)
|
|
|
|
|
|
|
(Decrease) increase
in cash and cash equivalents
|
|
(15,650)
|
16,478
|
7,047
|
31,487
|
Cash and cash
equivalents - beginning of period
|
|
247,801
|
210,899
|
225,104
|
195,890
|
Cash and cash
equivalents - end of period
|
|
$
232,151
|
$
227,377
|
$
232,151
|
$
227,377
|
* Acquisitions are net of cash acquired of $2,088 for the three and six months ended
April 30, 2023 and $NIL for the three
and six months ended April 30,
2022, respectively.
Enghouse Systems Limited
Segment Reporting Information
(in thousands of
Canadian dollars)
Three months ended
April 30
|
|
2023
|
|
2022
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
Revenue
|
$
|
64,578
|
$
|
48,883
|
$
|
113,461
|
$
|
57,218
|
$
|
49,094
|
$
|
106,312
|
Direct costs
|
|
(19,133)
|
|
(18,973)
|
|
(38,106)
|
|
(15,313)
|
|
(18,268)
|
|
(33,581)
|
Revenue, net of
direct costs
|
|
45,445
|
|
29,910
|
|
75,355
|
|
41,905
|
|
30,826
|
|
72,731
|
Operating expenses
excluding special charges
|
|
(23,034)
|
|
(12,596)
|
|
(35,630)
|
|
(19,412)
|
|
(11,101)
|
|
(30,513)
|
Depreciation
|
|
(544)
|
|
(69)
|
|
(613)
|
|
(600)
|
|
(105)
|
|
(705)
|
Depreciation of
right-of-use assets
|
|
(941)
|
|
(990)
|
|
(1,931)
|
|
(1,192)
|
|
(777)
|
|
(1,969)
|
Segment
profit
|
$
|
20,926
|
$
|
16,255
|
$
|
37,181
|
$
|
20,701
|
$
|
18,843
|
$
|
39,544
|
Special
charges
|
|
|
|
|
|
(2,001)
|
|
|
|
|
|
(46)
|
Corporate and shared
service expenses
|
|
|
|
|
|
(9,538)
|
|
|
|
|
|
(8,442)
|
Results from
operating activities
|
|
|
|
|
$
|
25,642
|
|
|
|
|
$
|
31,056
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended
April 30
|
|
2023
|
|
2022
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
Revenue
|
$
|
122,431
|
$
|
97,465
|
$
|
219,896
|
$
|
119,089
|
$
|
98,325
|
$
|
217,414
|
Direct costs
|
|
(35,564)
|
|
(37,350)
|
|
(72,914)
|
|
(30,756)
|
|
(35,653)
|
|
(66,409)
|
Revenue, net of
direct costs
|
|
86,867
|
|
60,115
|
|
146,982
|
|
88,333
|
|
62,672
|
|
151,005
|
Operating expenses
excluding special charges
|
|
(42,285)
|
|
(23,916)
|
|
(66,201)
|
|
(38,963)
|
|
(22,273)
|
|
(61,236)
|
Depreciation
|
|
(1,081)
|
|
(158)
|
|
(1,239)
|
|
(1,196)
|
|
(229)
|
|
(1,425)
|
Depreciation of
right-of-use assets
|
|
(2,041)
|
|
(1,626)
|
|
(3,667)
|
|
(2,519)
|
|
(1,562)
|
|
(4,081)
|
Segment
profit
|
$
|
41,460
|
$
|
34,415
|
$
|
75,875
|
$
|
45,655
|
$
|
38,608
|
$
|
84,263
|
Special
charges
|
|
|
|
|
|
(2,029)
|
|
|
|
|
|
(64)
|
Corporate and shared
service expenses
|
|
|
|
|
|
(18,315)
|
|
|
|
|
|
(17,438)
|
Results from
operating activities
|
|
|
|
|
$
|
55,531
|
|
|
|
|
$
|
66,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
Tuesday, June 13, 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: 18752188. 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