NexJ Systems Reports Fourth Quarter and Full Year 2012 Financial Results

TORONTO, March 6, 2013 /CNW/ - NexJ Systems Inc., (TSX: NXJ), a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance, and healthcare industries, today announced financial results for its fourth quarter and year-ended December 31, 2012.

Financial Highlights for Q4 2012

  • Revenue was $6.9 million, down 6% Y/Y
  • Adjusted EBITDA (as defined below) was a loss of $4.2 million or $0.21 per share (basic and diluted) for the quarter ended December 31, 2012 as compared to an adjusted EBITDA loss of $2.3 million or $0.12 per share (basic and diluted) for the comparative period in 2011
  • Net loss was $4.2 million or $0.21 per share (basic and diluted) for the quarter ended December 31, 2012, as compared to a net loss of $3 million or $0.15 per share (basic and diluted) for the comparative period in 2011

Financial Highlights for Fiscal Year 2012

  • Revenue was $26.2 million, down 13% Y/Y
  • Adjusted EBITDA (as defined below) was a loss of $14.8 million or $0.74 per share (basic and diluted) for the year ended December 31, 2012 as compared to an adjusted EBITDA loss of $5.9 million or $0.33 per share (basic and diluted) for the comparative period in 2011
  • Net loss was $16.4 million or $0.83 per share (basic and diluted) for the year ended December 31, 2012, as compared to a net loss of $7.5 million or $0.42 per share (basic and diluted) for the comparative period in 2011
  • Completed the acquisition of Broadstreet Data Solutions Inc. ("Broadstreet")

"The integration of Broadstreet went well and we are already seeing the benefits of the management strength we acquired and the expansion of our offerings to the market," said William M. Tatham, Chief Executive Officer of NexJ.  "The restructuring of sales has led to dramatically increased sales activity which I am confident will translate in to a year of strong growth in 2013."

Recent Business Highlights

Conference Call Information
NexJ will be hosting an earnings report conference call today at 5:00 p.m. ET. The call can be accessed via webcast or by phone by dialing 647-427-7450 (Toronto local or international) or 1-888-231-8191 (North America Toll Free).  Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin.

A replay of the call will be available beginning today at 8:00 p.m. ET through 11:59 p.m. on March 13, 2013 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 13742884.

Non-IFRS Measures
This news release includes certain measures that have not been prepared in accordance with International Financial Reporting Standards ("IFRS") such as Adjusted EBITDA and Adjusted EBITDA margin which are used to evaluate the Company's operating performance as a complement to results provided in accordance with IFRS.  The Company believes that Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental information as they provide an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and the other items listed below.

The term "Adjusted EBITDA" refers to net income/loss before deducting share-based payment expense, earn-out expense, finance income, finance costs, foreign exchange gain/loss, depreciation and income taxes.  "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.

The term Adjusted EBITDA and Adjusted EBITDA margin are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS.  Therefore, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similar measures presented by other issuers.  Investors are cautioned that Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an alternative to net income (loss) as determined in accordance with IFRS.

The following table reconciles Adjusted EBITDA to net loss:

  Three months ended
December 31,
Year Ended
December 31,
2012 2011 2012 2011
  (in thousands of dollars,
except percentages)
(in thousands of dollars,
except percentages)
         
Total revenue  $6,852 $7,296 $ 26,189 $ 30,249
         
Net loss  (4,186) (2,977) (16,435) (7,543)
Adjust for:        
Share-based payment expense  233 358 1,065 2,012
Depreciation and amortization  406 282 1,256 847
Earn-out expense  384 - 384 -
Foreign exchange loss (gain)  (202) 187 213 (788)
Finance income  (161) (178) (612) (418)
Finance costs  2 1 3 7
Income tax recovery  669 - 669 -
         
Adjusted EBITDA  (4,193) (2,327) (14,795) (5,883)
Adjusted EBITDA margin  (61)% (32)% (56)% (19)%

About NexJ Systems Inc.
NexJ is a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance and healthcare industries. Our next-generation, people-centered software combines industry-specific functionality with information from multiple applications and data stores to provide comprehensive knowledge of the individual.

Through the acquisition of Broadstreet Data Solutions Inc., NexJ has added expertize in data governance and master data management, data conversion and integration, data analytics and business intelligence, and mobile solution development.

NexJ is named as Canada's fastest growing company in the 24th Annual PROFIT 200 ranking by PROFIT Magazine, and ranks in the top 5 of the Deloitte Technology Fast 50™ for the third consecutive year. Based in Toronto, NexJ has clients throughout North America and in Europe. For more information about NexJ Systems visit www.nexj.com, e-mail info@nexj.com, or call 416-222-5611

NexJ Forward-looking Statement
Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings, may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.

Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of NexJ; (ii) the ability of NexJ to protect, maintain and enforce its intellectual property rights; (iii) the acceptance by the Company's customers and the marketplace of new technologies and solutions; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the CRM market; (vi) the Company's competitive position in the CRM market and its ability to take advantage of future opportunities in this market; (vii) the Company's ability to attract new customers and develop and maintain existing customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the CRM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances.

The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our dependence on a limited number of customers and large project size; (ii) fluctuation in our quarterly operating results; (iii) our dependence on key personnel and our compensation structure; (iv) risks associated with managing large and complex software implementation projects; (v) uncertainties and assumptions in our sales forecasts, including the extent to which sales proposals are converted into sales; (vi) risks associated with our ability to design, develop, test, market, license and support our software products on a timely basis; (vii) market acceptance of our products and services; (viii) commercial success of products resulting from our investment in research and development; (ix) our success in expanding sales into new international markets; * risks associated with expansion into healthcare and other new industry verticals; (xi) competition in our industry; (xii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiii) reliance upon a limited number of third-party software products to develop our products; (xiv) defects or disruptions in our products and services; (xv) currency exchange rate fluctuations; (xvi) lengthy sales cycles for our software; (xvii) global financial market conditions; (xviii) failure to manage our growth successfully; (xix) failure to successfully manage and integrate acquisitions, including the business acquired from Broadstreet .

For additional information with respect to risks and other factors which could occur, see the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2012 dated March 6, 2013, and other securities filings with the Canadian securities regulators available on www.sedar.com.  Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NEXJ SYSTEMS INC.          
Consolidated Statements of Financial Position          
(Expressed in thousands of Canadian dollars)          
           
December 31, 2012 and 2011          
           
    2012     2011
           
Assets          
           
Current assets:          
    Cash and cash equivalents $ 46,263   $ 56,218
    Short-term investments    -      4,068
    Accounts receivable   9,513     4,128
    Investment tax credits receivable    -      2,479
    Income taxes receivable   146      - 
    Prepaid expenses and other assets    992     1,645
    Total current assets   56,914     68,538
           
Non-current assets:          
    Property and equipment   3,869     4,596
    Intangible assets    2,400      - 
    Goodwill    3,640      - 
    Other assets    260     260
    Total non-current assets   10,169     4,856
           
Total assets $ 67,083   $ 73,394
           
Liabilities and Shareholders' Equity          
           
Current liabilities:          
    Accounts payable and accrued liabilities  $ 7,318   $ 4,805
    Current portion of obligations under capital leases    -      41
    Deferred revenue   5,069     2,097
    Total current liabilities   12,387     6,943
           
Non-current liabilities:          
    Accrued liabilities   801     1,053
    Provisions   428      - 
    Deferred revenue   268      - 
    Total non-current liabilities   1,497     1,053
           
Total liabilities   13,884     7,996
           
Shareholders' equity:          
    Share capital    83,061     79,831
    Share purchase loans    (3,622)     (3,803)
    Contributed surplus    4,859     4,034
    Deficit   (31,099)     (14,664)
    Total shareholders' equity   53,199     65,398
           
           
Total liabilities and shareholders' equity $ 67,083   $ 73,394

 

NEXJ SYSTEMS INC.          
Consolidated Statements of Comprehensive Loss            
(Expressed in thousands of Canadian dollars, except per share amounts)          
           
Years ended December 31, 2012 and 2011          
           
    2012     2011
           
Revenue:          
    License fees $ 4,102   $ 8,542
    Net license reseller fees   219      - 
    Professional services   16,770     18,259
    Maintenance and support   5,098     3,448
    26,189     30,249
           
Expenses*:          
    Professional service costs   11,523     10,007
    Research and development, net   14,900     13,364
    Sales and marketing   8,398     7,812
    General and administrative   8,868     7,808
    43,689     38,991
           
Loss from operations   (17,500)     (8,742)
           
Foreign exchange gain (loss)   (213)     788
Finance income    612     418
Finance costs   (3)     (7)
    396     1,199
           
Loss before income taxes   (17,104)     (7,543)
           
Income tax recovery:          
    Current   -      - 
    Deferred   (669)      - 
    (669)      - 
           
Loss and comprehensive loss for the year $ (16,435)   $ (7,543)
           
Loss per share:          
    Basic and diluted $ (0.83)   $ (0.42)
           
           
Weighted average number of common shares          
  outstanding:          
    Basic and diluted   19,880     17,751
           
           
*Share-based payment expense has been included          
  in expenses as follows:          
    Professional service costs $ 241   $ 293
    Research and development, net   389     535
    Sales and marketing   60     595
    General and administrative   375     589
           
  $ 1,065   $ 2,012

 

NEXJ SYSTEMS INC.          
Consolidated Statements of Cash Flows          
(Expressed in thousands of Canadian dollars)          
           
Years ended December 31, 2012 and 2011          
           
    2012     2011
           
Cash flows from operating activities:          
  Loss for the year $ (16,435)   $ (7,543)
  Adjustments for:          
    Depreciation and amortization   1,256     847
    Share-based payment expense   1,065     2,012
    Finance income   (612)     (418)
    Finance costs   3     7
    Deferred tax recovery   (669)      - 
    Foreign exchange loss (gain)   85     (714)
  Change in non-cash operating working capital:          
    Accounts receivable   (2,612)     2,363
    Investment tax credits receivable   2,479     940
    Prepaid expenses and other assets   668     (568)
    Accounts payable and accrued liabilities and provisions   879     (334)
    Deferred revenue   3,233     (3,630)
  Net cash flows used in operating activities   (10,660)     (7,038)
           
Cash flows from financing activities:          
  Obligations under capital leases   (41)     (67)
  Proceeds from exercise of employee stock options   70     34
  Proceeds from exercise of agent stock options   635     564
  Proceeds from repayment of share purchase loans   143     39
  Repayment of bank indebtedness of Broadstreet Data Solutions Inc.   (1,083)      - 
  Issuance of common shares    -      43,650
  Financing costs, net    -      (3,888)
  Interest paid   (3)     (7)
  Net cash flows from (used in) financing activities   (279)     40,325
           
Cash flows from investing activities:          
  Purchase of property and equipment   (358)     (3,192)
  Acquisition of Broadstreet Data Solutions Inc., net of cash acquired   (3,297)      - 
  Redemption of short-term investments   4,005     1,136
  Interest received   612     418
  Decrease in other non-current assets    -      47
  Net cash flows from (used in) investing activities   962     (1,591)
           
Effects of exchange rates on cash and cash equivalents   22     580
           
Increase (decrease) in cash and cash equivalents   (9,955)     32,276
           
Cash and cash equivalents, beginning of year   56,218     23,942
           
Cash and cash equivalents, end of year $ 46,263   $ 56,218
           
Supplemental cash flow information:          
  Acquisition of property and equipment not yet paid for $  -    $ 393

 

 

 

SOURCE: NexJ Systems Inc.

For further information:

Media Contact: Matthew Bogart
416-227-3708
matthew.bogart@nexj.com


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