Tecsys Reports Record Revenue for the First Quarter of Fiscal 2024

SaaS Revenue Rises 44% and Total Revenue Rises 23% in the First Quarter

MONTREAL, Sept. 7, 2023 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the first quarter fiscal year 2024, ended July 31, 2023. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).

"We are pleased to kick off fiscal 2024 with robust results, led by 44% growth in SaaS revenue and record quarterly revenue," says Peter Brereton, president and CEO at Tecsys Inc. "Our focus on innovation and customer-centricity has driven significant gains across key metrics, and we are seeing the impact of that in our results. This quarter's performance sets a positive tone for the rest of the year."

Mark Bentler, chief financial officer of Tecsys Inc., adds, "Our momentum continues with back-to-back quarters of total revenue growth of 20% or more.  We are seeing positive results in our gross margin, and we've demonstrated our ability to manage costs while investing in areas that drive growth. Underpinned by a 36% increase in our SaaS RPO, we remain well-positioned for the future."

First Quarter Highlights:

• SaaS revenue increased by 44% to $11.5 million, up from $8.0 million in Q1 2023.
• SaaS subscription bookingsⁱ (measured on an ARRⁱ basis) decreased by 50% to $1.9 million, compared to $3.9 million in the first quarter of fiscal 2023.
• SaaS Remaining Performance Obligation (RPOⁱ) increased by 36% to $139.4 million at July 31, 2023, up from $102.5 million at the same time last year.
• Annual Recurring Revenue (ARRⁱ) at July 31, 2023 was up 20% to $78.3 million compared to $65.1 million at July 31, 2022.
• Professional services revenue was up 9% to $14.9 million compared to $13.6 million in Q1 2023.
• Total revenue excluding hardware revenue was $35.2 million, 16% higher than $30.4 million reported for Q1 last year, while total revenue rose 23% to reach a record $42.0 million.
• Gross margin was 46% for the first quarter of fiscal 2024 compared to 43% for the same period in fiscal 2023.
• Total gross profit increased to $19.5 million, up 32% from $14.8 million in Q1 2023.
• Operating expenses increased to $17.7 million, higher by $3 million or 21% compared to $14.7 million in Q1 last year.
• Profit from operations was $1.8 million, up from $0.1 million in Q1 2023.
• Net profit was $1.2 million or $0.08 per share on a fully diluted basis in Q1 2024, compared to $40 thousand or $0.00 per share for the same period in fiscal 2023.
• Adjusted EBITDAⁱⁱ was $3.2 million, up 114% compared to $1.5 million reported in Q1 last year.

Financial Guidance:

Tecsys is reiterating previously presented financial guidance as follows:

	FY24 Guidance		FY25 Guidance
Total Revenue Growth	10-15%		n.a.
SaaS Revenue Growth	35-37%		n.a.
Adjusted EBITDA^ii Margin	6 %		8-9%

On September 7, 2023, the Company declared a quarterly dividend of $0.075 per share to be paid on October 6, 2023 to shareholders of record on September 22, 2023.

Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be "eligible" dividends.

ⁱ See Key Performance Indicators in Management's Discussion and Analysis of the Q1 2024 Financial Statements.

ⁱⁱ See Non-IFRS Performance Measures in Management's Discussion and Analysis of the Q1 2024 Financial Statements.

First Quarter Fiscal 2024 Results Conference Call
Date: September 8, 2023
Time: 8:30am EDT
Phone number: [phone] or [phone]
The call can be replayed until September 15, 2023 by calling:
[phone] or [phone] (access code: 22027896)

About Tecsys

Since our founding 40 years ago, much has changed in the realm of supply chain technology. But one thing has remained constant; by developing dynamic and innovative supply chain solutions, Tecsys has been equipping organizations for growth and competitive advantage. Serving healthcare, distribution and converging commerce industries, and spanning multiple complex, regulated and high-volume markets, Tecsys delivers warehouse management, distribution and transportation management, supply management at point of use, retail order management, as well as complete financial management and analytics solutions.

Tecsys' shares are listed on the Toronto Stock Exchange under the ticker symbol TCS. For more information on Tecsys, visit www.tecsys.com.

Forward Looking Statements
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 the most recently filed annual information form. These documents have been filed with the Canadian securities commissions and are available on our website (www.tecsys.com) and on SEDAR+ (www.sedarplus.ca).

Copyright © Tecsys Inc. 2023. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

Non-IFRS Measures

Reconciliation of EBITDA and Adjusted EBITDA

EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before stock-based compensation, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods. The exclusion of interest expense, interest income and income taxes eliminates the impact on earnings derived from non-operational activities, and the exclusion of depreciation, amortization, share-based compensation, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods eliminates the non-cash impact of these items.

The Company believes that these measures are useful measures of financial performance without the variation caused by the impacts of the items described above and that could potentially distort the analysis of trends in our operating performance. In addition, they are commonly used by investors and analysts to measure a company's performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement. Excluding these items does not imply that they are necessarily non-recurring. Management believes these non-GAAP financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and future prospects in a manner similar to management. Although EBITDA and Adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, they have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under IFRS.

The reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable IFRS measure is provided below.

	Three months ended July 31,				Trailing 12 months ended July 31,
(in thousands of CAD)		2023		2022		2023		2022
Net profit for the period	$	1,171	$	40	$	3,220	$	4,274
Adjustments for:
Depreciation of property and equipment and right-of-use assets		384		430		1,729		2,049
Amortization of deferred development costs		142		102		536		338
Amortization of other intangible assets		396		396		1,603		1,597
Interest expense		38		119		325		580
Interest income		(269)		(104)		(851)		(538)
Income taxes		859		25		2,458		242
EBITDA	$	2,721	$	1,008	$	9,020	$	8,542
Adjustments for:
Stock based compensation		452		476		2,153		1,806
Gain on remeasurement of lease liability		-		-		-		(573)
Recognition of tax credits generated in prior periods		-		-		-		(617)
Adjusted EBITDA^ii	$	3,173	$	1,484	$	11,173	$	9,158

Consolidated Statements of Financial Position
As at July31, 2023 and April 30, 2023
(In thousands of Canadian dollars)
	July 31, 2023		April 30, 2023
Assets
Current assets
Cash and cash equivalents	$	15,825	$	21,235
Short-term investments		16,046		15,835
Accounts receivable		24,648		22,900
Work in progress		2,555		1,734
Other receivables		2,028		523
Tax credits		6,672		5,338
Inventory		1,874		1,034
Prepaid expenses		8,264		8,193
Total current assets		77,912		76,792
Non-current assets
Other long-term receivables		1,415		363
Tax credits		5,545		5,368
Property and equipment		1,638		1,802
Right-of-use assets		1,575		1,708
Contract acquisition costs		3,944		3,738
Deferred development costs		2,359		2,254
Other intangible assets		8,733		9,287
Goodwill		17,280		17,467
Deferred tax assets		8,132		8,137
Total non-current assets		50,621		50,124
Total assets	$	128,533	$	126,916
Liabilities
Current liabilities
Accounts payable and accrued liabilities	$	18,001	$	21,669
Deferred revenue		31,745		30,388
Lease obligations		788		793
Total current liabilities		50,534		52,850
Non-current liabilities
Other long-term liabilities		-		253
Deferred tax liabilities		1,220		1,255
Lease obligations		1,910		2,120
Total non-current liabilities		3,130		3,628
Total liabilities	$	53,664	$	56,478
Equity
Share capital	$	46,645	$	44,338
Contributed surplus		15,193		15,285
Retained earnings		10,901		10,832
Accumulated other comprehensive income (loss)		2,130		(17)
Total equity attributable to the owners of the Company		74,869		70,438
Total liabilities and equity	$	128,533	$	126,916

Consolidated Statements of Income and Comprehensive Income
For the three-month periods ended July 31, 2023 and 2022
(In thousands of Canadian dollars, except per share data)
	July 31, 2023		July 31, 2022
Revenue:
SaaS	$	11,495	$	8,001
Maintenance and Support		8,298		8,268
Professional Services		14,908		13,631
License		456		459
Hardware		6,818		3,845
Total revenue		41,975		34,204
Cost of revenue		22,475		19,446
Gross profit		19,500		14,758
Operating expenses:
Sales and marketing		7,671		6,250
General and administration		2,959		2,734
Research and development, net of tax credits		7,112		5,684
Total operating expenses		17,742		14,668
Profit from operations		1,758		90
Other (income) costs		(272)		25
Profit before income taxes		2,030		65
Income tax expense		859		25
Net profit	$	1,171	$	40
Other comprehensive income (loss):
Effective portion of changes in fair value on designated revenue hedges		2,573		154
Exchange differences on translation of foreign operations		(426)		(304)
Comprehensive income (loss)	$	3,318	$	(110)
Basic and diluted earnings per common share		0.08		0.00

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Cash Flows
For the three-month periods ended July 31, 2023 and 2022
(In thousands of Canadian dollars)
			July 31, 2023		July 31, 2022
Cash flows from operating activities:
Net profit		$	1,171	$	40
Adjustments for:
Depreciation of property and equipment and right-of-use-assets			384		430
Amortization of deferred development costs			142		102
Amortization of other intangible assets			396		396
Interest expense (income) and foreign exchange (gain) loss			(272)		25
Unrealized foreign exchange and other			(1,198)		(372)
Non-refundable tax credits			(440)		(421)
Stock-based compensation			452		476
Income taxes			14		25
Net cash from operating activities excluding changes in non-cash working capital items related to operations			649		701
Accounts receivable			(1,820)		(543)
Work in progress			(829)		(954)
Other receivables			(262)		(335)
Tax credits			(1,071)		(1,048)
Inventory			(842)		(255)
Prepaid expenses			(283)		(562)
Contract acquisition costs			3		(253)
Accounts payable and accrued liabilities			(3,799)		(3,012)
Deferred revenue			1,376		1,238
Changes in non-cash working capital items related to operations			(7,527)		(5,724)
Net cash used in operating activities			(6,878)		(5,023)
Cash flows from financing activities:
Repayment of long-term debt			-		(300)
Payment of lease obligations			(199)		(244)
Interest paid			(38)		(119)
Issuance of common shares on exercise of stock options			1,763		62
Net cash provided by (used in) financing activities			1,526		(601)
Cash flows from investing activities:
Interest received			269		104
Transfer from short-term investments			22		-
Acquisitions of property and equipment			(102)		(60)
Deferred development costs			(247)		(209)
Net cash used in investing activities			(58)		(165)
Net decrease in cash and cash equivalents during the period			(5,410)		(5,789)
Cash and cash equivalents - beginning of period			21,235		23,004
Cash and cash equivalents - end of period		$	15,825	$	17,215

See accompanying notes to the consolidated financial statements.

Consolidated Statements of Changes in Equity
For the three-month periods ended July 31, 2023 and 2022
(In thousands of Canadian dollars, except number of shares)
	Share capital
	Number	Amount		Contributed Surplus			Accumulated other comprehensive income (loss)	Retained earnings			Total
Balance, May 1, 2023	14,582,837	$	44,338	$	15,285	$	(17)	$	10,832	$	70,438
Net profit									1,171		1,171
Other comprehensive income:
Effective portion of changes in fair value on designated revenue hedges	-		-		-		2,573		-		2,573
Exchange difference on translation of foreign operations	-		-		-		(426)				(426)
Total comprehensive income	-		-		-		2,147		1,171		3,318
Stock-based Compensation	-		-		452		-		-		452
Dividends to equity owners	-		-		-		-		(1,102)		(1,102)
Share options exercised	111,306		2,307		(544)		-		-		1,763
Total transactions with owners of the Company	111,306		2,307		(92)		-		(1,102)		1,113
Balance, July 31, 2023	14,694,143		46,645		15,193		2,130		10,901		74,869
Balance, May 1, 2022	14,562,895	$	43,973	$	13,176	$	(1,434)	$	12,968	$	68,683
Net profit	-		-		-		-		40		40
Other comprehensive income:
Effective portion of changes in fair value on designated revenue hedges	-		-		-		154		-		154
Exchange difference on translation of foreign operations	-		-		-		(304)		-		(304)
Total comprehensive (loss) income	-		-		-		(150)		40		(110)
Stock-based Compensation	-		-		476		-		-		476
Dividends to equity owners	-		-		-		-		(1,020)		(1,020)
Share options exercised	3,994		76		(14)		-		-		62
Total transactions with owners of the Company	3,994	$	76	$	462	$	-	$	(1,020)	$	(482)
Balance, July 31, 2022	14,566,889	$	44,049	$	13,638	$	(1,584)	$	11,988	$	68,091

See accompanying notes to the consolidated financial statements.

SOURCE Tecsys Inc.

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