Sylogist 9 Months Fiscal 2018 Results: Earnings/share up 70%, Adjusted EBITDA/share increased 36% as Revenue rose 17%; Dividend Declared

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CALGARY, Aug. 13, 2018 /CNW/ - Sylogist Ltd. (TSXV:SYZ) ("Sylogist" or the "Company"), a provider of enterprise information management solutions, is pleased to announce its unaudited financial results for the first 9 months and third quarter of the 2018 fiscal year, ended June 30, 2018.

Nine months of fiscal 2018 (Comparisons are to the nine months of fiscal 2017, unless otherwise noted)

• Revenues were $29.1 million, compared to $24.9 million, up 17%.
• Gross profit margins improved to 73% of revenue, compared to 70%.
• Reported earnings were $8.7 million ($0.39 per share) compared to $5.3 million ($0.23 per share), a 70% increase.
• Adjusted EBITDA⁽¹⁾ was $13.6 million ($0.61 per share), compared to $10.2 million ($0.45 per share) an increase of 36%
• Adjusted EBITDA Margin ⁽¹⁾ was 47%, compared to 41%.
• Cash from operating activities (before non-cash changes in working capital) was $12.8 million ($0.57 per share), compared to $8.9 million ($0.39 per share), an increase of 43% and a per share increase of 46%.
• The Company paid regular and special dividends to shareholders totalling $6.5 million during the first nine months of fiscal 2018.

Q3 2018 Summary (Comparisons are to Q3 2017, unless otherwise noted)

• Revenues were $11 million, compared to $8.9 million, an increase of 23%.
• Reported earnings were $3.2 million compared to $2.2 million in Q3 2017, an increase of 45%.
• Earnings per fully diluted common share increased 40% to $0.14 per share, up from $0.10 per share.
• Adjusted EBITDA⁽¹⁾ was $4.9 million, an increase of 20%, or $0.22 per fully diluted common share, up 22%.
• Adjusted EBITDA Margin⁽¹⁾ was 45%, compared to 46%.
• Cash from operating activities (before non-cash changes in working capital) totalled $4.1 million ($0.18 per share), up from $3.8 million ($0.17 per share) in Q3 2017.
• The Company paid regular dividends to shareholders totalling $1.8 million during the quarter.
• Adjusted Working Capital⁽¹⁾ was $33 million, or $1.48 per share, compared to $1.46 per share in Q3 2017.
• Combined tax pools at the end of the third quarter 2018 were approximately $15.3 million (CAD).
• For the quarter ended June 30, 2018, the Company repurchased 67,000 common shares at an average price of $10.98 for a total cost of $736 thousand.
• The Company's Board of Directors has approved a quarterly dividend of $0.08 per common share for shareholders of record as at August 31, 2018 to be paid on September 12, 2018, which is to be treated as an eligible dividend under the Income Tax Act (Canada).

Results of Operations

The following section sets forth, for the periods indicated, certain financial data derived from the Company's consolidated financial statements.  

	(Amounts are in thousands of Canadian dollars, except percentages and per share amounts.)
	Three months ended June 30,		Period-Over-Period Change			Nine months ended June 30,		Period-Over Period Change
	2018	2017	$	%		2018	2017	$	%
Revenue	10,971	8,917	2,054	23%		29,097	24,882	4,215	17%
Expenses, net of interest income	6,051	4,832	1,219	25%		15,490	14,716	774	5%
Profit before income tax	4,049	3,266	783	24%		10,899	7,578	3,321	44%
Amortization of intangible assets	817	635	182	29%		2,433	1,886	547	29%
Depreciation of property and equipment	39	45	(6)	-13%		133	143	(10)	-7%
Stock based compensation	87	204	(117)	-57%		249	698	(449)	-64%
Foreign exchange gain	(78)	(65)	(13)	20%		(275)	(139)	(136)	98%
Acquisition-related costs	6	-	6	n/m		168	-	168	n/m
Adjusted EBITDA ^(1)	4,920	4,085	835	20%		13,607	10,166	3,441	34%
Adjusted EBITDA Margin ^(2)	45%	46%				47%	41%
Income tax (recovery) expense
Current income tax	816	541	275	51%		1,955	1,155	800	69%
Deferred income tax	46	521	(475)	-91%		243	1,138	(895)	-79%
Income tax expense	862	1,062	(200)	-19%		2,198	2,293	(95)	-4%
Profit for the period	3,187	2,204	983	45%		8,701	5,285	3,416	65%
Weighted average number of shares outstanding
Basic	22,281,571	22,658,352				22,360,476	22,733,423
Diluted	22,666,119	22,659,313				22,465,464	22,873,982
Profit per share
Basic	$0.14	$0.10	0.04	40%		$0.39	$0.23	0.16	70%
Diluted	$0.14	$0.10	0.04	40%		$0.39	$0.23	0.16	70%
Adjusted EBITDA per share
Basic	$0.22	$0.18	0.04	22%		$0.61	$0.45	0.16	36%
Diluted	$0.22	$0.18	0.04	22%		$0.61	$0.44	0.17	39%
Working Capital	21,673	22,031	(358)	-2%		21,673	22,031	(358)	-2%
Working Capital per share
(Basic shares outstanding at period end)	$0.97	$0.98	(0.01)	-1%		$0.97	$0.98	(0.01)	-1%
Adjusted Working Capital ^(3)	33,036	33,007	29	0%		33,036	33,007	29	0%
Adjusted Working Capital per share
(Basic shares outstanding at period end)	$1.48	$1.46	0.02	1%		$1.48	$1.46	0.02	1%
Cash dividends declared per share	$0.08	$0.07	0.0100	14%		$0.290	$0.260	0.03	12%
Total assets	58,955	57,749	1,206	2%		58,955	57,749	1,206	2%
Total long-term liabilities	2,192	2,964	(772)	-26%		2,192	2,964	(772)	-26%

n/m - "Not Meaningful"
1)	Adjusted EBITDA is a non-IFRS measure, defined as: profit for the period before stock based compensation, foreign exchange gains or losses, interest expense, bargain purchase price on acquisition, income taxes, acquisition-related costs, depreciation and amortization.
2)	Adjusted EBITDA Margin refers to Adjusted EBITDA as a percentage of revenue.
3)	Adjusted Working Capital is a non-IFRS measure, defined as: current assets less current liabilities adjusted for deferred revenue.

Jim Wilson, President & Chief Executive Officer of Sylogist, commented, "After the completion of the first nine months of fiscal 2018, our performance is tracking well. Revenue, cash flow and profits have shown material improvements over last year with our revenue and profitability in Q3 reaching a historical quarterly high. Our product development team has been busy improving our flagship Navigator foundation, K-12 vertical market extensions and payroll software, adding features and performance that distance us from competitors. Our acquisition during this fiscal year of K12 Enterprise and Sunpac Systems is yielding fruit as we expand our implementation resources to address market growth including a recent go-live for a marque K12 education customer. Our financial metrics continues to be industry leading and in line with our guidance. We are pleased with our fiscal 2018 results to date and feel we are poised for continued success in the Public Sector verticals we serve.

In keeping with our practice of distributing a portion of profits to shareholders, the board of directors of Sylogist has approved a quarterly dividend of $0.08", concluded Mr. Wilson.

About Sylogist

Sylogist is a software company that, through strategic acquisitions, investments and operations management, provides comprehensive, mission-critical ERP solutions, including fund accounting, grant management and payroll to public service organizations. Sylogist's public service customers include local governments, nonprofit organizations, non-governmental organizations, educational institutions and government agencies, as well as public compliance driven and funded. Our Company delivers highly scalable, multi-language, multi-currency software solutions, which serve the needs of an international clientele.

Full financial statements together with Management's Discussion and Analysis are available on SEDAR at www.sedar.com.

The Company's stock is traded on the TSX Venture Exchange under the symbol SYZ. Information about Sylogist can be found at http://www.sylogist.com.

Forward-looking Statements

Certain statements in this news release may be forward-looking statements within the meaning of applicable securities laws and regulations. These statements typically use words such as expect, believe, estimate, project, anticipate, plan, may, should, could and would, or the negative of these terms, variations thereof or similar terminology. Forward-looking information in this news release includes statements with respect to the Company's payment of dividend to shareholders of record as at August 31, 2018 to be paid on September 12, 2018 and the Company being poised for continued success. By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature. It is therefore possible that the beliefs and plans and other forward-looking expectations expressed herein will not be achieved or will prove inaccurate. Although Sylogist believes that the expectations reflected in these forward-looking statements are reasonable, it provides no assurance that these expectations will prove to have been correct. Forward-looking information involves risks, uncertainties and other factors that could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Additional information regarding some of these risks, uncertainties and other factors may be found under in the management's discussion and analysis for the quarter ended June 30, 2018, and other documents available on the Company's profile at www.sedar.com. Material assumptions and factors that could cause actual results to differ materially from such forward-looking information include Sylogist's ability to attract and retain customers and to realize on its investments. Although Sylogist believes that the material assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur. Sylogist disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.

Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Sylogist's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

Non-GAAP Financial Measures

(1) Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Working Capital are non-GAAP financial measures: Adjusted EBITDA is defined as: profit for the period before stock based compensation, foreign exchange gains or losses, interest expense, bargain purchase price on acquisition, income taxes, acquisition-related costs, depreciation and amortization. Adjusted EBITDA Margin refers to Adjusted EBITDA as a percentage of revenue. Adjusted Working Capital is defined as current assets less current liabilities adjusted for deferred revenue. 

This news release makes reference to certain non-GAAP measures. These measures are not recognized measures under Canadian GAAP, do not have a standardized meaning prescribed by Canadian GAAP and are therefore may not be comparable to similar measures presented by other issuers. These measures are provided as additional information to complement measures under GAAP by providing further understanding of the Company's expected results of operations from management's perspective. Accordingly, such measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under Canadian GAAP.

Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Working Capital are provided to investors as alternative methods for assessing the Company's operating results in a manner that is focused on the Company's ongoing operations and to provide a more consistent basis for comparison between periods. These measures should not be construed as alternatives to net profit (loss) or cash flow from operating activities determined in accordance with GAAP as an indicator of the Company's performance.

- Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release-

SOURCE Sylogist Ltd.

Jim Wilson, President and CEO or Xavier Shorter, Vice President, Finance and CFO or Andre Drouillard, Vice President, Business Development and Investor Relations, Sylogist Ltd., [phone]