MARKHAM,
ON, Dec. 14, 2023 /CNW/ - Enghouse
Systems Limited (TSX: ENGH) announces its fourth quarter
(unaudited) and year-end financial results for the period ended
October 31, 2023. All figures are
denominated in Canadian dollars unless otherwise indicated.
Highlights for the Fourth Quarter ended October 31, 2023 compared to the same period in
the prior year:
- Revenue increased 13.9% to $123.1
million.
- Recurring revenue, which includes SaaS and maintenance
services, grew 35.0% to $87.2
million.
- Operating profits improved from $33.1 to $35.7
million, while achieving a 30.8% EBITDA margin.
Financial highlights for the three and twelve months ended
October 31, 2023 compared to the
three and twelve months ended October 31,
2022 are as follows:
- Revenue increased to $123.1 and
$454.0 million, respectively,
compared to revenue of $108.1 and $427.6
million;
- Results from operating activities were $35.7 and $122.1 million, respectively, compared to
$33.1 and $129.7 million;
- Net income was $25.1 and
$72.2 million, respectively,
compared to $36.9 and
$94.5 million;
- Adjusted EBITDA was $37.9 and
$133.8 million, respectively,
compared to $35.8 and
$140.6 million;
- Cash flows from operating activities, excluding changes in
working capital, was $43.5 and
$140.5 million, respectively,
compared to $37.7 and
$145.1 million;
In fiscal 2023 we achieved a significant milestone by expanding
our revenue, increasing our cash reserves and also deploying
$55.2 million on acquisitions. We are
pleased to announce record annual SaaS and Maintenance services
revenue of $297.6 million, an
increase of $39.4 million or
15.2% compared to the prior year. SaaS and maintenance services are
an important strategic source of revenue characterized by their
predictable and recurring nature. They now represent 65.6% of total
revenues for the year compared to 60.4% in the prior year.
The growth in revenue was accomplished through the expansion of
our recurring SaaS revenue base, bolstered by new revenues from
Qumu, Navita and Lifesize, all of which were acquired and
successfully integrated in Fiscal 2023, combined with positive
impacts from foreign exchange rates in the year. This positive
momentum was somewhat offset by declining software license revenue
as we see increasing customer preference for SaaS solutions.
Aligned with our commitment to provide our customers choice, we are
actively broadening the global availability of our SaaS offerings,
particularly in our customer experience and contact center
technologies where demand for SaaS is growing. Despite the industry
shift, we remain profitable, reporting results from operating
activities of $122.1 million.
With cash reserves of $240.4
million and no external debt, we continue to actively pursue
opportunities to strategically deploy our cash reserves on
acquisitions and return cash to our shareholders in the form of
dividends.
Quarterly dividends:
Today, the Board of Directors
approved the Company's eligible quarterly dividend of $0.22 per common share payable on February 29, 2024 to shareholders of record at
the close of business on February 15,
2024.
Enghouse Systems Limited
Financial Highlights
(unaudited, in thousands of Canadian
dollars)
For the period ended
October 31
|
Three
months
|
|
Twelve
months
|
|
2023
|
|
2022
|
Var
($)
|
Var
(%)
|
|
|
2023
|
|
2022
|
Var
($)
|
Var
(%)
|
Revenue
|
$
|
123,129
|
$
|
108,060
|
15,069
|
13.9
|
|
$
|
454,022
|
$
|
427,585
|
26,437
|
6.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
41,213
|
|
32,340
|
8,873
|
27.4
|
|
|
149,999
|
|
130,097
|
19,902
|
15.3
|
Revenue, net of
direct costs
|
$
|
81,916
|
$
|
75,720
|
6,196
|
8.2
|
|
$
|
304,023
|
$
|
297,488
|
6,535
|
2.2
|
As a % of
revenue
|
|
66.5 %
|
|
70.1 %
|
|
|
|
|
67.0 %
|
|
69.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
46,115
|
|
42,448
|
3,667
|
8.6
|
|
|
179,438
|
|
167,418
|
12,020
|
7.2
|
Special
charges
|
|
117
|
|
123
|
(6)
|
(4.9)
|
|
|
2,477
|
|
403
|
2,074
|
514.6
|
Results from
operating activities
|
$
|
35,684
|
$
|
33,149
|
2,535
|
7.6
|
|
$
|
122,108
|
$
|
129,667
|
(7,559)
|
(5.8)
|
As a % of
revenue
|
|
29.0 %
|
|
30.7 %
|
|
|
|
|
26.9 %
|
|
30.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired software and
customer relationships
|
|
(11,205)
|
|
(8,826)
|
(2,379)
|
(27.0)
|
|
|
(39,605)
|
|
(36,174)
|
(3,431)
|
(9.5)
|
Foreign exchange
gains
|
|
2,753
|
|
931
|
1,822
|
n/a
|
|
|
1,266
|
|
1,954
|
(688)
|
(35.2)
|
Interest expense –
lease obligations
|
|
(164)
|
|
(164)
|
-
|
0.0
|
|
|
(695)
|
|
(735)
|
40
|
5.4
|
Finance
income
|
|
2,581
|
|
651
|
1,930
|
n/a
|
|
|
6,264
|
|
1,192
|
5,072
|
425.5
|
Finance
expenses
|
|
(27)
|
|
(27)
|
-
|
0.0
|
|
|
(163)
|
|
(89)
|
(74)
|
(83.1)
|
Other (expense)
income
|
|
17
|
|
(507)
|
524
|
103.4
|
|
|
(1,950)
|
|
423
|
(2,373)
|
(561.0)
|
Income before income
taxes
|
$
|
29,639
|
$
|
25,207
|
4,432
|
17.6
|
|
$
|
87,225
|
$
|
96,238
|
(9,013)
|
(9.4)
|
Provision for (recovery
of) income taxes
|
|
4,517
|
|
(11,742)
|
16,259
|
138.5
|
|
|
14,977
|
|
1,740
|
13,237
|
760.7
|
Net Income for the
period
|
$
|
25,122
|
$
|
36,949
|
(11,827)
|
(32.0)
|
|
$
|
72,248
|
$
|
94,498
|
(22,250)
|
(23.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
0.45
|
|
0.67
|
(0.22)
|
(32.8)
|
|
|
1.31
|
|
1.70
|
(0.39)
|
(22.9)
|
Diluted earnings per
share
|
|
0.45
|
|
0.67
|
(0.22)
|
(32.8)
|
|
|
1.31
|
|
1.70
|
(0.39)
|
(22.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flows
|
|
28,318
|
|
18,539
|
9,779
|
52.7
|
|
|
115,298
|
|
103,181
|
12,117
|
11.7
|
Operating cash flows
excluding changes in
working capital
|
|
43,504
|
|
37,740
|
5,764
|
15.3
|
|
|
140,492
|
|
145,074
|
(4,582)
|
(3.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating
activities
|
|
35,684
|
|
33,149
|
2,535
|
7.6
|
|
|
122,108
|
|
129,667
|
(7,559)
|
(5.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
627
|
|
709
|
(82)
|
(11.6)
|
|
|
2,451
|
|
2,799
|
(348)
|
(12.4)
|
Depreciation of
right-of-use assets
|
|
1,491
|
|
1,824
|
(333)
|
(18.3)
|
|
|
6,764
|
|
7,754
|
(990)
|
(12.8)
|
Special
charges
|
|
117
|
|
123
|
(6)
|
(4.9)
|
|
|
2,477
|
|
403
|
2,074
|
514.6
|
Adjusted
EBITDA
|
$
|
37,919
|
$
|
35,805
|
2,114
|
5.9
|
|
$
|
133,800
|
$
|
140,623
|
(6,823)
|
(4.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
30.8 %
|
|
33.1 %
|
|
|
|
|
29.5 %
|
|
32.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per
diluted share
|
$
|
0.69
|
$
|
0.65
|
0.04
|
6.2
|
|
$
|
2.42
|
$
|
2.53
|
( 0.11)
|
(4.3)
|
|
|
|
|
Consolidated
Statements of Financial Position
|
|
|
|
(in thousands
of Canadian dollars)
|
|
As at October 31,
2023
|
As at October 31,
2022
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
239,532
|
$
|
225,104
|
Short-term
investments
|
|
|
827
|
|
2,950
|
Accounts
receivable
|
|
|
93,383
|
|
93,104
|
Prepaid
expenses and other assets
|
|
|
15,515
|
|
12,848
|
Income
taxes recoverable
|
|
|
114
|
|
492
|
|
|
|
349,371
|
|
334,498
|
Non-current
assets:
|
|
|
|
|
|
Property
and equipment
|
|
|
3,273
|
|
4,186
|
Right-of-use assets
|
|
|
12,242
|
|
20,063
|
Intangible
assets
|
|
|
109,659
|
|
85,902
|
Goodwill
|
|
|
280,241
|
|
230,002
|
Deferred
income tax assets
|
|
|
28,884
|
|
30,347
|
|
|
|
434,299
|
|
370,500
|
|
|
$
|
783,670
|
$
|
704,998
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
67,769
|
$
|
60,525
|
Dividends
payable
|
|
|
12,156
|
|
10,221
|
Provisions
|
|
|
2,238
|
|
3,183
|
Deferred
revenue
|
|
|
109,019
|
|
83,122
|
Lease
obligations
|
|
|
6,322
|
|
6,822
|
|
|
|
197,504
|
|
163,873
|
Non-current
liabilities:
|
|
|
|
|
|
Income
taxes payable
|
|
|
1,333
|
|
2,576
|
Deferred
income tax liabilities
|
|
|
13,340
|
|
12,038
|
Deferred
revenue
|
|
|
8,170
|
|
3,470
|
Net
employee defined benefit obligation
|
|
|
1,912
|
|
1,821
|
Lease
obligations
|
|
|
6,080
|
|
13,055
|
|
|
|
30,835
|
|
32,960
|
|
|
|
228,339
|
|
196,833
|
Shareholders'
equity
|
|
|
|
|
|
Share
capital
|
|
|
107,701
|
|
107,007
|
Contributed surplus
|
|
|
10,404
|
|
8,882
|
Retained
earnings
|
|
|
426,397
|
|
401,247
|
Accumulated other comprehensive income (loss)
|
|
|
10,829
|
|
(8,971)
|
|
|
|
555,331
|
|
508,165
|
|
|
$
|
783,670
|
$
|
704,998
|
|
|
|
Consolidated
Statement of Operations and Comprehensive Income
|
|
|
(in thousands
of Canadian dollars, except per share
amounts)
|
|
|
|
|
Three
months
|
Twelve
months
|
Periods ended
October 31
|
|
2023
(unaudited)
|
2022
(Unaudited)
|
2023
|
2022
|
Revenue
|
|
|
|
|
|
Software licenses
|
|
$
17,467
|
$
25,588
|
$
80,054
|
$
90,602
|
SaaS and maintenance
services
|
|
87,196
|
64,575
|
297,635
|
258,277
|
Professional
services
|
|
16,483
|
16,066
|
67,273
|
68,648
|
Hardware
|
|
1,983
|
1,831
|
9,060
|
10,058
|
|
|
123,129
|
108,060
|
454,022
|
427,585
|
Direct
costs
|
|
|
|
|
|
Software licenses
|
|
622
|
704
|
2,910
|
4,340
|
Services
|
|
39,108
|
30,594
|
141,802
|
119,762
|
Hardware
|
|
1,483
|
1,042
|
5,287
|
5,995
|
|
|
41,213
|
32,340
|
149,999
|
130,097
|
Revenue, net of
direct costs
|
|
81,916
|
75,720
|
304,023
|
297,488
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Selling, general and
administrative
|
|
23,702
|
21,727
|
90,889
|
84,603
|
Research and
development
|
|
20,295
|
18,188
|
79,334
|
72,262
|
Depreciation
|
|
627
|
709
|
2,451
|
2,799
|
Depreciation of right-of-use
assets
|
|
1,491
|
1,824
|
6,764
|
7,754
|
Special charges
|
|
117
|
123
|
2,477
|
403
|
|
|
46,232
|
42,571
|
181,915
|
167,821
|
|
|
|
|
|
|
Results from
operating activities
|
|
35,684
|
33,149
|
122,108
|
129,667
|
|
|
|
|
|
|
Amortization of
acquired software and customer
relationships
|
|
(11,205)
|
(8,826)
|
(39,605)
|
(36,174)
|
Foreign exchange
gains
|
|
2,753
|
931
|
1,266
|
1,954
|
Interest expense –
lease obligations
|
|
(164)
|
(164)
|
(695)
|
(735)
|
Finance
income
|
|
2,581
|
651
|
6,264
|
1,192
|
Finance
expenses
|
|
(27)
|
(27)
|
(163)
|
(89)
|
Other income
(expense)
|
|
17
|
(507)
|
(1,950)
|
423
|
Income before income
taxes
|
|
29,639
|
25,207
|
87,225
|
96,238
|
|
|
|
|
|
|
Provision for
(recovery of) income taxes
|
|
4,517
|
(11,742)
|
14,977
|
1,740
|
|
|
|
|
|
Net income for the
period
|
|
$
25,122
|
$
36,949
|
$
72,248
|
$
94,498
|
Items that may be
subsequently reclassified to income:
|
|
|
|
|
Cumulative translation
adjustment
|
|
12,394
|
17,883
|
19,800
|
5,613
|
|
|
|
|
|
|
Other comprehensive
income
|
|
12,394
|
17,883
|
19,800
|
5,613
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
37,516
|
$
54,832
|
$
92,048
|
$
100,111
|
Earnings per
share
|
|
|
|
|
|
Basic
|
|
$
0.45
|
$ 0.67
|
$ 1.31
|
$ 1.70
|
Diluted
|
|
$
0.45
|
$ 0.67
|
$ 1.31
|
$ 1.70
|
|
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
(in thousands
of Canadian dollars)
|
|
Three
months
|
Twelve
months
|
Periods ended
October 31
|
|
2023
(Unaudited)
|
2022
(Unaudited)
|
2023
|
2022
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
Net income for the
period
|
|
$
25,122
|
$
36,949
|
$
72,248
|
$
94,498
|
Adjustments for
non-cash items
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
627
|
709
|
2,451
|
2,799
|
Depreciation of right-of-use assets
|
|
1,491
|
1,824
|
6,764
|
7,754
|
Interest
expense – lease obligations
|
|
164
|
164
|
695
|
735
|
Amortization of acquired software and customer
relationships
|
|
11,205
|
8,826
|
39,605
|
36,174
|
Stock-based compensation expense
|
|
368
|
476
|
1,639
|
1,708
|
Provision
for (recovery of) income taxes
|
|
4,517
|
(11,742)
|
14,977
|
1,740
|
Finance
expenses and other (expense) income
|
|
10
|
534
|
2,113
|
(334)
|
|
|
43,504
|
37,740
|
140,492
|
145,074
|
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
|
(11,624)
|
(14,467)
|
(11,244)
|
(26,139)
|
Income taxes
paid
|
|
(3,562)
|
(4,734)
|
(13,950)
|
(15,754)
|
Net cash provided by
operating activities
|
|
28,318
|
18,539
|
115,298
|
103,181
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Purchase of property
and equipment, net
|
|
(453)
|
(321)
|
(1,060)
|
(919)
|
Acquisitions, net of
cash acquired*
|
|
(27,189)
|
(14,139)
|
(55,167)
|
(20,231)
|
Recovery (payment) of
purchase consideration for prior-year acquisitions
|
|
13
|
528
|
(999)
|
120
|
Sale (purchase) of
short-term investments
|
|
65
|
-
|
(4)
|
(60)
|
Net cash used in
investing activities
|
|
(27,564)
|
(13,932)
|
(57,230)
|
(21,090)
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Issuance of share
capital
|
|
-
|
-
|
604
|
971
|
Normal course issuer
bid share repurchases
|
|
(425)
|
(367)
|
(425)
|
(9,318)
|
Repayment of lease
obligations
|
|
(1,440)
|
(2,010)
|
(7,194)
|
(8,235)
|
Dividends
paid
|
|
(12,159)
|
(10,224)
|
(44,765)
|
(38,286)
|
Net cash used in
financing activities
|
|
(14,024)
|
(12,601)
|
(51,780)
|
(54,868)
|
Impact of foreign
exchange on cash and cash equivalents
|
|
4,018
|
7,152
|
8,140
|
1,991
|
|
|
|
|
|
|
(Decrease) increase
in cash and cash equivalents
|
|
(9,252)
|
(842)
|
14,428
|
29,214
|
Cash and cash
equivalents - beginning of period
|
|
248,784
|
225,946
|
225,104
|
195,890
|
Cash and cash
equivalents - end of period
|
|
$
239,532
|
$
225,104
|
$
239,532
|
$
225,104
|
* Acquisitions are
net of cash acquired of nil and $2,088 for the quarter and year
ended October 31, 2023, respectively and nil and $3,647 for the
quarter and year ended October 31, 2022,
respectively.
|
Enghouse Systems Limited
Segment Reporting
Information
(in thousands of Canadian dollars)
For the period ended
October 31, 2023
|
|
Three
months
|
|
Twelve
months
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
Revenue
|
$
|
78,578
|
$
|
44,551
|
$
|
123,129
|
$
|
265,311
|
$
|
188,711
|
$
|
454,022
|
Direct costs
|
|
(24,337)
|
|
(16,876)
|
|
(41,213)
|
|
(78,788)
|
|
(71,211)
|
|
(149,999)
|
Revenue, net of
direct costs
|
|
54,241
|
|
27,675
|
|
81,916
|
|
186,523
|
|
117,500
|
|
304,023
|
Operating expenses
excluding special charges
|
|
(21,807)
|
|
(10,450)
|
|
(32,257)
|
|
(84,493)
|
|
(45,169)
|
|
(129,662)
|
Depreciation
|
|
(485)
|
|
(142)
|
|
(627)
|
|
(1,969)
|
|
(482)
|
|
(2,451)
|
Depreciation of
right-of-use assets
|
|
(904)
|
|
(587)
|
|
(1,491)
|
|
(4,184)
|
|
(2,580)
|
|
(6,764)
|
Segment
profit
|
$
|
31,045
|
$
|
16,496
|
$
|
47,541
|
$
|
95,877
|
$
|
69,269
|
$
|
165,146
|
Special
charges
|
|
|
|
|
|
(117)
|
|
|
|
|
|
(2,477)
|
Corporate and shared
service expenses
|
|
|
|
|
|
(11,740)
|
|
|
|
|
|
(40,561)
|
Results from
operating activities
|
|
|
|
|
$
|
35,684
|
|
|
|
|
$
|
122,108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the period ended
October 31, 2022
|
|
Three
months
|
|
Twelve
months
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
Revenue
|
$
|
61,759
|
$
|
46,301
|
$
|
108,060
|
$
|
235,925
|
$
|
191,660
|
$
|
427,585
|
Direct costs
|
|
(15,815)
|
|
(16,525)
|
|
(32,340)
|
|
(62,079)
|
|
(68,018)
|
|
(130,097)
|
Revenue, net of
direct costs
|
|
45,944
|
|
29,776
|
|
75,720
|
|
173,846
|
|
123,642
|
|
297,488
|
Operating expenses
excluding special charges
|
|
(18,394)
|
|
(11,859)
|
|
(30,253)
|
|
(75,272)
|
|
(45,816)
|
|
(121,088)
|
Depreciation
|
|
(583)
|
|
(126)
|
|
(709)
|
|
(2,336)
|
|
(463)
|
|
(2,799)
|
Depreciation of
right-of-use assets
|
|
(1,112)
|
|
(712)
|
|
(1,824)
|
|
(4,742)
|
|
(3,012)
|
|
(7,754)
|
Segment
profit
|
$
|
25,855
|
$
|
17,079
|
$
|
42,934
|
$
|
91,496
|
$
|
74,351
|
$
|
165,847
|
Special
charges
|
|
|
|
|
|
(123)
|
|
|
|
|
|
(403)
|
Corporate and shared
service expenses
|
|
|
|
|
|
(9,662)
|
|
|
|
|
|
(35,777)
|
Results from
operating activities
|
|
|
|
|
$
|
33,149
|
|
|
|
|
$
|
129,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Friday,
December 15, 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:
44260758 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, Adjusted EBITDA margin and Adjusted
EBITDA per diluted share as measures of operating performance.
Therefore, these collective Adjusted EBITDA measures 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