MARKHAM, ONTARIO — (Marketwired) — 12/18/14 — Enghouse Systems Limited (TSX: ESL) today announced its fourth quarter (unaudited) and year-end financial results for the period ended October 31, 2014.
Revenue increased by 22% to $220.0 million for the fiscal year, compared to revenue of $179.9 million in the previous fiscal year, resulting in another record year for the Company. Income from operating activities was $52.1 million compared to $40.7 million last year, an increase of 28%. Net income for the fiscal year was $29.7 million or $1.11 per diluted share compared to $24.3 million or $0.92 per diluted share in the prior year. Adjusted EBITDA for the fiscal year was $56.0 million or $2.09 per diluted share compared to $44.9 million or $1.69 per diluted share last year, an increase of 24%.
Revenue for the fourth quarter was $62.1 million, an increase of 32% over last year–s fourth quarter revenue of $47.2 million. Income from operating activities for the quarter was $14.6 million compared to $12.0 million last year, an increase of 22%. Net income for the quarter was $9.7 million or $0.36 per diluted share compared to $9.7 million or $0.36 per diluted share last year. Adjusted EBITDA for the quarter was $15.6 million or $0.58 per diluted share compared to $12.4 million or $0.46 per diluted share last year, an increase of 25%.
Increased revenue in the quarter reflects incremental revenue from acquisitions, including Voxtron NV, acquired October 3, 2014, Jinny Software Limited, acquired August 5, 2014 and the favourable impact of foreign exchange. Revenue includes license revenue of $19.1 million, an increase of 27% over last year and $32.2 million from hosted and maintenance services, an increase of 33%. For the fiscal year, license revenue was $71.9 million compared to $58.9 million, while hosted and maintenance services revenue grew by 25% to $115.0 million.
Operating expenses increased to $28.3 million for the quarter and $102.6 million for the fiscal year compared to $21.5 million and $88.1 million respectively last year as a result of the incremental cost of acquired operations and the negative impact of foreign exchange. This also includes research and development costs of $10.7 million for the quarter and $37.7 million for the year, reflecting the Company–s continued investment in product development. Foreign exchange continues to impact both the revenue and operating expenses denominated in currencies other than the Canadian dollar. Non-cash amortization charges for the year were $17.6 million compared to $15.6 million in the prior fiscal year and relate to incremental amortization charges for acquired software and customer relationship intangibles recorded on the current year–s acquisitions.
The Company closed the year with $84.9 million in cash, cash equivalents and short-term investments, after the payment of approximately $45.0 million related to acquisitions and $9.4 million to dividends. The Company generated cash flows from operating activities of $47.6 million in the year compared to $32.4 million in 2013, an increase of 47%.
Enghouse completed five acquisitions during the fiscal year, expanded the scale and product portfolio of its Asset Management Group, entered new geographic regions and strengthened its presence in key markets. The Company generated strong cash flows and has a healthy balance sheet with no debt. Enghouse remains committed to seeking accretive acquisitions to continue to grow its market share and increase shareholder value.
The Board of Directors has approved an eligible quarterly dividend of $0.10 per common share, payable on February 27, 2015 to shareholders of record at the close of business on February 13, 2015.
A conference call to discuss the results will be held on Friday, December 19, 2014 at 8:45 a.m. EST. To participate, please call 416-640-5947 or North American Toll-Free 1-866-233-4606. No PIN required.
About Enghouse
Enghouse Systems Limited is a leading global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a larger and more diverse software company through strategic acquisitions and profitable growth. Enghouse shares are listed on the Toronto Stock Exchange under the symbol “ESL”. Further information about Enghouse may be obtained from the Company–s web site at .
Non-GAAP Measures
The Company uses non-GAAP measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than GAAP 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 as income before income taxes adjusted for depreciation of property, plant and equipment, amortization of acquired software and customer relationships, finance income, finance expenses, other income, 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, other income and restructuring costs primarily related to acquisitions.
Adjusted EBITDA:
The table below reconciles Adjusted EBITDA to income before income taxes:
Contacts:
Enghouse Systems Limited
Sam Anidjar
Vice President, Corporate Development
(905) 946-3200
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