MARKHAM, ONTARIO — (Marketwired) — 03/05/15 — Enghouse Systems Limited (TSX: ESL) today announced its unaudited first quarter financial results for the period ended January 31, 2015.
First quarter revenue was $63.0 million, an increase of 33% over revenue of $47.5 million in the first quarter last year. The increase in revenue was primarily the result of incremental revenue contributions from acquisitions. Revenue reflects hosted and maintenance services contributions of $32.3 million in the quarter, an increase of 29% over last year. Adjusted EBITDA for the quarter was $16.2 million or $0.60 per diluted share compared to $12.2 million or $0.45 per diluted share in last year–s first quarter. Results from operating activities for the quarter were $15.6 million compared to $11.5 million in the prior year–s first quarter, an increase of 35% over the prior year. Net income for the quarter was $2.5 million or $0.09 per diluted share compared to the prior year–s first quarter net income of $6.2 million or $0.23 per diluted share. The decrease in net income in the quarter reflects an adjustment of $8.8 million ($5.0 million net of tax) to the provision for contract litigation matters which were finalized after quarter end.
Operating expenses before special charges related to restructuring of acquired operations were $27.6 million compared to $21.9 million in the prior year–s first quarter and reflect incremental costs of acquired operations. Of note, as a percentage of revenue, operating expenses before special charges decreased from 46.2% to 43.8% in the quarter largely as a result of foreign exchange gains booked to selling, general and administrative expenses. Non-cash amortization charges in the quarter were $5.4 million and include amortization charges for acquired software and customer relationships from acquired operations.
Enghouse generated cash flows from operations of $17.6 million and closed the quarter with $101.8 million in cash, cash equivalents and short-term investments, compared to $84.9 million at October 31, 2014. This is after cash paid of $0.4 million related to acquisition hold backs in the quarter and cash dividends of $2.6 million. The Company continues to have no debt.
Effective March 2, 2015 the Company acquired 100% of the issued and outstanding common shares of CDRator A/S of Denmark for a purchase price of approximately $23.0 million, net of cash acquired. CDRator had annual revenues of $20.0 million in fiscal 2014 and provides market leading solutions that automate billing and customer care functions for mobile networks operators and MVNO/E–s (mobile virtual network operators and enablers). This acquisition will further balance the revenue split between our two business segments which as of the first quarter is approximately 70% and 30% respectively for the Interactive and Asset Management Groups.
The Board of Directors also approved a 20% increase in its eligible quarterly dividend to $0.12 per common share, payable on May 29, 2015 to shareholders of record at the close of business on May 15, 2015. Enghouse has increased its dividend in each of the past six years.
Building on Enghouse–s presence in Germany established with the acquisitions of CosmoCom and Andtek, the Company added IT Sonix in March 2014 and Voxtron in October 2014 to expand its market reach within Germany and beyond to Italy and Belgium. Enghouse is now one of the more significant contact center solutions providers in the important German market. As the Company continues to grow outside of North America, the foreign exchange risk dependency on any one currency is lessened. Enghouse remains committed to diversifying its revenue stream and accelerating its expansion as it continues to seek accretive acquisitions to grow its market share.
A conference call to discuss the results will be held on Friday, March 5, 2015 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, profitable and more diverse software company through strategic acquisitions targeting the Contact Center, Networks (OSS/BSS) and Transportation/Public Safety sectors. Enghouse shares are listed on the Toronto Stock Exchange under the symbol “ESL”. Further information about Enghouse may be obtained from the Company–s website 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, litigation settlements 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:
(In thousands of Canadian dollars)
(Unaudited)
Enghouse Systems Limited
Consolidated Statements of Financial Position
(In thousands of Canadian dollars)
(Unaudited)
Enghouse Systems Limited
Condensed Consolidated Interim Statements of Operations and Comprehensive Income
(In thousands of Canadian dollars, except per share amounts)
(Unaudited)
Enghouse Systems Limited
Condensed Consolidated Interim Statements of Changes in Equity
(In thousands of Canadian dollars)
(Unaudited)
Enghouse Systems Limited
Condensed Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
(Unaudited)
Enghouse Systems Limited
Selected Segment Reporting Information
(In thousands of Canadian dollars)
(Unaudited)
Contacts:
Sam Anidjar
Vice President, Corporate Development
Enghouse Systems Limited
Tel: (905) 946-3200
Email:
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