MARKHAM, ON, Sept. 9, 2021 /CNW/ - Enghouse Systems Limited
(TSX: ENGH) today announced its third quarter unaudited financial
results for the period ended July 31,
2021. All the financial information is in Canadian dollars
unless otherwise indicated.
Financial and operational highlights for the three and nine
months ended July 31, 2021 compared
to the three and nine months ended July 31,
2020 are as follows:
- Revenue achieved was $117.6 and $354.1 million, respectively, compared to
revenue of $131.3 and
$382.9 million;
- Results from operating activities was $38.5 and $116.1 million, respectively, compared to
$42.2 and $119.3 million;
- Net income was $21.2 and
$62.6 million, respectively,
compared to $26.0 and
$69.2 million;
- Adjusted EBITDA was $41.7 and $126.4 million, respectively, compared to
$45.6 and $130.2 million while Adjusted EBITDA margins
increased from 34.0% to 35.7% for the current year to date
period;
- Cash flows from operating activities excluding changes in
working capital was $41.1 and
$125.4 million, respectively
compared to $45.3 and
$130.5 million.
Revenue achieved for the quarter was $117.6 million, compared to revenue of
$131.3 million in the same period in
the prior year. The decrease reflects exceptional revenue in the
comparative period as a result of COVID-19 related demand. Similar
to the second quarter of 2021, the comparatively higher revenue
last year was driven primarily by the previous year's significant
increase in our Vidyo business that has now returned to levels that
are more consistent with pre-COVID volumes. Revenue for the quarter
was also negatively impacted by $6.2
million as a result of foreign exchange as the Canadian
dollar strengthened against the U.S. dollar and Euro.
During the quarter, Enghouse completed two tuck-in acquisitions,
adding Nebu BV on June 3, 2021 and
Momindum SAS on July 7, 2021. Nebu is
an Amsterdam-based provider of
market research and data analytics software solutions, which
augments our existing market research and survey solutions.
Momindum is an enterprise software provider of a secure, SaaS based
platform for virtual events, recording, editing and sharing
interactive video presentations. Momindum is complementary to our
Vidyo offering and broadens our video collaboration solutions.
Enghouse closed the quarter with $187.8
million in cash, cash equivalents and short-term
investments, compared to $251.8
million at October 31, 2020
and $169.6 million as of April 30, 2021. The cash balance was achieved
after making payments of $36.3
million for acquisitions and $106.9
million for dividends this year. Enghouse continues to
prioritize its long-term growth strategy over quarter-to-quarter
results, investing in products while ensuring continued
profitability and maximizing operating cashflows. As a result,
Enghouse continues to replenish its acquisition capital, while
returning $83.2 million in special
dividends to shareholders and annually increasing its eligible
quarterly dividend.
Quarterly
dividends:
Today, the Board of Directors approved the Company's eligible
quarterly dividend of $0.16 per
common share payable on November 30,
2021 to shareholders of record at the close of business on
November 16, 2021.
Enghouse Systems Limited
Financial
Highlights
(unaudited, in thousands of Canadian
dollars)
|
|
|
|
For the period
ended July 31
|
Three
months
|
|
Nine
months
|
|
2021
|
|
2020
|
Var
($)
|
Var
(%)
|
|
|
2021
|
|
2020
|
Var
($)
|
Var
(%)
|
Revenue
|
$
|
117,644
|
$
|
131,324
|
(13,680)
|
(10.4)
|
|
$
|
354,078
|
$
|
382,880
|
(28,802)
|
(7.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
costs
|
|
33,437
|
|
39,740
|
(6,303)
|
(15.9)
|
|
|
98,478
|
|
111,916
|
(13,438)
|
(12.0)
|
Revenue, net of
direct costs
|
$
|
84,207
|
$
|
91,584
|
(7,377)
|
(8.1)
|
|
$
|
255,600
|
$
|
270,964
|
(15,364)
|
(5.7)
|
As a % of
revenue
|
|
71.6%
|
|
69.7%
|
|
|
|
|
72.2%
|
|
70.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
45,267
|
|
49,351
|
(4,084)
|
(8.3)
|
|
|
138,629
|
|
150,157
|
(11,528)
|
(7.7)
|
Special
charges
|
|
433
|
|
35
|
398
|
1137.1
|
|
|
873
|
|
1,490
|
(617)
|
(41.4)
|
Results from
operating activities
|
$
|
38,507
|
$
|
42,198
|
(3,691)
|
(8.7)
|
|
$
|
116,098
|
$
|
119,317
|
(3,219)
|
(2.7)
|
As a % of
revenue
|
|
32.7%
|
|
32.1%
|
|
|
|
|
32.8%
|
|
31.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired software and
|
|
(10,355)
|
|
(11,502)
|
1,147
|
10.0
|
|
|
(31,983)
|
|
(33,182)
|
1,199
|
3.6
|
customer
relationships
|
Foreign exchange
losses
|
|
(453)
|
|
(1,102)
|
649
|
58.9
|
|
|
(1,976)
|
|
(1,148)
|
(828)
|
(72.1)
|
Interest expense –
lease obligations
|
|
(212)
|
|
(302)
|
90
|
29.8
|
|
|
(818)
|
|
(864)
|
46
|
5.3
|
Finance
income
|
|
46
|
|
209
|
(163)
|
(78.0)
|
|
|
162
|
|
691
|
(529)
|
(76.6)
|
Finance
expenses
|
|
(12)
|
|
(5)
|
(7)
|
(140.0)
|
|
|
(76)
|
|
(39)
|
(37)
|
(94.9)
|
Other (expenses)
income
|
|
(516)
|
|
3,827
|
(4,343)
|
(113.5)
|
|
|
(1,962)
|
|
4,224
|
(6,186)
|
(146.4)
|
Income before
income taxes
|
$
|
27,005
|
$
|
33,323
|
(6,318)
|
(19.0)
|
|
$
|
79,445
|
$
|
88,999
|
(9,554)
|
(10.7)
|
Provision for income
taxes
|
|
5,778
|
|
7,330
|
(1,552)
|
(21.2)
|
|
|
16,837
|
|
19,781
|
(2,944)
|
(14.9)
|
Net Income for the
period
|
$
|
21,227
|
$
|
25,993
|
(4,766)
|
(18.3)
|
|
$
|
62,608
|
$
|
69,218
|
(6,610)
|
(9.5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
0.38
|
|
0.47
|
(0.09)
|
(19.1)
|
|
|
1.13
|
|
1.26
|
(0.13)
|
(10.3)
|
Diluted earnings per
share
|
|
0.38
|
|
0.46
|
(0.08)
|
(17.4)
|
|
|
1.12
|
|
1.25
|
(0.13)
|
(10.4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flows
|
|
33,552
|
|
55,690
|
(22,138)
|
(39.8)
|
|
|
93,254
|
|
133,156
|
(39,902)
|
(30.0)
|
Operating cash flows
excluding changes in
|
|
41,105
|
|
45,294
|
(4,189)
|
(9.2)
|
|
|
125,422
|
|
130,510
|
(5,088)
|
(3.9)
|
working
capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from
operating activities
|
|
38,507
|
|
42,198
|
|
|
|
|
116,098
|
|
119,317
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
719
|
|
801
|
|
|
|
|
2,212
|
|
2,446
|
|
|
Depreciation of
right-of-use assets
|
|
2,006
|
|
2,534
|
|
|
|
|
7,201
|
|
6,925
|
|
|
Special
charges
|
|
433
|
|
35
|
|
|
|
|
873
|
|
1,490
|
|
|
Adjusted
EBITDA
|
$
|
41,665
|
$
|
45,568
|
(3,903)
|
(8.6)
|
|
$
|
126,384
|
$
|
130,178
|
(3,794)
|
(2.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
35.4%
|
|
34.7%
|
|
|
|
|
35.7%
|
|
34.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
per diluted share
|
$
|
0.75
|
$
|
0.81
|
( 0.06)
|
(7.4)
|
|
$
|
2.26
|
$
|
2.35
|
( 0.09)
|
(3.8)
|
|
|
|
|
Condensed
Consolidated Interim Statements of Financial
Position
|
|
|
|
(in
thousands of Canadian dollars)
|
|
As at
July 31, 2021
|
As at October 31,
2020
|
(unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
184,429
|
$
|
244,792
|
Short-term
investments
|
|
|
3,368
|
|
6,999
|
Accounts
receivable
|
|
|
94,266
|
|
90,789
|
Prepaid expenses and
other assets
|
|
|
12,645
|
|
14,772
|
|
|
|
294,708
|
|
357,352
|
Non-current
assets:
|
|
|
|
|
|
Property and
equipment
|
|
|
5,931
|
|
6,301
|
Right-of-use
assets
|
|
|
29,957
|
|
42,832
|
Intangible
assets
|
|
|
113,447
|
|
123,616
|
Goodwill
|
|
|
226,852
|
|
217,426
|
Deferred income tax
assets
|
|
|
16,169
|
|
16,119
|
|
|
|
392,356
|
|
406,294
|
|
|
$
|
687,064
|
$
|
763,646
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
71,138
|
$
|
80,339
|
Income taxes
payable
|
|
|
5,089
|
|
13,245
|
Dividends
payable
|
|
|
8,883
|
|
7,472
|
Provisions
|
|
|
6,657
|
|
5,697
|
Deferred
revenue
|
|
|
92,197
|
|
89,927
|
Lease
obligations
|
|
|
8,387
|
|
9,914
|
|
|
|
192,351
|
|
206,594
|
Non-current
liabilities:
|
|
|
|
|
|
Income taxes
payable
|
|
|
2,967
|
|
3,829
|
Deferred income tax
liabilities
|
|
|
19,256
|
|
14,782
|
Deferred
revenue
|
|
|
10,631
|
|
7,021
|
Net employee defined
benefit obligation
|
|
|
2,739
|
|
2,855
|
Lease
obligations
|
|
|
21,071
|
|
32,242
|
|
|
|
56,664
|
|
60,729
|
|
|
|
249,015
|
|
267,323
|
Shareholders'
equity
|
|
|
|
|
|
Share
capital
|
|
|
105,276
|
|
99,405
|
Contributed
surplus
|
|
|
7,283
|
|
6,583
|
Retained
earnings
|
|
|
333,722
|
|
379,378
|
Accumulated other
comprehensive (loss) income
|
|
|
(8,232)
|
|
10,957
|
|
|
|
438,049
|
|
496,323
|
|
|
$
|
687,064
|
$
|
763,646
|
|
Condensed
Consolidated Interim Statements of Operations and Comprehensive
Income
|
(in thousands of
Canadian dollars, except per share amounts)
|
|
|
(unaudited)
|
|
Three
months
|
Nine
months
|
Periods ended July
31
|
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
Software
licenses
|
|
$
|
26,807
|
$
|
29,438
|
$
|
80,274
|
$
|
106,629
|
Hosted and maintenance
services
|
|
68,419
|
77,356
|
211,064
|
213,733
|
Professional
services
|
|
18,779
|
16,059
|
53,076
|
47,329
|
Hardware
|
|
3,639
|
8,471
|
9,664
|
15,189
|
|
|
117,644
|
131,324
|
354,078
|
382,880
|
Direct
costs
|
|
|
|
|
|
Software
licenses
|
|
1,334
|
2,058
|
4,020
|
8,445
|
Services
|
|
29,633
|
30,417
|
88,248
|
91,843
|
Hardware
|
|
2,470
|
7,265
|
6,210
|
11,628
|
|
|
33,437
|
39,740
|
98,478
|
111,916
|
Revenue, net of
direct costs
|
|
84,207
|
91,584
|
255,600
|
270,964
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Selling, general and
administrative
|
|
23,726
|
25,812
|
68,885
|
80,106
|
Research and
development
|
|
18,816
|
20,204
|
60,331
|
60,680
|
Depreciation
|
|
719
|
801
|
2,212
|
2,446
|
Depreciation of
right-of-use assets
|
|
2,006
|
2,534
|
7,201
|
6,925
|
Special
charges
|
|
433
|
35
|
873
|
1,490
|
|
|
45,700
|
49,386
|
139,502
|
151,647
|
|
|
|
|
|
|
Results from
operating activities
|
|
38,507
|
42,198
|
116,098
|
119,317
|
|
|
|
|
|
|
Amortization of
acquired software and customer
relationships
|
|
(10,355)
|
(11,502)
|
(31,983)
|
(33,182)
|
Foreign exchange
losses
|
|
(453)
|
(1,102)
|
(1,976)
|
(1,148)
|
Interest expense –
lease obligations
|
|
(212)
|
(302)
|
(818)
|
(864)
|
Finance
income
|
|
46
|
209
|
162
|
691
|
Finance
expenses
|
|
(12)
|
(5)
|
(76)
|
(39)
|
Other (expenses)
income
|
|
(516)
|
3,827
|
(1,962)
|
4,224
|
Income before
income taxes
|
|
27,005
|
33,323
|
79,445
|
88,999
|
|
|
|
|
|
|
Provision for
income taxes
|
|
5,778
|
7,330
|
16,837
|
19,781
|
|
|
|
|
|
Net income for the
period
|
|
$
|
21,227
|
$
|
25,993
|
$
|
62,608
|
$
|
69,218
|
|
|
|
|
|
Items that may be
subsequently reclassified to income:
|
|
|
|
|
Cumulative
translation adjustment
|
|
3,953
|
2,868
|
(19,189)
|
15,319
|
|
|
|
|
|
|
Other
comprehensive income (loss)
|
|
3,953
|
2,868
|
(19,189)
|
15,319
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
25,180
|
$
|
28,861
|
$
|
43,419
|
$
|
84,537
|
Earnings per
share
|
|
|
|
|
|
Basic
|
|
$
|
0.38
|
$
|
0.47
|
$
|
1.13
|
$
|
1.26
|
Diluted
|
|
$
|
0.38
|
$
|
0.46
|
$
|
1.12
|
$
|
1.25
|
|
|
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
|
|
(in thousands of
Canadian dollars)
|
Three
months
|
Nine
months
|
(unaudited)
|
Periods ended July
31
|
2021
|
2020
|
2021
|
2020
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income for the
period
|
$
|
21,227
|
$
|
25,993
|
$
|
62,608
|
$
|
69,218
|
Adjustments to
reconcile net income to net cash provided by
|
|
|
|
|
operating
activities
|
|
|
|
|
|
Depreciation
|
719
|
801
|
2,212
|
2,446
|
Depreciation of
right-of-use assets
|
2,006
|
2,534
|
7,201
|
6,925
|
Interest expense –
lease obligations
|
212
|
302
|
818
|
864
|
Amortization of
acquired software and customer relationships
|
10,355
|
11,502
|
31,983
|
33,182
|
Stock-based
compensation expense
|
280
|
654
|
1,725
|
2,279
|
Provision for income
taxes
|
5,778
|
7,330
|
16,837
|
19,781
|
Finance expenses and
other expenses (income)
|
528
|
(3,822)
|
2,038
|
(4,185)
|
|
41,105
|
45,294
|
125,422
|
130,510
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
(942)
|
17,614
|
(9,857)
|
18,150
|
Income taxes
paid
|
(6,611)
|
(7,218)
|
(22,311)
|
(15,504)
|
Net cash provided
by operating activities
|
33,552
|
55,690
|
93,254
|
133,156
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchase of property
and equipment
|
(505)
|
(458)
|
(1,849)
|
(1,902)
|
Acquisitions, net of
cash acquired*
|
(3,837)
|
1,103
|
(36,137)
|
(46,561)
|
Purchase
consideration for prior-year acquisitions
|
(1,263)
|
3,201
|
(158)
|
2,655
|
(Purchase) sale of
short-term investments
|
(44)
|
233
|
1,570
|
(1,569)
|
Net cash (used in)
provided by investing activities
|
(5,649)
|
4,079
|
(36,574)
|
(47,377)
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Issuance of share
capital
|
666
|
7,789
|
4,846
|
13,361
|
Repayment of
loans
|
-
|
-
|
-
|
(62)
|
Repayment of lease
obligations
|
(2,398)
|
(2,483)
|
(7,319)
|
(6,935)
|
Dividends
paid
|
(8,879)
|
(7,427)
|
(106,853)
|
(19,496)
|
Net cash used in
financing activities
|
(10,611)
|
(2,121)
|
(109,326)
|
(13,132)
|
Impact of foreign
exchange on cash and cash equivalents
|
1,471
|
(555)
|
(7,717)
|
2,012
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents
|
18,763
|
57,093
|
(60,363)
|
74,659
|
Cash and cash
equivalents - beginning of period
|
165,666
|
162,330
|
244,792
|
144,764
|
Cash and cash
equivalents - end of period
|
$
|
184,429
|
$
|
219,423
|
$
|
184,429
|
$
|
219,423
|
|
* Acquisitions are
net of cash acquired of $2,150 and $3,613 for the three and nine
months ended July 31, 2021, respectively, and nil and $6,906 for
the three and nine months ended July 31, 2020,
respectively.
|
Enghouse Systems Limited
Segment Reporting
Information
(in thousands of Canadian dollars)
|
|
|
|
Three months ended
July 31, 2021
|
IMG
|
AMG
|
Total
|
Revenue
|
$
|
65,556
|
$
|
52,088
|
$
|
117,644
|
Direct
costs
|
|
(17,273)
|
|
(16,164)
|
|
(33,437)
|
Revenue, net of
direct costs
|
|
48,283
|
|
35,924
|
|
84,207
|
Operating expenses
excluding special charges
|
|
(21,822)
|
|
(11,718)
|
|
(33,540)
|
Depreciation of
property and equipment
|
|
(607)
|
|
(112)
|
|
(719)
|
Depreciation of
right-of-use assets
|
|
(1,203)
|
|
(803)
|
|
(2,006)
|
Segment
profit
|
$
|
24,651
|
$
|
23,291
|
$
|
47,942
|
Special
charges
|
|
|
|
|
|
(433)
|
Corporate and shared
service expenses
|
|
|
|
|
|
(9,002)
|
Results from
operating activities
|
|
|
|
|
$
|
38,507
|
|
|
|
|
Three months ended
July 31, 2020
|
IMG
|
AMG
|
Total
|
Revenue
|
$
|
75,151
|
$
|
56,173
|
$
|
131,324
|
Direct
costs
|
|
(18,152)
|
|
(21,588)
|
|
(39,740)
|
Revenue, net of
direct costs
|
|
56,999
|
|
34,585
|
|
91,584
|
Operating expenses
excluding special charges
|
|
(22,871)
|
|
(12,735)
|
|
(35,606)
|
Depreciation of
property and equipment
|
|
(646)
|
|
(155)
|
|
(801)
|
Depreciation of
right-of-use assets
|
|
(1,447)
|
|
(1,087)
|
|
(2,534)
|
Segment
profit
|
$
|
32,035
|
$
|
20,608
|
$
|
52,643
|
Special
charges
|
|
|
|
|
|
(35)
|
Corporate and shared
service expenses
|
|
|
|
|
|
(10,410)
|
Results from
operating activities
|
|
|
|
|
$
|
42,198
|
|
|
|
|
Nine months ended
July 31, 2021
|
IMG
|
AMG
|
Total
|
Revenue
|
$
|
201,738
|
$
|
152,340
|
$
|
354,078
|
Direct
costs
|
|
(49,660)
|
|
(48,818)
|
|
(98,478)
|
Revenue, net of
direct costs
|
|
152,078
|
|
103,522
|
|
255,600
|
Operating expenses
excluding special charges
|
|
(68,559)
|
|
(36,057)
|
|
(104,616)
|
Depreciation of
property and equipment
|
|
(1,902)
|
|
(310)
|
|
(2,212)
|
Depreciation of
right-of-use assets
|
|
(4,687)
|
|
(2,514)
|
|
(7,201)
|
Segment
profit
|
$
|
76,930
|
$
|
64,641
|
$
|
141,571
|
Special
charges
|
|
|
|
|
|
(873)
|
Corporate and shared
service expenses
|
|
|
|
|
|
(24,600)
|
Results from
operating activities
|
|
|
|
|
$
|
116,098
|
|
|
|
|
Nine months ended
July 31, 2020
|
IMG
|
AMG
|
Total
|
Revenue
|
$
|
227,949
|
$
|
154,931
|
$
|
382,880
|
Direct
costs
|
|
(54,240)
|
|
(57,676)
|
|
(111,916)
|
Revenue, net of
direct costs
|
|
173,709
|
|
97,255
|
|
270,964
|
Operating expenses
excluding special charges
|
|
(69,722)
|
|
(40,815)
|
|
(110,537)
|
Depreciation of
property and equipment
|
|
(1,619)
|
|
(827)
|
|
(2,446)
|
Depreciation of
right-of-use assets
|
|
(3,891)
|
|
(3,034)
|
|
(6,925)
|
Segment
profit
|
$
|
98,477
|
$
|
52,579
|
$
|
151,056
|
Special
charges
|
|
|
|
|
|
(1,490)
|
Corporate and shared
service expenses
|
|
|
|
|
|
(30,249)
|
Results from
operating activities
|
|
|
|
|
$
|
119,317
|
About Enghouse
Enghouse is a Canadian publicly traded company (TSX:ENGH) that
provides enterprise software solutions focusing on remote work,
visual computing and communications for next-generation
software-defined networks. The Company's two-pronged growth
strategy focuses on internal growth and acquisitions, which, to
date, have been funded through operating cash flows. The Company is
well capitalized, has no long-term debt and is organized around two
business segments: the Interactive Management Group and the Asset
Management Group. 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, September 10, 2021 at
8:45 a.m. EST. To participate, please
call +1-647-689-4521 or North American Toll-Free +1-833-235-7649.
Confirmation code: 8499981. 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 as a measure of operating performance.
Therefore, Adjusted EBITDA 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