MARKHAM,
ON, Sept. 5, 2024 /CNW/ - Enghouse Systems
Limited (TSX: ENGH) announces third quarter (unaudited)
financial results for the period ended July
31, 2024. All figures are denominated in Canadian dollars
unless otherwise indicated.
Third Quarter Financial Highlights:
- Revenue increased 17.6% to $130.5
million from $111.0 million in
Q3 2023 and 13.9% for the nine-month period to $376.8 million from $330.9
million last year;
- Recurring revenue, which includes SaaS and maintenance
services, grew 22.8% to $88.8 million
compared to $72.3 million in Q3 2023,
and represents 68.1% of total revenue. For the nine-month period,
recurring revenue increased to $258.4
million from $210.4 million in
the prior period, an increase of 22.8%, as we continue to
prioritize this revenue stream;
- Results from operating activities increased to $34.3 million compared to $30.9 million in Q3 2023 and increased for the
nine-month period to $100.4 million,
from $86.4 million in the prior
period;
- Net income was $20.6 million
compared to $17.6 million in Q3 2023
and $58.7 million year to date
compared to $47.1 million last year,
as we grow our business with a focus on profitability;
- Adjusted EBITDA increased to $37.7
million compared to $33.4
million, growing by 12.9%, while achieving a 28.9% margin.
Year to date Adjusted EBITDA was $108.2
million compared to $95.9
million in the prior year, an increase of 12.8%;
- Cash flow from operating activities, excluding changes in
working capital, was $37.4 million
compared to $35.5 million in the
prior quarter and $111.5 million
year to date compared to $97.0 million in the comparable period.
Cash, cash equivalents and short-term investments reached near
record highs at $258.7 million as at
July 31, 2024.
Our third quarter operating performance continued its upward
trend with revenue, profitability and operating cash flow, all
exhibiting positive growth. Our commitment to operational
efficiency, alongside our capability in executing and integrating
acquisitions continues to deliver positive results. This quarter we
completed the acquisition of SeaChange, expanding our IPTV market
presence, a growing sector for Enghouse. We have effectively
integrated SeaChange into our Asset Management Group, achieving
profitability in its first quarter, post-acquisition, although not
yet at our standard levels.
Our strategic direction remains steadfast as we continue to
expand our business profitably. Offering both SaaS and on-premise
solutions positions us uniquely in the marketplace. Operational
enhancements across our existing businesses and recent acquisitions
are driving positive outcomes, enabling us to maintain robust cash
reserves while simultaneously increasing annual dividends,
repurchasing shares and pursuing acquisitions.
Quarterly
dividends:
Today, the Board of Directors approved the Company's eligible
quarterly dividend of $0.26 per
common share, payable on November 29,
2024 to shareholders of record at the close of business on
November 15, 2024.
Enghouse Systems Limited
Financial Highlights
(unaudited, in
thousands of Canadian dollars)
|
For the period ended
July 31
|
Three
months
|
|
Nine
months
|
|
2024
|
|
2023
|
Var
($)
|
Var
(%)
|
|
|
2024
|
|
2023
|
Var
($)
|
Var
(%)
|
|
Revenue
|
$
|
130,501
|
$
|
110,997
|
19,504
|
17.6
|
|
$
|
376,803
|
$
|
330,893
|
45,910
|
13.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
45,836
|
|
35,872
|
9,964
|
27.8
|
|
|
130,619
|
|
108,786
|
21,833
|
20.1
|
|
Revenue, net of
direct costs
|
$
|
84,665
|
$
|
75,125
|
9,540
|
12.7
|
|
$
|
246,184
|
$
|
222,107
|
24,077
|
10.8
|
|
As a % of
revenue
|
|
64.9 %
|
|
67.7 %
|
|
|
|
|
65.3 %
|
|
67.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
49,120
|
|
43,901
|
5,219
|
11.9
|
|
|
144,331
|
|
133,323
|
11,008
|
8.3
|
|
Special
charges
|
|
1,243
|
|
331
|
912
|
275.5
|
|
|
1,440
|
|
2,360
|
(920)
|
(39.0)
|
|
Results from
operating activities
|
$
|
34,302
|
$
|
30,893
|
3,409
|
11.0
|
|
$
|
100,413
|
$
|
86,424
|
13,989
|
16.2
|
|
As a % of
revenue
|
|
26.3 %
|
|
27.8 %
|
|
|
|
|
26.6 %
|
|
26.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired software and
customer relationships
|
|
(9,663)
|
|
(9,730)
|
67
|
0.7
|
|
|
(31,183)
|
|
(28,400)
|
(2,783)
|
(9.8)
|
|
Foreign exchange
(losses) gains
|
|
(1,747)
|
|
356
|
(2,103)
|
(590.7)
|
|
|
(3,550)
|
|
(1,487)
|
(2,063)
|
(138.7)
|
|
Interest expense –
lease obligations
|
|
(132)
|
|
(172)
|
40
|
23.3
|
|
|
(430)
|
|
(531)
|
101
|
19.0
|
|
Finance
income
|
|
2,333
|
|
1,701
|
632
|
37.2
|
|
|
7,296
|
|
3,683
|
3,613
|
98.1
|
|
Finance
expenses
|
|
(29)
|
|
(5)
|
(24)
|
(480.0)
|
|
|
(41)
|
|
(136)
|
95
|
69.9
|
|
Other income
(expenses)
|
|
407
|
|
(1,312)
|
1,719
|
131.0
|
|
|
513
|
|
(1,967)
|
2,480
|
126.1
|
|
Income before income
taxes
|
$
|
25,471
|
$
|
21,731
|
3,740
|
17.2
|
|
$
|
73,018
|
$
|
57,586
|
15,432
|
26.8
|
|
Provision for income
taxes
|
|
4,891
|
|
4,164
|
727
|
17.5
|
|
|
14,331
|
|
10,460
|
3,871
|
37.0
|
|
Net Income for the
period
|
$
|
20,580
|
$
|
17,567
|
3,013
|
17.2
|
|
$
|
58,687
|
$
|
47,126
|
11,561
|
24.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
0.37
|
|
0.32
|
0.05
|
15.6
|
|
|
1.06
|
|
0.85
|
0.21
|
24.7
|
|
Diluted earnings per
share
|
|
0.37
|
|
0.32
|
0.05
|
15.6
|
|
|
1.06
|
|
0.85
|
0.21
|
24.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flows
|
|
40,333
|
|
39,020
|
1,313
|
3.4
|
|
|
100,488
|
|
86,980
|
13,508
|
15.5
|
|
Operating cash flows
excluding changes
in working capital
|
|
37,363
|
|
35,481
|
1,882
|
5.3
|
|
|
111,533
|
|
96,988
|
14,545
|
15.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating
activities
|
|
34,302
|
|
30,893
|
3,409
|
11.0
|
|
|
100,413
|
|
86,424
|
13,989
|
16.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
647
|
|
585
|
62
|
(10.6)
|
|
|
1,692
|
|
1,824
|
(132)
|
7.2
|
|
Depreciation of
right-of-use assets
|
|
1,530
|
|
1,606
|
(76)
|
4.7
|
|
|
4,606
|
|
5,273
|
(667)
|
12.6
|
|
Special
charges
|
|
1,243
|
|
331
|
912
|
(275.5)
|
|
|
1,440
|
|
2,360
|
(920)
|
39.0
|
|
Adjusted
EBITDA
|
$
|
37,722
|
$
|
33,415
|
4,307
|
12.9
|
|
$
|
108,151
|
$
|
95,881
|
12,270
|
12.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
28.9 %
|
|
30.1 %
|
|
|
|
|
28.7 %
|
|
29.0 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per
diluted share
|
$
|
0.68
|
$
|
0.60
|
0.08
|
13.3
|
|
$
|
1.95
|
$
|
1.73
|
0.22
|
12.7
|
|
Condensed
Consolidated Interim Statements of Financial
Position
|
|
(in thousands
of Canadian dollars)
(unaudited)
|
As at
July 31,
2024
|
As at October
31,
2023
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
257,713
|
$
|
239,532
|
|
Short-term
investments
|
|
|
980
|
|
827
|
|
Accounts
receivable
|
|
|
108,543
|
|
93,383
|
|
Prepaid
expenses and other assets
|
|
|
16,445
|
|
15,515
|
|
Income
taxes recoverable
|
|
|
-
|
|
114
|
|
|
|
383,681
|
|
349,371
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property
and equipment
|
|
|
4,305
|
|
3,273
|
|
Right-of-use assets
|
|
|
13,963
|
|
12,242
|
|
Intangible
assets
|
|
|
106,878
|
|
109,659
|
|
Goodwill
|
|
|
307,291
|
|
280,241
|
|
Deferred
income tax assets
|
|
|
24,719
|
|
28,884
|
|
|
|
457,156
|
|
434,299
|
|
|
$
|
840,837
|
$
|
783,670
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
71,652
|
$
|
67,769
|
|
Income tax
payable
|
|
|
2,645
|
|
-
|
|
Dividends
payable
|
|
|
14,397
|
|
12,156
|
|
Provisions
|
|
|
1,974
|
|
2,238
|
|
Deferred
revenue
|
|
|
131,405
|
|
109,019
|
|
Lease
obligations
|
|
|
5,330
|
|
6,322
|
|
|
|
227,403
|
|
197,504
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Income
taxes payable
|
|
|
-
|
|
1,333
|
|
Deferred
income tax liabilities
|
|
|
11,135
|
|
13,340
|
|
Deferred
revenue
|
|
|
7,630
|
|
8,170
|
|
Net
employee defined-benefit obligation
|
|
|
1,960
|
|
1,912
|
|
Lease
obligations
|
|
|
8,042
|
|
6,080
|
|
|
|
28,767
|
|
30,835
|
|
|
|
256,170
|
|
228,339
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Share
capital
|
|
|
114,812
|
|
107,701
|
|
Contributed surplus
|
|
|
10,268
|
|
10,404
|
|
Retained
earnings
|
|
|
441,391
|
|
426,397
|
|
Accumulated other comprehensive income
|
|
|
18,196
|
|
10,829
|
|
|
|
584,667
|
|
555,331
|
|
|
$
|
840,837
|
$
|
783,670
|
|
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
|
|
2024
|
2023
|
2024
|
2023
|
|
|
|
|
|
|
|
Revenue
Software licenses
|
|
$
19,579
|
$
19,836
|
$
57,046
|
$
62,587
|
|
SaaS and maintenance
services
|
|
88,812
|
72,302
|
258,383
|
210,439
|
|
Professional
services
|
|
18,231
|
15,904
|
51,577
|
50,790
|
|
Hardware
|
|
3,879
|
2,955
|
9,797
|
7,077
|
|
|
130,501
|
110,997
|
376,803
|
330,893
|
|
Direct
costs
|
|
|
|
|
|
|
Software licenses
|
|
1,689
|
720
|
3,104
|
2,288
|
|
Services
|
|
41,696
|
33,476
|
122,178
|
102,694
|
|
Hardware
|
|
2,451
|
1,676
|
5,337
|
3,804
|
|
|
45,836
|
35,872
|
130,619
|
108,786
|
|
Revenue, net of
direct costs
|
|
84,665
|
75,125
|
246,184
|
222,107
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
23,980
|
22,454
|
71,661
|
67,187
|
|
Research and
development
|
|
22,963
|
19,256
|
66,372
|
59,039
|
|
Depreciation
|
|
647
|
585
|
1,692
|
1,824
|
|
Depreciation of right-of-use
assets
|
|
1,530
|
1,606
|
4,606
|
5,273
|
|
Special charges
|
|
1,243
|
331
|
1,440
|
2,360
|
|
|
50,363
|
44,232
|
145,771
|
135,683
|
|
|
|
|
|
|
|
Results from
operating activities
|
|
34,302
|
30,893
|
100,413
|
86,424
|
|
|
|
|
|
|
|
Amortization of
acquired software and customer
relationships
|
|
(9,663)
|
(9,730)
|
(31,183)
|
(28,400)
|
|
Foreign exchange
(losses) gains
|
|
(1,747)
|
356
|
(3,550)
|
(1,487)
|
|
Interest expense –
lease obligations
|
|
(132)
|
(172)
|
(430)
|
(531)
|
|
Finance
income
|
|
2,333
|
1,701
|
7,296
|
3,683
|
|
Finance
expenses
|
|
(29)
|
(5)
|
(41)
|
(136)
|
|
Other income
(expenses)
|
|
407
|
(1,312)
|
513
|
(1,967)
|
|
Income before income
taxes
|
|
25,471
|
21,731
|
73,018
|
57,586
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
4,891
|
4,164
|
14,331
|
10,460
|
|
|
|
|
|
|
Net income for the
period
|
|
20,580
|
17,567
|
58,687
|
47,126
|
|
Item that may be
subsequently reclassified to income:
|
|
|
|
|
|
Cumulative translation
adjustment
|
|
5,929
|
(13,632)
|
7,367
|
7,406
|
|
|
|
|
|
|
|
Other comprehensive
income (loss)
|
|
5,929
|
(13,632)
|
7,367
|
7,406
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
26,509
|
$
3,935
|
$
66,054
|
$
54,532
|
|
Earnings per
share
|
|
|
|
|
|
|
Basic
|
|
$
0.37
|
$ 0.32
|
$ 1.06
|
$ 0.85
|
|
Diluted
|
|
$
0.37
|
$ 0.32
|
$ 1.06
|
$ 0.85
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
(in thousands
of Canadian dollars)
(unaudited)
|
Three
months
|
Nine
months
|
|
Periods ended July
31
|
|
2024
|
2023
|
2024
|
2023
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
Net income for the
period
|
|
$
20,580
|
$
17,567
|
$
58,687
|
$
47,126
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
647
|
585
|
1,692
|
1,824
|
|
Depreciation of right-of-use assets
|
|
1,530
|
1,606
|
4,606
|
5,273
|
|
Interest
expense – lease obligations
|
|
132
|
172
|
430
|
531
|
|
Amortization of acquired software and customer
relationships
|
|
9,663
|
9,730
|
31,183
|
28,400
|
|
Stock-based compensation expense
|
|
298
|
340
|
1,076
|
1,271
|
|
Provision
for income taxes
|
|
4,891
|
4,164
|
14,331
|
10,460
|
|
Finance
expenses and other (income) expenses
|
|
(378)
|
1,317
|
(472)
|
2,103
|
|
|
37,363
|
35,481
|
111,533
|
96,988
|
|
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
|
6,243
|
4,367
|
(246)
|
380
|
|
Income taxes
paid
|
|
(3,273)
|
(828)
|
(10,799)
|
(10,388)
|
|
Net cash provided by
operating activities
|
|
40,333
|
39,020
|
100,488
|
86,980
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
Net purchase of
property and equipment
|
|
(683)
|
(436)
|
(1,461)
|
(607)
|
|
Acquisitions, net of
cash acquired*
|
|
(30,854)
|
(2,361)
|
(43,448)
|
(27,978)
|
|
Purchase consideration
for prior-year acquisition
|
|
-
|
(1,245)
|
171
|
(1,012)
|
|
Purchase of short-term
investments
|
|
-
|
-
|
-
|
(69)
|
|
Net cash used in
investing activities
|
|
(31,537)
|
(4,042)
|
(44,738)
|
(29,666)
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
Issuance of share
capital
|
|
1,412
|
-
|
6,095
|
604
|
|
Normal course issuer
bid share repurchases
|
|
(1,759)
|
-
|
(2,906)
|
|
|
Repayment of lease
obligations
|
|
(2,347)
|
(1,474)
|
(5,747)
|
(5,754)
|
|
Dividends
paid
|
|
(14,398)
|
(12,160)
|
(38,742)
|
(32,606)
|
|
Net cash used in
financing activities
|
|
(17,092)
|
(13,634)
|
(41,300)
|
(37,756)
|
|
Impact of foreign
exchange on cash and cash equivalents
|
|
3,091
|
(4,711)
|
3,731
|
4,122
|
|
|
|
|
|
|
|
(Decrease)
increase in cash and cash equivalents
|
|
(5,205)
|
16,633
|
18,181
|
23,680
|
|
Cash and cash
equivalents - beginning of period
|
|
262,918
|
232,151
|
239,532
|
225,104
|
|
Cash and cash
equivalents - end of period
|
|
$
257,713
|
$
248,784
|
$
257,713
|
$
248,784
|
|
* Acquisitions are
net of cash acquired of $245 and $742 for the three and nine
months ended July 31, 2024, and nil and $2,088 for the three and
nine months ended July 31, 2023, respectively.
|
Enghouse Systems Limited
Segment Reporting
Information
(in thousands of Canadian dollars)
|
Three months ended
July 31
|
2024
|
|
2023
|
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
77,522
|
$
|
52,979
|
$
|
130,501
|
$
|
64,302
|
$
|
46,695
|
$
|
110,997
|
|
Direct costs
|
|
(27,981)
|
|
(17,855)
|
|
(45,836)
|
|
(18,884)
|
|
(16,988)
|
|
(35,872)
|
|
Revenue, net of
direct costs
|
|
49,541
|
|
35,124
|
|
84,665
|
|
45,418
|
|
29,707
|
|
75,125
|
|
Operating expenses
excluding special charges
|
|
(21,257)
|
|
(14,190)
|
|
(35,447)
|
|
(20,401)
|
|
(10,803)
|
|
(31,204)
|
|
Depreciation
|
|
(389)
|
|
(258)
|
|
(647)
|
|
(403)
|
|
(182)
|
|
(585)
|
|
Depreciation of
right-of-use assets
|
|
(997)
|
|
(533)
|
|
(1,530)
|
|
(1,239)
|
|
(367)
|
|
(1,606)
|
|
Segment
profit
|
$
|
26,898
|
$
|
20,143
|
$
|
47,041
|
$
|
23,375
|
$
|
18,355
|
$
|
41,730
|
|
Special
charges
|
|
|
|
|
|
(1,243)
|
|
|
|
|
|
(331)
|
|
Corporate and shared
service expenses
|
|
|
|
|
|
(11,496)
|
|
|
|
|
|
(10,506)
|
|
Results from
operating activities
|
|
|
|
|
$
|
34,302
|
|
|
|
|
$
|
30,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended
July 31
|
2024
|
|
2023
|
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
234,189
|
$
|
142,614
|
$
|
376,803
|
$
|
186,733
|
$
|
144,160
|
$
|
330,893
|
|
Direct costs
|
|
(79,960)
|
|
(50,659)
|
|
(130,619)
|
|
(54,451)
|
|
(54,335)
|
|
(108,786)
|
|
Revenue, net of
direct costs
|
|
154,229
|
|
91,955
|
|
246,184
|
|
132,282
|
|
89,825
|
|
222,107
|
|
Operating expenses
excluding special charges
|
|
(66,166)
|
|
(37,637)
|
|
(103,803)
|
|
(62,686)
|
|
(34,719)
|
|
(97,405)
|
|
Depreciation
|
|
(1,158)
|
|
(534)
|
|
(1,692)
|
|
(1,484)
|
|
(340)
|
|
(1,824)
|
|
Depreciation of
right-of-use assets
|
|
(2,930)
|
|
(1,676)
|
|
(4,606)
|
|
(3,280)
|
|
(1,993)
|
|
(5,273)
|
|
Segment
profit
|
$
|
83,975
|
$
|
52,108
|
$
|
136,083
|
$
|
64,832
|
$
|
52,773
|
$
|
117,605
|
|
Special
charges
|
|
|
|
|
|
(1,440)
|
|
|
|
|
|
(2,360)
|
|
Corporate and shared
service expenses
|
|
|
|
|
|
(34,230)
|
|
|
|
|
|
(28,821)
|
|
Results from
operating activities
|
|
|
|
|
$
|
100,413
|
|
|
|
|
$
|
86,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 only
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, September 6, 2024 at
8:45 a.m. EST. To participate, please
call +1-289-514-5100 or North American Toll-Free
+1-800-717-1738. Confirmation code: 59337. 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