MARKHAM, ON, Dec. 16, 2021 /CNW/ - Enghouse Systems Limited (TSX: ENGH) today announced its fourth quarter (unaudited) and year-end financial results for period ended October 31, 2021. All the financial information is in Canadian dollars unless otherwise indicated.

Financial and operational highlights for the three and twelve months ended October 31, 2021 compared to the three and twelve months ended October 31, 2020 are as follows:

  • Revenue achieved was $113.1 and $467.2 million, respectively, compared to revenue of $120.9 and $503.8 million;

  • Results from operating activities was $39.1 and $155.2 million, respectively, compared to $42.7 and $162.0 million;

  • Net income was $30.2 and $92.8 million, respectively, compared to $29.4 and $98.6 million;

  • Adjusted EBITDA was $42.1 and $168.5 million, respectively, compared to $46.6 and $176.8 million while Adjusted EBITDA margins increased from 35.1% to 36.1% for the year.

  • Cash flows from operating activities excluding changes in working capital was $42.4 and $167.8 million, respectively compared to $48.0 and $178.5 million.

Fiscal 2021 was another year of positive income and operating cash flows, improved Adjusted EBITDA margins and record distributions to shareholders. Although record revenue was not achieved this year, we again demonstrated the benefit of maintaining our financial discipline during times of significant market fluctuations. For the year, Enghouse achieved adjusted EBITDA margins of 36.1% and cash flows from operations, excluding changes in working capital, of $167.8 million.

Revenue for the quarter was $113.1 million, compared to revenue of $120.9 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 in addition to unfavourable foreign exchange. Similar to the second and third quarters of 2021, the comparatively higher revenue last year was driven primarily by the previous year's significant increase in our Vidyo business that has returned to levels more consistent with pre-COVID volumes. Revenue for the quarter was negatively impacted by $4.4 million as a result of foreign exchange as the Canadian dollar strengthened against the U.S. dollar and Euro.

Enghouse closed the quarter with $198.8 million in cash, cash equivalents and short-term investments, compared to $251.8 million at October 31, 2020. The cash balance was achieved after making payments of $35.6 million for acquisitions and $115.7 million for dividends this year, inclusive of $83.2 million of special dividends.

Changes in the macroeconomic environment, caused by COVID or other factors, continue to impact our business. We closed three acquisitions during the year that met our return-on-investment criteria. However, acquisitions in the technology marketplace continue to be priced at prohibitively higher valuations that do not support our return-on-investment objective.

Going forward, we continue to seek earnings-accretive acquisitions to grow our revenue and further expand both our product suite and geographic reach, while maintaining our commitment to profitable growth in accordance with our disciplined business model. We continue to operate our business consistent with our value-for-money philosophy that we believe provides shareholder value in the long-term.

Quarterly dividends:
Today, the Board of Directors approved the Company's eligible quarterly dividend of $0.16 per common share payable on February 28, 2022 to shareholders of record at the close of business on February 14, 2022.

Enghouse Systems Limited
Financial Highlights
(unaudited, in thousands of Canadian dollars) 





 

For the period ended October 31

Three months


Twelve months


2021


2020

 Var ($)

Var (%)



2021


2020

Var ($)

Var (%)

Revenue

$

113,099

$

120,898

(7,799)

(6.5)


$

467,177

$

503,778

(36,601)

(7.3)















Direct costs


31,149


33,261

(2,112)

(6.3)



129,627


145,177

(15,550)

(10.7)

Revenue, net of direct costs

$

81,950

$

87,637

(5,687)

(6.5)


$

337,550

$

358,601

(21,051)

(5.9)

As a % of revenue


72.5%


72.5%





72.3%


71.2%

















Operating expenses


42,784


44,952

(2,168)

(4.8)



181,413


195,109

(13,696)

(7.0)

Special charges


31


(12)

43

358.3



904


1,478

(574)

(38.8)

Results from operating activities

$

39,135

$

42,697

(3,562)

(8.3)


$

155,233

$

162,014

(6,781)

(4.2)

As a % of revenue


34.6%


35.3%





33.2%


32.2%

















Amortization of acquired software and


(10,438)


(10,958)

520

4.7



(42,421)


(44,140)

1,719

3.9

customer relationships

Foreign exchange (losses) gains


(62)


850

(912)

(107.3)



(2,038)


(298)

(1,740)

(583.9)

Interest expense – lease obligations


(218)


(467)

249

53.3



(1,036)


(1,331)

295

22.2

Finance income


52


43

9

20.9



214


734

(520)

(70.8)

Finance expenses


(10)


(42)

32

76.2



(86)


(81)

( 5)

(6.2)

Other (expense) income


(486)


671

(1,157)

(172.4)



(2,448)


4,895

(7,343)

(150.0)

Income before income taxes

$

27,973

$

32,794

(4,821)

(14.7)


$

107,418

$

121,793

(14,375)

(11.8)

(Recovery of) provision for income taxes


(2,213)


3,422

(5,635)

(164.7)



14,624


23,203

(8,579)

(37.0)

Net Income for the period

$

30,186

$

29,372

814

2.8


$

92,794

$

98,590

(5,796)

(5.9)















Basic earnings per share


0.54


0.53

0.01

1.9



1.67


1.79

(0.12)

(6.7)

Diluted earnings per share


0.54


0.52

0.02

3.8



1.66


1.77

(0.11)

(6.2)















Operating cash flows


25,206


34,989

(9,783)

(28.0)



118,460


168,145

(49,685)

(29.5)

Operating cash flows excluding changes in


42,385


48,008

(5,623)

(11.7)



167,807


178,518

(10,711)

(6.0)

working capital















Adjusted EBITDA














Results from operating activities


39,135


42,697

(3,562)

(8.3)



155,233


162,014

(6,781)

(4.2)















Depreciation


791


795

(4)

(0.5)



3,003


3,241

(238)

(7.3)

Depreciation of right-of-use assets


2,168


3,158

(990)

(31.3)



9,369


10,083

(714)

(7.1)

Special charges


31


(12)

43

358.3



904


1,478

(574)

(38.8)

Adjusted EBITDA

$

42,125

$

46,638

(4,513)

(9.7)


$

168,509

$

176,816

(8,307)

(4.7)















Adjusted EBITDA margin


37.2%


38.6%





36.1%


35.1%

















Adjusted EBITDA per diluted share

$

0.75

$

0.84

( 0.09)

(10.7)


$

3.02

$

3.18

( 0.16)

(5.0)

 





Consolidated Statements of Financial Position




(in thousands of Canadian dollars)


As at October 31,2021

As at October 31, 2020

ASSETS






Current assets:






Cash and cash equivalents


$

195,890

$

244,792

Short-term investments



2,944


6,999

Accounts receivable



89,374


90,789

Prepaid expenses and other assets



13,322


14,772

Income taxes recoverable



2,130


-




303,660


357,352

Non-current assets:






Property and equipment



6,246


6,301

Right-of-use assets



25,943


42,832

Intangible assets



101,822


123,616

Goodwill



223,021


217,426

Deferred income tax assets



13,932


16,119




370,964


406,294



$

674,624

$

763,646







LIABILITIES AND SHAREHOLDERS' EQUITY






Current liabilities:






Accounts payable and accrued liabilities


$

71,506

$

80,339

Income taxes payable



-


13,245

Dividends payable



8,889


7,472

Provisions



5,588


5,697

Deferred revenue



80,614


89,927

Lease obligations



7,941


9,914




174,538


206,594

Non-current liabilities:






Income taxes payable



2,949


3,829

Deferred income tax liabilities



13,392


14,782

Deferred revenue



9,111


7,021

Net employee defined benefit obligation



2,663


2,855

Lease obligations



17,660


32,242




45,775


60,729




220,313


267,323

 

Shareholders' equity






Share capital



106,470


99,405

Contributed surplus



7,406


6,583

Retained earnings



355,019


379,378

Accumulated other comprehensive (loss) income



(14,584)


10,957




454,311


496,323



$

674,624

$

763,646

 







Consolidated Statement of Operations and Comprehensive Income






(in thousands of Canadian dollars, except per share amounts)









Three months


Twelve months

Periods ended October 31



2021

(unaudited)


2020

(Unaudited)


2021


2020

 

Revenue










Software licenses


$

24,798

$

27,658

$

105,072

$

134,287

Hosted and maintenance services



67,917


73,037


278,981


286,770

Professional services



18,121


16,906


71,197


64,235

Hardware



2,263


3,297


11,927


18,486




113,099


120,898


467,177


503,778

Direct costs










Software licenses



535


1,649


4,555


10,094

Services



29,422


29,557


117,670


121,400

Hardware



1,192


2,055


7,402


13,683




31,149


33,261


129,627


145,177

Revenue, net of direct costs



81,950


87,637


337,550


358,601











Operating expenses










Selling, general and administrative



22,959


21,922


91,844


102,028

Research and development



16,866


19,077


77,197


79,757

Depreciation



791


795


3,003


3,241

Depreciation of right-of-use assets



2,168


3,158


9,369


10,083

Special charges



31


(12)


904


1,478




42,815


44,940


182,317


196,587











Results from operating activities



39,135


42,697


155,233


162,014











Amortization of acquired software and customer relationships   



(10,438)


(10,958)


(42,421)


(44,140)

Foreign exchange (losses) gains



(62)


850


(2,038)


(298)

Interest expense – lease obligations



(218)


(467)


(1,036)


(1,331)

Finance income



52


43


214


734

Finance expenses



(10)


(42)


(86)


(81)

Other (expense) income



(486)


671


(2,448)


4,895

Income before income taxes



27,973


32,794


107,418


121,793











(Recovery of) provision for income taxes



(2,213)


3,422


14,624


23,203










Net income for the period


$

30,186

$

29,372

$

92,794

$

98,590

 

Items that may be subsequently reclassified to income:









Cumulative translation adjustment



(6,352)


(8,984)


(25,541)


6,335











Other comprehensive (loss) income



(6,352)


(8,984)


(25,541)


6,335











Comprehensive income


$

23,834

$

20,388

$

67,253

$

104,925

Earnings per share










Basic


$

0.54

$

0.53

$

1.67

$

1.79

Diluted


$

0.54

$

0.52

$

1.66

$

1.77












 











Consolidated Statements of Cash Flows










(in thousands of Canadian dollars)









Three months


Twelve months

Periods ended October 31



2021

(Unaudited)


2020

(Unaudited)


2021


2020

 

OPERATING ACTIVITIES










Net income for the period


$

30,186

$

29,372

$

92,794

$

98,590

Adjustments for non-cash items



















Depreciation



791


795


3,003


3,241

Depreciation of right-of-use assets



2,168


3,158


9,369


10,083

Interest expense – lease obligations



218


467


1,036


1,331

Amortization of acquired software and customer relationships



10,438


10,958


42,421


44,140

Stock-based compensation expense



301


465


2,026


2,744

Provision for income taxes



(2,213)


3,422


14,624


23,203

Finance expenses and other expense (income)



496


(629)


2,534


(4,814)




42,385


48,008


167,807


178,518











Changes in non-cash operating working capital



(11,814)


(8,762)


(21,671)


9,388

Income taxes paid



(5,365)


(4,257)


(27,676)


(19,761)

Net cash provided by operating activities



25,206


34,989


118,460


168,145











INVESTING ACTIVITIES










Purchase of property and equipment



(1,484)


(638)


(3,333)


(2,540)

Acquisitions, net of cash acquired*



661


-


(35,476)


(43,454)

Purchase consideration for prior-year acquisitions



-


-


(158)


(452)

(Purchase) sale of short-term investments



(218)


2,948


1,352


1,379

Net cash (used in) provided by investing activities



(1,041)


2,310


(37,615)


(45,067)











FINANCING ACTIVITIES










Issuance of share capital



1,016


1,630


5,862


14,991

Repayment of loans



-


(66)


-


(128)

Repayment of lease obligations



(2,314)


(3,285)


(9,633)


(10,220)

Dividends paid



(8,883)


(7,463)


(115,736)


(26,959)

Net cash used in financing activities



(10,181)


(9,184)


(119,507)


(22,316)

 

Impact of foreign exchange on cash and cash equivalents



(2,523)


(2,746)


(10,240)


 

(734)











Increase (decrease) in cash and cash equivalents



11,461


25,369


(48,902)


100,028

Cash and cash equivalents - beginning of period



184,429


219,423


244,792


144,764

Cash and cash equivalents - end of period


$

195,890

$

244,792

$

195,890

$

244,792


* Acquisitions are net of cash acquired of nil and $3,613 for the quarter and year ended October 31, 2021, respectively, and nil and $6,906 for the quarter and year ended October 31, 2020, respectively.

Enghouse Systems Limited
Segment Reporting Information
(in thousands of Canadian dollars)






For the period ended October 31, 2021


Three months


Twelve months

IMG

AMG

Total

IMG

AMG

Total

Revenue

$

66,846

$

46,253

$

113,099

$

268,584

$

198,593

$

467,177

Direct costs


(15,281)


(15,868)


(31,149)


(64,941)


(64,686)


(129,627)

Revenue, net of direct costs


51,565


30,385


81,950


203,643


133,907


337,550

Operating expenses excluding special charges


(19,505)


(13,249)


(32,754)


(88,064)


(49,306)


(137,370)

Depreciation of property and equipment


(668)


(123)


(791)


(2,570)


(433)


(3,003)

Depreciation of right-of-use assets


(1,213)


(955)


(2,168)


(5,900)


(3,469)


(9,369)

Segment profit

$

30,179

$

16,058

$

46,237

$

107,109

$

80,699

$

187,808

Special charges






(31)






(904)

Corporate and shared service expenses






(7,071)






(31,671)

Results from operating activities





$

39,135





$

155,233















 






 For the period ended October 31, 2020


Three months


Twelve months

IMG

AMG

Total

IMG

AMG

Total

Revenue

$

70,927

$

49,971

$

120,898

$

298,876

$

204,902

$

503,778

Direct costs


(16,055)


(17,206)


(33,261)


(70,295)


(74,882)


(145,177)

Revenue, net of direct costs


54,872


32,765


87,637


228,581


130,020


358,601

Operating expenses excluding special charges


(24,153)


(11,105)


(35,258)


(93,875)


(51,920)


(145,795)

Depreciation of property and equipment


(678)


(117)


(795)


(2,297)


(944)


(3,241)

Depreciation of right-of-use assets


(2,732)


(426)


(3,158)


(6,623)


(3,460)


(10,083)

Segment profit

$

27,309

$

21,117

$

48,426

$

125,786

$

73,696

$

199,482

Special charges






12






(1,478)

Corporate and shared service expenses






(5,741)






(35,990)

Results from operating activities





$

42,697





$

162,014















About Enghouse
Enghouse is a Canadian publicly traded company (TSX:ENGH) that provides enterprise software solutions focusing on contact centers, video communications, remote work, communications for next generation software defined networks, public safety and the transit market. 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 has no debt financing 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, December 17, 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: 5379462. 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

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