MARKHAM,
ON, June 10, 2024 /CNW/ - Enghouse Systems
Limited (TSX: ENGH) announces second quarter (unaudited)
financial results for the period ended April
30, 2024. All figures are denominated in Canadian dollars
unless otherwise indicated.
Highlights for the Second Quarter ended April 30, 2024 compared to the same quarter in
the prior year:
- Revenue increased 10.9% to $125.8
million.
- Recurring revenue, which includes SaaS and maintenance
services, grew 18.6% to $85.0
million, and represents 67.5% of total revenue.
- Operating profits increased 30.5% to $33.5 million, while achieving a 28.4%
EBITDA margin.
Financial results for the three and six months ended
April 30, 2024, compared to the three
and six months ended April 30, 2023,
are as follows:
- Revenue increased to $125.8 and
$246.3 million, respectively,
compared to revenue of $113.5 and
$219.9 million;
- Results from operating activities was $33.5 and $66.1
million, respectively, compared to $25.6 and $55.5
million;
- Net income was $20.0 and
$38.1 million, respectively, compared
to $12.5 and $29.6 million;
- Adjusted EBITDA was $35.7 and
$70.4 million, respectively, compared
to $30.2 and $62.5 million;
- Cash flow from operating activities, excluding changes in
working capital, was $38.6 and
$74.2 million, respectively,
compared to $28.9 and
$61.5 million resulting in
record cash and cash equivalents of $263.8
million.
Our strong performance this quarter is demonstrated by
double-digit growth in revenue, profitability and operating cash
flows. Our proficiency in executing and integrating acquisitions
continues to be a crucial profit growth driver. This quarter we
completed the acquisition of Mediasite, which expanded our video
technology into the education and event market and increased our
presence in Japan.
Our business model continues to prioritize operational
discipline as the demand for SaaS increases. Operational
expenditures have shown improvement when compared to revenue both
for the quarter and period to date, despite inflationary pressures
and integrating acquisitions. Continued discipline in our business
activities has increased our cash and cash equivalents to the
record level of $263.8 million, with
no external debt, while increasing our dividend, repurchasing
shares, and completing and integrating the Mediasite acquisition in
the quarter.
Subsequent to quarter-end on May 9,
2024, Enghouse completed its acquisition of substantially
all of the assets of SeaChange International, Inc. ("SeaChange")
related to its IPTV products and services business, for a net
purchase price of approximately US$23
million. This acquisition increases the scale of our IPTV
business, augments our product offering and furthers our expansion
into the European market. SeaChange will be integrated within the
Asset Management Group from the date of acquisition.
Quarterly
dividends:
Today, the Board of Directors approved the Company's eligible
quarterly dividend of $0.26 per
common share payable on August 30,
2024 to shareholders of record at the close of business on
August 16, 2024.
Enghouse Systems Limited
Financial Highlights
(unaudited, in thousands
of Canadian dollars)
|
For the period ended
April 30
|
Three
months
|
|
Six
months
|
|
2024
|
|
2023
|
Var
($)
|
Var
(%)
|
|
|
2024
|
|
2023
|
Var
($)
|
Var
(%)
|
|
Revenue
|
$
|
125,813
|
$
|
113,461
|
12,352
|
10.9
|
|
$
|
246,302
|
$
|
219,896
|
26,406
|
12.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct costs
|
|
43,201
|
|
38,106
|
5,095
|
13.4
|
|
|
84,783
|
|
72,914
|
11,869
|
16.3
|
|
Revenue, net of
direct costs
|
$
|
82,612
|
$
|
75,355
|
7,257
|
9.6
|
|
$
|
161,519
|
$
|
146,982
|
14,537
|
9.9
|
|
As a % of
revenue
|
|
65.7 %
|
|
66.4 %
|
|
|
|
|
65.6 %
|
|
66.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
49,031
|
|
47,712
|
1,319
|
2.8
|
|
|
95,211
|
|
89,422
|
5,789
|
6.5
|
|
Special
charges
|
|
106
|
|
2,001
|
(1,895)
|
(94.7)
|
|
|
197
|
|
2,029
|
(1,832)
|
(90.3)
|
|
Results from
operating activities
|
$
|
33,475
|
$
|
25,642
|
7,833
|
30.5
|
|
$
|
66,111
|
$
|
55,531
|
10,580
|
19.1
|
|
As a % of
revenue
|
|
26.6 %
|
|
22.6 %
|
|
|
|
|
26.8 %
|
|
25.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired software and
customer relationships
|
|
(11,146)
|
|
(9,838)
|
(1,308)
|
(13.3)
|
|
|
(21,520)
|
|
(18,670)
|
(2,850)
|
(15.3)
|
|
Foreign exchange
losses
|
|
(86)
|
|
(790)
|
704
|
89.1
|
|
|
(1,803)
|
|
(1,843)
|
40
|
2.2
|
|
Interest expense –
lease obligations
|
|
(148)
|
|
(192)
|
44
|
22.9
|
|
|
(298)
|
|
(359)
|
61
|
17.0
|
|
Finance
income
|
|
2,602
|
|
1,006
|
1,596
|
158.6
|
|
|
4,963
|
|
1,982
|
2,981
|
150.4
|
|
Finance
expenses
|
|
(12)
|
|
(124)
|
112
|
90.3
|
|
|
(12)
|
|
(131)
|
119
|
90.8
|
|
Other income
(expenses)
|
|
220
|
|
( 528)
|
748
|
141.7
|
|
|
106
|
|
(655)
|
761
|
116.2
|
|
Income before income
taxes
|
$
|
24,905
|
$
|
15,176
|
9,729
|
64.1
|
|
$
|
47,547
|
$
|
35,855
|
11,692
|
32.6
|
|
Provision for income
taxes
|
|
4,931
|
|
2,640
|
2,291
|
86.8
|
|
|
9,440
|
|
6,296
|
3,144
|
49.9
|
|
Net Income for the
period
|
$
|
19,974
|
$
|
12,536
|
7,438
|
59.3
|
|
$
|
38,107
|
$
|
29,559
|
8,548
|
28.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
|
0.36
|
|
0.23
|
0.13
|
56.5
|
|
|
0.69
|
|
0.53
|
0.16
|
30.2
|
|
Diluted earnings per
share
|
|
0.36
|
|
0.23
|
0.13
|
56.5
|
|
|
0.69
|
|
0.53
|
0.16
|
30.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash
flows
|
|
40,256
|
|
18,698
|
21,558
|
115.3
|
|
|
60,155
|
|
47,960
|
12,195
|
25.4
|
|
Operating cash flows
excluding changes
in working
capital
|
|
38,613
|
|
28,875
|
9,738
|
33.7
|
|
|
74,170
|
|
61,507
|
12,663
|
20.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Results from operating
activities
|
|
33,475
|
|
25,642
|
7,833
|
30.5
|
|
|
66,111
|
|
55,531
|
10,580
|
19.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
551
|
|
613
|
(62)
|
10.1
|
|
|
1,045
|
|
1,239
|
(194)
|
15.7
|
|
Depreciation of
right-of-use assets
|
|
1,570
|
|
1,931
|
(361)
|
18.7
|
|
|
3,076
|
|
3,667
|
(591)
|
16.1
|
|
Special
charges
|
|
106
|
|
2,001
|
(1,895)
|
94.7
|
|
|
197
|
|
2,029
|
(1,832)
|
90.3
|
|
Adjusted
EBITDA
|
$
|
35,702
|
$
|
30,187
|
5,515
|
18.3
|
|
$
|
70,429
|
$
|
62,466
|
7,963
|
12.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin
|
|
28.4 %
|
|
26.6 %
|
|
|
|
|
28.6 %
|
|
28.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per
diluted share
|
$
|
0.64
|
$
|
0.54
|
0.10
|
18.5
|
|
$
|
1.27
|
$
|
1.13
|
0.14
|
12.4
|
|
Condensed
Consolidated Interim Statements of Financial
Position
|
|
(in thousands of
Canadian dollars)
(unaudited)
|
|
As at
April 30,
2024
|
As at October
31,
2023
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
262,918
|
$
|
239,532
|
|
Short-term
investments
|
|
|
854
|
|
827
|
|
Accounts
receivable
|
|
|
110,965
|
|
93,383
|
|
Prepaid
expenses and other assets
|
|
|
17,369
|
|
15,515
|
|
Income
taxes recoverable
|
|
|
-
|
|
114
|
|
|
|
392,106
|
|
349,371
|
|
Non-current
assets:
|
|
|
|
|
|
|
Property
and equipment
|
|
|
3,328
|
|
3,273
|
|
Right-of-use assets
|
|
|
9,966
|
|
12,242
|
|
Intangible
assets
|
|
|
98,253
|
|
109,659
|
|
Goodwill
|
|
|
292,990
|
|
280,241
|
|
Deferred
income tax assets
|
|
|
25,422
|
|
28,884
|
|
|
|
429,959
|
|
434,299
|
|
|
$
|
822,065
|
$
|
783,670
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
70,229
|
$
|
67,769
|
|
Income tax
payable
|
|
|
1,500
|
|
-
|
|
Dividends
payable
|
|
|
14,398
|
|
12,156
|
|
Provisions
|
|
|
1,420
|
|
2,238
|
|
Deferred
revenue
|
|
|
130,273
|
|
109,019
|
|
Lease
obligations
|
|
|
5,733
|
|
6,322
|
|
|
|
223,553
|
|
197,504
|
|
Non-current
liabilities:
|
|
|
|
|
|
|
Income
taxes payable
|
|
|
-
|
|
1,333
|
|
Deferred
income tax liabilities
|
|
|
11,897
|
|
13,340
|
|
Deferred
revenue
|
|
|
7,752
|
|
8,170
|
|
Net
employee defined-benefit obligation
|
|
|
1,922
|
|
1,912
|
|
Lease
obligations
|
|
|
4,337
|
|
6,080
|
|
|
|
25,908
|
|
30,835
|
|
|
|
249,461
|
|
228,339
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Share
capital
|
|
|
113,237
|
|
107,701
|
|
Contributed surplus
|
|
|
10,252
|
|
10,404
|
|
Retained
earnings
|
|
|
436,848
|
|
426,397
|
|
Accumulated other comprehensive income
|
|
|
12,267
|
|
10,829
|
|
|
|
572,604
|
|
555,331
|
|
|
$
|
822,065
|
$
|
783,670
|
|
Condensed
Consolidated Interim Statements of Operations and Comprehensive
Income
|
|
(in thousands of
Canadian dollars, except per share amounts)
|
|
|
|
(unaudited)
|
|
Three
months
|
Six
months
|
|
Periods ended April
30
|
|
2024
|
2023
|
2024
|
2023
|
|
|
|
|
|
|
|
Revenue
Software licenses
|
|
$
20,492
|
$
22,016
|
$
37,467
|
$
42,751
|
|
SaaS and maintenance
services
|
|
84,984
|
71,634
|
169,571
|
138,137
|
|
Professional
services
|
|
17,401
|
17,995
|
33,346
|
34,886
|
|
Hardware
|
|
2,936
|
1,816
|
5,918
|
4,122
|
|
|
125,813
|
113,461
|
246,302
|
219,896
|
|
Direct
costs
|
|
|
|
|
|
|
Software licenses
|
|
741
|
698
|
1,415
|
1,568
|
|
Services
|
|
40,951
|
36,793
|
80,482
|
69,218
|
|
Hardware
|
|
1,509
|
615
|
2,886
|
2,128
|
|
|
43,201
|
38,106
|
84,783
|
72,914
|
|
Revenue, net of
direct costs
|
|
82,612
|
75,355
|
161,519
|
146,982
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
24,812
|
23,935
|
47,681
|
44,733
|
|
Research and
development
|
|
22,098
|
21,233
|
43,409
|
39,783
|
|
Depreciation
|
|
551
|
613
|
1,045
|
1,239
|
|
Depreciation of right-of-use
assets
|
|
1,570
|
1,931
|
3,076
|
3,667
|
|
Special charges
|
|
106
|
2,001
|
197
|
2,029
|
|
|
49,137
|
49,713
|
95,408
|
91,451
|
|
|
|
|
|
|
|
Results from
operating activities
|
|
33,475
|
25,642
|
66,111
|
55,531
|
|
|
|
|
|
|
|
Amortization of
acquired software and customer
relationships
|
|
(11,146)
|
(9,838)
|
(21,520)
|
(18,670)
|
|
Foreign exchange
losses
|
|
(86)
|
(790)
|
(1,803)
|
(1,843)
|
|
Interest expense –
lease obligations
|
|
(148)
|
(192)
|
(298)
|
(359)
|
|
Finance
income
|
|
2,602
|
1,006
|
4,963
|
1,982
|
|
Finance
expenses
|
|
(12)
|
(124)
|
(12)
|
(131)
|
|
Other income
(expenses)
|
|
220
|
(528)
|
106
|
( 655)
|
|
Income before income
taxes
|
|
24,905
|
15,176
|
47,547
|
35,855
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
4,931
|
2,640
|
9,440
|
6,296
|
|
|
|
|
|
|
Net income for the
period
|
|
19,974
|
12,536
|
38,107
|
29,559
|
|
Item that may be
subsequently reclassified to income:
|
|
|
|
|
|
Cumulative translation
adjustment
|
|
9,455
|
11,295
|
1,438
|
21,038
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
9,455
|
11,295
|
1,438
|
21,038
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
29,429
|
$
23,831
|
$
39,545
|
$
50,597
|
|
Earnings per
share
|
|
|
|
|
|
|
Basic
|
|
$
0.36
|
$ 0.23
|
$ 0.69
|
$ 0.53
|
|
Diluted
|
|
$
0.36
|
$ 0.23
|
$ 0.69
|
$ 0.53
|
|
Condensed
Consolidated Interim Statements of Cash Flows
|
|
(in thousands of
Canadian dollars)
(unaudited)
|
|
Three
months
|
Six
months
|
|
Periods ended April
30
|
|
2024
|
2023
|
2024
|
2023
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
Net income for the
period
|
|
$
19,974
|
$
12,536
|
$
38,107
|
$
29,559
|
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
551
|
613
|
1,045
|
1,239
|
|
Depreciation of right-of-use assets
|
|
1,570
|
1,931
|
3,076
|
3,667
|
|
Interest
expense – lease obligations
|
|
148
|
192
|
298
|
359
|
|
Amortization of acquired software and customer
relationships
|
|
11,146
|
9,838
|
21,520
|
18,670
|
|
Stock-based compensation expense
|
|
501
|
473
|
778
|
931
|
|
Provision
for income taxes
|
|
4,931
|
2,640
|
9,440
|
6,296
|
|
Finance
expenses and other (income) expenses
|
|
(208)
|
652
|
(94)
|
786
|
|
|
38,613
|
28,875
|
74,170
|
61,507
|
|
|
|
|
|
|
|
Changes in non-cash
operating working capital
|
|
6,651
|
(5,989)
|
(6,489)
|
(3,987)
|
|
Income taxes
paid
|
|
(5,008)
|
(4,188)
|
(7,526)
|
(9,560)
|
|
Net cash provided by
operating activities
|
|
40,256
|
18,698
|
60,155
|
47,960
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
Net purchase of
property and equipment
|
|
(418)
|
(66)
|
(778)
|
(171)
|
|
Acquisitions, net of
cash acquired*
|
|
(12,594)
|
(25,617)
|
(12,594)
|
(25,617)
|
|
Purchase consideration
for prior-year acquisition
|
|
-
|
233
|
171
|
233
|
|
Purchase of short-term
investments
|
|
-
|
-
|
-
|
(69)
|
|
Net cash used in
investing activities
|
|
(13,012)
|
(25,450)
|
(13,201)
|
(25,624)
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
Issuance of share
capital
|
|
373
|
-
|
4,683
|
604
|
|
Normal course issuer
bid share repurchases
|
|
(1,147)
|
-
|
(1,147)
|
|
|
Repayment of lease
obligations
|
|
(1,798)
|
(2,470)
|
(3,400)
|
(4,280)
|
|
Dividends
paid
|
|
(12,188)
|
(10,225)
|
(24,344)
|
(20,446)
|
|
Net cash used in
financing activities
|
|
(14,760)
|
(12,695)
|
(24,208)
|
(24,122)
|
|
Impact of foreign
exchange on cash and cash equivalents
|
|
3,682
|
3,797
|
640
|
8,833
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash
equivalents
|
|
16,166
|
(15,650)
|
23,386
|
7,047
|
|
Cash and cash
equivalents - beginning of period
|
|
246,752
|
247,801
|
239,532
|
225,104
|
|
Cash and cash
equivalents - end of period
|
|
$
262,918
|
$
232,151
|
$
262,918
|
$
232,151
|
|
* Acquisitions are
net of cash acquired of $497 for the three and six months
ended April 30, 2024 and $2,088 for the three and six months
ended April 30, 2023, respectively.
|
Enghouse Systems Limited
Segment Reporting
Information
(in thousands of Canadian dollars)
|
Three months ended
April 30
|
|
2024
|
|
2023
|
|
IMG
|
AMG
|
Total
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
80,530
|
$
|
45,283
|
$
|
125,813
|
$
|
64,578
|
$
|
48,883
|
$
|
113,461
|
|
Direct costs
|
|
(26,573)
|
|
(16,628)
|
|
(43,201)
|
|
(19,133)
|
|
(18,973)
|
|
(38,106)
|
|
Revenue, net of
direct costs
|
|
53,957
|
|
28,655
|
|
82,612
|
|
45,445
|
|
29,910
|
|
75,355
|
|
Operating expenses
excluding special charges
|
|
(23,483)
|
|
(11,751)
|
|
(35,234)
|
|
(23,034)
|
|
(12,596)
|
|
(35,630)
|
|
Depreciation
|
|
(392)
|
|
(159)
|
|
(551)
|
|
(544)
|
|
(69)
|
|
(613)
|
|
Depreciation of
right-of-use assets
|
|
(997)
|
|
(573)
|
|
(1,570)
|
|
(941)
|
|
(990)
|
|
(1,931)
|
|
Segment
profit
|
$
|
29,085
|
$
|
16,172
|
$
|
45,257
|
$
|
20,926
|
$
|
16,255
|
$
|
37,181
|
|
Special
charges
|
|
|
|
|
|
(106)
|
|
|
|
|
|
(2,001)
|
|
Corporate and shared
service expenses
|
|
|
|
|
|
(11,676)
|
|
|
|
|
|
(9,538)
|
|
Results from
operating activities
|
|
|
|
|
$
|
33,475
|
|
|
|
|
$
|
25,642
|
|
Six months ended
April 30
|
|
2024
|
|
2023
|
|
IMG
|
AMG
|
Total
|
|
IMG
|
AMG
|
Total
|
|
Revenue
|
$
|
156,666
|
$
|
89,636
|
$
|
246,302
|
$
|
122,431
|
$
|
97,465
|
$
|
219,896
|
|
Direct costs
|
|
(51,979)
|
|
(32,804)
|
|
(84,783)
|
|
(35,564)
|
|
(37,350)
|
|
(72,914)
|
|
Revenue, net of
direct costs
|
|
104,687
|
|
56,832
|
|
161,519
|
|
86,867
|
|
60,115
|
|
146,982
|
|
Operating expenses
excluding special charges
|
|
(44,909)
|
|
(23,447)
|
|
(68,356)
|
|
(42,285)
|
|
(23,916)
|
|
(66,201)
|
|
Depreciation
|
|
(769)
|
|
(276)
|
|
(1,045)
|
|
(1,081)
|
|
(158)
|
|
(1,239)
|
|
Depreciation of
right-of-use assets
|
|
(1,933)
|
|
(1,143)
|
|
(3,076)
|
|
(2,041)
|
|
(1,626)
|
|
(3,667)
|
|
Segment
profit
|
$
|
57,076
|
$
|
31,966
|
$
|
89,042
|
$
|
41,460
|
$
|
34,415
|
$
|
75,875
|
|
Special
charges
|
|
|
|
|
|
(197)
|
|
|
|
|
|
(2,029)
|
|
Corporate and shared
service expenses
|
|
|
|
|
|
(22,734)
|
|
|
|
|
|
(18,315)
|
|
Results from
operating activities
|
|
|
|
|
$
|
66,111
|
|
|
|
|
$
|
55,531
|
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 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
Tuesday, June 11, 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: 14684. 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
