Sylogist Q2 Fiscal 2021 Results: Sylogist Initiates Operational and Strategic changes, Maintains Core Financial Performance, Dividend Declared

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CALGARY, AB, May 13, 2021 /CNW/ - Sylogist Ltd. (TSX: SYZ) ("Sylogist" or the "Company"), a provider of enterprise information management solutions, is pleased to announce its unaudited financial results for the second quarter of the 2021 fiscal year, ended March 31, 2021.

Bill Wood, President and CEO of Sylogist commented, "Despite the material headwinds from COVID-19 on the public service markets we serve and the unfavorable currency exchange rate due to a weakened US dollar, we are pleased with our performance this quarter. We focused on serving our customer communities and the successful protection of our recurring revenue base. We also began to make foundational changes and investments in strategic initiatives across the company aimed at operational excellence and accelerating future organic growth.

Revenue was impacted primarily from a weakened US dollar and from continued purchase delays due to COVID. While a weakened US dollar unfavorably affects our shorter term performance it also enhances our prospects for additional US acquisitions. Our sales and acquisition pipelines remain intact and we expect to see demand begin to recover in the back-half of calendar 2021, possibly sooner. 

Throughout Q2, we began taking strategic steps to improve alignment, processes and our products. For instance, we began to strengthen and better align our development and product management teams and are continuing to build capability and capacity where needed.

In March, we closed on the acquisition of Municipal Accounting Systems, Inc. ("MAS"). This was a strong value creation accelerator as we gained valuable IP, a talented team, an expanded K-12 customer footprint and gained a dominant position in the Oklahoma K-12 market, and a significant increase in revenue and profitability. MAS is highly complementary, and we have identified opportunities to offer a broader, integrated platform offering to our customers, which expands the options related to transitioning our legacy Bellamy and SunPac customers to a modern platform, and it creates greater leverage and scale for our go-to-market strategy.

Simultaneously with the acquisition of MAS, we announced the expansion of our credit facility to $75 million CAD. This provides additional resources to pursue other strategic and transformative acquisitions.

Lastly, at the end of Q2, Sylogist's common shares began trading on the Toronto Stock Exchange (the "TSX"). Graduating to the TSX from the TSX Venture Exchange was an important milestone for the Company and provides us with greater exposure to investors and a potential source of further growth capital.

Again, I am pleased with the Company's Q2 results in these extraordinary times and excited about the outlook and our path forward," concluded Mr. Wood.

Q2 2021 Summary (Comparisons are to Q2 2020, unless otherwise noted)

• The Company acquired Municipal Accounting Systems Inc. on March 17^th, 2021; the deal was immediately accretive and provided Sylogist with valuable IP, a talented team, ~85% market share among Oklahoma K-12 school districts, and further growth opportunities.
  
  
• The Company's common shares began trading on the Toronto Stock Exchange on March 31^st, 2021.
  
  
• Revenues were $8.9 million, compared to $9.4 million, a decrease of 6%.
  
  
• Gross profit margins of 71%, compared to 75% in Q2 2020.
  
  
• Profit before income taxes of $1.7 million, compared to $3.9 million in the second quarter last year.
  
  
• Reported earnings were $1.1 million, compared to $2.8 million in Q2 2020.
  
  
• Earnings per fully diluted common share of $0.05 per share, compared to $0.12 in Q2 2020.
  
  
• Adjusted EBITDA⁽¹⁾ was $4.4 million, or $0.18 per fully diluted common share, compared to $0.24 per fully diluted common share in the second quarter of 2020.
  
  
• Adjusted EBITDA Margin⁽¹⁾ was 50%, compared to 60%.
  
  
• Cash flow from operations was $4.9M compared to $6M, a decrease of 19%.
  
  
• The Company paid regular dividends to shareholders totaling $3 million during the quarter, compared to $2.4 million in the same period last year, an increase of 25%.
  
  
• Adjusted Working Capital⁽¹⁾ was $6.9 million ($0.29 per share) compared to $45.2 million ($1.99 per share) in the same period last year.
  
  
• Combined tax pools at the end of the second quarter 2021 were approximately $13.5 million (CAD).
  
  
• Given the strong and growing cash generating ability of the Company, its Board of Directors has approved a quarterly dividend to $0.125 per common share for shareholders of record as at May 28, 2021 to be paid on June 9, 2021, which is treated as an eligible dividend under the Income Tax Act (Canada).

First half of fiscal 2021 (Comparisons are to the first half of fiscal 2020, unless otherwise noted)

• Revenues increased to $18.4 million, compared to $18.3 million.
  
  
• Recurring revenues from subscriptions and maintenance were $14 million compared to $14.1 million for the first half of 2020.
  
  
• Gross profit margins were 72% of revenue, compared to 76% for the first half of fiscal 2020.
  
  
• Adjusted EBITDA⁽¹⁾ was $9.4 million ($0.39 per share), compared to $10.9 million ($0.46 per share).
  
  
• Adjusted EBITDA Margin ⁽¹⁾ was 51%, compared to 59%.
  
  
• The Company paid regular dividends to shareholders totaling $5.9 million during the first half of fiscal 2021, compared to $4.8 million in the same period in 2020.
  
  
• For the six months ended March 31, 2021, the Company repurchased 118,400 common shares at an average price of $10.96 for a total cost of $1.3 million.

About Sylogist

Sylogist is a software company that, through strategic acquisitions, investments and operations management, provides comprehensive, mission-critical enterprise resource planning (ERP) and constituent relationship management (CRM) solutions, including fund accounting, case management, grant management and payroll, to public service organizations. Sylogist's customers include all levels of government, non-profit organizations, non-governmental organizations, educational institutions as well as public compliance driven and funded companies. The Company delivers highly scalable, multi-language, multi-currency software solutions, which serve the needs of an international clientele.

Full financial statements together with Management's Discussion and Analysis are available on SEDAR at www.sedar.com

The Company's stock is traded on the Toronto Stock Exchange under the symbol SYZ. Information about Sylogist can be found at www.sylogist.com. 

Forward-looking Statements

Certain statements in this news release may be forward-looking statements within the meaning of applicable securities laws and regulations. These statements typically use words such as expect, believe, estimate, project, anticipate, plan, may, should, could and would, or the negative of these terms, variations thereof or similar terminology. Forward-looking information in this news release includes statements with respect to the Company's pipeline and anticipated demand for its products, its acquisition pipeline, opportunities with respect to MAS, and the TSX's ability to provide additional investor exposure and potential growth capital. By their very nature, forward-looking statements are based on assumptions and involve inherent risks and uncertainties, both general and specific in nature. It is therefore possible that the beliefs and plans and other forward-looking expectations expressed herein will not be achieved or will prove inaccurate. Although Sylogist believes that the expectations reflected in these forward-looking statements are reasonable, it provides no assurance that these expectations will prove to have been correct. Forward-looking information involves risks, uncertainties and other factors that could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information, including headwinds from COVID-19 and economic turmoil, customer delays and the availability of growth prospects. Additional information regarding some of these risks, uncertainties and other factors may be found in the Company's Annual Information Form for the fiscal period ended September 30, 2020 and in the management's discussion and analysis for the three months ended March 31, 2021, and other documents available on the Company's profile at www.sedar.com. Material assumptions and factors that could cause actual results to differ materially from such forward-looking information include Sylogist's ability to attract and retain customers and to realize on its investments, the ability to expand technology partner and customer relationships and the acceleration of organic and inorganic growth. Although Sylogist believes that the material assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur. Sylogist disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.

Certain information set out herein may be considered as "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Sylogist's reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

Non-GAAP Financial Measures

(1) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA per share and Adjusted Working Capital are non-GAAP financial measures: Adjusted EBITDA is defined as: profit for the period before stock-based compensation, share-based payments, foreign exchange gains or losses, interest expense, bargain purchase price on acquisition, income taxes, acquisition-related costs, depreciation and amortization. Adjusted EBITDA Margin refers to Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA per share refers to Adjusted EBITDA per basic weighted average number of shares outstanding. Adjusted Working Capital is defined as current assets less current liabilities adjusted for deferred revenue. 

This news release makes reference to certain non-GAAP measures. These measures are not recognized measures under Canadian GAAP, do not have a standardized meaning prescribed by Canadian GAAP and are therefore may not be comparable to similar measures presented by other issuers. These measures are provided as additional information to complement measures under GAAP by providing further understanding of the Company's expected results of operations from management's perspective. Accordingly, such measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under Canadian GAAP.

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA per share and Adjusted Working Capital are provided to investors as alternative methods for assessing the Company's operating results in a manner that is focused on the Company's ongoing operations and to provide a more consistent basis for comparison between periods. These measures should not be construed as alternatives to net profit (loss) or cash flow from operating activities determined in accordance with GAAP as an indicator of the Company's performance. For further information regarding non-GAAP measures used by the Company, please refer to the management's discussion and analysis of the Company, copies of which are available on Sylogist's SEDAR profile at www.sedar.com.

SOURCE Sylogist Ltd.

Bill Wood, President and CEO or Rudy Shirra, Manager, Corporate Development and Investor Relations, Sylogist Ltd., [phone]

Related Links

http://www.sylogist.com/