Tecsys Reports Record Revenue for the Fourth Quarter and Full Year Fiscal 2024

SaaS subscription bookings set new record in fourth quarter, SaaS RPO climbs 43%

MONTREAL, June 27, 2024 /CNW/ -- Tecsys Inc. (TSX: TCS), an industry-leading supply chain management SaaS company, today announced its results for the fourth quarter and full year of fiscal 2024, ended April 30, 2024. All dollar amounts are expressed in Canadian currency and are prepared in accordance with International Financial Reporting Standards (IFRS).

"Fiscal 2024 has been a landmark year for Tecsys in which we have demonstrated our ability to drive continued growth and expand market opportunity," said Peter Brereton, president and CEO at Tecsys. "Our SaaS revenue surged by 39% in fiscal 2024 and we achieved record-breaking SaaS bookings in our fourth quarter as well as for the full year. We head into fiscal 2025 with confidence that we are delivering exceptional value to our customers and are well-positioned to capitalize on our market momentum."

Mark Bentler, chief financial officer of Tecsys Inc., added, "Our financial performance in fiscal 2024 underscores the strength of our business model. With a 43% increase in SaaS RPO in fiscal 2024 and positive evolution in our gross margin profiles, we continue to see the path for AEBITDA margin expansion to 8-9% in fiscal 2025 and 10-11% in fiscal 2026."

Fourth Quarter Highlights:

• SaaS revenue increased by 27% to $14.2 million, up from $11.1 million in Q4 2023.
• SaaS subscription bookingsⁱ (measured on an ARRⁱ basis) increased by 108% to a record $8.0 million, compared to $3.9 million in the fourth quarter of fiscal 2023.
• SaaS Remaining Performance Obligation (RPOⁱ) increased by 43% to $196.9 million at April 30, 2024, up from $137.7 million at the same time last year.
• Annual Recurring Revenue (ARRⁱ) at April 30, 2024 was up 21% to $94.7 million compared to $78.3 million at April 30, 2023.
• Total revenue increased 7% to a record $44.0 million compared to $41.2 million in Q4 2023. Professional services revenue decreased by 2% to $14.4 million compared to $14.6 million in Q4 2023.
• Gross margin was 47% for the fourth quarter of fiscal 2024 compared to 45% for the same period in fiscal 2023.
• Total gross profit increased to $20.6 million, up 12% from $18.4 million in Q4 2023.
• Operating expenses increased to $21.3 million, higher by $4.3 million or 25% compared to $17.0 million in Q4 last year. Q4 2024 operating expenses included $2.1 million of restructuring costs.
• Loss from operations (including the impact of restructuring costs) was $0.6 million in Q4 2024, compared to a profit from operations of $1.4 million in Q4 2023.
• Net profit was $0.3 million or $0.02 per share on a fully diluted basis in Q4 2024, compared to $0.4 million or $0.03 per share for the same period in fiscal 2023.
• Adjusted EBITDAⁱⁱ was $2.8 million, up 14% compared to $2.4 million reported in Q4 last year.
• In the fourth quarter of fiscal 2024, Tecsys acquired 128,300 of its outstanding common shares for approximately $5.0 million as part of its ongoing normal course issuer bid.

Fiscal 2024 Highlights:

• SaaS revenue increased by 39% to $51.9 million, up from $37.5 million in fiscal 2023.
• SaaS subscription bookingsⁱ (measured on an ARRⁱ basis) increased to $18.6 million, up 13% from $16.4 million in fiscal 2023.
• Total revenue increased 12% to $171.2 million compared to $152.4 million in fiscal 2023.
• Professional services revenue was $55.2 million, down slightly compared to $55.4 million in fiscal 2023.
• Gross margin was 46% for fiscal 2024 compared to 44% for fiscal 2023.
• Total gross profit increased to $78.4 million, up 17% from $66.8 million in the same period of fiscal 2023.
• Operating expenses increased to $76.5 million, higher by $13.2 million or 21% compared to $63.2 million in fiscal 2023.
• Profit from operations (including the impact of restructuring) was $1.9 million, down from $3.6 million in fiscal 2023.
• Net profit was $1.8 million, or $0.13 per diluted share in fiscal 2024, compared to a net profit of $2.1 million, or $0.14 per diluted share, for fiscal 2023.
• Adjusted EBITDAⁱⁱ was $9.6 million, up slightly compared to $9.5 million in fiscal 2023.

Financial Guidance:

Tecsys is providing financial guidance as follows:

	FY25 Guidance		FY26 Guidance
Total Revenue Growth	7-9%		n.a.
SaaS Revenue Growth	30-32%		n.a.
Adjusted EBITDA^ii Margin	8-9%		10-11%

On June 27, 2024, the Company declared a quarterly dividend of $0.08 per share to be paid on August 2, 2024 to shareholders of record on July 12, 2024.

Pursuant to the Canadian Income Tax Act, dividends paid by the Company to Canadian residents are considered to be "eligible" dividends.

Q4 and FY2024 Financial Results Conference Call
Date: June 28, 2024
Time: 8:30 a.m. ET
Phone number: 800-836-8184 or 646-357-8785
The call can be replayed until July 5, 2024, by calling:
888-660-6345 or 646-517-4150 (access code: 46999#)

ⁱ See Key Performance Indicators in Management's Discussion and Analysis of the 2024 Financial Statements.

ⁱⁱ See Non-IFRS Performance Measures in Management's Discussion and Analysis of the 2024 Financial Statements.

About Tecsys

Tecsys is a global provider of advanced supply chain solutions. With a commitment to innovation and customer success, the company equips organizations with the essential software, technology and expertise needed for operational excellence and competitive advantage. Its cloud solutions serve a diverse range of industries, including healthcare, distribution and converging commerce, across multiple complex, regulated and high-volume markets. Built on the Itopia® low-code application platform, Tecsys' offerings include enterprise resource planning, warehouse management, consolidated service management, distribution and transportation management, supply management at the point of use and order management solutions. Tecsys provides critical data insights and control across the supply chain, ensuring that organizations are agile, responsive and scalable. Tecsys is publicly traded on the Toronto Stock Exchange under the ticker symbol TCS. For more about Tecsys and its solutions, please visit www.tecsys.com.

Forward Looking Statements
The statements in this news release relating to matters that are not historical fact are forward-looking statements that are based on management's beliefs and assumptions. Such statements are not guarantees of future performance and are subject to a number of uncertainties, including but not limited to future economic conditions, the markets that Tecsys Inc. serves, the actions of competitors, major new technological trends, and other factors beyond the control of Tecsys Inc., which could cause actual results to differ materially from such statements. More information about the risks and uncertainties associated with Tecsys Inc.'s business can be found in the MD&A section of the Company's annual report and the most recently filed annual information form. These documents have been filed with the Canadian securities commissions and are available on our website (www.tecsys.com) and on SEDAR+ (www.sedarplus.ca).

Copyright © Tecsys Inc. 2024. All names, trademarks, products, and services mentioned are registered or unregistered trademarks of their respective owners.

Non-IFRS Measures

Reconciliation of EBITDA and Adjusted EBITDA

EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as EBITDA before stock-based compensation, gain on remeasurement of lease liability, recognition of tax credits generated in prior periods and restructuring costs. The exclusion of interest expense, interest income, income taxes and restructuring costs eliminates the impact on earnings derived from non-operational activities and non-recurring items, and the exclusion of depreciation, amortization, stock-based compensation, gain on remeasurement of lease liability and recognition of tax credits generated in prior periods eliminates the non-cash impact of these items. 

The Company believes that these measures are useful measures of financial performance without the variation caused by the impacts of the items described above and that could potentially distort the analysis of trends in our operating performance. In addition, they are commonly used by investors and analysts to measure a company's performance, its ability to service debt and to meet other payment obligations, or as a common valuation measurement. Excluding these items does not imply that they are necessarily non-recurring. Management believes these non-IFRS financial measures, in addition to conventional measures prepared in accordance with IFRS, enable investors to evaluate the Company's operating results, underlying performance and future prospects in a manner similar to management. Although EBITDA and Adjusted EBITDA are frequently used by securities analysts, lenders and others in their evaluation of companies, they have limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under IFRS.

The reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable IFRS measure is provided below.

	Year ended April 30,
(in thousands of CAD)		2024		2023		2022
Net profit for the period	$	1,849	$	2,089	$	4,478
Adjustments for:
Depreciation of property and equipment and right-of-use assets		1,477		1,775		2,162
Amortization of deferred development costs		583		496		290
Amortization of other intangible assets		1,493		1,603		1,612
Interest expense		163		406		622
Interest income		(1,015)		(686)		(474)
Income taxes		641		1,624		946
EBITDA	$	5,191	$	7,307	$	9,636
Adjustments for:
Stock based compensation		2,301		2,177		1,684
Gain on remeasurement of lease liability		-		-		(573)
Recognition of tax credits generated in prior periods		-		-		(617)
Restructuring costs		2,122		-		-
Adjusted EBITDA^ii	$	9,614	$	9,484	$	10,130

Consolidated Statements of Financial Position (In thousands of Canadian dollars)
		April 30, 2024		April 30, 2023
Assets
Current assets
Cash and cash equivalents	$	18,856	$	21,235
Short-term investments		16,713		15,835
Accounts receivable		22,090		22,900
Work in progress		4,248		1,734
Other receivables		134		523
Tax credits		6,422		5,338
Inventory		1,359		1,034
Prepaid expenses and other		9,143		8,193
Total current assets		78,965		76,792
Non-current assets
Other long-term receivables and assets		421		363
Tax credits		4,737		5,368
Property and equipment		1,372		1,802
Right-of-use assets		1,251		1,708
Contract acquisition costs		4,478		3,738
Deferred development costs		2,683		2,254
Other intangible assets		7,703		9,287
Goodwill		17,363		17,467
Deferred tax assets		9,073		8,137
Total non-current assets		49,081		50,124
Total assets	$	128,046	$	126,916
Liabilities
Current liabilities
Accounts payable and accrued liabilities		20,030		21,669
Deferred revenue		36,211		30,388
Lease obligations		812		793
Total current liabilities		57,053		52,850
Non-current liabilities
Other long-term accrued liabilities		496		253
Deferred tax liabilities		826		1,255
Lease obligations		1,302		2,120
Total non-current liabilities		2,624		3,628
Total liabilities	$	59,677	$	56,478
Equity
Share capital	$	52,256	$	44,338
Contributed surplus		9,417		15,285
Retained earnings		8,121		10,832
Accumulated other comprehensive loss		(1,425)		(17)
Total equity attributable to the owners of the Company		68,369		70,438
Total liabilities and equity	$	128,046	$	126,916

Consolidated Statements of Income and Comprehensive (loss) Income  (In thousands of Canadian dollars, except per share data)
	Three Months Ended				Twelve Months Ended
	April 30,				April 30,
	2024		2023		2024		2023
Revenue:
SaaS	$	14,191	$	11,133	$	51,918	$	37,476
Maintenance and Support		8,140		7,992		33,957		32,714
Professional Services		14,390		14,614		55,188		55,353
License		282		529		1,386		3,116
Hardware		6,952		6,924		28,793		23,765
Total revenue		43,955		41,192		171,242		152,424
Cost of revenue		23,341		22,828		92,853		85,615
Gross profit		20,614		18,364		78,389		66,809
Operating expenses:
Sales and marketing		8,437		7,778		32,976		28,080
General and administration		3,264		2,599		11,844		11,218
Research and development, net of tax credits		7,435		6,597		29,514		23,943
Restructuring costs		2,122		-		2,122		-
Total operating expenses		21,258		16,974		76,456		63,241
(Loss) profit from operations		(644)		1,390		1,933		3,568
Other income (costs)		122		(189)		557		145
(Loss) profit before income taxes		(522)		1,201		2,490		3,713
Income tax (benefit) expense		(781)		755		641		1,624
Net profit	$	259	$	446	$	1,849	$	2,089
Other comprehensive income (loss):
Effective portion of changes in fair value on designated revenue hedges		(2,187)		(521)		(1,086)		(6)
Exchange differences on translation of foreign operations		102		489		(322)		1,423
Comprehensive (loss) income	$	(1,826)	$	414	$	441	$	3,506
Basic and diluted earnings per common share	$	0.02	$	0.03	$	0.13	$	0.14

Consolidated Statements of Cash Flows (In thousands of Canadian dollars)
	Three Months Ended				Twelve Months Ended
	April 30,				April 30,
		2024		2023		2024		2023
Cash flows from operating activities:
Net profit	$	259	$	446	$	1,849	$	2,089
Adjustments for:
Depreciation of property and equipment and right-of-use-assets		361		440		1,477		1,775
Amortization of deferred development costs		147		145		583		496
Amortization of other intangible assets		347		402		1,493		1,603
Interest (income) expense and foreign exchange (gain) loss		(122)		189		(557)		(145)
Unrealized foreign exchange and other		481		1,336		(569)		1,754
Non-refundable tax credits		(596)		(429)		(1,961)		(2,095)
Stock-based compensation		531		455		2,301		2,177
Income taxes		65		124		519		554
Net cash from operating activities excluding changes in non-cash    working capital items related to operations		1,473		3,108		5,135		8,208
Accounts receivable		2,714		955		764		(5,915)
Work in progress		(856)		208		(2,518)		(151)
Other receivables and assets		(135)		163		1		(58)
Tax credits		(728)		3,239		113		(114)
Inventory		544		268		(327)		(226)
Prepaid expenses		299		21		(646)		(1,452)
Contract acquisition costs		(784)		(190)		(1,045)		(908)
Accounts payable and accrued liabilities		(3,052)		1,645		(2,455)		3,259
Deferred revenue		5,506		1,258		5,833		5,713
Changes in non-cash working capital items related to operations		3,508		7,567		(280)		148
Net cash provided by operating activities		4,981		10,675		4,855		8,356
Cash flows from financing activities:
Repayment of long-term debt		-		-		-		(8,400)
Proceeds from short-term investments		-		-		-		5,000
Payment of lease obligations		(193)		(119)		(786)		(689)
Payment of dividends		(1,175)		(1,094)		(4,560)		(4,225)
Interest paid		(27)		(17)		(163)		(406)
Issuance of common shares on exercise of stock options		3,897		185		6,964		297
Shares repurchased and cancelled		(5,010)		-		(7,215)		-
Net cash used in financing activities		(2,508)		(1,045)		(5,760)		(8,423)
Cash flows from investing activities:
Interest received		6		27		97		90
Transfers from short-term investments		-		-		40		-
Acquisitions of property and equipment		(144)		(340)		(599)		(850)
Acquisitions of other intangible assets		-		-		-		(62)
Deferred development costs		(203)		(283)		(1,012)		(880)
Net cash used in investing activities		(341)		(596)		(1,474)		(1,702)
Net Increase (decrease) in cash and cash equivalents during the period		2,132		9,034		(2,379)		(1,769)
Cash and cash equivalents - beginning of period		16,724		12,201		21,235		23,004
Cash and cash equivalents - end of period	$	18,856	$	21,235	$	18,856	$	21,235

Consolidated Statements of Changes in Equity (In thousands of Canadian dollars, except number of shares)
	Share capital
	Number		Amount		Contributed Surplus		Accumulated other comprehensive income (loss)		Retained earnings		Total
Balance, May 1, 2023	14,582,837	$	44,338	$	15,285	$	(17)	$	10,832	$	70,438
Net profit	-		-		-		-		1,849		1,849
Other comprehensive (loss) income:
Effective portion of changes in fair value on designated revenue hedges	-		-		-		(1,086)		-		(1,086)
Exchange difference on translation of foreign operations	-		-		-		(322)		-		(322)
Total comprehensive (loss) income	-		-		-		(1,408)		1,849		441
Shares repurchased and cancelled	(204,500)		(684)		(6,531)		-		-		(7,215)
Stock-based compensation	-		-		2,301		-		-		2,301
Dividends to equity owners	-		-		-		-		(4,560)		(4,560)
Share options exercised	461,813		8,602		(1,638)		-		-		6,964
Total transactions with owners of the Company	257,313	$	7,918		(5,868)	$	-	$	(4,560)	$	(2,510)
Balance, April 30, 2024	14,840,150	$	52,256		9,417	$	(1,425)	$	8,121	$	68,369
											-
Balance, May 1, 2022	14,562,895	$	43,973		13,176	$	(1,434)	$	12,968	$	68,683
Net profit	-		-		-		-		2,089		2,089
Other comprehensive income:
Effective portion of changes in fair value on designated revenue hedges	-		-		-		(6)		-		(6)
Exchange difference on translation of foreign operations	-		-		-		1,423		-		1,423
Total comprehensive income	-		-		-		1,417		2,089		3,506
Stock-based compensation	-		-		2,177		-		-		2,177
Dividends to equity owners	-		-		-		-		(4,225)		(4,225)
Share options exercised	19,942		365		(68)		-		-		297
Total transactions with owners of the Company	19,942	$	365		2,109	$	-	$	(4,225)	$	(1,751)
Balance, April 30, 2023	14,582,837	$	44,338		15,285	$	(17)	$	10,832	$	70,438

SOURCE Tecsys Inc.

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