MARKHAM, ON, Sept. 9, 2021 /CNW/ - Enghouse Systems Limited (TSX: ENGH) today announced its third quarter unaudited financial results for the period ended July 31, 2021. All the financial information is in Canadian dollars unless otherwise indicated.

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

  • Revenue achieved was $117.6 and $354.1 million, respectively, compared to revenue of $131.3 and $382.9 million;
  • Results from operating activities was $38.5 and $116.1 million, respectively, compared to $42.2 and $119.3 million;
  • Net income was $21.2 and $62.6 million, respectively, compared to $26.0 and $69.2 million;
  • Adjusted EBITDA was $41.7 and $126.4 million, respectively, compared to $45.6 and $130.2 million while Adjusted EBITDA margins increased from 34.0% to 35.7% for the current year to date period;
  • Cash flows from operating activities excluding changes in working capital was $41.1 and $125.4 million, respectively compared to $45.3 and $130.5 million.

Revenue achieved for the quarter was $117.6 million, compared to revenue of $131.3 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. Similar to the second quarter of 2021, the comparatively higher revenue last year was driven primarily by the previous year's significant increase in our Vidyo business that has now returned to levels that are more consistent with pre-COVID volumes. Revenue for the quarter was also negatively impacted by $6.2 million as a result of foreign exchange as the Canadian dollar strengthened against the U.S. dollar and Euro.

During the quarter, Enghouse completed two tuck-in acquisitions, adding Nebu BV on June 3, 2021 and Momindum SAS on July 7, 2021. Nebu is an Amsterdam-based provider of market research and data analytics software solutions, which augments our existing market research and survey solutions. Momindum is an enterprise software provider of a secure, SaaS based platform for virtual events, recording, editing and sharing interactive video presentations. Momindum is complementary to our Vidyo offering and broadens our video collaboration solutions.

Enghouse closed the quarter with $187.8 million in cash, cash equivalents and short-term investments, compared to $251.8 million at October 31, 2020 and $169.6 million as of April 30, 2021. The cash balance was achieved after making payments of $36.3 million for acquisitions and $106.9 million for dividends this year. Enghouse continues to prioritize its long-term growth strategy over quarter-to-quarter results, investing in products while ensuring continued profitability and maximizing operating cashflows. As a result, Enghouse continues to replenish its acquisition capital, while returning $83.2 million in special dividends to shareholders and annually increasing its eligible quarterly dividend.

Quarterly dividends:                                                                                                      
Today, the Board of Directors approved the Company's eligible quarterly dividend of $0.16 per common share payable on November 30, 2021 to shareholders of record at the close of business on November 16, 2021.

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





For the period ended July 31

Three months


Nine months


2021


2020

 Var ($)

Var (%)



2021


2020

Var ($)

Var (%)

Revenue

$

117,644

$

131,324

(13,680)

(10.4)


$

354,078

$

382,880

(28,802)

(7.5)















Direct costs


33,437


39,740

(6,303)

(15.9)



98,478


111,916

(13,438)

(12.0)

Revenue, net of direct costs

$

84,207

$

91,584

(7,377)

(8.1)


$

255,600

$

270,964

(15,364)

(5.7)

As a % of revenue


71.6%


69.7%





72.2%


70.8%

















Operating expenses


45,267


49,351

(4,084)

(8.3)



138,629


150,157

(11,528)

(7.7)

Special charges


433


35

398

1137.1



873


1,490

(617)

(41.4)

Results from operating activities

$

38,507

$

42,198

(3,691)

(8.7)


$

116,098

$

119,317

(3,219)

(2.7)

As a % of revenue


32.7%


32.1%





32.8%


31.2%

















Amortization of acquired software and


(10,355)


(11,502)

1,147

10.0



(31,983)


(33,182)

1,199

3.6

customer relationships

Foreign exchange losses


(453)


(1,102)

649

58.9



(1,976)


(1,148)

(828)

(72.1)

Interest expense – lease obligations


(212)


(302)

90

29.8



(818)


(864)

46

5.3

Finance income


46


209

(163)

(78.0)



162


691

(529)

(76.6)

Finance expenses


(12)


(5)

(7)

(140.0)



(76)


(39)

(37)

(94.9)

Other (expenses) income


(516)


3,827

(4,343)

(113.5)



(1,962)


4,224

(6,186)

(146.4)

Income before income taxes

$

27,005

$

33,323

(6,318)

(19.0)


$

79,445

$

88,999

(9,554)

(10.7)

Provision for income taxes


5,778


7,330

(1,552)

(21.2)



16,837


19,781

(2,944)

(14.9)

Net Income for the period

$

21,227

$

25,993

(4,766)

(18.3)


$

62,608

$

69,218

(6,610)

(9.5)















Basic earnings per share


0.38


0.47

(0.09)

(19.1)



1.13


1.26

(0.13)

(10.3)

Diluted earnings per share


0.38


0.46

(0.08)

(17.4)



1.12


1.25

(0.13)

(10.4)















Operating cash flows


33,552


55,690

(22,138)

(39.8)



93,254


133,156

(39,902)

(30.0)

Operating cash flows excluding changes in


41,105


45,294

(4,189)

(9.2)



125,422


130,510

(5,088)

(3.9)

working capital















Adjusted EBITDA














Results from operating activities


38,507


42,198





116,098


119,317

















Depreciation


719


801





2,212


2,446



Depreciation of right-of-use assets


2,006


2,534





7,201


6,925



Special charges


433


35





873


1,490



Adjusted EBITDA

$

41,665

$

45,568

(3,903)

(8.6)


$

126,384

$

130,178

(3,794)

(2.9)















Adjusted EBITDA margin


35.4%


34.7%





35.7%


34.0%

















Adjusted EBITDA per diluted share

$

0.75

$

0.81

( 0.06)

(7.4)


$

2.26

$

2.35

( 0.09)

(3.8)

 





Condensed Consolidated Interim Statements of Financial Position




(in thousands of Canadian dollars)


   As at July 31, 2021

As at October 31, 2020

(unaudited)




ASSETS






Current assets:






Cash and cash equivalents


$

184,429

$

244,792

Short-term investments



3,368


6,999

Accounts receivable



94,266


90,789

Prepaid expenses and other assets



12,645


14,772




294,708


357,352

Non-current assets:






Property and equipment



5,931


6,301

Right-of-use assets



29,957


42,832

Intangible assets



113,447


123,616

Goodwill



226,852


217,426

Deferred income tax assets



16,169


16,119




392,356


406,294



$

687,064

$

763,646







LIABILITIES AND SHAREHOLDERS' EQUITY






Current liabilities:






Accounts payable and accrued liabilities


$

71,138

$

80,339

Income taxes payable



5,089


13,245

Dividends payable



8,883


7,472

Provisions



6,657


5,697

Deferred revenue



92,197


89,927

Lease obligations



8,387


9,914




192,351


206,594

Non-current liabilities:






Income taxes payable



2,967


3,829

Deferred income tax liabilities



19,256


14,782

Deferred revenue



10,631


7,021

Net employee defined benefit obligation



2,739


2,855

Lease obligations



21,071


32,242




56,664


60,729




249,015


267,323

 

Shareholders' equity






Share capital



105,276


99,405

Contributed surplus



7,283


6,583

Retained earnings



333,722


379,378

Accumulated other comprehensive (loss) income



(8,232)


10,957




438,049


496,323



$

687,064

$

763,646

 


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


2021

2020

2021

2020







Revenue






Software licenses


$

26,807

$

29,438

$

80,274

$

106,629

Hosted and maintenance services


68,419

77,356

211,064

213,733

Professional services


18,779

16,059

53,076

47,329

Hardware


3,639

8,471

9,664

15,189



117,644

131,324

354,078

382,880

Direct costs






Software licenses


1,334

2,058

4,020

8,445

Services


29,633

30,417

88,248

91,843

Hardware


2,470

7,265

6,210

11,628



33,437

39,740

98,478

111,916

Revenue, net of direct costs


84,207

91,584

255,600

270,964







Operating expenses






Selling, general and administrative


23,726

25,812

68,885

80,106

Research and development


18,816

20,204

60,331

60,680

Depreciation


719

801

2,212

2,446

Depreciation of right-of-use assets


2,006

2,534

7,201

6,925

Special charges


433

35

873

1,490



45,700

49,386

139,502

151,647







Results from operating activities


38,507

42,198

116,098

119,317







Amortization of acquired software and customer relationships   


(10,355)

(11,502)

(31,983)

(33,182)

Foreign exchange losses


(453)

(1,102)

(1,976)

(1,148)

Interest expense – lease obligations


(212)

(302)

(818)

(864)

Finance income


46

209

162

691

Finance expenses


(12)

(5)

(76)

(39)

Other (expenses) income


(516)

3,827

(1,962)

4,224

Income before income taxes


27,005

33,323

79,445

88,999







Provision for income taxes


5,778

7,330

16,837

19,781






Net income for the period


$

21,227

$

25,993

$

62,608

$

69,218






Items that may be subsequently reclassified to income:





Cumulative translation adjustment


3,953

2,868

(19,189)

15,319







Other comprehensive income (loss)


3,953

2,868

(19,189)

15,319







Comprehensive income


$

25,180

$

28,861

$

43,419

$

84,537

Earnings per share






Basic


$

0.38

$

0.47

$

1.13

$

1.26

Diluted


$

0.38

$

0.46

$

1.12

$

1.25

 





Condensed Consolidated Interim Statements of Cash Flows




(in thousands of Canadian dollars)

Three months

Nine months

(unaudited)

Periods ended July 31

2021

2020

2021

2020






OPERATING ACTIVITIES





Net income for the period

$

21,227

$

25,993

$

62,608

$

69,218

Adjustments to reconcile net income to net cash provided by





operating activities






Depreciation

719

801

2,212

2,446

Depreciation of right-of-use assets

2,006

2,534

7,201

6,925

Interest expense – lease obligations

212

302

818

864

Amortization of acquired software and customer relationships

10,355

11,502

31,983

33,182

Stock-based compensation expense

280

654

1,725

2,279

Provision for income taxes

5,778

7,330

16,837

19,781

Finance expenses and other expenses (income)

528

(3,822)

2,038

(4,185)


41,105

45,294

125,422

130,510






Changes in non-cash operating working capital

(942)

17,614

(9,857)

18,150

Income taxes paid

(6,611)

(7,218)

(22,311)

(15,504)

Net cash provided by operating activities

33,552

55,690

93,254

133,156






INVESTING ACTIVITIES





Purchase of property and equipment

(505)

(458)

(1,849)

(1,902)

Acquisitions, net of cash acquired*

(3,837)

1,103

(36,137)

(46,561)

Purchase consideration for prior-year acquisitions

(1,263)

3,201

(158)

2,655

(Purchase) sale of short-term investments

(44)

233

1,570

(1,569)

Net cash (used in) provided by investing activities

(5,649)

4,079

(36,574)

(47,377)






FINANCING ACTIVITIES





Issuance of share capital

666

7,789

4,846

13,361

Repayment of loans

-

-

-

(62)

Repayment of lease obligations

(2,398)

(2,483)

(7,319)

(6,935)

Dividends paid

(8,879)

(7,427)

(106,853)

(19,496)

Net cash used in financing activities

(10,611)

(2,121)

(109,326)

(13,132)

 

Impact of foreign exchange on cash and cash equivalents

1,471

(555)

(7,717)

 

2,012






Increase (decrease) in cash and cash equivalents

18,763

57,093

(60,363)

74,659

Cash and cash equivalents - beginning of period

165,666

162,330

244,792

144,764

Cash and cash equivalents - end of period

$

184,429

$

219,423

$

184,429

$

219,423


* Acquisitions are net of cash acquired of $2,150 and $3,613 for the three and nine months ended July 31, 2021, respectively, and nil and $6,906 for the three and nine months ended July 31, 2020, respectively.

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





Three months ended July 31, 2021

IMG

AMG

Total

Revenue

$

65,556

$

52,088

$

117,644

Direct costs


(17,273)


(16,164)


(33,437)

Revenue, net of direct costs


48,283


35,924


84,207

Operating expenses excluding special charges


(21,822)


(11,718)


(33,540)

Depreciation of property and equipment


(607)


(112)


(719)

Depreciation of right-of-use assets


(1,203)


(803)


(2,006)

Segment profit

$

24,651

$

23,291

$

47,942

Special charges






(433)

Corporate and shared service expenses






(9,002)

Results from operating activities





$

38,507

 





Three months ended July 31, 2020

IMG

AMG

Total

Revenue

$

75,151

$

56,173

$

131,324

Direct costs


(18,152)


(21,588)


(39,740)

Revenue, net of direct costs


56,999


34,585


91,584

Operating expenses excluding special charges


(22,871)


(12,735)


(35,606)

Depreciation of property and equipment


(646)


(155)


(801)

Depreciation of right-of-use assets


(1,447)


(1,087)


(2,534)

Segment profit

$

32,035

$

20,608

$

52,643

Special charges






(35)

Corporate and shared service expenses






(10,410)

Results from operating activities





$

42,198

 





Nine months ended July 31, 2021

IMG

AMG

Total

Revenue

$

201,738

$

152,340

$

354,078

Direct costs


(49,660)


(48,818)


(98,478)

Revenue, net of direct costs


152,078


103,522


255,600

Operating expenses excluding special charges


(68,559)


(36,057)


(104,616)

Depreciation of property and equipment


(1,902)


(310)


(2,212)

Depreciation of right-of-use assets


(4,687)


(2,514)


(7,201)

Segment profit

$

76,930

$

64,641

$

141,571

Special charges






(873)

Corporate and shared service expenses






(24,600)

Results from operating activities





$

116,098

 





Nine months ended July 31, 2020

IMG

AMG

Total

Revenue

$

227,949

$

154,931

$

382,880

Direct costs


(54,240)


(57,676)


(111,916)

Revenue, net of direct costs


173,709


97,255


270,964

Operating expenses excluding special charges


(69,722)


(40,815)


(110,537)

Depreciation of property and equipment


(1,619)


(827)


(2,446)

Depreciation of right-of-use assets


(3,891)


(3,034)


(6,925)

Segment profit

$

98,477

$

52,579

$

151,056

Special charges






(1,490)

Corporate and shared service expenses






(30,249)

Results from operating activities





$

119,317

About Enghouse

Enghouse is a Canadian publicly traded company (TSX:ENGH) that provides enterprise software solutions focusing on remote work, visual computing and communications for next-generation software-defined networks. 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 is well capitalized, has no long-term debt 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, September 10, 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: 8499981. 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

© Canada Newswire, source Canada Newswire English