The Descartes Systems Group Inc. (TSX:DSG) (Nasdaq:DSGX) announced
its financial results for its fiscal 2021 second quarter
(
Q2FY21). All financial results referenced are in
United States (
US) currency and, unless otherwise
indicated, are determined in accordance with US Generally Accepted
Accounting Principles (
GAAP).
“The last six months have cast a spotlight on
the logistics industry as an essential service,” said Edward J.
Ryan, Descartes’ CEO. “Supply chain resilience and flexibility are
now top-of-mind for governments and businesses alike. Technology
and connectivity are central to navigating today’s dynamic
landscape, helping to ensure the right goods and services are
delivered to those that need them most. Our Global Logistics
Network is well-positioned to help, by connecting shippers,
carriers, logistics services providers and governments to
efficiently and securely manage the lifecycle of shipments.”
Q2FY21 Financial ResultsAs
described in more detail below, key financial highlights for Q2FY21
included:
- Revenues of $84.0 million, up 4% from $80.5 million in the
second quarter of fiscal 2020 (Q2FY20) and up from
$83.7 million in the previous quarter
(Q1FY21);
- Revenues were comprised of services revenues of $75.3 million
(90% of total revenues), professional services and other revenues
of $7.4 million (9% of total revenues) and license revenues of $1.3
million (1% of total revenues). Services revenues were up 5% from
$71.4 million in Q2FY20 and up 2% from $74.1 million in
Q1FY21;
- Cash provided by operating activities of $34.1 million, up 27%
from $26.9 million in Q2FY20 and up 24% from $27.5 million in
Q1FY21;
- Income from operations of $15.0 million, up 15% from $13.1
million in Q2FY20 and down from $15.7 million in Q1FY21;
- Net income of $10.5 million, up 22% from $8.6 million in Q2FY20
and down from $11.0 million in Q1FY21. Net income as a percentage
of revenues was 13%, compared to 11% in Q2 FY20 and 13% in
Q1FY21;
- Earnings per share on a diluted basis of $0.12, up 20% from
$0.10 in Q2FY20 and down from $0.13 in Q1FY21; and
- Adjusted EBITDA of $34.0 million, up 13% from $30.2 million in
Q2FY20 and up 3% from $33.0 million in Q1FY21. Adjusted EBITDA as a
percentage of revenues was 40%, compared to 38% in Q2FY20 and 39%
in Q1FY21.
Adjusted EBITDA and Adjusted EBITDA as a
percentage of revenues are non-GAAP financial measures provided as
a complement to financial results presented in accordance with
GAAP. We define Adjusted EBITDA as earnings before interest, taxes,
depreciation, amortization, stock-based compensation (for which we
include related fees and taxes) and other charges (for which we
include restructuring charges and acquisition-related expenses).
These items are considered by management to be outside Descartes'
ongoing operational results. We define Adjusted EBITDA as a
percentage of revenues as the quotient, expressed as a percentage,
from dividing Adjusted EBITDA for a period by revenues for the
corresponding period. A reconciliation of Adjusted EBITDA and
Adjusted EBITDA as a percentage of revenues to net income
determined in accordance with GAAP is provided later in this
release.
The following table summarizes Descartes' results in the
categories specified below over the past 5 fiscal quarters
(unaudited; dollar amounts, other than per share amounts, in
millions):
|
Q2FY21 |
Q1FY21 |
Q4FY20 |
Q3FY20 |
Q2FY20 |
Revenues |
84.0 |
83.7 |
84.2 |
83.0 |
80.5 |
Services revenues |
75.3 |
74.1 |
73.7 |
72.6 |
71.4 |
Gross margin |
73% |
74% |
73% |
73% |
74% |
Cash provided by operating
activities |
34.1 |
27.5 |
26.4 |
27.5 |
26.9 |
Income from operations |
15.0 |
15.7 |
13.6 |
13.7 |
13.1 |
Net income |
10.5 |
11.0 |
11.4 |
9.7 |
8.6 |
Net income as a % of
revenues |
13% |
13% |
14% |
12% |
11% |
Earnings per diluted
share |
0.12 |
0.13 |
0.13 |
0.11 |
0.10 |
Adjusted EBITDA |
34.0 |
33.0 |
32.2 |
31.5 |
30.2 |
Adjusted EBITDA as a % of
revenues |
40% |
39% |
38% |
38% |
38% |
|
|
|
|
|
|
Year-to-Date Financial Results
As described in more detail below, key financial
highlights for Descartes’ six-month period ended July 31, 2020
(1HFY21) included:
- Revenues of $167.7 million, up 6% from $158.5 million in the
same period a year ago (1HFY20);
- Revenues were comprised of services revenues of $149.4 million
(89% of total revenues), professional services and other revenues
of $15.2 million (9% of total revenues) and license revenues of
$3.1 million (2% of total revenues). Services revenues were up 8%
from $138.4 million in 1HFY20;
- Cash provided by operating activities of $61.6 million, up 22%
from $50.4 million in 1HFY20;
- Income from operations of $30.7 million, up 23% from $25.0
million in 1HFY20;
- Net income of $21.6 million, up 36% from $15.9 million in
1HFY20. Net income as a percentage of revenues was 13%, compared to
10% in 1HFY20;
- Earnings per share on a diluted basis of $0.25, up 25% from
$0.20 in 1HFY20; and
- Adjusted EBITDA of $67.0 million, up 14% from $58.9 million in
1HFY20. Adjusted EBITDA as a percentage of revenues was 40%,
compared to 37% in 1HFY20.
The following table summarizes Descartes’
results in the categories specified below over 1HFY21 and 1HFY20
(unaudited, dollar amounts in millions):
|
|
1HFY21 |
1HFY20 |
|
|
Revenues |
167.7 |
158.5 |
|
|
Services
revenues |
149.4 |
138.4 |
|
|
Gross
margin |
74% |
74% |
|
|
Cash
provided by operating activities |
61.6 |
50.4 |
|
|
Income
from operations |
30.7 |
25.0 |
|
|
Net
income |
21.6 |
15.9 |
|
|
Net
income as a % of revenues |
13% |
10% |
|
|
Earnings
per diluted share |
0.25 |
0.20 |
|
|
Adjusted
EBITDA |
67.0 |
58.9 |
|
|
Adjusted
EBITDA as a % of revenues |
40% |
37% |
|
|
|
|
|
|
Cash PositionAt July 31, 2020, Descartes had
$81.9 million in cash. Cash increased $25.9 million in Q2FY21 and
increased $37.5 million in 1HFY21. The table set forth below
provides a summary of cash flows for Q2FY21 and 1HFY21 in millions
of dollars:
|
Q2FY21 |
|
1HFY21 |
|
Cash provided by operating
activities |
34.1 |
|
61.6 |
|
Additions to property and
equipment |
(1.1 |
) |
(2.1 |
) |
Acquisitions of subsidiaries, net
of cash acquired |
(5.2 |
) |
(29.4 |
) |
Proceeds from borrowing on credit
facility |
- |
|
10.2 |
|
Credit facility repayments |
(10.1 |
) |
(10.1 |
) |
Issuances of common shares, net
of issuance costs |
5.7 |
|
5.7 |
|
Effect of foreign exchange rate
on cash |
2.5 |
|
1.6 |
|
Net change in cash |
25.9 |
|
37.5 |
|
Cash, beginning of period |
56.0 |
|
44.4 |
|
Cash, end of period |
81.9 |
|
81.9 |
|
|
|
|
|
|
Acquistion of KontainersOn June 10, 2020
Descartes acquired Cracking Logistics Limited (“Kontainers”), a
UK-based provider of client-facing digital freight execution
platforms. The purchase price for the acquisition was approximately
$5.4 million, net of cash acquired, which was funded from cash on
hand. Additional contingent consideration of up to $6.0 million in
cash is payable if certain revenue performance targets are met by
Kontainers in the two years following the acquisition.
New Shelf ProspectusOn July 16, 2020, we filed
a final short-form base shelf prospectus (the “2020 Base Shelf
Prospectus”), allowing us to offer and issue the following
securities: (i) common shares; (ii) preferred shares; (iii) senior
or subordinated unsecured debt securities; (iv) subscription
receipts; (v) warrants; and (vi) securities comprised of more than
one of the aforementioned common shares, preferred shares, debt
securities, subscription receipts and/ or warrants offered together
as a unit. These securities may be offered separately or together,
in separate series, in amounts, at prices and on terms to be set
forth in one or more shelf prospectus supplements. The aggregate
initial offering price of securities that may be sold by us (or
certain of our current or future shareholders) pursuant to the 2020
Base Shelf Prospectus during the 25-month period that the 2020 Base
Shelf Prospectus, including any amendments thereto, remains valid
is limited to an aggregate of $1 billion.
COVID-19As a result of the COVID-19 pandemic,
many countries across the globe, including Canada, the United
States and other countries in which we operate, ordered businesses
to close or alter their day-to-day operations. In response, we
implemented measures that allow our employees to work remotely from
home locations, while allowing us to continue to operate our
business, service our customers and engage with prospective new
customers. In addition, to manage our operating expenses, we
continue to mostly suspend travel and participation in external
marketing events, and have reduced our typical levels of hiring new
employees, all measures which we anticipate will remain in place
until the uncertainty caused by the COVID-19 pandemic subsides.
Restructuring PlanIn light of the economic
uncertainty to some of Descartes' customers caused by COVID-19, in
May 2020, Descartes undertook a restructuring plan to reduce its
cost base and further strengthen the company’s financial position.
The plan is expected to reduce Descartes’ global workforce by
approximately 5% while also providing for the closure of several
office facilities where work from home arrangements have proven to
be a viable option. The cost of the restructuring is expected to be
approximately $2 million. Restructuring activities are
substantially advanced with activities anticipated to be completed
over the next 6 months. Once completed, Descartes anticipates
annualized cost savings of approximately $6 million to $7
million.
Conference CallMembers of Descartes' executive
management team will host a conference call to discuss the
company's financial results today at 5:00 p.m. ET, Wednesday,
September 9. Designated numbers are +1 888 465-5079 for North
America and +1 416 216-4169 for international, using Passcode 5773
518#.
The company will simultaneously conduct an audio
webcast on the Descartes Web site at
www.descartes.com/descartes/investor-relations. Phone conference
dial-in or webcast log-in is required approximately 10 minutes
beforehand.
A digital replay of the conference call will be
available following the call from 8:00 p.m. ET, and until October
9, 2020, at
https://onlinexperiences.com/Launch/QReg/ShowUUID=C0A2B254-897C-4894-A8EF-AE3B11790B3E&LangLocaleID=1033 using
Passcode 49865497. An archived replay of the webcast will be
available at www.descartes.com/descartes/investor-relations.
About DescartesDescartes (Nasdaq:DSGX)
(TSX:DSG) is the global leader in providing on-demand,
software-as-a-service solutions focused on improving the
productivity, performance and security of logistics-intensive
businesses. Customers use our modular, software-as-a-service
solutions to route, schedule, track and measure delivery resources;
plan, allocate and execute shipments; rate, audit and pay
transportation invoices; access global trade data; file customs and
security documents for imports and exports; and complete numerous
other logistics processes by participating in the world's largest,
collaborative multimodal logistics community. Our headquarters are
in Waterloo, Ontario, Canada and we have offices and partners
around the world. Learn more at www.descartes.com, and connect
with us on LinkedIn and Twitter.
Descartes Investor Contact: Laurie
McCauley +1-519-746-6114 x202358 investor@descartes.com
Safe Harbor StatementThis
release may contain forward-looking information within the meaning
of applicable securities laws ("forward-looking statements") that
relates to Descartes' expectations concerning future revenues and
earnings, and our projections for any future reductions in expenses
or growth in margins and generation of cash; our assessment of the
current and future potential impact of the COVID-19 pandemic on our
business, results of operations and financial condition; continued
growth and acquisitions; rate of profitable growth; demand for
Descartes' solutions; growth of Descartes' Global Logistics Network
(“GLN”); customer buying patterns; customer expectations of
Descartes; development of the GLN and the benefits thereof to
customers; and other matters. These forward-looking statements are
based on certain assumptions including the following: global
shipment volumes continuing at levels generally consistent with
those experienced historically; the current COVID-19 pandemic not
having a material impact on shipment volumes or on the demand for
the products and services of Descartes by its customers and the
ability of those customers to continue to pay for those products
and services; countries continuing to implement and enforce
existing and additional customs and security regulations relating
to the provision of electronic information for imports and exports;
countries continuing to implement and enforce existing and
additional trade restrictions and sanctioned party lists with
respect to doing business with certain countries, organizations,
entities and individuals; Descartes' continued operation of a
secure and reliable business network; the stability of general
economic and market conditions, currency exchange rates, and
interest rates; equity and debt markets continuing to provide
Descartes with access to capital; Descartes' continued ability to
identify and source attractive and executable business combination
opportunities; Descartes' ability to develop solutions that keep
pace with the continuing changes in technology, and our continued
compliance with third party intellectual property rights. These
assumptions may prove to be inaccurate. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or
achievements of Descartes, or developments in Descartes' business
or industry, to differ materially from the anticipated results,
performance or achievements or developments expressed or implied by
such forward-looking statements. Such factors include, but are not
limited to, Descartes' ability to successfully identify and execute
on acquisitions and to integrate acquired businesses and assets,
and to predict expenses associated with and revenues from
acquisitions; the impact of network failures, information security
breaches or other cyber-security threats; disruptions in the
movement of freight and a decline in shipment volumes including as
a result of contagious illness outbreaks; a deterioration of
general economic conditions or instability in the financial markets
accompanied by a decrease in spending by our customers; the ability
to attract and retain key personnel and the ability to manage the
departure of key personnel and the transition of our executive
management team; changes in trade or transportation regulations
that currently require customers to use services such as those
offered by Descartes; changes in customer behaviour and
expectations; Descartes’ ability to successfully design and develop
enhancements to our products and solutions; departures of key
customers; the impact of foreign currency exchange rates;
Descartes' ability to retain or obtain sufficient capital in
addition to its debt facility to execute on its business strategy,
including its acquisition strategy; disruptions in the movement of
freight; the potential for future goodwill or intangible asset
impairment as a result of other-than-temporary decreases in
Descartes' market capitalization; and other factors and assumptions
discussed in the section entitled, "Certain Factors That May Affect
Future Results" in documents filed with the Securities and Exchange
Commission, the Ontario Securities Commission and other securities
commissions across Canada, including Descartes' most recently filed
Management's Discussion and Analysis. If any such risks actually
occur, they could materially adversely affect our business,
financial condition or results of operations. In that case, the
trading price of our common shares could decline, perhaps
materially. Readers are cautioned not to place undue reliance upon
any such forward-looking statements, which speak only as of the
date made. Forward-looking statements are provided for the purpose
of providing information about management's current expectations
and plans relating to the future. Readers are cautioned that such
information may not be appropriate for other purposes.
We do not undertake or accept any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements to reflect any change in our expectations or any change
in events, conditions or circumstances on which any such statement
is based, except as required by law.
Reconciliation of Non-GAAP Financial
Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of
revenues
We prepare and release quarterly unaudited and
annual audited financial statements prepared in accordance with
GAAP. We also disclose and discuss certain non-GAAP financial
information, used to evaluate our performance, in this and other
earnings releases and investor conference calls as a complement to
results provided in accordance with GAAP. We believe that current
shareholders and potential investors in our company use non-GAAP
financial measures, such as Adjusted EBITDA and Adjusted EBITDA as
a percentage of revenues, in making investment decisions about our
company and measuring our operational results.
The term “Adjusted EBITDA” refers to a financial
measure that we define as earnings before certain charges that
management considers to be non-operating expenses and which consist
of interest, taxes, depreciation, amortization, stock-based
compensation (for which we include related fees and taxes) and
other charges (for which we include restructuring charges and
acquisition-related expenses). Adjusted EBITDA as a percentage of
revenues divides Adjusted EBITDA for a period by the revenues for
the corresponding period and expresses the quotient as a
percentage.
Management considers these non-operating
expenses to be outside the scope of Descartes’ ongoing operations
and the related expenses are not used by management to measure
operations. Accordingly, these expenses are excluded from Adjusted
EBITDA, which we reference to both measure our operations and as a
basis of comparison of our operations from period-to-period.
Management believes that investors and financial analysts measure
our business on the same basis, and we are providing the Adjusted
EBITDA financial metric to assist in this evaluation and to provide
a higher level of transparency into how we measure our own
business. However, Adjusted EBITDA and Adjusted EBITDA as a
percentage of revenues are non-GAAP financial measures and may not
be comparable to similarly titled measures reported by other
companies. Adjusted EBITDA and Adjusted EBITDA as a percentage of
revenues should not be construed as a substitute for net income
determined in accordance with GAAP or other non-GAAP measures that
may be used by other companies, such as EBITDA. The use of Adjusted
EBITDA and Adjusted EBITDA as a percentage of revenues does have
limitations. In particular, we have completed six acquisitions
since the beginning of fiscal 2020 and may complete additional
acquisitions in the future that will result in acquisition-related
expenses and restructuring charges. As these acquisition-related
expenses and restructuring charges may continue as we pursue our
consolidation strategy, some investors may consider these charges
and expenses as a recurring part of operations rather than expenses
that are not part of operations.
The table below reconciles Adjusted EBITDA and
Adjusted EBITDA as a percentage of revenues to net income reported
in our unaudited Consolidated Statements of Operations for Q2FY21,
Q1FY21, Q4FY20, Q3FY20, and Q2FY20, which we believe is the most
directly comparable GAAP measure.
(US dollars in millions) |
Q2FY21 |
|
Q1FY21 |
|
Q4FY20 |
|
Q3FY20 |
|
Q2FY20 |
|
Net income, as reported on Consolidated Statements
of Operations |
10.5 |
|
11.0 |
|
11.4 |
|
9.7 |
|
8.6 |
|
Adjustments to reconcile to
Adjusted EBITDA: |
|
|
|
|
|
Interest expense |
0.3 |
|
0.3 |
|
0.4 |
|
0.4 |
|
1.4 |
|
Investment income |
- |
|
- |
|
(0.1 |
) |
- |
|
- |
|
Income tax expense |
4.2 |
|
4.4 |
|
1.9 |
|
3.5 |
|
3.1 |
|
Depreciation expense |
1.4 |
|
1.6 |
|
2.9 |
|
1.2 |
|
1.1 |
|
Amortization of intangible assets |
14.1 |
|
13.7 |
|
14.1 |
|
14.5 |
|
14.1 |
|
Stock-based compensation and related taxes |
1.8 |
|
1.2 |
|
1.3 |
|
1.4 |
|
1.3 |
|
Other charges |
1.7 |
|
0.8 |
|
0.3 |
|
0.8 |
|
0.6 |
|
Adjusted EBITDA |
34.0 |
|
33.0 |
|
32.2 |
|
31.5 |
|
30.2 |
|
|
|
|
|
|
|
Revenues |
84.0 |
|
83.7 |
|
84.2 |
|
83.0 |
|
80.5 |
|
Net income as % of
revenues |
13% |
|
13% |
|
14% |
|
12% |
|
11% |
|
Adjusted EBITDA as % of revenues |
40% |
|
39% |
|
38% |
|
38% |
|
38% |
|
|
|
|
|
|
|
The table below reconciles Adjusted EBITDA and
Adjusted EBITDA as a percentage of revenues to net income reported
in our unaudited Consolidated Statements of Operations for 1HFY21
and 1HFY20, which we believe is the most directly comparable GAAP
measure.
(US dollars in millions) |
1HFY21 |
|
1HFY20 |
|
Net income, as reported on Consolidated Statements
of Operations |
21.6 |
|
15.9 |
|
Adjustments to reconcile to
Adjusted EBITDA: |
|
|
Interest expense |
0.6 |
|
3.6 |
|
Investment income |
(0.1 |
) |
(0.1 |
) |
Income tax expense |
8.6 |
|
5.6 |
|
Depreciation expense |
3.0 |
|
2.0 |
|
Amortization of intangible assets |
27.8 |
|
26.9 |
|
Stock-based compensation and related taxes |
3.0 |
|
2.3 |
|
Other charges |
2.5 |
|
2.7 |
|
Adjusted EBITDA |
67.0 |
|
58.9 |
|
|
|
|
Revenues |
167.7 |
|
158.5 |
|
Net income as % of revenues |
13% |
|
10% |
|
Adjusted EBITDA as % of revenues |
40% |
|
37% |
|
|
|
|
|
|
|
The Descartes Systems Group Inc. |
Condensed Consolidated Balance Sheets |
(US dollars in thousands; US GAAP; Unaudited) |
|
|
July 31, |
|
January 31, |
|
|
2020 |
|
2020(Audited) |
|
ASSETS |
|
|
CURRENT
ASSETS |
|
|
Cash |
81,862 |
|
44,403 |
|
Accounts receivable (net) |
|
|
Trade |
32,982 |
|
35,118 |
|
Other |
11,574 |
|
7,294 |
|
Prepaid expenses and other |
14,810 |
|
12,984 |
|
Inventory |
344 |
|
411 |
|
|
141,572 |
|
100,210 |
|
OTHER LONG-TERM
ASSETS |
14,015 |
|
13,520 |
|
PROPERTY AND
EQUIPMENT, NET |
12,532 |
|
13,731 |
|
RIGHT-OF-USE
ASSETS |
12,640 |
|
12,877 |
|
DEFERRED INCOME
TAXES |
17,786 |
|
21,602 |
|
INTANGIBLE ASSETS,
NET |
245,464 |
|
256,956 |
|
GOODWILL |
544,388 |
|
523,690 |
|
|
988,397 |
|
942,586 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
CURRENT
LIABILITIES |
|
|
|
Accounts payable |
7,518 |
|
7,667 |
|
|
Accrued liabilities |
31,824 |
|
34,876 |
|
|
Lease obligations |
4,037 |
|
3,928 |
|
|
Income taxes payable |
1,488 |
|
1,329 |
|
|
Deferred revenue |
47,417 |
|
41,143 |
|
|
92,284 |
|
88,943 |
|
LONG-TERM
DEBT |
- |
|
- |
|
LONG-TERM LEASE
OBLIGATIONS |
9,570 |
|
9,477 |
|
LONG-TERM DEFERRED
REVENUE |
1,122 |
|
920 |
|
LONG-TERM INCOME
TAXES PAYABLE |
6,828 |
|
6,470 |
|
DEFERRED INCOME
TAXES |
22,668 |
|
15,067 |
|
|
132,472 |
|
120,877 |
|
|
|
|
SHAREHOLDERS’
EQUITY |
|
|
Common shares –
unlimited shares authorized; Shares issued and outstanding
totaled 84,473,968 at July 31, 2020 (January 31, 2020 –
84,156,316) |
531,225 |
|
524,154 |
|
Additional paid-in
capital |
460,634 |
|
459,269 |
|
Accumulated other
comprehensive loss |
(21,753 |
) |
(25,944 |
) |
Accumulated
deficit |
(114,181 |
) |
(135,770 |
) |
|
855,925 |
|
821,709 |
|
|
988,397 |
|
942,586 |
|
|
|
|
|
|
|
The Descartes Systems Group Inc. |
Consolidated Statements of Operations |
(US dollars in thousands, except per share and weighted average
share amounts; US GAAP; Unaudited) |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
July 31, |
|
July 31, |
|
|
July 31, |
|
July 31, |
|
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
REVENUES |
84,045 |
|
80,540 |
|
|
167,748 |
|
158,544 |
|
COST OF
REVENUES |
22,397 |
|
21,137 |
|
|
44,264 |
|
40,993 |
|
GROSS
MARGIN |
61,648 |
|
59,403 |
|
|
123,484 |
|
117,551 |
|
EXPENSES |
|
|
|
|
|
Sales and marketing |
9,421 |
|
10,035 |
|
|
18,743 |
|
20,167 |
|
Research and development |
13,076 |
|
13,358 |
|
|
26,655 |
|
26,086 |
|
General and administrative |
8,331 |
|
8,228 |
|
|
17,068 |
|
16,706 |
|
Other charges |
1,671 |
|
600 |
|
|
2,454 |
|
2,664 |
|
Amortization of intangible assets |
14,085 |
|
14,102 |
|
|
27,798 |
|
26,879 |
|
|
46,584 |
|
46,323 |
|
|
92,718 |
|
92,502 |
|
INCOME FROM
OPERATIONS |
15,064 |
|
13,080 |
|
|
30,766 |
|
25,049 |
|
INTEREST
EXPENSE |
(312 |
) |
(1,444 |
) |
|
(632 |
) |
(3,603 |
) |
INVESTMENT
INCOME |
19 |
|
41 |
|
|
63 |
|
112 |
|
INCOME BEFORE
INCOME TAXES |
14,771 |
|
11,677 |
|
|
30,197 |
|
21,558 |
|
INCOME TAX (RECOVERY)
EXPENSE |
|
|
|
|
|
Current |
(4,146 |
) |
1,626 |
|
|
(331 |
) |
3,361 |
|
Deferred |
8,375 |
|
1,478 |
|
|
8,939 |
|
2,304 |
|
|
4,229 |
|
3,104 |
|
|
8,608 |
|
5,665 |
|
NET
INCOME |
10,542 |
|
8,573 |
|
|
21,589 |
|
15,893 |
|
EARNINGS PER
SHARE |
|
|
|
|
|
Basic |
0.13 |
|
0.11 |
|
|
0.26 |
|
0.20 |
|
Diluted |
0.12 |
|
0.10 |
|
|
0.25 |
|
0.20 |
|
WEIGHTED AVERAGE
SHARES OUTSTANDING (thousands) |
|
|
|
|
|
Basic |
84,316 |
|
81,049 |
|
|
84,237 |
|
79,132 |
|
Diluted |
85,753 |
|
82,245 |
|
|
85,585 |
|
80,287 |
|
|
|
|
|
|
|
|
|
|
|
|
The Descartes Systems Group Inc. |
Condensed Consolidated Statements of Cash
Flows |
(US dollars in thousands; US GAAP; Unaudited) |
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
July 31, |
|
July 31, |
|
|
July 31, |
|
July 31, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
OPERATING
ACTIVITIES |
|
|
|
|
Net income |
10,542 |
|
8,573 |
|
21,589 |
|
15,893 |
|
Adjustments to reconcile net
income to cash provided by operating activities: |
|
|
|
|
Depreciation |
1,405 |
|
1,075 |
|
2,985 |
|
1,967 |
|
Amortization of intangible assets |
14,085 |
|
14,102 |
|
27,798 |
|
26,879 |
|
Stock-based compensation expense |
1,566 |
|
1,325 |
|
2,734 |
|
2,264 |
|
Other non-cash operating activities |
(27 |
) |
182 |
|
51 |
|
11 |
|
Deferred tax expense |
8,375 |
|
1,478 |
|
8,939 |
|
2,304 |
|
Changes in operating assets and liabilities |
(1,860 |
) |
186 |
|
(2,477 |
) |
1,038 |
|
Cash provided by operating
activities |
34,086 |
|
26,921 |
|
61,619 |
|
50,356 |
|
INVESTING
ACTIVITIES |
|
|
|
|
Additions to property and equipment |
(1,063 |
) |
(997 |
) |
(2,085 |
) |
(2,395 |
) |
Acquisition of subsidiaries, net of cash acquired |
(5,237 |
) |
(40,472 |
) |
(29,374 |
) |
(280,335 |
) |
Cash used in investing
activities |
(6,300 |
) |
(41,469 |
) |
(31,459 |
) |
(282,730 |
) |
FINANCING
ACTIVITIES |
|
|
|
|
Proceeds from borrowing on the credit facility |
- |
|
43,809 |
|
10,196 |
|
285,015 |
|
Credit facility repayments |
(10,065 |
) |
(267,930 |
) |
(10,065 |
) |
(287,862 |
) |
Payment of debt issuance costs |
- |
|
(432 |
) |
(38 |
) |
(1,814 |
) |
Issuance of common shares for cash, net of issuance costs |
5,690 |
|
237,071 |
|
5,706 |
|
237,803 |
|
Cash (used in) provided by
financing activities |
(4,375 |
) |
12,518 |
|
5,799 |
|
233,142 |
|
Effect of foreign exchange
rate changes on cash |
2,475 |
|
(158 |
) |
1,500 |
|
(704 |
) |
Increase (decrease) in
cash |
25,886 |
|
(2,188 |
) |
37,459 |
|
64 |
|
Cash, beginning of
period |
55,976 |
|
29,550 |
|
44,403 |
|
27,298 |
|
Cash, end of
period |
81,862 |
|
27,362 |
|
81,862 |
|
27,362 |
|
Descartes Systems (NASDAQ:DSGX)
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