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CALGARY, Aug. 13, 2019 /CNW/ - Sylogist Ltd.
(TSXV:SYZ) ("Sylogist" or the "Company"), is pleased to
announce its unaudited financial results for the third quarter of
the 2019 fiscal year, ended June 30,
2019.
Q3 2019 Summary (Comparisons are to Q3 2018, unless
otherwise noted)
- Revenues were $9.8 million,
compared to $11 million in the third
quarter of fiscal 2018.
- Gross Profit was $7.4 million,
compared to $7.7 million in the same
period last year.
- Gross Profit Margin of 76%, was an increase of 9% over the
third quarter of 2018.
- Reported earnings were $2.7
million, compared to $3.2
million in Q3 2018.
- Earnings per fully diluted common share were $0.12 per share, compared to $0.14 per share.
- Adjusted EBITDA(1) was $4.5
million, or $0.20 per fully
diluted common share, compared to $4.9
million or $0.22 per
share.
- Adjusted EBITDA Margin(1) was 46%, compared to
45%.
- Cash from operating activities (before non-cash changes in
working capital) totalled $3.3
million ($0.15 per share),
compared to $4.1 million
($0.18 per share) in Q3 2018.
- The Company paid regular dividends to shareholders totalling
$2.1 million during the quarter.
- Adjusted Working Capital(1) was $49.5 million, or $2.09 per share, compared to $1.48 per share in Q3 2018.
- Combined tax pools at the end of the third quarter 2019 were
approximately $14 million (CAD).
- The Company's Board of Directors has approved an increase in
the quarterly dividend to $0.10 per
common share for shareholders of record as at August 30, 2019 to be paid on September 11, 2019, which is treated as an
eligible dividend under the Income Tax Act (Canada).
Nine months of fiscal 2019 (Comparisons are to the
nine months of fiscal 2018, unless otherwise noted)
- Revenues were $28.7 million,
compared to $29.1 million.
- Gross profit margins improved to 75% of revenue, compared to
73%.
- Reported earnings were $7.7
million ($0.34 per share)
compared to $8.7 million
($0.39 per share).
- Adjusted EBITDA(1) was $13.2
million ($0.59 per share),
compared to $13.6 million
($0.61 per share).
- Adjusted EBITDA Margin (1) was 46%, compared to
47%.
- Cash from operating activities (before non-cash changes in
working capital) was $10 million
($0.45 per share), compared to
$12.8 million ($0.57 per share).
- The Company paid regular dividends to shareholders totalling
$6.3 million during the first nine
months of fiscal 2019.
Jim Wilson, President & Chief
Executive Officer of Sylogist, commented, "In the first nine months
of fiscal 2019, Sylogist made steady progress building and
expanding its recurring revenue business. Repeatable revenue
grew 8% compared to the same period in fiscal 2018. Within the
sources of recurring revenue, SaaS (software as a service)
demonstrated strong organic growth, up 29%, as new customers
adopted SaaS implementations and existing customers switched from
on premises to SaaS delivery. To accommodate the SaaS growth,
Sylogist is expanding its data centre capacity. Licensing
revenue, largely associated with international clientele where SaaS
is not yet an available option due to limited connectivity, grew
65%. Lower margin professional services revenue decreased by
10% and product revenue was down by 92%, as a large hardware sale
in Q3 of fiscal 2018 skewed comparable results. Overall, total
revenues for the first nine months were slightly lower, while total
margins were higher than the comparable period last fiscal
year. During the first nine months the Company incurred
one-time expenses related to our rigorous operational review,
mostly lease terminations and severance costs, of $152 thousand.
During Q3, employees and directors exercised stock options,
adding $15 million to the Company
treasury and increasing the cash position to $47.6 million or $2.01 per share. The current cash position
along with solid operating cash flow allows Sylogist to pursue
larger acquisition candidates than those previously
considered.
With a strong forward financial picture impacted by the events
update below, the Board of Directors has increased the quarterly
eligible dividend to $0.10 commencing
with the September 11, 2019
payment."
Financial and Governance Update:
- As previously advised, Barry
Foster was appointed to the Board in June. At
its meeting July 17, 2019, the Board
appointed Mr. Foster to its Audit and Compensation Committees, both
of which are entirely comprised of independent directors;
- Over the past three months Sylogist's Compensation Committee
has met with a number of institutional shareholders to solicit
their views on equity and executive compensation. The
independent board members are in the process of reviewing and
drafting compensation alternatives that align with current views on
governance and shareholder value creation. The Compensation
Committee is targeting a completion date for new equity and
executive compensation agreements, to replace existing agreements,
by mid-September with implementation effective by October 1, 2019, being the start of Sylogist's
2020 fiscal year.
- The exercise of options by senior executives and directors in
May 2019 resulted in the increase of
cash in treasury by $15
million. As of June 30,
2019, the Company had $47.6
million of cash;
- The Company's pay-per-use payroll platform was rolled out to
partners and end users in June. We are pleased to advise that
over 5,000 employees are already enrolled and being paid through
this new system with another 26,500 committed and being enrolled
within the next 60 days;
- All of the Company North Carolina legacy customers have signed
support agreements with us, the vast majority being for 3-year
terms representing a total contracted revenue of $14.2 million. These contracts more than double
the annual run-rate support revenues from this business and, along
with significantly reduced costs, the commitments materially
enhance profitability for the foreseeable future.
Concurrently, the Company has offered its legacy customers
its modern certified K12 solution as an immediate upgrade. The K12
solution is an alternative to RFP selected competitive solutions
which are still in the planning and development stages and years
from completion;
- The Company is pleased to advise that it is in the process of
finalizing the previously announced contract extension with a large
not-for-profit customer for professional services revenues
exceeding Cdn $2 million, which
services are commencing in Q4 to run through spring 2020; and
- Sylogist has experienced increased demand for cloud services
from customers who historically used an on-premises version of our
public sector software. To meet this demand, the Company has
invested in a 3-fold expansion of its data centre
capacity.
About Sylogist
Sylogist is a software company that, through strategic
acquisitions, investments and operations management, provides
comprehensive, mission-critical enterprise resource planning
("ERP") solutions, including fund accounting, grant management and
payroll to public service organizations. Sylogist's public
service customers include local governments, nonprofit
organizations, non-governmental organizations, educational
institutions and government agencies, as well as public compliance
driven and funded. Our 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 TSX Venture Exchange under
the symbol SYZ. Information about Sylogist can be found at
http://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 quarterly dividend for
shareholders of record as of August 30,
2019 to be paid on September 11,
2019, the Company's intention to complete new equity and
executive compensation alternatives that align with current views
on governance and shareholder value creation by October 1, 2019, the Company's expansion of its
data centre capacity to accommodate increased demand for its cloud
services, the Company's plans to pursue larger acquisition targets
with its increased cash position following stock option exercises
in May 2019, the enrollment of
employees of customers on the Company's pay-per-use payroll
platform, the Company's significantly reduced cost structure in its
North Carolina customer base to
materially enhance its profitability for the foreseeable future and
the Company's new customer contract that is being finalized this
fiscal year. 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. Additional information
regarding some of these risks, uncertainties and other factors may
be found under in the management's discussion and analysis for the
period ended June 30, 2019, 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. 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 and Adjusted
Working Capital are non-GAAP financial measures: Adjusted EBITDA is
defined as: profit for the period before stock based compensation,
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 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 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.
- Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release-
SOURCE Sylogist Ltd.