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DISSEMINATION IN THE UNITED
STATES./
CALGARY, Jan. 16, 2020 /CNW/ - Sylogist Ltd.
(TSXV:SYZ) ("Sylogist" or the "Company"), a provider of
enterprise information management solutions, is pleased to announce
its audited financial results for the fiscal year ended
September 30, 2019.
Fiscal 2019 Highlights (Comparisons are to fiscal
2018, unless otherwise noted)
- Revenues were $37.6 million,
compared to $38.2 million, a decrease
of 2%.
- Gross profit margins improved to 76% of revenue, compared to
73%.
- Reported earnings were $10
million ($0.44 per share)
compared to $13.2 million
($0.59 per share). Fiscal 2018
earnings were higher in part due to a one time, non-cash, bargain
purchase price gain on acquisition of $2.7
million recorded in Q4 of that year. Additionally,
fiscal 2019 earnings yielded increased income taxes.
- Adjusted EBITDA(1) was $17.6
million ($0.78 per share),
compared to $17 million ($0.76 per share), an increase of 4%.
- Adjusted EBITDA Margin (1) was 47%, compared to
44%.
- Cash from operating activities (before non-cash changes in
working capital) was $13.2 million
($0.58 per share), compared to
$15.7 million ($0.70 per share).
- Cash as at September 30, 2019
totalled $53.1 million or
$2.24 per share. Sylogist has no
debt.
- Combined tax pools at the end of the fiscal year 2019 were
approximately $13.7 million
(CAD).
- The Company paid regular dividends to shareholders totalling
$8.7 million in fiscal 2019, compared
to $8.3 million (regular and special)
in fiscal 2018.
- For the fiscal year ended September 30,
2019, the Company repurchased a total of 191,900 common
shares at an average price of $12.81
for a total cost of $2.5
million.
- There are currently 23.8 million Sylogist shares
outstanding.
Q4 2019 Summary (Comparisons are to Q4 2018, unless
otherwise noted)
- Revenues were $8.9 million,
compared to $9.1 million.
- Reported earnings were $2.3
million ($0.10 per share)
compared to $4.5 million
($0.20 per share) in Q4 2018
(reflecting the gain from the bargain purchase associated with the
K12 Enterprise and Sunpac Systems acquisition of $2.7 million and increased income taxes in Q4
2019).
- Adjusted EBITDA(1) was $4.4
million, an increase of 31%, or $0.19 per fully diluted common share, up
27%.
- Adjusted EBITDA Margin(1) was 49%, compared to
37%.
- Cash from operating activities (before non-cash changes in
working capital) totalled $3.2
million ($0.14 per share), up
from $3 million ($0.13 per share) in Q4 2018.
- The Company paid regular dividends to shareholders totalling
$2.4 million during the quarter
compared to $1.8 million.
- Adjusted Working Capital(1) was $53.5 million, or $2.26 per share, compared to $33.1 million, or $1.49 per share, in Q4 2018.
- During the quarter ended September 30,
2019, the Company did not repurchase any shares compared to
63,500 common shares repurchased in Q4 2018 at an average price of
$12.69 for a total cost of
$806 thousand.
Jim Wilson, President and CEO or
Sylogist commented, "Fiscal 2019 was a year of significant
efficiency gains and acquisition focus for the Company.
Sylogist reduced its employee base by 20%, while generating the
same level of business activity with greater capacity available to
assimilate future acquisitions and while simultaneously improving
operating margins.
The Company's acquisition efforts did not yield results in
fiscal 2019 despite making offers on several targeted
opportunities. The Company continues to be a prudent
custodian of shareholder capital and has resisted engaging in a
currently observed acquisition trend of buying revenue that has
little prospect of generating cash flow in the medium term or at
all without significant follow-on investment. Growing revenue
in the absence of tangible prospects of growing cash flow is not
the Company's investment thesis.
The M&A market continues to be target rich with increasing
competitive pressures. We have recognized that most
acquisition targets are businesses with legacy technology or more
modern technology with no established customer base or brand
recognition. The available target base reinforces the value of our
modern and well-established public sector platform with its
Microsoft branded foundational technology. We continue to be
very active on the acquisition front and will be enhancing our
reach by expanding our M&A team. Additionally, we are
extending our partner relationships in the United States. The US market size and
dynamics have fostered a highly sophisticated and knowledgeable
ecosystem of companies and technology resources, including
investment banking capabilities, in our technology areas."
"Subsequent to its fiscal 2019 year end, Sylogist announced
certain changes to its executive compensation arrangements
effective October 15, 2019.
These new arrangements provide for annual incentive bonuses based
solely on strategic value improvements in the Company going
forward, including incremental improvements, if any, in
consolidated revenue and Adjusted EBITDA for the current period or
subsequent higher performance levels in ensuing fiscal years (high
water mark), such bonuses not to exceed 150% of base salary in a
given year.
For fiscal 2019, the Company reported Adjusted EBITDA of
$17.6 million, which included
executive bonuses of $3
million. With those bonuses eliminated, fiscal 2019
Adjusted EBITDA would have been approximately $3 million, or 17%, higher for total Adjusted
EBITDA in that period of $20.6
million, or $0.91 per share,
the new high water mark for executive bonus calculations going
forward.
These new arrangements are anticipated to effectively increase
Adjusted EBITDA by a minimum of $3 million
dollars annually as the Company's performance
improves. As previously announced, to facilitate this change
and for the Company to realize significantly enhanced Adjusted
EBITDA into the future, the Company paid executives a total of
$12 million, or less than 4 times the
total 2019 earned executive bonuses. The Sylogist board views
the new executive agreements as highly accretive to shareholder
interests".
About Sylogist
Sylogist is a software company that, through strategic
acquisitions, investments and operations management, provides
comprehensive, mission-critical 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 entities. 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 having greater capacity available to assimilate
future acquisitions, the M&A market being target rich, the
target base reinforcing the Company's view of the value of its
modern technology and that going forward, contractual changes to
executive contracts is anticipated to effectively increase Adjusted
EBITDA by a minimum of $3 million
dollars annually as the Company's performance
improves. 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 year ended
September 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. 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.
- 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.