MARKHAM, ON, Dec. 14, 2023 /CNW/ - Enghouse Systems Limited (TSX: ENGH) announces its fourth quarter (unaudited) and year-end financial results for the period ended October 31, 2023. All figures are denominated in Canadian dollars unless otherwise indicated.

Highlights for the Fourth Quarter ended October 31, 2023 compared to the same period in the prior year:

Revenue increased 13.9% to $123.1 million. Recurring revenue, which includes SaaS and maintenance services, grew 35.0% to $87.2 million. Operating profits improved from $33.1 to $35.7 million, while achieving a 30.8% EBITDA margin.

Financial highlights for the three and twelve months ended October 31, 2023 compared to the three and twelve months ended October 31, 2022 are as follows:

Revenue increased to $123.1 and $454.0 million, respectively, compared to revenue of $108.1 and $427.6 million; Results from operating activities were $35.7 and $122.1 million, respectively, compared to $33.1 and $129.7 million; Net income was $25.1 and $72.2 million, respectively, compared to $36.9 and $94.5 million; Adjusted EBITDA was $37.9 and $133.8 million, respectively, compared to $35.8 and $140.6 million; Cash flows from operating activities, excluding changes in working capital, was $43.5 and $140.5 million, respectively, compared to $37.7 and $145.1 million;

In fiscal 2023 we achieved a significant milestone by expanding our revenue, increasing our cash reserves and also deploying $55.2 million on acquisitions. We are pleased to announce record annual SaaS and Maintenance services revenue of $297.6 million, an increase of $39.4 million or 15.2% compared to the prior year. SaaS and maintenance services are an important strategic source of revenue characterized by their predictable and recurring nature. They now represent 65.6% of total revenues for the year compared to 60.4% in the prior year.

The growth in revenue was accomplished through the expansion of our recurring SaaS revenue base, bolstered by new revenues from Qumu, Navita and Lifesize, all of which were acquired and successfully integrated in Fiscal 2023, combined with positive impacts from foreign exchange rates in the year. This positive momentum was somewhat offset by declining software license revenue as we see increasing customer preference for SaaS solutions. Aligned with our commitment to provide our customers choice, we are actively broadening the global availability of our SaaS offerings, particularly in our customer experience and contact center technologies where demand for SaaS is growing. Despite the industry shift, we remain profitable, reporting results from operating activities of $122.1 million.



With cash reserves of $240.4 million and no external debt, we continue to actively pursue opportunities to strategically deploy our cash reserves on acquisitions and return cash to our shareholders in the form of dividends.

Quarterly dividends: Today, the Board of Directors approved the Company's eligible quarterly dividend of $0.22 per common share payable on February 29, 2024 to shareholders of record at the close of business on February 15, 2024.

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

For the period ended October 31 Three months Twelve months  2023 2022 Var ($) Var (%) 2023 2022 Var ($) Var (%) Revenue $ 123,129 $ 108,060 15,069 13.9 $ 454,022 $ 427,585 26,437 6.2 Direct costs 41,213 32,340 8,873 27.4 149,999 130,097 19,902 15.3 Revenue, net of direct costs $ 81,916 $ 75,720 6,196 8.2 $ 304,023 $ 297,488 6,535 2.2 As a % of revenue 66.5 % 70.1 % 67.0 % 69.6 % Operating expenses 46,115 42,448 3,667 8.6 179,438 167,418 12,020 7.2 Special charges 117 123 (6) (4.9) 2,477 403 2,074 514.6 Results from operating activities $ 35,684 $ 33,149 2,535 7.6 $ 122,108 $ 129,667 (7,559) (5.8) As a % of revenue 29.0 % 30.7 % 26.9 % 30.3 % Amortization of acquired software and 
 customer relationships (11,205) (8,826) (2,379) (27.0) (39,605) (36,174) (3,431) (9.5) Foreign exchange gains 2,753 931 1,822 n/a 1,266 1,954 (688) (35.2) Interest expense – lease obligations (164) (164) - 0.0 (695) (735) 40 5.4 Finance income 2,581 651 1,930 n/a 6,264 1,192 5,072 425.5 Finance expenses (27) (27) - 0.0 (163) (89) (74) (83.1) Other (expense) income  17 (507) 524 103.4 (1,950) 423 (2,373) (561.0) Income before income taxes $ 29,639 $ 25,207 4,432 17.6 $ 87,225 $ 96,238 (9,013) (9.4) Provision for (recovery of) income taxes 4,517 (11,742) 16,259 138.5 14,977 1,740 13,237 760.7 Net Income for the period $ 25,122 $ 36,949 (11,827) (32.0) $ 72,248 $ 94,498 (22,250) (23.5) Basic earnings per share 0.45 0.67 (0.22) (32.8) 1.31 1.70 (0.39) (22.9) Diluted earnings per share 0.45 0.67 (0.22) (32.8) 1.31 1.70 (0.39) (22.9) Operating cash flows 28,318 18,539 9,779 52.7 115,298 103,181 12,117 11.7 Operating cash flows excluding changes in      
 working capital 43,504 37,740 5,764 15.3 140,492 145,074 (4,582) (3.2) Adjusted EBITDA Results from operating activities 35,684 33,149 2,535 7.6 122,108 129,667 (7,559) (5.8) Depreciation  627 709 (82) (11.6) 2,451 2,799 (348) (12.4) Depreciation of right-of-use assets 1,491 1,824 (333) (18.3) 6,764 7,754 (990) (12.8) Special charges 117 123 (6) (4.9) 2,477 403 2,074 514.6 Adjusted EBITDA $ 37,919 $ 35,805 2,114 5.9 $ 133,800 $ 140,623 (6,823) (4.9) Adjusted EBITDA margin 30.8 % 33.1 % 29.5 % 32.9 % Adjusted EBITDA per diluted share $ 0.69 $ 0.65 0.04 6.2 $ 2.42 $ 2.53 ( 0.11) (4.3)

Consolidated Statements of Financial Position (in thousands of Canadian dollars) As at October 31, 2023 As at October 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 239,532 $ 225,104 Short-term investments 827 2,950 Accounts receivable 93,383 93,104 Prepaid expenses and other assets 15,515 12,848 Income taxes recoverable 114 492 349,371 334,498 Non-current assets: Property and equipment 3,273 4,186 Right-of-use assets 12,242 20,063 Intangible assets 109,659 85,902 Goodwill 280,241 230,002 Deferred income tax assets 28,884 30,347 434,299 370,500 $ 783,670 $ 704,998 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 67,769 $ 60,525 Dividends payable 12,156 10,221 Provisions 2,238 3,183 Deferred revenue 109,019 83,122 Lease obligations 6,322 6,822 197,504 163,873 Non-current liabilities: Income taxes payable 1,333 2,576 Deferred income tax liabilities 13,340 12,038 Deferred revenue 8,170 3,470 Net employee defined benefit obligation 1,912 1,821 Lease obligations 6,080 13,055 30,835 32,960 228,339 196,833 Shareholders' equity Share capital 107,701 107,007 Contributed surplus  10,404 8,882 Retained earnings 426,397 401,247 Accumulated other comprehensive income (loss) 10,829 (8,971) 555,331 508,165 $ 783,670 $ 704,998

Consolidated Statement of Operations and Comprehensive Income (in thousands of Canadian dollars, except per share amounts) Three months Twelve months Periods ended October 31 2023

(unaudited) 2022

(Unaudited) 2023 2022 Revenue Software licenses $  17,467 $  25,588 $  80,054 $  90,602 SaaS and maintenance services 87,196 64,575 297,635 258,277 Professional services 16,483 16,066 67,273 68,648 Hardware 1,983 1,831 9,060 10,058 123,129 108,060 454,022 427,585 Direct costs Software licenses 622 704 2,910 4,340 Services 39,108 30,594 141,802 119,762 Hardware 1,483 1,042 5,287 5,995 41,213 32,340 149,999 130,097 Revenue, net of direct costs 81,916 75,720 304,023 297,488 Operating expenses Selling, general and administrative 23,702 21,727 90,889 84,603 Research and development 20,295 18,188 79,334 72,262 Depreciation  627 709 2,451 2,799 Depreciation of right-of-use assets 1,491 1,824 6,764 7,754 Special charges 117 123 2,477 403 46,232 42,571 181,915 167,821 Results from operating activities 35,684 33,149 122,108 129,667 Amortization of acquired software and customer relationships  (11,205) (8,826) (39,605) (36,174) Foreign exchange gains 2,753 931 1,266 1,954 Interest expense – lease obligations (164) (164) (695) (735) Finance income 2,581 651 6,264 1,192 Finance expenses (27) (27) (163) (89) Other income (expense) 17 (507) (1,950) 423 Income before income taxes 29,639 25,207 87,225 96,238 Provision for (recovery of) income taxes 4,517 (11,742) 14,977 1,740 Net income for the period $  25,122 $  36,949 $  72,248 $  94,498 Items that may be subsequently reclassified to income: Cumulative translation adjustment 12,394 17,883 19,800 5,613 Other comprehensive income  12,394 17,883 19,800 5,613 Comprehensive income $    37,516 $  54,832 $  92,048 $  100,111 Earnings per share Basic $        0.45 $      0.67 $      1.31 $      1.70 Diluted $        0.45 $      0.67 $      1.31 $      1.70

Consolidated Statements of Cash Flows (in thousands of Canadian dollars) Three months Twelve months Periods ended October 31 2023

(Unaudited) 2022

(Unaudited) 2023 2022 OPERATING ACTIVITIES Net income for the period $    25,122 $    36,949 $    72,248 $    94,498 Adjustments for non-cash items Depreciation 627 709 2,451 2,799 Depreciation of right-of-use assets 1,491 1,824 6,764 7,754 Interest expense – lease obligations 164 164 695 735 Amortization of acquired software and customer relationships 11,205 8,826 39,605 36,174 Stock-based compensation expense 368 476 1,639 1,708 Provision for (recovery of) income taxes 4,517 (11,742) 14,977 1,740 Finance expenses and other (expense) income 10 534 2,113 (334) 43,504 37,740 140,492 145,074 Changes in non-cash operating working capital (11,624) (14,467) (11,244) (26,139) Income taxes paid (3,562) (4,734) (13,950) (15,754) Net cash provided by operating activities 28,318 18,539 115,298 103,181 INVESTING ACTIVITIES Purchase of property and equipment, net (453) (321) (1,060) (919) Acquisitions, net of cash acquired* (27,189) (14,139) (55,167) (20,231) Recovery (payment) of purchase consideration for prior-year acquisitions 13 528 (999) 120 Sale (purchase) of short-term investments 65 - (4) (60) Net cash used in investing activities (27,564) (13,932) (57,230) (21,090) FINANCING ACTIVITIES Issuance of share capital - - 604 971 Normal course issuer bid share repurchases (425) (367) (425) (9,318) Repayment of lease obligations (1,440) (2,010) (7,194) (8,235) Dividends paid (12,159) (10,224) (44,765) (38,286) Net cash used in financing activities (14,024) (12,601) (51,780) (54,868) Impact of foreign exchange on cash and cash equivalents 4,018 7,152 8,140 1,991 (Decrease) increase in cash and cash equivalents  (9,252) (842) 14,428 29,214 Cash and cash equivalents - beginning of period 248,784 225,946 225,104 195,890 Cash and cash equivalents - end of period $  239,532 $  225,104 $  239,532 $  225,104

* Acquisitions are net of cash acquired of nil and $2,088 for the quarter and year ended October 31, 2023, respectively and nil and $3,647 for the quarter and year ended October 31, 2022, respectively.

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

For the period ended October 31, 2023 Three months Twelve months IMG AMG Total IMG AMG Total Revenue $ 78,578 $ 44,551 $ 123,129 $ 265,311 $ 188,711 $ 454,022 Direct costs (24,337) (16,876) (41,213) (78,788) (71,211) (149,999) Revenue, net of direct costs 54,241 27,675 81,916 186,523 117,500 304,023 Operating expenses excluding special charges (21,807) (10,450) (32,257) (84,493) (45,169) (129,662) Depreciation  (485) (142) (627) (1,969) (482) (2,451) Depreciation of right-of-use assets (904) (587) (1,491) (4,184) (2,580) (6,764) Segment profit $ 31,045 $ 16,496 $ 47,541 $ 95,877 $ 69,269 $ 165,146 Special charges (117) (2,477) Corporate and shared service expenses (11,740) (40,561) Results from operating activities $ 35,684 $ 122,108

For the period ended October 31, 2022 Three months Twelve months IMG AMG Total IMG AMG Total Revenue $ 61,759 $ 46,301 $ 108,060 $ 235,925 $ 191,660 $ 427,585 Direct costs (15,815) (16,525) (32,340) (62,079) (68,018) (130,097) Revenue, net of direct costs 45,944 29,776 75,720 173,846 123,642 297,488 Operating expenses excluding special charges (18,394) (11,859) (30,253) (75,272) (45,816) (121,088) Depreciation  (583) (126) (709) (2,336) (463) (2,799) Depreciation of right-of-use assets (1,112) (712) (1,824) (4,742) (3,012) (7,754) Segment profit $ 25,855 $ 17,079 $ 42,934 $ 91,496 $ 74,351 $ 165,847 Special charges (123) (403) Corporate and shared service expenses (9,662) (35,777) Results from operating activities $ 33,149 $ 129,667

About-Enghouse Enghouse is a Canadian publicly traded company (TSX:ENGH) that provides mission-critical vertically focused enterprise software solutions. Our core technologies are used for contact centers, video communications, virtual healthcare, telecommunications networks, public safety and the transit market. The Company's two-pronged growth strategy to grow earnings focuses on organic growth and acquisitions, which, to date, have been funded through operating cash flows as the Company has no outstanding external debt financing. The Company is organized around two business segments, the Interactive Management Group ("IMG") and the Asset Management Group ("AMG") due to their unique customer segments and technology offerings. 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, December 15, 2023 at 8:45 a.m. EST. To participate, please call +1-416-764-8646 or North American Toll-Free +1-888-396-8049. Confirmation code: 44260758  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, Adjusted EBITDA margin and Adjusted EBITDA per diluted share as measures of operating performance. Therefore, these collective Adjusted EBITDA measures 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 Cision

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