Mr. Edward Ryan reports
DESCARTES REPORTS FISCAL 2015 FOURTH QUARTER AND ANNUAL FINANCIAL RESULTS;
RECORD REVENUES AND OPERATING PERFORMANCE
The Descartes Systems Group Inc. has released its financial results for its fiscal 2015 fourth quarter and year ended Jan. 31, 2015. All financial results referenced are in U.S. currency and, unless otherwise indicated, are determined in accordance with U.S. generally accepted accounting principles.
"We're pleased that we've once again delivered another quarter, and year, of record revenues and record operating performance, despite continued foreign exchange pressures on our non-U.S. revenues," said Edward J. Ryan, Descartes's chief executive officer. "Our focus on growing our business through disciplined operations and complementary acquisitions continues to deliver consistent, predictable financial results. As we look ahead to fiscal 2016, we continue to see strong demand for our SaaS-based logistics solutions and we remain well positioned to continue to grow the largest collaborative logistics community in the world, the global logistics network."
Fiscal 2015 financial results
As described in more detail below, key financial highlights for Descartes in fiscal 2015 included:
- Revenues of $170.9-million, up 13 per cent from $151.3-million in the fiscal year ended Jan. 31, 2014. The approximate impact of changes in foreign exchange rates from fiscal 2014 to fiscal 2015 on revenues was negative $2.8-million;
- Services revenues of $159.1-million, up 15 per cent from $137.8-million in fiscal 2014. Services revenues made up 93 per cent of total revenues for the year;
- Cash provided by operating activities of $49.5-million, up 16 per cent from $42.6-million in fiscal 2014;
- Net income of $15.1-million, up 57 per cent from $9.6-million in fiscal 2014;
- Earnings per share on a diluted basis of 21 cents, up 40 per cent from 15 cents in fiscal 2014;
- Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $52.0-million, up 17 per cent from $44.5-million in fiscal 2014. Adjusted EBITDA as a percentage of revenues was 30 per cent, up from 29 per cent in fiscal 2014;
- Adjusted EBITDA per share on a diluted basis of 73 cents, up 6 per cent from 69 cents in fiscal 2014.
Adjusted EBITDA and adjusted EBITDA per diluted share are non-GAAP financial measures provided as a complement to financial results presented in accordance with GAAP. Descartes defines adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, stock-based compensation (including related fees and taxes) and other charges (including executive departure charges, restructuring charges and acquisition-related expenses). These items are considered by management to be outside Descartes's operational results. Descartes defines adjusted EBITDA per diluted share as adjusted EBITDA divided by the number of diluted shares used to calculate the GAAP measure of earnings per share.
Fourth-quarter 2015 financial results
As described in more detail below, key financial highlights for Descartes in the fourth quarter of fiscal 2015 included:
- Revenues of $44.3-million, up 10 per cent from $40.3-million in the fourth quarter of fiscal 2014 and up 3 per cent from $43.1-million in the previous quarter. The approximate impact of changes in foreign exchange rates from the fourth quarter of fiscal 2014 to the fourth quarter of fiscal 2015 on revenues was negative $2.5-million;
- Services revenues of $41.5-million, up 13 per cent from $36.6-million in the fourth quarter of fiscal 2014 and up 5 per cent from $39.4-million in the third quarter of fiscal 2015. Services revenues made up 94 per cent of total revenues for the quarter;
- Cash provided by operating activities of $13.1-million, up 4 per cent from $12.6-million in the fourth quarter of fiscal 2014 and up 9 per cent from $12.0-million in the third quarter of fiscal 2015;
- Net income of $3.6-million, up 24 per cent from $2.9-million in the fourth quarter of fiscal 2014 and down from $4.2-million in the third quarter of fiscal 2015;
- Earnings per share on a diluted basis of five cents, up 25 per cent from four cents in the fourth quarter of fiscal 2014 and consistent with the third quarter of fiscal 2015;
- Adjusted EBITDA of $13.9-million, up 17 per cent from $11.9-million in the fourth quarter of fiscal 2014 and up 5 per cent from $13.2-million in the third quarter of fiscal 2015. Adjusted EBITDA as a percentage of revenues was 31 per cent, up from 30 per cent in the fourth quarter of fiscal 2014 and consistent with the third quarter of fiscal 2015;
- Adjusted EBITDA per share on a diluted basis of 18 cents, consistent with the fourth quarter of fiscal 2014 and up 6 per cent from 17 cents in the third quarter of fiscal 2015.
Cash position
At Jan. 31, 2015, Descartes had $118.1-million in cash, entirely comprising cash and cash equivalents. Cash and cash equivalents have decreased $32.2-million in the fourth quarter of fiscal 2015 primarily due to the acquisitions of Airclic Inc., e-customs Ltd. and Pentant Ltd. Cash and cash equivalents have increased $55.4-million in fiscal 2015 primarily due to strong cash flow from operations and net proceeds received from the public offering of 10,925,000 common shares completed in the second quarter of fiscal 2015. This was partially offset by the repayment of the outstanding interest-bearing debt and the acquisitions of Computer Management, Customs Info, Airclic, e-customs and Pentant.
Acquisitions in the fourth quarter of fiscal 2015
Acquisition of Airclic
On Nov. 19, 2014, Descartes acquired all of the outstanding shares of privately held Airclic, a leading U.S.-based provider of mobile solutions. Airclic's cloud-based mobile solutions help companies reduce the cost of delivering goods by streamlining and automating traditional paper-based last-mile logistics processes. The total purchase price for the acquisition was $29.6-million, net of cash acquired, which was financed with cash on hand.
Acquisition of e-customs
On Dec. 5, 2014, Descartes acquired all of the outstanding shares of privately held e-customs, a leading provider of electronic security and fiscal customs filing solutions in the United Kingdom. E-customs' cloud-based solution, Webdecs, provides both shippers and logistics service providers with a wide range of customs capabilities to cost-effectively comply with U.K. fiscal filing and security filing requirements. The total purchase price for the acquisition was $9.6-million, net of cash acquired, which was financed with cash on hand.
Acquisition of Pentant
On Dec. 5, 2014, Descartes acquired all of the outstanding shares of privately held Pentant, a leading U.K.-based community system provider offering customs connectivity and import/export inventory control solutions for ocean, truck and air cargo. Pentant provides its shipper and logistics service provider customers with a reliable and secure connection to both CHIEF (the central U.K. revenue and customs system) and ICS (the European Union import control system) to streamline declaration, cargo security and clearance processes. The total purchase price for the acquisition was $2.1-million, net of cash acquired, which was financed with cash on hand.
Conference call
Members of Descartes's executive management team will host a conference call to discuss the company's financial results at 8 a.m. ET on Thursday, March 5. Designated numbers are 1-866-229-4144 for North America and 1-416-216-4169 for international, using passcode 8010580 then the pound sign.
The company will simultaneously conduct an audio webcast on the Descartes website. Phone conference dial-in or webcast log-in is required approximately 10 minutes beforehand.
Replays of the conference call will be available following the call from 11 a.m. ET, and until March 11, 2015, by dialling 1-888-843-7419 or 1-630-652-3042 followed by passcode 8010580 then the pound sign. An archived replay of the webcast will be available on the company's website.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of U.S. dollars, except per share AMOUNTS)
Three months ended Year ended
Jan. 31, Jan. 31, Jan. 31, Jan. 31,
2015 2014 2015 2014
Revenues $ 44,287 $ 33,799 $170,860 $151,294
Cost of revenues 13,934 10,801 54,879 49,043
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Gross margin 30,353 22,998 115,981 102,251
Expenses
Sales and marketing 4,970 3,824 20,404 16,681
Research and development 7,263 5,915 28,077 25,881
General and administrative 5,643 4,479 20,333 20,509
Other charges 1,424 533 2,876 6,512
Amortization of intangible assets 6,238 4,020 21,715 17,999
--------- --------- --------- ---------
25,538 18,771 93,405 87,582
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Income from operations 4,815 4,227 22,576 14,669
Interest expense (150) (13) (1,088) (993)
Investment income 88 6 333 57
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Income before income taxes 4,753 4,220 21,821 13,733
Income tax expense (recovery)
Current 860 383 2,784 1,768
Deferred 298 (3,951) 3,978 2,353
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1,158 (3,568) 6,762 4,121
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Net income $ 3,595 $ 7,788 $ 15,059 $ 9,612
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Earnings per share
Basic $ 0.05 $ 0.12 $ 0.21 $ 0.15
Diluted 0.05 0.12 0.21 0.15
We seek Safe Harbor.
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