Mr. Peter Brereton reports

TECSYS REPORTS RECORD REVENUE FOR THE THIRD QUARTER OF FISCAL 2024

TECSYS Inc. has released its results for the third quarter fiscal year 2024, ended Jan. 31, 2024. All dollar amounts are prepared in accordance with international financial reporting standards.

"Our third quarter represents another record quarter led by [software-as-a-service] revenue and included the addition of five new logos, three new hospital networks, ongoing customer SaaS migrations and the biggest bookings quarter of the fiscal year so far," said Peter Brereton, president and chief executive officer of TECSYS. "Our SaaS margins continue to expand, and the resulting impact on our overall margin profile is becoming evident. We are seeing activity across all key verticals and through all commercial channels, with rising demand and pipeline expansion. This solid financial performance is bolstered by a market that is showing no signs of slowing down."

Mark Bentler, chief financial officer of TECSYS, added: "After our third quarter, we embarked on a strategic restructuring designed to improve profitability over the long term. As part of this effort, we reduced our work force by about 4 per cent across a range of departments. This restructuring is expected to result in one-time costs of around $2.3-million, which will be recorded in our [fourth quarter] fiscal 2024 financial statements and result in anticipated annual operating cost savings of around $4.6-million heading into fiscal 2025."

Third quarter highlights:

• SaaS revenue increased by 48 per cent to $14.2-million, up from $9.5-million in Q3 2023.
• SaaS subscription bookings (measured on an annual recurring revenue basis) decreased by 17 per cent to $4.9-million, compared with $5.8-million in the third quarter of fiscal 2023.
• SaaS remaining performance obligation increased by 23 per cent to $157.2-million at Jan. 31, 2024, up from $128.3-million at the same time last year.
• Annual recurring revenue at Jan. 31, 2024, was up 16 per cent to $87.2-million compared with $75.4-million at Jan. 31, 2023.
• Professional service revenue was down by 4 per cent to $13.0-million compared with $13.6-million in Q3 fiscal 2023.
• Total revenue excluding hardware revenue was $36.2-million, 11 per cent higher than $32.5-million reported for Q3 last year, while total revenue rose 13 per cent to reach a record $43.8-million.
• Gross margin was 45 per cent, compared with 44 per cent for the same period of fiscal 2023.
• Total gross profit increased to $19.9-million, up 17 per cent from $17.0-million in Q3 fiscal 2023.
• Operating expenses increased to $18.7-million, higher by $2.7-million or 17 per cent compared with $16.0-million in Q3 last year.
• Profit from operations was $1.2-million, up from $1.0-million in the same period of fiscal 2023.
• Net profit was $800,000 or five cents per share on a fully diluted basis in Q3 fiscal 2024, compared with net profit of $900,000 or six cents per share for the same period in fiscal 2023.
• Adjusted earnings before interest, taxes, depreciation and amortization were $2.6-million compared with $2.8-million reported in Q3 last year.
• In the third quarter of fiscal 2024, TECSYS acquired 50,400 of its outstanding common shares for $1.5-million as part of its continuing normal course issuer bid.

Year-to-date performance for first nine months of fiscal 2024:

• SaaS revenue increased by 43 per cent to $37.7-million, up from $26.3-million in the same period of fiscal 2023.
• SaaS subscription bookings (measured on an ARR basis) decreased by 16 per cent to $10.5-million, compared with $12.5-million in the same period of fiscal 2023.
• Professional service revenue was $40.8-million compared with $40.7-million in the same period of fiscal 2023.
• Total revenue excluding hardware revenue was $105.4-million, 12 per cent higher than $94.4-million reported for the same period of fiscal 2023, while total revenue rose 14 per cent to reach $127.3-million.
• Gross margin was 45 per cent for the first nine months of fiscal 2024 compared with 44 per cent for the same period in fiscal 2023.
• Total gross profit increased to $57.8-million, up 19 per cent from $48.4-million in the same period of fiscal 2023.
• Operating expenses increased to $55.2-million, higher by $8.9-million or 19 per cent, compared with $46.3-million in the same period of fiscal 2023.
• Profit from operations was $2.6-million, up from $2.2-million in the same period of fiscal 2023.
• Net profit was $1.6-million or 11 cents per fully diluted share, flat compared with the same period in fiscal 2023.
• Adjusted EBITDA was $6.8-million compared with $7.0-million reported in the same period of fiscal 2023.

"Based on our Q3 results and our Q4 outlook, we are revising our full-year fiscal 2024 guidance to tighten the range on total revenue growth, tighten the range and increase the high end on SaaS revenue growth, and tighten the range on short-term adjusted EBITDA margin guidance," continued Mr. Bentler. "We expect to provide updated guidance for fiscal 2025 as part of our Q4 and full-year fiscal 2024 earnings release."

Financial guidance

TECSYS is revising financial guidance.

On Feb. 29, 2024, the company declared a quarterly dividend of eight cents per share to be paid on April 11, 2024, to shareholders of record on March 21, 2024.

Pursuant to the Canadian Income Tax Act, dividends paid by the company to Canadian residents are considered to be eligible dividends.

Third quarter fiscal 2024 results conference call

Date:  March 1, 2024

Time:  8:30 a.m. EST

Phone number:  800-935-9319 or 416-981-9016

The call can be replayed until March 8, 2024, by calling 800-558-5253 or 416-626-4100 (access code: 22029167).

About TECSYS Inc.

Since its founding 40 years ago, much has changed in the realm of supply chain technology, but one thing has remained constant: By developing dynamic and innovative supply chain solutions, TECSYS has been equipping organizations for growth and competitive advantage. Serving health care, distribution and converging commerce industries, and spanning multiple complex, regulated and high-volume markets, TECSYS delivers warehouse management, distribution and transportation management, supply management at point of use, and retail order management, as well as complete financial management and analytic solutions.

TECSYS's shares are listed on the Toronto Stock Exchange under the ticker symbol TCS.

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