Sylogist Q1 Fiscal 2021 Results: Revenue Growth & Strong Profitability Continues, Dividend Declared

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CALGARY, AB, Feb. 11, 2021 /CNW/ - Sylogist Ltd. (TSXV: SYZ) ("Sylogist" or the "Company"), a provider of enterprise information management solutions, is pleased to announce its unaudited financial results for the first quarter of the 2021 fiscal year, ended December 31, 2020.

Q1 2021 Summary (comparisons are to Q1 2020, unless otherwise noted)

• Total Revenues were $9.5 million, compared to $8.8 million in the first quarter of fiscal 2020, an increase of 7%.
  
  
• Gross Profit of $7 million, compared to $6.8 million in the same period in the prior year, an increase of 2%.
  
  
• Gross Profit Margin was 73%, compared to 77% in the first quarter of 2020.
  
  
• Profit before income tax of $2.8 million, compared to a loss before income taxes of $8.6 million in the first quarter of 2020. (Q1 '20 period reflected a one-time charge for the buy out of senior executives' historical compensation arrangements).
  
  
• Adjusted EBITDA⁽¹⁾ of $4.9 million, compared to $5.2 million in the same period last year.
  
  
• Adjusted EBITDA Margin⁽¹⁾ of 52%, compared to 59% in the first quarter of 2020.
  
  
• Adjusted EBITDA per share⁽¹⁾ of $0.21 per share, compared to $0.22 per share in the first quarter of fiscal 2020.
  
  
• Cash generated from operating activities (before non-cash changes in working capital) totalled $4.9 million ($0.20 per share), compared to cash used in operations (before non-cash changes in working capital) of $6.7 million ($0.28 per share) in Q1 2020.
  
  
• The Company paid regular dividends to shareholders totalling $3 million during the quarter, compared to $2.4 million in same period of fiscal 2020, an increase of 25%.
  
  
• Working Capital was $32.3 million, or $1.35 per share, compared to $30.2 million or $1.27 per share in Q1 2020, an increase of 7%.
  
  
• Adjusted Working Capital (1) was $42.6 million, or $1.78 per share, compared to $40.8 million or $1.71 per share in Q1 2020, an increase of 5%.
  
  
• Combined tax pools at the end of the first quarter 2021 totalled approximately $12.7 million (CAD).
  
• During the three-month period ended December 31, 2020, the Company repurchased 68,400 shares at an average price of $10.56.
  
  
• The Company's Board of Directors approved a quarterly dividend of $0.125 per common share for shareholders of record as of February 26, 2021 to be paid on March 10, 2021, which is to be treated as an eligible dividend under the Income Tax Act (Canada).

Bill Wood, President and CEO of Sylogist commented, "Q1 delivered strong financial performance. We grew revenue while maintaining very strong profit margins, despite market headwinds from COVID-19 and its economic turmoil. More broadly, we are pleased with Sylogist's resilience in the face of challenging market conditions. Our recurring revenue base has held strong, and increased professional services revenue from our InfoStrat division helped drive a 7% increase in our top line. With this came a modest decrease in Adjusted EBITDA, due to a depreciating US dollar, one-time costs related to CEO recruitment, costs associated with establishing a credit facility and new, lower-margin professional services from the InfoStrat division now contributing a share of revenue. Although some new bookings have been delayed as a result of the pandemic, many of those conversations have restarted, we see bookings pipeline activity growing and expect new deal wins will accelerate throughout this year.

Business activities continued in Q1 to strengthen our foundation for growth. In October, we closed on a $40 million credit facility that can be used for acquisitions, strategic initiatives, and general corporate purposes. This provides additional resources to pursue transformative acquisitions and growth initiatives. We also continued to integrate our InfoStrat acquisition, with a focus on leveraging its IP to develop innovative products that will grow recurring revenue.

Finally, I was pleased to announce the hire of Terry LoPresti as Sylogist's Chief Technology and Innovation officer in early January. Terry brings years of valuable experience delivering scalable solutions and leading technology strategy at fast-growing SaaS companies. In addition to leading innovation and product development, she will play a key role in expanding technology partner and customer relationships, and in our M&A strategy and execution.

Over the past several weeks, I have been leading Sylogist through a strategic planning process, with a focus on accelerating both organic and inorganic growth. Having now been at the helm for 90+ days, I'm increasingly excited about the opportunities for the company and look forward to sharing more about our plans and the path forward in the near future" concluded Mr. Wood.         

About Sylogist

Sylogist is a software company that, through strategic acquisitions, investments and operations management, provides comprehensive, mission-critical ERP and CRM solutions, including fund accounting, case management, grant management and payroll, to public service organizations. Sylogist's customers include all levels of government, nonprofit organizations, non-governmental organizations, educational institutions as well as public compliance driven and funded companies. The 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 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 executing on delayed implementations throughout the remainder of fiscal 2021 and continued integration of the InfoStrat acquisition, with a focus on leveraging its IP to develop products that drive more recurring revenue, the payment of a quarterly dividend on March 10, 2021 and the sharing of future plans. 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, including headwinds from COVID-19 and economic turmoil, customer delays and the availability of growth prospects. Additional information regarding some of these risks, uncertainties and other factors may be found under in the management's discussion and analysis for the three months ended December 31, 2020, 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, the ability to expand technology partner and customer relationships and the acceleration of organic and inorganic growth. 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, Adjusted EBITDA per share and Adjusted Working Capital are non-GAAP financial measures: Adjusted EBITDA is defined as: profit for the period before stock-based compensation, share-based payments, 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 EBITDA per share refers to Adjusted EBITDA per basic weighted average number of shares outstanding. 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, Adjusted EBITDA per share 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.

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