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Descartes Reports Fiscal 2013 Second Quarter Financial Results

Record Revenues and Operating Results

WATERLOO, Ontario, Sept. 6, 2012 (GLOBE NEWSWIRE) -- The Descartes Systems Group Inc. (TSX:DSG) (Nasdaq:DSGX) announced financial results for its fiscal 2013 second quarter (Q2FY13) ended July 31, 2012. All financial results referenced are in United States (US) currency and, unless otherwise indicated, are determined in accordance with US Generally Accepted Accounting Principles (GAAP).

Q2FY13 Financial Results

As described in more detail below, key financial highlights for Descartes in Q2FY13 included:
  • Revenues of $30.5 million, up 6% from $28.8 million in the second quarter of fiscal 2012 (Q2FY12) and up 2% from $29.9 million in the previous quarter (Q1FY13);
  • Services revenues of $29.3 million, up 10% from $26.7 million in Q2FY12 and up 6% from $27.7 million in Q1FY13. Services revenues comprised 96% of total revenues for the quarter;
  • Cash provided by operating activities of $6.6 million, up from $4.6 million in Q2FY12 and $4.4 million in Q1FY13;
  • Net income of $2.5 million, slightly down from $2.6 million in both Q2FY12 and Q1FY13;
  • Earnings per share on a diluted basis of $0.04, consistent with both Q2FY12 and Q1FY13;
  • Days-sales-outstanding (DSO) for Q2FY13 were 55 days, down from 58 days in Q1FY13 and up from 53 days in Q2FY12;
  • Adjusted EBITDA of $9.3 million, up 12% from $8.3 million in Q2FY12 and up 7% from $8.7 million in Q1FY13. Adjusted EBITDA as a percentage of revenues was 30%, up from 29% in both Q2FY12 and Q1FY13; and
  • Adjusted EBITDA per share on a diluted basis of $0.15, up 15% from $0.13 in Q2FY12 and up 7% from Q1FY13.

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. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization (for which we include amortization of intangible assets, deferred compensation, stock-based compensation and related fees and taxes) and other charges (for which we include acquisition-related expenses and restructuring charges). These items are considered by management to be outside Descartes' ongoing operational results. We define 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. A reconciliation of Adjusted EBITDA and Adjusted EBITDA per diluted share to net income and earnings per share determined in accordance with GAAP, respectively, is provided later in this release. The following table summarizes Descartes' results in the categories specified below over the past 5 fiscal quarters (unaudited; dollar amounts, other than per share amounts, in millions):
   
  Q2 FY13 Q1 FY13 Q4 FY12 Q3 FY12 Q2 FY12
Revenues 30.5 29.9 29.6 28.5 28.8
Services revenues 29.3 27.7 26.9 26.2 26.7
Cash provided by operating activities 6.6 4.4 7.5 6.6 4.6
Net income * 2.5 2.6 4.5 2.7 2.6
Earnings per diluted share* 0.04 0.04 0.07 0.04 0.04
Adjusted EBITDA 9.3 8.7 8.5 8.5 8.3
Adjusted EBITDA as a % of revenues 30% 29% 29% 30% 29%
Adjusted EBITDA per diluted share 0.15 0.14 0.13 0.13 0.13
DSOs (days) 55 58 52 53 53
     
* Net income and earnings per diluted share in Q4FY12 were positively impacted by the recovery of deferred income taxes of $1.9 million. 

Based on the location of Descartes' customers, the geographic distribution of revenues was as follows:
  • $14.2 million of revenues (46%) were generated in the US;
  • $7.3 million (24%) in Europe, Middle East and Africa ("EMEA"), excluding Belgium;
  • $3.8 million (12%) in Belgium;
  • $3.6 million (12%) in Canada;
  • $1.4 million (5%) in the Asia Pacific region; and
  • $0.2 million (1%) in the Americas, excluding the US and Canada.

Year-to-Date Financial Results

As described in more detail below, key financial highlights for Descartes' six-month period ended July 31, 2012 (1HFY13) included:
  • Revenues of $60.4 million, up 8% from $55.9 million in the same period a year ago (1HFY12);
  • Services revenues of $57.0 million, up 8% from $52.6 million in 1HFY12. Services revenues comprised 94% of total revenues for 1HFY13, consistent with 1HFY12;
  • Gross margin of 65%, down from 67% in 1HFY12;
  • Net income of $5.1 million, up 6% from $4.8 million in 1HFY12;
  • Earnings per share on a diluted basis of $0.08, consistent with 1HFY12;
  • Adjusted EBITDA of $18.0 million, up 13% from $16.0 million in 1HFY12. Adjusted EBITDA as a percentage of revenues was 30% in 1HFY13, up from 29% in 1HFY12; and
  • Adjusted EBITDA per share on a diluted basis for 1HFY13 was $0.28, up 12% from $0.25 in 1HFY12.

The following table summarizes Descartes' results in the categories specified below over 1HFY13 and 1HFY12 (unaudited, dollar amounts in millions): 
   
  1HFY13 1HFY12
Revenues 60.4 55.9
Services revenues 57.0 52.6
Gross margin 65% 67%
Net income 5.1 4.8
Earnings per diluted share 0.08 0.08
Adjusted EBITDA 18.0 16.0
Adjusted EBITDA as a % of revenues 30% 29%
Adjusted EBITDA per diluted share 0.28 0.25

"We're metrics-driven and focused on results. By focusing first and foremost on the results our customers achieve using our technology and services, we've again delivered outstanding financial results in a challenging economic environment," said Art Mesher, Descartes' Chairman and CEO. "We're well-positioned to continue to deliver on our plans with a healthy and well-calibrated business."

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