UNITED STATES
|
SECURITIES AND EXCHANGE COMMISSION
|
Washington, D.C. 20549
|
FORM 6-K
|
REPORT OF FOREIGN PRIVATE ISSUER
|
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
|
THE SECURITIES EXCHANGE ACT OF 1934
|
For the month of June 2022
|
Commission File Number: 000-29970
|
THE DESCARTES SYSTEMS GROUP INC.
|
(Translation of registrant’s name into English)
|
120 Randall Drive
|
Waterloo, Ontario
|
Canada N2V 1C6
|
(Address of principal executive office)
|
THE DESCARTES SYSTEMS GROUP INC.
|
|
(Registrant)
|
|
By:
|
/s/ Peter V. Nguyen
|
Name:
|
Peter V. Nguyen
|
Title:
|
General Counsel
|
• |
Revenues of $116.4 million, up 18% from $98.8 million in the first quarter of fiscal 2022 (Q1FY22)
and up 4% from $112.4 million in the previous quarter (Q4FY22);
|
• |
Revenues were comprised of services revenues of $102.8 million (88% of total revenues), professional services and other revenues of $11.3 million (10% of total revenues) and license
revenues of $2.3 million (2% of total revenues). Services revenues were up 16% from $88.3 million in Q1FY22 and up 3% from $99.5 million in Q4FY22;
|
• |
Cash provided by operating activities of $44.4 million, up 9% from $40.9 million in Q1FY22 and down from $45.5 million in Q4FY22;
|
• |
Income from operations of $30.6 million, up 31% from $23.4 million in Q1FY22 and up 18% from $26.0 million in Q4FY22;
|
• |
Net income of $23.1 million, up 26% from $18.4 million in Q1FY22 and up 20% from $19.2 million in Q4FY22. Net income as a percentage of revenue was 20%, compared to 19% in Q1FY22
and 17% in Q4FY22;
|
• |
Earnings per share on a diluted basis of $0.27, up 29% from $0.21 in Q1FY22 and up 23% from $0.22 in Q4FY22; and
|
• |
Adjusted EBITDA of $51.2 million, up 23% from $41.5 million in Q1FY22 and up 2% from $50.1 million in Q4FY22. Adjusted EBITDA as a percentage of revenues was 44%, compared to 42% in
Q1FY22 and 45% in Q4FY22.
|
Q1
FY23
|
Q4
FY22
|
Q3
FY22
|
Q2
FY22
|
Q1
FY22
|
|
Revenues
|
116.4
|
112.4
|
108.9
|
104.6
|
98.8
|
Services revenues
|
102.8
|
99.5
|
97.2
|
93.5
|
88.3
|
Gross margin
|
76%
|
76%
|
76%
|
76%
|
76%
|
Cash provided by operating activities
|
44.4
|
45.5
|
43.3
|
46.4
|
40.9
|
Income from operations
|
30.6
|
26.0
|
27.8
|
26.1
|
23.4
|
Net income
|
23.1
|
19.2
|
25.5
|
23.2
|
18.4
|
Net income as a % of revenues
|
20%
|
17%
|
23%
|
22%
|
19%
|
Earnings per diluted share
|
0.27
|
0.22
|
0.30
|
0.27
|
0.21
|
Adjusted EBITDA
|
51.2
|
50.1
|
48.2
|
45.9
|
41.5
|
Adjusted EBITDA as a % of revenues
|
44%
|
45%
|
44%
|
44%
|
42%
|
Q1FY23
|
||||
Cash provided by operating activities
|
44.4
|
|||
Additions to property and equipment
|
(1.6
|
)
|
||
Acquisitions of subsidiaries, net of cash acquired
|
(42.9
|
)
|
||
Issuance of common shares for cash
|
0.4
|
|||
Effect of foreign exchange rate on cash
|
(1.9
|
)
|
||
Net change in cash
|
(1.6
|
)
|
||
Cash, beginning of period
|
213.4
|
|||
Cash, end of period
|
211.8
|
- |
We will issue a press release advising of the TSX’s acceptance;
|
- |
We expect to be permitted to repurchase for cancellation, at our discretion during the 12 months following such acceptance, up to 10% of the “public float” (calculated in accordance
with the rules of the TSX) of Descartes’ issued and outstanding common shares; and
|
- |
Any purchases under the NCIB will be conducted in the open market (or as otherwise permitted), subject to the terms and limitations applicable to such NCIB, and will be made through
the facilities of the TSX, Nasdaq, other designated exchanges and/or alternative Canadian trading systems, or by such other means as may be permitted by the Ontario Securities Commission or other applicable Canadian Securities Administrators.
|
(US dollars in millions)
|
Q1FY23
|
Q4FY22
|
Q3FY22
|
Q2FY22
|
Q1FY22
|
|||||||||||||||
Net income, as reported on Consolidated Statements of Operations
|
23.1
|
19.2
|
25.5
|
23.2
|
18.4
|
|||||||||||||||
Adjustments to reconcile to Adjusted EBITDA:
|
||||||||||||||||||||
Interest expense
|
0.3
|
0.3
|
0.3
|
0.3
|
0.3
|
|||||||||||||||
Investment income
|
(0.2
|
)
|
(0.1
|
)
|
(0.1
|
)
|
(0.1
|
)
|
(0.1
|
)
|
||||||||||
Income tax expense
|
7.4
|
6.7
|
2.1
|
2.7
|
4.8
|
|||||||||||||||
Depreciation expense
|
1.2
|
1.3
|
1.3
|
1.3
|
1.2
|
|||||||||||||||
Amortization of intangible assets
|
15.1
|
15.0
|
15.4
|
15.0
|
13.8
|
|||||||||||||||
Stock-based compensation and related taxes
|
2.9
|
2.9
|
3.0
|
3.1
|
2.6
|
|||||||||||||||
Other charges (recoveries)
|
1.4
|
4.8
|
0.7
|
0.4
|
0.5
|
|||||||||||||||
Adjusted EBITDA
|
51.2
|
50.1
|
48.2
|
45.9
|
41.5
|
|||||||||||||||
Revenues
|
116.4
|
112.4
|
108.9
|
104.6
|
98.8
|
|||||||||||||||
Net income as % of revenues
|
20
|
%
|
17
|
%
|
23
|
%
|
22
|
%
|
19
|
%
|
||||||||||
Adjusted EBITDA as % of revenues
|
44
|
%
|
45
|
%
|
44
|
%
|
44
|
%
|
42
|
%
|
||||||||||
April 30,
|
January 31,
|
|||||||
2022
|
2022 (Audited)
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash
|
211,779
|
213,437
|
||||||
Accounts receivable (net)
|
||||||||
Trade
|
45,182
|
41,705
|
||||||
Other
|
14,310
|
14,075
|
||||||
Prepaid expenses and other
|
20,174
|
21,974
|
||||||
Inventory
|
806
|
868
|
||||||
292,251
|
292,059
|
|||||||
OTHER LONG-TERM ASSETS
|
19,191
|
18,652
|
||||||
PROPERTY AND EQUIPMENT, NET
|
11,143
|
10,817
|
||||||
RIGHT-OF-USE ASSETS
|
9,439
|
10,571
|
||||||
DEFERRED INCOME TAXES
|
13,738
|
14,962
|
||||||
INTANGIBLE ASSETS, NET
|
239,768
|
229,609
|
||||||
GOODWILL
|
630,076
|
608,761
|
||||||
1,215,606
|
1,185,431
|
|||||||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts payable
|
9,662
|
10,566
|
||||||
Accrued liabilities
|
67,884
|
56,442
|
||||||
Lease obligations
|
3,872
|
4,029
|
||||||
Income taxes payable
|
4,888
|
5,616
|
||||||
Deferred revenue
|
62,340
|
56,780
|
||||||
148,646
|
133,433
|
|||||||
LONG-TERM DEBT
|
-
|
-
|
||||||
LEASE OBLIGATIONS
|
6,288
|
7,382
|
||||||
DEFERRED REVENUE
|
968
|
1,920
|
||||||
INCOME TAXES PAYABLE
|
8,306
|
7,354
|
||||||
DEFERRED INCOME TAXES
|
36,906
|
35,523
|
||||||
201,114
|
185,612
|
|||||||
SHAREHOLDERS’ EQUITY
|
||||||||
Common shares – unlimited shares authorized; Shares issued and outstanding totaled 84,781,562 at April 30, 2022 (January 31,
2022 – 84,756,210)
|
536,842
|
536,297
|
||||||
Additional paid-in capital
|
475,934
|
473,303
|
||||||
Accumulated other comprehensive loss
|
(24,011
|
)
|
(12,393
|
)
|
||||
Retained earnings
|
25,727
|
2,612
|
||||||
1,014,492
|
999,819
|
|||||||
1,215,606
|
1,185,431
|
Three Months Ended
|
||||||||
April 30,
|
April 30,
|
|||||||
2022
|
2021
|
|||||||
|
||||||||
REVENUES
|
116,395
|
98,838
|
||||||
COST OF REVENUES
|
27,823
|
23,849
|
||||||
GROSS MARGIN
|
88,572
|
74,989
|
||||||
EXPENSES
|
||||||||
Sales and marketing
|
13,236
|
11,011
|
||||||
Research and development
|
16,569
|
15,219
|
||||||
General and administrative
|
11,642
|
11,006
|
||||||
Other charges
|
1,482
|
520
|
||||||
Amortization of intangible assets
|
15,048
|
13,835
|
||||||
57,977
|
51,591
|
|||||||
INCOME FROM OPERATIONS
|
30,595
|
23,398
|
||||||
INTEREST EXPENSE
|
(278
|
)
|
(277
|
)
|
||||
INVESTMENT INCOME
|
153
|
63
|
||||||
INCOME BEFORE INCOME TAXES
|
30,470
|
23,184
|
||||||
INCOME TAX EXPENSE
|
||||||||
Current
|
4,841
|
2,134
|
||||||
Deferred
|
2,514
|
2,629
|
||||||
7,355
|
4,763
|
|||||||
NET INCOME
|
23,115
|
18,421
|
||||||
EARNINGS PER SHARE
|
||||||||
Basic
|
0.27
|
0.22
|
||||||
Diluted
|
0.27
|
0.21
|
||||||
WEIGHTED AVERAGE SHARES OUTSTANDING (thousands)
|
||||||||
Basic
|
84,765
|
84,501
|
||||||
Diluted
|
86,348
|
86,045
|
Three Months Ended
|
||||||||
April 30,
|
April 30,
|
|||||||
2022
|
2021
|
|||||||
OPERATING ACTIVITIES
|
||||||||
Net income
|
23,115
|
18,421
|
||||||
Adjustments to reconcile net income to cash provided by operating activities:
|
||||||||
Depreciation
|
1,245
|
1,215
|
||||||
Amortization of intangible assets
|
15,048
|
13,835
|
||||||
Stock-based compensation expense
|
2,787
|
2,152
|
||||||
Other non-cash operating activities
|
(17
|
)
|
276
|
|||||
Deferred tax expense
|
2,514
|
2,629
|
||||||
Changes in operating assets and liabilities
|
(260
|
)
|
2,378
|
|||||
Cash provided by operating activities
|
44,432
|
40,906
|
||||||
INVESTING ACTIVITIES
|
||||||||
Additions to property and equipment
|
(1,636
|
)
|
(1,655
|
)
|
||||
Acquisition of subsidiaries, net of cash acquired
|
(42,892
|
)
|
(35,860
|
)
|
||||
Cash used in investing activities
|
(44,528
|
)
|
(37,515
|
)
|
||||
FINANCING ACTIVITIES
|
||||||||
Payment of debt issuance costs
|
(66
|
)
|
(60
|
)
|
||||
Issuance of common shares for cash, net of issuance costs
|
388
|
647
|
||||||
Cash provided by financing activities
|
322
|
587
|
||||||
Effect of foreign exchange rate changes on cash
|
(1,884
|
)
|
498
|
|||||
(Decrease) / increase in cash
|
(1,658
|
)
|
4,476
|
|||||
Cash, beginning of period
|
213,437
|
133,661
|
||||||
Cash, end of period
|
211,779
|
138,137
|
||||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the period for interest
|
-
|
-
|
||||||
Cash paid during the period for income taxes
|
4,094
|
3,178
|
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