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MARKHAM, ONTARIO -- (Marketwired) -- 03/05/15 -- Enghouse Systems Limited (TSX: ESL) today announced its unaudited first quarter financial results for the period ended January 31, 2015.

First quarter revenue was $63.0 million, an increase of 33% over revenue of $47.5 million in the first quarter last year. The increase in revenue was primarily the result of incremental revenue contributions from acquisitions. Revenue reflects hosted and maintenance services contributions of $32.3 million in the quarter, an increase of 29% over last year. Adjusted EBITDA for the quarter was $16.2 million or $0.60 per diluted share compared to $12.2 million or $0.45 per diluted share in last year's first quarter. Results from operating activities for the quarter were $15.6 million compared to $11.5 million in the prior year's first quarter, an increase of 35% over the prior year. Net income for the quarter was $2.5 million or $0.09 per diluted share compared to the prior year's first quarter net income of $6.2 million or $0.23 per diluted share. The decrease in net income in the quarter reflects an adjustment of $8.8 million ($5.0 million net of tax) to the provision for contract litigation matters which were finalized after quarter end.

Operating expenses before special charges related to restructuring of acquired operations were $27.6 million compared to $21.9 million in the prior year's first quarter and reflect incremental costs of acquired operations. Of note, as a percentage of revenue, operating expenses before special charges decreased from 46.2% to 43.8% in the quarter largely as a result of foreign exchange gains booked to selling, general and administrative expenses. Non-cash amortization charges in the quarter were $5.4 million and include amortization charges for acquired software and customer relationships from acquired operations.

Enghouse generated cash flows from operations of $17.6 million and closed the quarter with $101.8 million in cash, cash equivalents and short-term investments, compared to $84.9 million at October 31, 2014. This is after cash paid of $0.4 million related to acquisition hold backs in the quarter and cash dividends of $2.6 million. The Company continues to have no debt.

Effective March 2, 2015 the Company acquired 100% of the issued and outstanding common shares of CDRator A/S of Denmark for a purchase price of approximately $23.0 million, net of cash acquired. CDRator had annual revenues of $20.0 million in fiscal 2014 and provides market leading solutions that automate billing and customer care functions for mobile networks operators and MVNO/E's (mobile virtual network operators and enablers). This acquisition will further balance the revenue split between our two business segments which as of the first quarter is approximately 70% and 30% respectively for the Interactive and Asset Management Groups.

The Board of Directors also approved a 20% increase in its eligible quarterly dividend to $0.12 per common share, payable on May 29, 2015 to shareholders of record at the close of business on May 15, 2015. Enghouse has increased its dividend in each of the past six years.

Building on Enghouse's presence in Germany established with the acquisitions of CosmoCom and Andtek, the Company added IT Sonix in March 2014 and Voxtron in October 2014 to expand its market reach within Germany and beyond to Italy and Belgium. Enghouse is now one of the more significant contact center solutions providers in the important German market. As the Company continues to grow outside of North America, the foreign exchange risk dependency on any one currency is lessened. Enghouse remains committed to diversifying its revenue stream and accelerating its expansion as it continues to seek accretive acquisitions to grow its market share.

A conference call to discuss the results will be held on Friday, March 5, 2015 at 8:45 a.m. EST. To participate, please call 416-640-5947 or North American Toll-Free 1-866-233-4606. No PIN required.

About Enghouse

Enghouse Systems Limited is a leading global provider of enterprise software solutions serving a variety of distinct vertical markets. Its strategy is to build a larger, profitable and more diverse software company through strategic acquisitions targeting the Contact Center, Networks (OSS/BSS) and Transportation/Public Safety sectors. Enghouse shares are listed on the Toronto Stock Exchange under the symbol "ESL". Further information about Enghouse may be obtained from the Company's website at www.enghouse.com.

Non-GAAP Measures

The Company uses non-GAAP measures to assess its operating performance. Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than GAAP do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Company uses Adjusted EBITDA as a measure of operating performance. Therefore, Adjusted EBITDA may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is calculated as income before income taxes adjusted for depreciation of property, plant and equipment, amortization of acquired software and customer relationships, finance income, finance expenses, other income, litigation settlements and special charges for acquisition related restructuring costs. Management uses Adjusted EBITDA to evaluate operating performance as it excludes amortization of software and intangibles (which is an accounting allocation of the cost of software and intangible assets arising on acquisition), any impact of finance and tax related activities, asset depreciation, other income and restructuring costs primarily related to acquisitions.

Adjusted EBITDA

The table below reconciles Adjusted EBITDA to income before income taxes:

(In thousands of Canadian dollars)

(Unaudited)

                                                      Three Months ended
                                                    January 31,  January 31,
                                                           2015         2014
Total Revenue                                          $ 63,019     $ 47,492

Income before income taxes                                1,460        7,702
Depreciation of property, plant and equipment               592          529
Amortization of acquired software and customer
 relationships                                            5,354        3,910
Finance income                                            (113)        (143)
Finance expenses                                            117           58
Other income                                               (17)          (7)
Litigation settlements                                    8,774            -
Special charges                                              24          112
                                                  --------------------------
Adjusted EBITDA                                        $ 16,191     $ 12,161
Adjusted EBITDA margin                                      26%          26%
Adjusted EBITDA per diluted share                         $0.60        $0.45

Enghouse Systems Limited

Consolidated Statements of Financial Position

(In thousands of Canadian dollars)

(Unaudited)

                                                    January 31,  October 31,
                                                           2015         2014

                      Assets
Current assets
  Cash and cash equivalents                            $ 86,891     $ 72,780
  Short-term investments                                 14,956       12,084
  Accounts receivable, net                               56,994       54,341
  Prepaid expenses and other assets                       8,123        7,571
                                                  --------------------------
                                                        166,964      146,776
Non-current assets
Property, plant and equipment                             4,799        4,020
Intangible assets                                       169,590      166,548
Deferred income tax assets                               13,275       10,427
                                                  --------------------------

Total assets                                          $ 354,628    $ 327,771
                                                  --------------------------
                                                  --------------------------

                    Liabilities
Current liabilities
  Accounts payable and accrued liabilities             $ 38,289     $ 41,297
  Income taxes payable                                    1,803        2,644
  Dividends payable                                       2,620        2,616
  Provisions                                             13,619        3,407
  Deferred revenue                                       58,006       47,745
                                                  --------------------------
                                                        114,337       97,709
Non-current liabilities
Deferred income tax liabilities                          19,988       19,930
Deferred revenue                                          1,990        1,877
                                                  --------------------------

Total liabilities                                       136,315      119,516
                                                  --------------------------
               Shareholders' Equity

Share capital                                            60,081       59,746
Contributed surplus                                       4,017        3,782
Retained earnings                                       135,473      135,554
Accumulated other comprehensive income                   18,742        9,173
                                                  --------------------------
Total shareholders' equity                              218,313      208,255
                                                  --------------------------
Total liabilities and shareholders' equity            $ 354,628    $ 327,771
                                                  --------------------------
                                                  --------------------------

Enghouse Systems Limited

Condensed Consolidated Interim Statements of Operations and Comprehensive Income

(In thousands of Canadian dollars, except per share amounts)

(Unaudited)

                                                  Three months ended January
                                                              31,
                                                          2015          2014
Revenue
  Software licenses                                   $ 19,612      $ 15,763
  Hosted and maintenance services                       32,259        25,014
  Professional services                                  8,921         5,132
  Hardware                                               2,227         1,583
                                                  ------------  ------------
                                                        63,019        47,492
                                                  ------------  ------------
Direct costs
  Software licenses                                      1,677         1,200
  Services                                              16,784        11,716
  Hardware                                               1,333         1,019
                                                  ------------  ------------
                                                        19,794        13,935
                                                  ------------  ------------

Revenue, net of direct costs                            43,225        33,557

Operating expenses
  Selling, general and administrative                   17,144        12,676
  Research and development                               9,890         8,720
  Depreciation of property, plant and equipment            592           529
  Special charges                                           24           112
                                                  ------------  ------------
                                                        27,650        22,037
                                                  ------------  ------------

Results from operating activities                       15,575        11,520

Litigation settlements                                 (8,774)             -
Amortization of acquired software and customer
 relationships                                         (5,354)       (3,910)
Finance income                                             113           143
Finance expenses                                         (117)          (58)
Other income                                                17             7
                                                  ------------  ------------

Income before income taxes                               1,460         7,702

(Recovery of) provision for income taxes               (1,079)         1,530
                                                  ------------  ------------

Net income for the period                              $ 2,539       $ 6,172
                                                  ------------  ------------
                                                  ------------  ------------
Items that are or may be reclassified subsequently
 to profit or loss:
--------------------------------------------------
Foreign currency translation gain from foreign
 operations                                              9,406         9,770
Transfer to net income of realized gains on
 available for sale investments                              -          (20)
Unrealized gain (loss) on available for sale
 investments                                               188          (17)
Deferred income tax (expense) recovery                    (25)             5
                                                  ------------  ------------

Other comprehensive income                               9,569         9,738
                                                  ------------  ------------

Comprehensive income                                  $ 12,108      $ 15,910
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Earnings per share
Basic                                                   $ 0.10        $ 0.24
Diluted                                                 $ 0.09        $ 0.23
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Enghouse Systems Limited

Condensed Consolidated Interim Statements of Changes in Equity

(In thousands of Canadian dollars)

(Unaudited)

                                                     Accum-
                                                     ulated
                                                      other
                                                    compre-
                                            Contri- hensive
                              Share   Share   buted  income Retained
                           Capital- capital surplus  (loss) earnings   Total
                             number       $       $       $        $       $

Balance - November 1,
 2014                    26,163,962  59,746   3,782   9,173  135,554 208,255

Net income                        -       -       -       -    2,539   2,539
Other Comprehensive
 Income (net of tax):
Cumulative Translation
 Adjustment                       -       -       -   9,406        -   9,406
Unrealized gain on
 available-for-sale
 investments                      -       -       -     188        -     188
Deferred income tax
 expense                          -       -       -    (25)        -    (25)
                        ----------------------------------------------------
Comprehensive income for
 the period                       -       -       -   9,569    2,539  12,108
                        ----------------------------------------------------
                        ----------------------------------------------------
Employee share options:
  Value of services
   recognized                     -       -     305       -        -     305
  Proceeds on issuing
   shares                    38,500     335    (70)       -        -     265
Dividends                         -       -       -       -  (2,620) (2,620)
                        ----------------------------------------------------
Balance - January 31,
 2015                    26,202,462  60,081   4,017  18,742  135,473 218,313
                        ----------------------------------------------------
                        ----------------------------------------------------


Balance - November 1,
 2013                    26,042,962  58,514   3,175   5,139  115,800 182,628

Net income                        -       -       -       -    6,172   6,172
Other Comprehensive
 Income (net of tax):
Cumulative Translation
 Adjustment                       -       -       -   9,770        -   9,770
Transfer to net income
 of realized gains on
 available-for-sale
 investments                      -       -       -    (20)        -    (20)
Unrealized loss on
 available-for-sale
 investments                      -       -       -    (17)        -    (17)
Deferred income tax
 recovery                         -       -       -       5        -       5
                        ----------------------------------------------------
Comprehensive income for
 the period                       -       -       -   9,738    6,172  15,910
                        ----------------------------------------------------
                        ----------------------------------------------------
Employee share options:
  Value of services
   recognized                                   159       -        -     159
  Proceeds on issuing
   shares                    44,000     480   (119)       -        -     361
Dividends                         -       -       -       -  (2,087) (2,087)
                        ----------------------------------------------------
Balance - January 31,
 2014                    26,086,962  58,994   3,215  14,877  119,885 196,971
                        ----------------------------------------------------
                        ----------------------------------------------------

Enghouse Systems Limited

Condensed Consolidated Interim Statements of Cash Flows

(In thousands of Canadian dollars)

(Unaudited)

                                                  Three months ended January
                                                              31,
                                                           2015         2014
Cash flows from operating activities
Net income for the period                               $ 2,539      $ 6,172

Adjustments for:
  Depreciation of property, plant and equipment             592          529
  Amortization of acquired software and customer
   relationships                                          5,354        3,910
  Stock-based compensation expense                          305          159
  (Recovery of) provision for income taxes              (1,079)        1,530
  Finance expenses and other income                         100           51
                                                  --------------------------
                                                          7,811       12,351

Changes in non-cash operating working capital            11,806      (1,660)
Income tax paid                                         (1,975)        (787)
----------------------------------------------------------------------------
Net cash flows from operating activities                 17,642        9,904

Cash flows from investing activities
Purchase of property, plant and equipment, net          (1,062)        (657)
Acquisitions, net of cash acquired (2014 - $334)              -      (1,778)
Purchase consideration for prior period
 acquisitions                                             (412)        (382)
Net purchase of short-term investments                  (2,075)      (1,615)
----------------------------------------------------------------------------
Net cash flows used in investing activities             (3,549)      (4,432)

Cash flows from financing activities
Issuance of share capital                                   265          361
Payment of cash dividend                                (2,616)      (2,083)
----------------------------------------------------------------------------
Net cash flows used in financing activities             (2,351)      (1,722)

Effect of currency translation adjustments on cash
 and cash equivalents                                     2,369        3,138
----------------------------------------------------------------------------

Net increase in cash and cash equivalents during
 the period
                                                         14,111        6,888
Cash and cash equivalents- beginning of period           72,780       70,109

Cash and cash equivalents - end of period              $ 86,891     $ 76,997
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Enghouse Systems Limited

Selected Segment Reporting Information

(In thousands of Canadian dollars)

(Unaudited)

                                                  Three months ended January
                                                              31
                                                  --------------------------
                                                           2015         2014
                                                  --------------------------

Revenue
  Asset Management Group                               $ 19,267      $ 9,692
  Interactive Management Group                           43,752       37,800
                                                  --------------------------
Total                                                  $ 63,019     $ 47,492
                                                  --------------------------
                                                  --------------------------


Segment Profit
  Asset Management Group                                $ 5,060      $ 2,206
  Interactive Management Group                           12,298       10,606
  Corporate expenses                                    (1,783)      (1,292)
  Amortization of acquired software and customer
   relationships                                        (5,354)      (3,910)
  Finance income                                            113          143
  Finance expenses                                        (117)         (58)
  Other income                                               17            7
  Litigation settlements                                (8,774)            -
                                                  --------------------------
Total                                                   $ 1,460      $ 7,702
                                                  --------------------------
                                                  --------------------------