TECSYS Inc.

Good morning, everyone. Welcome to Texas' fourth quarter and fiscal year 2024 results conference call. Please note that the complete annual and fourth quarter report, including MD&A and financial statements, were filed on Cedar Plus after market closed yesterday. All dollar amounts are expressed in Canadian currency and are prepared in accordance with international financial reporting standards. The company has added a companion presentation to today's call, which is available on their website at www.texas.com forward slash investors. Some of the statements in this conference call, including the question and answer period, may include forward-looking statements that are based on management's beliefs and assumptions. Actual results may differ materially from such statements. I would like to remind everyone that this call is being recorded on Friday, June 28, 2024, at 8.30 a.m. Eastern Time. I would now like to turn the conference over to Mr. Peter Burton, Chief Executive Officer at Texas. Please go ahead, sir.

Good morning. Joining me today is Mark Bentley, our Chief Financial Officer. We appreciate you joining us for today's call. As most of you have likely seen in the results issued last night, fiscal 2024 has been an outstanding year for our organization. marked by significant achievements and strong organic growth. Our year-over-year SaaS revenue is up 39%, and our RPO continues to grow up 43% over last year. Our momentum continues across the board, with emerging opportunities in new marketplaces and a clear path for sustained performance. Our vision for growth is sharper than ever, supported by investment in technology and an obsession with customer success. I'd like to take a moment to summarize the key events of our Q4 and full year results for fiscal 24. Mark will then walk us through the financial results in more detail. And finally, I'll comment on our outlook, followed by a Q&A session. If you're following along in the companion deck, I'll be speaking to slide three. Q4 has been a fantastic capstone for the fiscal year as we continue to break our own records. We achieved the highest quarterly revenue in our company's history. We achieved the highest SaaS bookings in our company's history, including migrations and expansions across verticals, and we welcomed two new healthcare IDMs. Our bookings this quarter were up 108% over last year and 37% higher than our best quarter ever. While we hardly expect this to be the new run rate, we're very happy with this high watermark in quarterly bookings, which brings our fiscal year bookings to a 13% increase year over year. Onto RPO, due to strong bookings as well as extensions and renewals in fiscal 2024, our SAS RPO is growing at a healthy clip, up 43% to 197 million compared to the same time last year. Just thinking about that a bit, that means that over the last few years, we have built a backlog of SAS that has something like 130 million of contracted but unrecognized gross margin contribution. that will flow through in the years ahead. That is pretty exciting stuff. In terms of milestones, a year ago, we announced that we crossed the 50% threshold of our recurring revenue being SaaS revenue. A year later, we're now looking at SaaS revenue representing 64% of our recurring revenue. It's worth mentioning that our positive momentum and growing SaaS customer base is underpinned by very robust growth and net retention levels. We are cementing our position as the system of choice for organizations grappling with supply chain complexity. From the Texas Children's Hospital, the largest pediatric facility in the United States, to Baptist Health, the major health system embarking on a consolidated pharmacy service center, and from TruPill, the pioneering digital pharmacy provider, to Roche, which I mentioned in a previous call, we are adding top tier organizations to our customer list that recognize the value that Texas delivers. This value is reinforced by organizations like Nissan, Intermountain Health, and Mayo Clinic, who are sharing their experiences in panels and presentations like those at our user conference last September, as well as at regional workshops through the year, or in industry publications like Becker's Healthcare and Fortune. With this customer growth comes an expanding white space opportunity. In healthcare, this is especially significant because we often enter an account in a single department or with one solution. As we prove out the value of that solution, our end-to-end health care offering now gives us a lot of flexibility into how we can penetrate further into each account. Earlier this year, we gained traction around the CPSC, or Consolidated Pharmacy Service Center model, essentially replicating the successful model that we brought to a health system's med-surg supply chain and adapting it to the pharmacy. With engagements at St. Luke's, Parkview Health, and Baptist Health, we're proving out the model. and significantly increasing the white space in our existing base and the total addressable market within an industry where we already have a solid foothold. We seem to be again emerging as the market leader in this CPSC space, and we're very quickly securing wins with major IDNs. We're also continuing to build and strengthen our partner ecosystem throughout this fiscal year. This effort has proven valuable with 26% of our deals and half of our new logos being partner-influenced. As part of our partner program, we became the only WMS provider to achieve AWS supply chain competency in three categories, which was announced in January. As previously discussed, we initiated a major restructuring in the fourth quarter to boost long-term profitability. I'm pleased to confirm that the end results came out fairly closely with what we had anticipated. Our expectations regarding the impact on our run rate and the cost we expected to incur were quite accurate. This restructuring was an important step for us as we continue to increase our investment in areas of growth. As we continue to invest in the products we sell and the manner in which we sell them, Texas has proven to be among the best cloud-based solutions available in the markets we serve. The steady growth we have experienced affirms our vision and strategy for shareholder value. Mark will now provide further details on our fourth quarter and the full fiscal financial year results, as well as financial guidance on several key metrics.

Thank you, Peter. We're very pleased with the strong performance in our fourth quarter and at April 30th, 2024. I'll start with slide four and focused first on SAS. SAS revenue continues to be the key driver for our growth, and we believe the key driver for value creation. SAS revenue growth is driving our recurring revenue, and during the fourth quarter, SAS revenue growth was 27% compared to the same quarter last year, reaching $14.2 million. The big news, as Peter mentioned previously, is our record-setting $8 million of SAS bookings in Q4. Our higher growth SAS revenue is now poised to overtake professional services revenue as our largest single source of revenue, and we expect this to continue to play out in fiscal 2025 and beyond. Total revenue for the quarter was a record $44 million. That's 7% higher than the same period last year. On a constant currency basis, total revenue growth was 5%. Professional services revenue for the fourth quarter was $14.4 million. That was down 2% from $14.6 million reported for the same quarter last year. but up 11% on a sequential basis from Q3. Professional services backlog continues to be strong at 32.1 million as of April 30th, 2024. For the fourth quarter of fiscal 2024, gross margin was 47% compared to 45% in the same period last year. Combined SAS, maintenance, support, and professional services gross profit margin for the three months ended April 30th, 2024 was 50%. That's up compared to 47% in the same period of fiscal 2023. SAS margin expansion was the driver and we're pleased to report that this continues to track as planned. Net profit in the quarter was relatively flat at 259,000 compared to 446,000 in the same quarter last year. Net profit in the quarter was negatively impacted by $2.1 million restructuring charges, and this was broadly offset by positive comparable impact from foreign exchange and income tax attribute recognition in the current quarter. Adjusted EBITDA was $2.8 million in Q4 of fiscal 24 compared to $2.4 million in the same period last year. I'm going to turn now briefly to our results for the full fiscal year 2024 and move to slide five if you're following along in the deck. Our total revenue was $171.2 million. That's up 12% compared to $152.4 million in the same period last year and up 9% on a constant currency basis. SAS revenue for fiscal 24 was $51.9 million, up 39%. from 37.5 million in the same period last year. And that was up 35% on a constant currency basis. Our adjusted EBITDA for fiscal 24 was $9.6 million compared to 9.5 million in the same period last year. Basic and fully diluted earnings per share were 13 cents in fiscal 24 compared to 14 cents in fiscal 23. We ended Q4 fiscal 24 with a solid balance sheet position. We had cash and short-term investments of $35.6 million and no debt. Operating activities provided $4.9 million of cash in fiscal 24. And during the year, we used $7.2 million to repurchase shares under our NCIB program. Additionally, the board yesterday approved a quarterly dividend of $0.08 a share. With respect to financial guidance, and now moving to slide six, we're providing full year 25 guidance as follows. Number one, total revenue growth between 7% and 9%. Number two, SAS revenue growth between 30% and 32%. And finally, adjusted EBITDA margin between between 8% and 9%. Additionally, we're providing adjusted EBITDA margin guidance for fiscal 2026 of between 10% and 11%. I'll now turn the call back to Peter to provide some outlook comments.