Descartes Announces Fiscal 2024 Third Quarter Financial Results

Descartes Announces Fiscal 2024 Third Quarter Financial Results

GlobeNewswireDec 5, 2023 5:18 PM EST

Descartes Announces Fiscal 2024 Third Quarter Financial Results

Record Revenues as Global Logistics Network Expands

WATERLOO, Ontario and ATLANTA, Dec. 05, 2023 (GLOBE NEWSWIRE) --  The Descartes Systems Group Inc. (TSX:DSG) (Nasdaq:DSGX) announced its financial results for its fiscal 2024 third quarter ( Q3FY24 ). 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 ).

“Our network continues to grow as new customers join our community and existing customers trust us with more of their business,” said Edward J. Ryan, Descartes’ CEO. “As a result, we delivered another strong quarter of financial results in a challenging market. We believe there’s a lot more we can do to help shippers, carriers and logistics services providers manage the complete lifecycle of shipments around the world. We have a strong financial position and the expertise to continue to invest in our business for the future.”

Q3FY24 Financial Results
As described in more detail below, key financial highlights for Descartes’ Q3FY24 included:

• Revenues of $144.7 million, up 19% from $121.5 million in the third quarter of fiscal 2023 ( Q3FY23 ) and up 1% from $143.4 million in the previous quarter ( Q2FY24 );
• Revenues were comprised of services revenues of $130.4 million (90% of total revenues), professional services and other revenues of $12.8 million (9% of total revenues) and license revenues of $1.5 million (1% of total revenues). Services revenues were up 18% from $110.1 million in Q3FY23;
• Cash provided by operating activities of $56.1 million, up 10% from $50.9 million in Q3FY23 and up 8% from $52.0 million in Q2FY24;
• Income from operations of $32.4 million, down from $34.8 million in Q3FY23 and down from $36.8 million in Q2FY24. Q3FY24 income from operations (as well as Q3FY24 net income and earnings per share) was negatively impacted by an increase in Other Charges of $9.5 million as compared to Q3FY23 and an increase of $7.2 million as compared to Q2FY24, primarily related to contingent consideration incurred due to better-than-expected performance from recent acquisitions;
• Net income of $26.6 million, up from $26.5 million in Q3FY23 and down from $28.1 million in Q2FY24. Net income as a percentage of revenue was 18%, compared to 22% in Q3FY23 and 20% in Q2FY24;
• Earnings per share on a diluted basis of $0.31, consistent with $0.31 in Q3FY23 and down from $0.32 in Q2FY24, respectively; and
• Adjusted EBITDA of $63.5 million, up 17% from $54.5 million in Q3FY23 and up 5% from $60.6 million in Q2FY24. Adjusted EBITDA as a percentage of revenues was 44%, compared to 45% and 42% in Q3FY23 and Q2FY24, respectively.
  
  

Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues 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, amortization, stock-based compensation (for which we include related fees and taxes) and other charges (for which we include restructuring charges, acquisition-related expenses, and contingent consideration incurred due to better-than-expected performance from acquisitions). These items are considered by management to be outside Descartes' ongoing operational results. We define Adjusted EBITDA as a percentage of revenues as the quotient, expressed as a percentage, from dividing Adjusted EBITDA for a period by revenues for the corresponding period. A reconciliation of Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues to net income determined in accordance with GAAP 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):

	Q3 FY24		Q2 FY24		Q1 FY24		Q4 FY23		Q3 FY23
Revenues	144.7		143.4		136.6		125.1		121.5
Services revenues	130.4		130.7		124.1		113.4		110.1
Gross margin	76	%	76	%	76	%	77	%	77	%
Cash provided by operating activities	56.1		52.0		48.9		50.6		50.9
Income from operations	32.4		36.8		36.5		33.6		34.8
Net income	26.6		28.1		29.4		29.8		26.5
Net income as a % of revenues	18	%	20	%	22	%	24	%	22	%
Earnings per diluted share	0.31		0.32		0.34		0.34		0.31
Adjusted EBITDA	63.5		60.6		57.7		55.4		54.5
Adjusted EBITDA as a % of revenues	44	%	42	%	42	%	44	%	45	%

Year-to-Date Financial Results
As described in more detail below, key financial highlights for Descartes’ nine-month period ended October 31, 2023 ( 9MFY24 ) included:

• Revenues of $424.7 million, up 18% from $360.9 million in the same period a year ago (9MFY23);
• Revenues were comprised of services revenues of $385.3 million (91% of total revenues), professional services and other revenues of $35.6 million (8% of total revenues) and license revenues of $3.8 million (1% of total revenues). Services revenues were up 20% from $322.3 million in 9MFY23;
• Cash provided by operating activities of $156.9 million, up 11% from $141.7 million in 9MFY23;
• Income from operations of $105.8 million, up 9% from $96.8 million in 9MFY23;
• Net income of $84.1 million, up 16% from $72.5 million in 9MFY23. Net income as a percentage of revenues was 20%, consistent with 20% in 9MFY23;
• Earnings per share on a diluted basis of $0.97, up 15% from $0.84 in 9MFY23; and
• Adjusted EBITDA of $181.7 million, up 14% from $159.8 million in 9MFY23. Adjusted EBITDA as a percentage of revenues was 43%, compared to 44% in 9MFY23.
  
  

The following table summarizes Descartes’ results in the categories specified below over 9MFY24 and 9MFY23 (unaudited, dollar amounts in millions):

	9MFY24		9MFY23
Revenues	424.7		360.9
Services revenues	385.3		322.3
Gross margin	76	%	77	%
Cash provided by operating activities	156.9		141.7
Income from operations	105.8		96.8
Net income	84.1		72.5
Net income as a % of revenues	20	%	20	%
Earnings per diluted share	0.97		0.84
Adjusted EBITDA	181.7		159.8
Adjusted EBITDA as a % of revenues	43	%	44	%

Cash Position
At October 31, 2023, Descartes had $279.6 million in cash. Cash increased by $52.2 million in Q3FY24 and $3.2 million in 9MFY24. The table set forth below provides a summary of cash flows for Q3FY24 and 9MFY24 in millions of dollars:

	Q3FY24		9MFY24
Cash provided by operating activities	56.1		156.9
Additions to property and equipment	(1.5	)	(4.8	)
Acquisitions of subsidiaries, net of cash acquired	-		(142.7	)
Issuances of common shares, net of issuance costs	0.4		6.4
Payment of withholding taxes on net share settlements	-		(4.9	)
Payment of contingent consideration	-		(6.3	)
Effect of foreign exchange rate on cash	(2.8	)	(1.4	)
Net change in cash	52.2		3.2
Cash, beginning of period	227.4		276.4
Cash, end of period	279.6		279.6

Conference Call
Members of Descartes’ executive management team will host a conference call to discuss the company’s financial results at 5:30 p.m. ET on Tuesday, December 5. Designated numbers are +1 416 764 8658 for North America and +1 888 886 7786 for international, using conference ID 13014079#.

The company will simultaneously conduct an audio webcast on the Descartes website at www.descartes.com/descartes/investor-relations. Phone conference dial-in or webcast login is required approximately 10 minutes beforehand.

Replays of the conference call will be available until December 12, 2023, by dialing +1 416 764 8692 or Toll-Free for North America using +1 877 674 7070 with Playback Passcode: 014079#. An archived replay of the webcast will be available at www.descartes.com/descartes/investor-relations.

About Descartes

Descartes (Nasdaq:DSGX) (TSX:DSG) is the global leader in providing on-demand, software-as-a-service solutions focused on improving the productivity, security and sustainability of logistics-intensive businesses. Customers use our modular, software-as-a-service solutions to route, track and help improve the safety, performance and compliance of delivery resources; plan, allocate and execute shipments; rate, audit and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes by participating in the world’s largest, collaborative multimodal logistics community. Our headquarters are in Waterloo, Ontario, Canada and we have offices and partners around the world. Learn more at www.descartes.com , and connect with us on LinkedIn and X (Twitter ) .

Descartes Investor Contact
Laurie McCauley
(519) 746-2969
investor@descartes.com

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Source

https://money.tmx.com/quote/DSG/news/5845718819846284/Descartes_Announces_Fiscal_2024_Third_Quarter_Financial_Results

ALTAGAS ANNOUNCES 2024 GUIDANCE AND STRATEGIC PRIORITIES, SIX PERCENT DIVIDEND INCREASE, AND RELEASES 2023 ESG REPORT

ALTAGAS ANNOUNCES 2024 GUIDANCE AND STRATEGIC PRIORITIES, SIX PERCENT DIVIDEND INCREASE, AND RELEASES 2023 ESG REPORT

Canada Newswire, Dec 5, 2023 6:00 AM EST

AltaGas remains focused on executing long-term strategic plan for shareholder value creation.

CALGARY, AB , Dec. 5, 2023 /CNW/ - AltaGas Ltd. ("AltaGas" or the "Company") (TSX: ALA) announces its 2024 guidance and outlook; provides an update on its long-term strategic plan, and releases its 2023 Environment, Social and Governance (ESG) report, including progress toward achieving ESG goals.

HIGHLIGHTS

(all financial figures are unaudited and in Canadian dollars unless otherwise noted)

• 2024 normalized EPS ¹ guidance of $2.05 - $2.25 represents approximately ten percent year-over-year growth using midpoint-to-midpoint guidance figures. Strong year-over-year growth is underpinned by strong business performance in each of the core segments.
  
  
• 2024 normalized EBITDA ¹ guidance of $1,675 million - $1,775 million represents approximately eleven percent year-over-year growth using midpoint-to-midpoint guidance figures. Strong growth in AltaGas' Midstream and Utilities businesses is expected to more than offset the lost contribution from the Alaska Utilities sale, which was divested in the first quarter of 2023.
  
  
• AltaGas is maintaining a disciplined and equity self-funded capital program of $1.2 Billion in 2024, excluding Asset Retirement Obligations (ARO). The 2024 capital program is more weighted towards low-risk organic growth in the Utilities; however, the program reflects a significant shift relative to prior years with Utilities 2024 capital accounting for approximately 58 percent of the annual capital budget and Midstream accounting for approximately 36 percent. Higher annual Midstream capital reflects the strong outlook for the Midstream business and strong growth opportunities, including the Pipestone II project.
  
  
• AltaGas is increasing returns of capital to shareholders through a six percent increase to its anticipated common share dividend of $1.19 per share for 2024. The Company remains committed to delivering regular, sustainable, and annual dividend increases while maintaining a prudent dividend payout target range of 50 - 60% of earnings, which balances the need to return capital to shareholders and fund the Company's significant organic growth program within an equity self-funding model.
  
  
• The Midstream segment is positioned to deliver strong year-over-year organic growth in 2024 and beyond. This growth is underpinned by the Pipestone acquisition, continued facility optimization, and growth initiatives across the value chain.
  
  
• AltaGas and its joint-venture partner, Royal Vopak, have commenced site clearing work at the Ridley Island Energy Export Facility ("REEF"), representing another important step in the project's development. Site clearing activities including logging, clearing, and drainage will help determine the project's readiness prior to reaching a Final Investment Decision ("FID").
  
  
• Earnings growth within the Utilities segment will be underpinned by operational excellence, stronger earned ROEs, contribution from recent rate cases, and ongoing rate base growth from the Company's Accelerated Pipeline Replacement programs ("ARPs").
  
  
• AltaGas remains committed to reducing financial leverage to move towards its 4.5x Net Debt ¹ to normalized EBITDA ¹ . Monetization of the Mountain Valley Pipeline ("MVP") is the most immediate path to moving towards this goal, which will be evaluated in 2024 as the pipeline moves toward completion. AltaGas also expects a stronger period of financial flexibility to evaluate the optionality associated with its strong investment capacity, which could be used for leverage reduction, post the Pipestone II and REEF projects coming online, assuming REEF reaches a positive FID in the first half of 2024.
  
  
• AltaGas released its 2023 ESG Report, which features 2022 performance data and highlights progress made towards its ESG goals in the core areas of emission reductions, safety, and diversity.

1 . Non-GAAP measure; see discussion in the advisories of this news release and reconciliation to US GAAP financial measures shown in AltaGas' Management's Discussion and Analysis (MD&A) as at and for the period ended September 30, 2023, which is available on www.sedar.com.

CEO MESSAGE

"We look forward to executing on our strategic plan and delivering strong value for AltaGas' shareholders in 2024" said Vern Yu , AltaGas' President and Chief Executive Officer. "We are exiting 2023 on a strong footing and expect to achieve financial results for 2023 in the upper half of our guidance ranges.

"AltaGas has a unique set of assets with strong competitive advantages that position the Company to deliver industry-leading earnings and dividend growth. We remain committed to operating with an equity self-funding model and see a clear path to moving towards our 4.5x Net Debt ¹ to normalized EBITDA ¹ target. We have a tremendous pipeline of growth projects, but we'll be disciplined in our capital allocation process to funnel these opportunities to ensure we deliver the best risk-adjusted returns and balance our competing priorities, including long-term leverage reduction.

"Our Utilities have a bright future with natural gas remaining the largest home energy source across all our jurisdictions where, on average, electrical substitution costs are more than three times the cost of natural gas on a delivered basis. We have visible and low-risk growth opportunities through new customer additions, system expansion, and modernization opportunities. AltaGas will continue to act in our customers best interests during this period of higher inflation and interest rates, balancing the critical needs of energy affordability and reliability with rate increases and regional climate goals.

"After a decade of being structurally challenged by a lack of take-away capacity, Canada is set to deliver significant natural gas and NGL production growth in the years ahead, with our Midstream business realizing strong growth opportunities. As liquified natural gas ("LNG") projects on the Canadian West Coast come online in the next couple of years, we expect numerous customer-backed opportunities to add infrastructure to support these developments. This includes opportunities to connect increasing Canadian liquefied petroleum gases ("LPGs") and other vital energy products into premiere downstream markets in Asia .

"As transporters of energy, we serve a crucial role delivering energy affordably, reliably, and safely, while working towards a lower carbon future. Today, with the release of our 2023 ESG report we're pleased to highlight the progress we've made against our commitments to safety and reliability, emissions reductions, and diversity and inclusion. While it's clear that we need to reduce our GHG emissions, we need to take a balanced approach, where affordability, reliability, and energy security are part of the mix."

2024 GUIDANCE

AltaGas expects to achieve normalized EPS ¹ of $2.05 - $2.25 and normalized EBITDA ¹ of $1,675 million - $1,775 million in 2024. These guidance figures represent AltaGas' expectations for continued growth in consolidated performance of the business.

Approximately 55 percent of 2024 normalized EBITDA ¹ is expected to be generated by the Utilities segment. Utilities normalized EBITDA ¹ growth is expected to be driven by positive contribution from the Maryland and District of Columbia rate cases, continued rate base growth through ongoing capital investments through various ARPs, new customer meter growth, normal 2024 weather, and ongoing cost management, which is being partially offset by the lost contribution of the Alaskan Utilities which divestiture closed in the first quarter of 2023 and higher operating costs associated with a higher inflationary and cost environment.

Washington Gas currently has active rate case applications in Maryland and the District of Columbia . Within Maryland the requested rates are designed to collect an incremental US$49 million in annual revenue, while the District of Columbia requested rates are designed to collect an incremental US$48 million in annual revenue with rates forecasted to take effect in December 2023 and the second quarter of 2024, respectively. AltaGas has ARPs in place across all three jurisdictions within Washington Gas as well as SEMCO in Michigan . New meter growth is expected to continue across AltaGas' Utilities jurisdictions at approximately ~1% over a multi-year time horizon.

AltaGas can grow rate base by up to an eight percent CAGR through 2028 through population growth and new meter connects and ongoing modernization investments across the network, which are focused on long-term safety and reliability. The Utilities growth rate in the year ahead will be a function of relative opportunities and calls on capital across the platform as AltaGas focuses on driving the best-balanced outcomes for all stakeholders.

Approximately 45 percent of 2024 normalized EBITDA ¹ is expected to be generated by the Midstream segment. Strong year-over-year growth in normalized EBITDA ¹ is driven by the Pipestone and Dimsdale asset acquisition, strong global export volumes and higher margins, higher utilization at the Company's existing Northeastern B.C. facilities, and the absence of wildfires impacts in Alberta . These positive factors are expected to be partially offset by a lower contribution from Allowance of Funds Used During Construction ("AFUDC") on the MVP and lower co-generation revenue at Harmattan.

AltaGas operates a fully integrated Midstream platform that connects Western Canadian producers to global markets. From wellhead to tidewater, the Company is focused on providing its customers with safe and reliable service. This includes providing access to global markets for North American LPGs and providing North American producers and aggregators with the best netbacks for their propane and butane, while delivering diversity of supply and affordable lower carbon energy to markets in Asia .

Strong macro fundamentals, commodity prices, and improving natural gas egress out of Western Canada are providing a strong outlook for natural gas and natural gas liquids ("NGL") production growth in the coming years. This includes LNG terminals coming online mid-decade on the Canadian West Coast, which will bring associated LPGs. AltaGas continues to see increasing demand for LPG exports through the Ridley Island Propane Export Terminal ("RIPET") and Ferndale LPG export terminal driven by the Company's structural shipping advantage to serve demand markets in Asia and access to low-cost supply. This structural advantage has magnified recently due to restricted vessel traffic through the Panama Canal, caused by lower water levels, and is driving strong demand for more Canadian LPGs in Asia .

AltaGas continues to focus on de-risking its business commercially through long-term tolling contracts while actively managing remaining commodity price exposure. In 2023, AltaGas made strong progress on this initiative with increased tolling within the Global Exports business and believes there is a clear path to push towards 60 percent or higher tolling over a multi-year time horizon. AltaGas will also continue to actively and systematically hedge remaining merchant export volumes to lock-in the structural margins and cashflows. The Company has hedged approximately 73 percent of AltaGas' 2024 expected global export volumes through tolling arrangements or financial hedges with the latter including an average Far East Index ("FEI") to North American financial hedge price of US$15.60 /Bbl for non-tolled propane and butane volumes. The Company is also 78 percent hedged on ocean freight costs for expected 2024 export volumes through a combination of time-charters, tolling, and financial hedges.

AltaGas also continues to de-risk the Global Exports supply chain. In October 2023 , AltaGas entered a five-year transportation agreement with Canadian National Railway Company, which provides AltaGas, and its customers, cost and service predictability. AltaGas also expects to take delivery of two new very large gas carriers ("VLGCs") in December 2023 and March 2024 . These two seven-year time charters will reduce total shipping costs to Asia by approximately 25 percent compared to normal pricing on a standard VLGC. The vessels' deployment will also remove pricing volatility and de-risk maritime shipping costs on a long-term basis. Following the delivery of these two vessels AltaGas will have three Time Charters operating in 2024 and a fourth under construction, which is set to be commissioned in the first half of 2026.

2024 DIVIDEND INCREASE

The Company's Board of Directors approved a six percent increase to the annual common share dividend to $1.19 per share annually for the 2024 calendar year, which equates to a rate of $0.2975 per common share on a quarterly basis. Subject to approval of the Board of Directors, the first quarterly dividend of $0.2975 per common share is expected to be effective for the March 2024 dividend and will be paid on March 29, 2024 , to common shareholders of record on March 15, 2024 . These dividends are eligible dividends for Canadian income tax purposes.

2024 CAPITAL

AltaGas' 2024 capital expenditure plan of approximately $1.2 billion , excluding ARO, is more weighted towards the low-risk Utilities business, which is anticipated to deliver stable and transparent rate base growth and strong risk-adjusted returns. The Company is allocating approximately 58 percent of AltaGas' consolidated 2024 capital to its Utilities business and approximately 36 percent to the Midstream business. This represents a strong increase in capital allocation to the Midstream segment versus recent years given the strong growth opportunities and relative capital returns that are projected, including the development of the Pipestone II project.

The Company expects to maintain an equity self-funding model in 2024, for the fifth consecutive year, and will fund capital requirements through a combination of internally generated cash flows and investment capacity associated with rising EBITDA levels, with no expectation to issue equity, assuming the Pipestone acquisition closes prior to 2023 year-end. Asset sales will be considered on an opportunistic basis, with any potential proceeds to be used to de-lever and strengthen the balance sheet and continue to increase financial flexibility of AltaGas.

Segment	Total Capital	Identified Projects
Utilities	~58%	Maintenance, Safety and Reliability, Including System Betterment Accelerated Pipe Replacement Programs New Customer Additions
Midstream	~36%	Maintenance, Safety and Reliability Facility Optimization and Higher Utilization New Development Opportunities Including Pipestone II Improvements in Environmental Stewardship
Corporate	~6%	Maintenance

2023 ESG Report

Today, AltaGas released its 2023 ESG Report which features 2022 performance data for the Company's ESG priority areas and highlights progress made towards its ESG goals. For more information, please see AltaGas' 2023 ESG Report available on the company's website at link .

INVESTOR DAY AND WEBCAST DETAILS

The Company will host its 2023 Investor Day today, December 5, 2023 . The event will be held in-person in Toronto, Ontario with a virtual option. At the event the Company will provide an update on its corporate strategy and outlook, share its near- and- long-term priorities, and discuss the road ahead. To register select the link below or go to AltaGas' Events and Presentations webpage.

Date:	Tuesday, December 5th, 2023
Time:	9:00 a.m. ET – 12:00pm ET
Registration:	Click Here to Register

ABOUT ALTAGAS

AltaGas is a leading North American infrastructure company that connects customers and markets to affordable and reliable sources of energy. The Company operates a diversified, lower-risk, high-growth Energy Infrastructure business that is focused on delivering stable and growing value for its stakeholders.

For more information visit www.altagas.ca or reach out to one of the following:

Jon Morrison
Senior Vice President, Corporate Development and Investor Relations
Jon.Morrison@altagas.ca

Adam McKnight
Director, Investor Relations
Adam.McKnight@altagas.ca

Investor Inquiries
1-877-691-7199

Media Inquiries
1-403-206-2841
media.relations@altagas.ca

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Source

https://money.tmx.com/quote/ALA/news/5753315642084743/ALTAGAS_ANNOUNCES_2024_GUIDANCE_AND_STRATEGIC_PRIORITIES_SIX_PERCENT_DIVIDEND_INCREASE_AND_RELEASES_2023_ESG_REPORT