The global logistics company touted its own operational efficiencies and its ability to make its customers more productive, even as shipping volumes remain low.
Descartes Systems Group, a global logistics network, continued to navigate the economic rough seas to higher revenue in the fourth quarter and fiscal 2010 year.
Total fourth-quarter revenue of $18.9 million rose 20% from $15.7 million a year earlier. Services revenue of $17.7 million accounted for 94% of the total. The quarterly license revenue came in at $1.2 million.
Net income for the quarter was $10.3 million, down from $15.4 million a year earlier. Adjusted net income, or earnings before interest, taxes, depreciation, and amortization (EBITDA), was $5.2 million, up 13% from $4.6 million a year ago.
Descartes CEO Art Mesher termed the results “a gold medal performance” on a call today with analysts to discuss the company’s financial picture.
“The headwinds over the past year have been unprecedented,” he said. “We planned our business at one cost level and adjusted on the fly as economies collapsed. Despite these things, we continued to beat our plan.”
Customers are investing in Descartes’ products and services not because customer volumes have risen, but because they have decreased, Mesher said, and clients are seeking ways to work more efficiently and to ensure that they comply with regulatory requirements for shipments. He said he is seeing no signs of a recovery.
“My customers’ volumes are nowhere close to what they had two years ago. The issue for our customers is they will have lower volumes and rising costs, and they need to deal with it. They need to be more efficient. They have no choice.”
For fiscal 2010, Descartes reported total revenue of $73.8 million, up from $66 million in 2009. Geographically, 60% of the year’s revenue was generated in the United States, 21% in EMEA, 12% in Canada, 5% in the Asia Pacific region, and 1% in the Americas, excluding the United States and Canada. The company changed its geographical reporting this year to reflect the location of customers rather than Descartes’ area of operation.
Looking ahead, Mesher said, “The plan is to crack $100 million in revenues, have half our cash in the bank, and maintain 25% adjusted net income margins.” Descartes has a bid on the table to acquire all of the shares of Zemblaz NV, known as Porthus, which offers global trade management products. The bid is conditioned on Descartes’ acquiring 95% of the outstanding shares. Mesher said he could not provide more granular guidance until the results are known. An announcement is planned for March 19.
Concurrent with the Porthus bid, Mesher told analysts, the company is looking for additional potential acquisitions. Also, he anticipates capital outlays in fiscal 2011 involving IT infrastructure investments and other consolidation of operations.
