March 10, 2010 / 11:49 AM / 8 years ago

UPDATE 2-Descartes Systems posts lower Q4 profit

* Q4 EPS $0.17 vs $0.29/shr a year ago

* Revenue up 20 pct

* Eyes FY 2011 revenue of $100 mln

* Shares trading flat (Recasts; adds conference call and analyst comments)

By Isheeta Sanghi

BANGALORE, March 10 (Reuters) - Logistics and management software and services provider Descartes Systems Group Inc DSG.TO (DSGX.O) posted a lower quarterly profit, but said it is eyeing higher revenue for 2011.

“We would like to crack $100 million this year. We would like to maintain our operating margin at a minimum 25 percent and we would like to still have a really good balance sheet going forward,” Chief Executive Officer Arthur Mesher said on a conference call with analysts.

The revenue target comfortably beats analysts’ expectations of $80.2 million, and an analyst said company’s outlook could depend on it closing its proposed acquisition of Porthus NV ALPTH.BR, a global trade management company.

In February, Descartes, through a wholly owned subsidiary, had launched a conditional voluntary cash tender offer to acquire all outstanding shares of Zemblaz NV, formerly denominated Porthus NV.

Descartes said the results of the bid will be announced by March 19.

“Once that (Porthus deal) closes, that should be a catalyst for positive revenue earnings revisions over the next little while,” Paradigm Capital analyst Gabriel Leung, who has a “buy” rating on the stock, said by phone.

“Generally speaking, that is a healthy outlook in the grand scheme of things.”

For 2010, the company reported revenue of $73.8 million.

When asked if the company would look at additional acquisitions, or focus on integrating Porthus, CEO Mesher said, “We are absolutely looking at other acquisition simultaneously concurrently.”

Q4 PROFIT FALLS

For the fourth quarter ended Jan. 31, net income was $10.3 million, or 17 cents a share, compared with $15.4 million, or 29 cents a share, a year ago.

Net income in the fourth quarter was negatively impacted by $3 million non-cash stock-based compensation expense, the company said.

“Generally speaking the company reported sequentially flat revenues which is pretty good considering that their fiscal fourth quarter is their seasonally weaker one,” Paradigm’s Leung added.

Adjusted net income was 8 cents a share for the period.

Revenue rose 20 percent to $18.9 million. However, expenses increased by about 59 percent to $13.5 million.

Analysts on average were expecting earnings of 9 cents a share, before items, on revenue of $18.4 million, according to Thomson Reuters I/B/E/S.

Shares of the company, which have gained more than two fold in value over the last year, were trading flat at C$6.35 Wednesday morning on the Toronto Stock Exchange. (Reporting by Isheeta Sanghi in Bangalore; Editing by Bijoy Koyitty) ((isheeta.sanghi@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: isheeta.sanghi.thomsonreuters.com@reuters.net))

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