Tecsys (TSX:TCS) last week completed a $10-million financing with the National Bank of Canada. The financing consists of a five-year $5.0-million term loan and a $5.0-million operating line of credit.
Tecsys CEO Peter Brereton said the capital will be used to help fund expansion: “Over the last 18 months we have experienced a significant increase in demand for our software and services resulting in the growth of our backlog, human resources and associated capital infrastructure,” he said, adding: “We have also accelerated our investments in research and development. The financing agreement we have just concluded will provide us with the added liquidity necessary to take advantage of the current growth opportunity.”
Industrial Alliance analyst Steve Li says the financing is a precautionary measure, as Tecysys already had a healthy balance sheet. He says the capital raise, which takes advantage of today’s low interest rates, will support growth he expects will come in at better than 15% in fiscal 2013. In a research update to clients Friday, Li maintained his Top Pick rating and $4.25 target on Tecsys.
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Montreal-based Tecsys has developed a reputation as an innovator in the maturing supply chain management space. The use of supply chain management systems has become a way for smaller manufacturers to gain an advantage over competitors, but has become an absolute necessity for multinationals looking to stay competitive. A window into its supply chain can improve customer satisfaction, reduce excess inventory and the time between the manufacture of a product and its sale. Tecsys counts some of the largest companies in the world as clients. The company’s visual oriented radio frequency device, for instance, uses simple, intuitive visual cues to prompt the end user where to find the product on the shelf, which bar code to scan and how to package an order.
Li says the proceeds of the financing will likely be earmarked for more hires and investment into R&D. He points out that Tecsys management recently noted it has fifteen unfilled positions, mostly for project execution and delivery. The Industrial Alliance analyst says the company’s R&D budget may begin to edge upwards as its product development cycle must continue to improve.
At press time, shares of Tecsys were even at $3.26.