Descartes Pre-Tax Profit Grows 4 Percent

Supply chain technology provider Descartes Systems Group generated a 15 percent increase in service revenue to boost pre-tax income in the third quarter, but after-tax profit fell 57 percent. Income before taxes rose 4 percent to $2.8 million, but net profit fell from $2.3 million to $1 million because of one-time tax expenses.

In the third quarter of the current fiscal year, ended Oct. 31, Descartes booked net non-cash deferred income tax expenses as tax losses applied to taxable income of $1.5 million.

In the third quarter of the prior fiscal year, Descartes booked net deferred income tax recoveries of $0.4 million and net non-cash deferred income tax expenses as tax losses applied to taxable income of $0.8 million.

The Waterloo, Ontario-based company produced revenue of $18.9 million in its third fiscal quarter this year, up 11 percent from last year and up 2 percent from the previous quarter.

Service revenue accounted for 95 percent of total business and gained 15 percent year-over-year to $18 million. The service sector produced 5 percent more in the third quarter than in the second, the company said.

Gross margin of 69 percent was a steady improvement on the 67 percent last year and the 68 percent in the second quarter of this year.

"This quarter, we strengthened our balance sheet to a healthy cash level with no debt, providing a solid platform for continuing to execute to our operational goals and consolidation strategy,” said Stephanie Ratza, CFO at Descartes.

"By leading our customers forward with our intellectual property and skilled personnel, we've collectively overcome difficult business challenges and delivered rapid results and payback. Our results are a consequence of our unbridled focus on improving the productivity and performance of logistics activities,” said Art Mesher, Descartes' CEO.

Contact Thomas L. Gallagher at tgallagher@joc.com.