Descartes Profit Tightens as Revenue Rises

Descartes Profit Tightens as Revenue Rises

Descartes Systems Group increased revenue by 22 percent from a year ago, but acquisitions, higher taxes and even volcanic ash shrank its profit.

“Our first quarter has historically been our most seasonally-challenging quarter and, this year, the challenges were heightened with severe currency fluctuations and the Icelandic volcanic activity that adversely impacted European air shipment volumes,” said CFO Stephanie Ratza.

The global trade management specialist reported $200,000 in net profit on $21.3 million in revenue for the quarter, which ended April 30.

That compares with $2.2 million in net profit on $17.4 million in revenue a year ago. Its earnings were well below its last fiscal quarter, when Descartes reported $10.3 million in net income on $18.9 million in sales.

The 90 percent contraction in its bottom line is the price of expansion.

The company spent $40.5 million on acquisitions in the quarter, leaving it with $56.1 million in cash April 30.

Descartes completed the acquisition of Porthus, a Brussels-based global trade management firm, and Imanet, a Canadian firm using technology to speed cross-border trade with the U.S., in the last quarter.

The acquisitions positioned the firm for expansion in North America and overseas, said CEO Art Mesher. “We have an enhanced operating scale that allows us to accelerate the results that we deliver,” he said.

Descartes said its pre-tax adjusted income was $5.3 million, compared with $5.2 million in the fourth quarter and $4.7 million a year ago. Those figures do not include acquisition or restructuring expenses.

--Contact William B. Cassidy at wcassidy@joc.com.