AGM 2025

Sep 4, 2025

Hello, and welcome to the annual meeting of shareholders of Tecsys Inc. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer, and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the corporation that you first obtained all required consents for the disclosure, recording, transfer, and use of such personal information from all appropriate persons before your disclosure. At the end of the meeting, we'll have a question and answer session. Shareholders and/or proxy holders can submit questions or comments at any time by clicking on the Q&A tab. It is now my pleasure to turn today's meeting over to Mr. Dave Brereton, Tecsys Chairman of the Board. Mr. Brereton, the floor is yours. Thank you. We will go to slide 1. Good morning, ladies and gentlemen. Welcome to the 2025 annual meeting of shareholders of Tecsys. My name is Dave Brereton, and I'm the Executive Chairman of the Board of Tecsys. Allow me to proceed with the introductions. With me today are Peter Brereton, President and CEO, and Mark Bentler, CFO and Secretary of Tecsys. The directors of Tecsys are also with us virtually today. According to the bylaws of the corporation, I am authorized to act as Chairman of the meeting, and Mark Bentler, in his capacity as the Secretary of the corporation, will act as Secretary of the meeting. As this meeting is held in a virtual format with attendance via live webcast, we think it is necessary to set out a few rules for the orderly conduct of the meeting. Questions in respect of a motion can be submitted by any registered shareholder or duly appointed proxy holder. Click the question icon at the top of your voting platform page, type in your question in the text box at the bottom of the messaging screen, and then click the send button. Our moderator will review the questions and send to review for the chairman to address them during the meeting. When asking a question, please indicate your name, which entity you represent, if any, and confirm that you are a registered shareholder or a duly appointed proxy holder. Questions will only be addressed during the question period at the end of the meeting, provided the questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting. Voting can be completed at any time from now until the end of the formal business of the meeting. If you've already voted and do not wish to change your vote, you do not need to vote again during the online meeting. If you vote again online, your vote will revoke the proxy you previously submitted. For those who have not yet voted, we encourage you to log on to the platform and vote. We will now proceed with the formal portion of today's meeting. To expedite the formal part of the meeting, I will move and second all motions. Slide 2, the agenda. In today's meeting, I would like us first to deal with all the procedural matters and close the annual meeting of shareholders. Following that, Peter Brereton will make his remarks on the last fiscal year. Then Mark Bentler will present the financial highlights of that year. Later today, after market close, we will be releasing Q1 fiscal 2026 results for the quarter ended July 31st, 2025, and then tomorrow at 8:30 A.M. Eastern Time, Peter and Mark will be conducting an earnings call to discuss the results of first quarter of fiscal 2026. We invite you to attend that call tomorrow morning and separate dial-in instructions for the call are being provided later in the presentation. The earnings call dial-in instructions have also been posted on SEDAR. Slide 3. Forward-looking statements. You can read that slide. You understand the limitations of all forward-looking statements. Slide 4, the nomination of scrutineers. With the consent of the meeting, I have designated as scrutineers, Tina Pacifico and Theresa DeLuca, employees of Computershare Investor Services, registrar and transfer agent of Tecsys. Slide 5, notice of meeting. The Secretary has submitted a copy of the notice of this meeting as sent to the shareholders and the accompanying material, as well as the affidavit of a transfer officer of Computershare, confirming that the notice of the meeting and proxy form were duly sent to shareholders of record on July 23, 2025. These documents will be filed with the records of this meeting. Slide 6, report of the scrutineers. The scrutineers have submitted a report showing that the quorum has been reached, and they confirm that 68.43% of the holders of the outstanding common shares of the corporation are present or represented at this meeting. Therefore, I declare this meeting duly called and constituted to deal with any matters appearing on the agenda. The Secretary will file the report of the scrutineers with the records of this meeting. Slide 7. Resolution for an exemption from the reading of the minutes of the last meeting. Unless there is any objection, I will dispense with the reading of the minutes of the last meeting of shareholders held on September 5th, 2024. I direct that the minutes of the last meeting of the shareholders be taken as read and approved and signed as accurate. Copies of the minutes are available with Tecsys Corporate Secretary. Slide 8. Receiving of financial statements and the auditor's report thereon. The next order of business on the agenda is the presentation of the financial statements for the fiscal year ended April 30th, 2025, and the auditor's report thereon. A copy of the annual report containing such financial statements and the auditor's report thereon has been sent to every shareholder of record on July 23, 2025, who requested a copy in accordance with the applicable regulatory requirements, and copies are available with Tecsys Corporate Secretary and on SEDAR. Consequently, I ask the Secretary to produce the annual report and file it with the records of this meeting. Slide 9. Election of directors. The next order of business on the agenda is the election of directors. The management of Tecsys has proposed in the management information circular 8 nominees for the shareholders to consider today. The directors appointed at this meeting will serve as directors of Tecsys until the next annual meeting of shareholders or until their successors are appointed. The proposed nominees are David Brereton, Peter Brereton, David Booth, Andrew Kirkwood, Vernon Lobo, Kathleen Miller, Sripriya Thinagar, and Stephany Verstraete. In accordance with the bylaws of Tecsys, shareholders are required to provide advance notice of their intent to nominate candidates for directors. No such notice was received. I now also move and second a motion to nominate the following persons as directors of Tecsys Inc. David Brereton, Peter Brereton, David Booth, Andrew Kirkwood, Vernon Lobo, Kathleen Miller, Sripriya Thinagar, and Stephany Verstraete. Unless there are any questions, I will move to the next item of business. Slide 10. Appointment of auditors. We shall now proceed with the appointment of auditors for the ensuing year and with authorizing the directors to fix the auditors' remuneration. The audit committee of the board of directors of Tecsys has approved, subject to shareholder confirmation, the appointment of KPMG LLP Chartered Professional Accountants as the auditors of Tecsys. I move and second that KPMG LLP Chartered Professional Accountants be appointed auditors of Tecsys until the next annual meeting of the shareholders. Unless there are any questions, I will move to the next item of business. Slide 11. Vote. As we mentioned, voting today will be conducted by electronic ballot for registered shareholder or duly appointed proxy holders. The polls are open. All registered voters and proxy holders who have properly logged in with their control numbers or invitation code and wish to vote will be able to see on the screen all motions being brought forth at this meeting. Please register your votes by accessing the voting page and selecting the For or Against buttons next to the name of each proposed director, and selecting the For or Withhold buttons next to the resolution with respect to the appointment of KPMG LLP Chartered Professional Accountants as the auditors. No question has been submitted on the voting procedure. We'll wait for a minute, make sure everyone has had time to vote. We'll provide registered shareholders and duly appointed proxy holders approximately 10 more seconds to complete the electronic ballots. Once the electronic balloting closes, the voting page will disappear, and your votes will automatically be submitted. I've been advised by the scrutineers that based on the preliminary results received by the scrutineers, the proxies deposited for the meeting have been voted in favor of the resolutions. Each of the eight nominees have been elected as directors of Tecsys to serve until the next annual meeting of shareholders, or until their successors are elected or appointed. The resolution appointing KPMG LLP chartered professional accountants as the auditors of Tecsys, and authorizing the directors to fix the auditors' remuneration has been approved. I would ask the scrutineers to compile the final report regarding the results of voting on all business matters. The results of the poll will be included with the minutes of this meeting, and the results of the voting will be announced in a press release in accordance with the policies of the TSX and filed on SEDAR. Slide 12, termination of the shareholders' meeting. We have now completed all procedural matters, and I would like us now to terminate the annual meeting of shareholders, and then we shall continue with the other presentations. I move and second that this meeting now terminate. As there is no further business to come before the meeting, I declare the formal part of the meeting to be concluded. I will now turn the meeting over to Peter Brereton, the CEO of Tecsys, for the presentation of his remarks on fiscal year 2025. Thanks, Dave. I'm gonna move right on to slide 14 and take a quick walk through the highlights of fiscal 2025 and sort of what we're doing in the marketplace. If you look at Tecsys at a glance, we say here, and we've used this line for a while, our purpose is to empower good companies to be great. It's all about supply chain. We equip supply chain greatness. If you think about our different customers, some of our customers use their supply chain as a key component of their value creation and place in the market. If I think of hospital networks, for instance, they couldn't exist without their supply chain. Their purpose is to care for their patients. To do that successfully, they need the right clinicians in the right environment and supplied with the right products, be they drugs or medical surgical supplies, whatever it might be. In their case, you could say that the supply chain is a key component of their existence in the marketplace. In other cases, we have clients where, in essence, their supply chain is their value add in the marketplace. These are, in many cases, global distributors or large national distributors that don't really have any products they create themselves, but their value in the marketplace is created by the efficient movement of many thousands of products from point of manufacture through to the final consumer's doorstep, whatever that may be it business or personal. These different types of organizations, say in some cases, supply chain is their competitive weapon. In other cases, it's a key component of what they do. We are there to support them all. We clarify uncertainty in the supply chain and equip supply chain greatness so that good companies have the space to thrive. I'm gonna move on to slide 15. Talking about here the total supply chain market. We're sort of clarifying here for you. Some of you may have seen our investor decks in the past or presentations in the past, but I want to walk through with you here very briefly our current thinking, in terms of the total addressable market that we pursue. If you look at the general distribution market, pardon me, it totals up to $9.6 billion of annual recurring revenue, total addressable market. Okay. That would be the annual SaaS revenue that could be achieved out of that particular market. There's literally thousands of companies in this market. They span a huge variety of vertical sectors from fresh produce to soft drinks, to wine and spirits, to consumer goods and fashion products and hazardous materials and so on. The list goes on and on. There are certain markets within that where we have a very high win rate. If you look at the health provider side, health systems and provider side, across U.S. and Canada, it totals $2.7 billion total addressable market. But again, within that, there's certain profiles of clients that we know we have a very high win rate. We deliver a very high return on investment, and that's where we're most likely to succeed. If you move to the next slide, you'll see there that we have narrowed both markets. If you look at general distribution, we are really focusing in on areas like life sciences and biomedical, medical and pharmaceutical distribution, healthcare and pharma 3PLs, digital pharmacies, veterinary supply, et cetera. There are a few other markets here we don't list that get a little smaller. We also handle, for instance, we do electrical and auto parts and some other areas. But we've narrowed this down to a very select, narrower group of verticals within the broad horizontal market called general distribution to end up with this CAD 1.5 billion total addressable market, where our win rate is significant. In these markets, we tend to have a win rate over 50%. That has become our focus more recently as we look to drive an increase in our overall bookings and SaaS revenue growth rate. We want to narrow our focus to the markets where our win rate is over 50%. That's a $1.5 billion TAM that's left in that space. Coincidentally, when we narrow down the health system and provider side, we also end up with approximately a $1.5 billion TAM. This is by focusing on larger hospital networks, multi-site health systems, or very large standalone hospitals. We know we don't tend to do as well in sort of small local community hospitals and so on. When we carve those out and just focus where the ROI is strong and where we tend to win, it's also approximately a $1.5 billion market, TAM. That's the breakdown of the markets we're pursuing. You'll see on the left side of the slide, win rate tends to be over 50%. On the right side of the slide, it's even higher, north of 75% or 80%, sometimes even higher. That is our narrowed focus and a huge opportunity for us to grow into. If you look at what happened in FY 2025, just a few key things to comment on here. Pharmacy continued to be significant for us. Pharmacy, here we're talking specifically about hospital pharmacy. This is helping our clients set up centralized pharma distribution centers where drugs are brought in in bulk and then packaged down into individual patient dosages and then sent out to hospital networks on a just-in-time basis. In many cases, being sent out early every morning for literally patients in the bed that day, in individual hospital wards. It minimizes waste, it maximizes the turnover rate of those drugs, drives a huge amount of savings and also produces better compliance and audit capability for 340B price management, which is something in the U.S. market that relates to the ability to buy lower cost drugs if you can prove that those drugs were used on indigent patients. Pharmacy has become a significant factor for us in fiscal 2025. We expect it will be an even bigger factor for us in fiscal 2026. We're pretty excited with the success we are seeing in that market. We have a number of successful go lives on that platform. We've spent years building up to this. I think we first entered the hospital pharmacy market maybe seven or eight years ago now. Sort of started finally picking up momentum about three years ago, and in fiscal 2025, it was starting to become quite significant. Healthcare distribution, now we're not talking outside of hospitals. These are the large national or international distributors or manufacturers, companies like Roche Canada, Accuristix, in the U.S., you have companies like LifeScience Logistics and others that are using our platform to move healthcare products to market. There are many sub-verticals within that. There's podiatry, there's eye care, there's ear care, there's blood products and drug products and so on. So there's many sub-verticals within healthcare distribution, but our win rate tends to be quite high here. We've seen some recent success overseas as well in Europe and the U.K. We are excited to see the progress in that market. India, as we mentioned here, it's actually fiscal 2026 really that we opened in India, but the deal was put together in fiscal 2025, and officially as of May 1st, we now have a location in Bangalore. I visited that office in July. Great team of people, doing a great job servicing some existing customers they were already servicing. Also taking on some new responsibility and beginning to assist us with the development and enhancement of some of our other product lines. We look to continue to build on that base in fiscal 2026. Lastly, SaaS margin expansion. As you can see here, the SaaS margin has continued to expand over the last few years from 50% in 2023 to 61% in fiscal 2025. We expect that to continue to climb. Fiscal 2026, we're projecting 65% and projecting it to continue to climb from there. Ultimately, our goal is to get that up into the 80% range, but that's going to take another few years. We're pleased with the progress we're seeing there. That's a combination, by the way, of bringing in larger accounts that tend to come with higher margins, but also becoming more efficient in the way we deploy in the public cloud infrastructure and how we support those clients. It's a combination of both the cost and revenue gains that are driving that expansion. That is it for my quick summary of fiscal 2025. I'm going to turn this over to Mark Bentler, our CFO. Thanks, Peter. I'm going to move forward to slide 18 and then skip right into slide 19, and just go through the agenda of the few slides that I'm going to cover. Again, I'm on slide 19 now. I'm going to be focusing on growth, where the growth is coming from, and SaaS is a real driver of that growth. I'm going to be talking about our operating results and Adjusted EBITDA performance. I'll briefly touch on our balance sheet and liquidity position, our financial strength. I'll finalize the conversation around a quick touch base and look back at our dividend history and stock performance over recent years. Moving on to slide number 20. This is a picture of revenue growth. Revenue grew by about 3% in 2025 compared to 2024. That was 1% on a constant currency basis. There was a little bit of tailwind from currency out of our US dollar revenue in that growth number. Inside that number, there's some pretty dramatic things going on. Number one, importantly, SaaS is our real growth driver, our real growth engine, and really what we believe is the key driver of our business value proposition. That revenue line grew quite significantly. It was up 29%, in fact, during the year, so we're really happy about that. Sort of moderating the overall headline revenue growth was a decline in hardware revenue. That was down about 39%. That revenue line is much less focused on. Here is SaaS and SaaS revenue growth to create value. With that, I'll move on to slide number 21 to just sort of highlight what's going on with that SaaS revenue line. This slide is a picture, again, on slide 21. This slide is a picture of our recurring revenue, which has two components in it. It has maintenance and support revenue, and then it also has SaaS revenue. You can see the maintenance and support in the red on this slide is kind of flat, kind of moderate to declining now. What's happening with the light blue is that's the SaaS revenue that's growing pretty significantly over time. What we think is going to happen in the future is some of those maintenance and support customers that we've had historically on-prem versions of our software, they're going to continue to migrate to SaaS, and that red part of the graphic will continue to decline over time. The light blue will continue to grow as those migrations happen, but also importantly, as we sign new logos and expand our existing base of SaaS customers. Moving on to slide 22, a historical view of the evolution of our profit from operations. This slide shows two different components. It has profit from operations, and then it has another measure that we like to focus on, which is adjusted EBITDA, which takes some of the unusual variances out of profit from operations, and it's a key performance indicator that we use really to measure the comparative success of the business. On that measure, adjusted EBITDA actually grew pretty significantly. You can see it kind of CAD 9.5 million in 2023, about the same level, CAD 9.6 million in 2024. Then in this past fiscal year, it increased up to CAD 13.4 million. That was a 39% increase. Really what's happening underneath that, it's really that SaaS revenue growth that's contributing a lot more gross margin to the business, which is driving that Adjusted EBITDA growth. Next slide is slide 23, for just a quick look at our balance sheet. The thing I wanted to highlight here for the listeners is that we have a really strong financial position. We have a solid cash and cash equivalents and short-term investments, over CAD 39 million at the end of fiscal 2025. We also have no debt. We do continue to run an NCIB, a normal course issuer bid, where we are buying shares back out of the market, and we're using excess cash in order to buy those shares. We repurchased during fiscal 2025, CAD 6.9 million worth of shares. We still have, like you can see here, very strong cash and short-term investment liquidity balances, and we're really pleased with the strength of our financial position. Moving on to slide 24. This is just a quick history over time dating all the way back to 2008. You can see over the course of time, we've very consistently been increasing our dividend just slightly from year to year. You can see in the last year, again, we increased the dividend by about CAD 0.02 a share in total over the course of the year. Moving on to slide 25. This is the historical price performance of our shares of Tecsys versus the S&P/TSX index. You can see that CAD 100 invested as of April 30, 2020, so 5 years ago, you can see how the Tecsys shares evolved. That's the red bar. It increased from 100 to 194, a 94% increase compared to the TSX, which also grew over time, but not nearly as much as the value of Tecsys shares. That concludes my remarks on the fiscal 2025 year. Moving on to slide 26, I would just point out that, as Dave mentioned at the top of the call, we do have our Q1 fiscal 2026 results conference call, which will be happening tomorrow morning. That call's at 8:30 A.M. The phone number that you can dial in to listen to that call is presented now on your screen, if you'd like to take note of that and join us on the call. We'd love to have you there. With that, we can move on to slide 27, and I will turn the call back over to Dave. Thank you, Mark, and thank you, Peter. I would now ask that all attendees who would like to ask a question use the question feature at the top of the voting platform page of the virtual interface to do so. We will answer as many questions as time permits. When asking a question, please state your name, the entity you represent, if any, and confirm you are a registered shareholder, duly appointed proxy holder. Please limit your questions to topics related to today's subject matter and keep your questions short and to the point. We will now give attendees a moment to type in their questions. For each question we answer, we will summarize the question and read out loud the name of the person who asked that question, and if applicable, the entity such person represents. We would like to remind you that questions which were already answered or that are redundant or repetitive will not be published or answered. I confirm that we have not received any questions from shareholders for today. That must mean that Peter and Mark were abundantly clear. Thank you very much, folks. This is all for today. Thanks to all of you who attended our virtual meeting, and have a great day. This concludes the meeting. You may now disconnect.