The Descartes Systems Group Inc (NASDAQ:DSGX) Q3 2020 Earnings Conference Call - Final Transcript

Dec 04, 2019 • 05:00 pm ET

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The Descartes Systems Group Inc (NASDAQ:DSGX) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Edward J. Ryan

we have the ability to expand that line of credit to $500 million, if needed. We have a preliminary shelf prospectus for up to $750 million; of which just over $500 million remains unused to raise capital by other mechanisms.

In short, we have good capacity for our planned acquisition activity. We have a strong acquisition pipeline as well. There continues to be a lot of industry activity right now with consolidation continuing in our market. With our capital capacity and our execution capabilities, there are still a number of acquisition opportunities to expand the geographic reach, functional capabilities, trade data and content, or community or participants on our network.

We continue to see lots of interesting opportunities out there to continue or even accelerate our pace of profitable growth. We're seeing both larger and smaller opportunities. And while we review everything as it comes our way, we're not buyers for buyers sake. The fact that we have an acquisition line of credit and a shelf line in place doesn't change how we view acquisitions. We intend to continue to be prudent on valuation, but we're confident in our ability to deploy capital effectively.

As a reminder for our plans for the remainder of fiscal 2020, as we said in the past, our belief for sustainable growth in the long term is 10% to 15% growth in adjusted EBITDA. However, given the scale of Visual Compliance acquisition for fiscal 2020, we indicated we would grow in the mid to high-20s. You'll see from our results this quarter that we're ahead of that plan. As in the past, we intend to invest any over-performance back in the business. Our growth is planned to come through a combination of organic and inorganic activities. And as always, acquisitions are not incremental to this plan.

We intend to continue to focus on recurring revenue and de-emphasize one-time license sales. Given the current performance of the business and mindful of the FX environment, our planned operating margin range remains 35% to 40%, but please keep in mind this could vary if buy other businesses that need fixing up or if the FX environment changes; both of which would impact that metric in the short run.

And finally, as always, we'll continue to make ourselves available to shareholders to answer any questions. We believe we've got a great business. We want to be available to help people learn about our business. We continue to spend time and resources to get the word out and we hope you'll do the same.

So with that, let's turn the call over to your questions. Operator, if you could open the lines.