Sylogist Ltd. – $SYZ.v

It’s been a minute since I posted. Been busy moving and setting up school/childcare during covid. Here is a company I have been following for about a year.

Head over to TIKR Terminal. It’s where I get many of the charts I insert that aren’t excel based. Their financial data has been correct so far (and that’s rare for small Canadian companies).


  • Price: $10.81
  • Shares (diluted): 23.771 mil
  • Market Cap: 257mil
  • EV: 215mil
  • P/S: 6.9
  • EV/S: 5.8
  • P/EBIT: 17.8
  • EV/EVIT: 14.9
  • P/FCF: 17
  • EV/FCF: 14.3
  • Yield: 4.6%

Sylogist Ltd., a software company, provides enterprise resource planning (ERP) solutions to local governments, non-profit and non-governmental organizations, education boards, and Districts and Defense and safety contractors in Canada, the United States, the United Kingdom, and internationally. It offers Serenic Navigator solutions that comprises accounting and financial management, award and budget management, payroll and human resources, analytics and decision support, reporting, deposits and loans, and field connect products. The company also provides NaviPayroll, an integrated payroll management and human resources solution; NaviTrak, a manufacturing and distribution solution; and NaviView terminal, a touch-screen terminal that runs various application. In addition, it offers NaviNet that captures data from various shop floor systems and data collection devices, and distributes processed data to a multitude of systems, including ERP and enterprise systems; and NaviBridge, a suite of integration and administration tool to setup, integrate, monitor, and manage data transfers between ERP and legacy systems, distributed mobile systems, and Web-based applications. Sylogist Ltd. was incorporated in 1993 and is headquartered in Calgary, Canada.

Business History

The company has found a niche with several different options for non-profit, education and government. The majority of contracts roll over and there is little customer churn. The business has grown consistently with strong gross margins. There has been some volatility in operating expenses. These have come from acquisition integration, employee compensation, and (to a lesser extent) foreign exchange.

As you can see the subscription amount has been consistently rising.

Pivot in Strategy

In July they announced a new credit facility for 40mil. Couple this with the 40mil in net cash and you get about 80mil in available capital for acquisitions to grow the business.

Along with the CEO retiring, they have announced new board members to replace two members who stepped down. Both have experience with the fast growing SaaS businesses and structured deals.

At the AGM in August, it was mentioned a few times that the intent is to grow this business via acquisition. The business is stable and generates consistent cash each year. They managed to execute an acquisition during covid lockdowns. That is no easy task. To me this shows the focus on growth at the moment.


I’ve chatted with a few investors about this name and why it doesn’t get any attention. The first thing mentioned was the compensation paid to the (now retired CEO) and Exec VP. Below is from the MIC, emphasis mine.

Overall expenses net of interest income for the first quarter of fiscal 2020 of $15.6 million were $10.8 million higher than the same period in fiscal 2019. The increase was mainly driven by a one-time $12 million buyout of the historic executive compensation arrangements. Effective October 15, 2019, the new compensation arrangements for the Company’s Chief Executive Officer and Executive Vice President provides for annual incentive bonuses based solely on strategic value improvements in the Company going forward, including incremental improvements, if any, in consolidated revenue and Adjusted EBITDA for the current period or subsequent higher performance levels in ensuing fiscal years such bonuses not to exceed 150% of base salary in a given year. In addition, in consideration of moving forward under new arrangements, the executives agreed to reduce their change of control compensation, calculated as a percentage of the Company’s fully diluted market capitalization, (i) by 50% and (ii) to a total collective limit of $15 million (such limit being achieved should the market capitalization at the time of a change of control exceed $500 million). Cost of sales of $2 million was 10% lower than the same period of prior year due mainly to cost reductions associated with the Company’s workforce efficiency initiative that was conducted in the third quarter of fiscal 2019. General and administrative expenses of $893 thousand were 16% lower than the same period last year due mainly to fewer office leases and the departure of the Company’s Vice President, Corporate Development and Investor Relations at the end of fiscal 2019. Executive bonuses of $102 thousand, reflected bonuses up until the change to the Company’s executive compensation arrangements, were 84% lower, as compared to $628 thousand in the same period in the prior year. Professional fees increased to $138 thousand compared to $94 thousand in the same period in the prior year. Sales and marketing of $176 thousand decreased by 69% compared to the same period of the prior year due mainly to the Company holding a major conference the first quarter of fiscal 2019 and no comparable conferences in the first quarter of 2020, as well as fewer sales and marketing personnel. Product research increased by $56 thousand or 15% compared to the same period in the prior year.

This is no small sum of money for a company this size. They have taken steps to eliminate this going forward. This is something a shareholder will have to get comfortable with regardless.

Subsequent to its fiscal 2019 year end, Sylogist announced certain changes to its executive compensation arrangements effective October 15, 2019. These new arrangements provide for annual incentive bonuses based solely on strategic value improvements in the Company going forward, including incremental improvements, if any, in consolidated revenue and Adjusted EBITDA for the current period or subsequent higher performance levels in ensuing fiscal years (high water mark), such bonuses not to exceed 150% of base salary in a given year.

For fiscal 2019, the Company reported Adjusted EBITDA of $17.6 million, which included executive bonuses of $3 million. With those bonuses eliminated, fiscal 2019 Adjusted EBITDA would have been approximately $3 million, or 17%, higher for total Adjusted EBITDA in that period of $20.6 million, or $0.91 per share, the new high water mark for executive bonus calculations going forward.

These new arrangements are anticipated to effectively increase Adjusted EBITDA by a minimum of $3 million dollars annually as the Company’s performance improves. As previously announced, to facilitate this change and for the Company to realize significantly enhanced Adjusted EBITDA into the future, the Company paid executives a total of $12 million, or less than 4 times the total 2019 earned executive bonuses. The Sylogist board views the new executive agreements as highly accretive to shareholder interests.

Given the new CEO has not been announced yet, I wouldn’t be surprised if they don’t quite hit the high water mark. The MD&A states that acquisition integration can take 18-24 months. So one could paint a picture that in late 2020 and 2021 we could see the start of more acquisitions.


  • searching for a new CEO
  • covid (and resulting lockdowns/restrictions)
  • they could fumble potential acquisitions
  • the company has traded cheaper before, so there could be a “re-rating” to the downside


A fair bit of capital to play with. Reasonable valuation. Recurring cash generation. Yield gets you paid to wait.

Anyone else follow this company?




*the author is long (a very small amount of) SYZ.v at time of writing

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