This company stands to gain market share by applying its systems to the current shipping logjams. Descartes is expected to grow at an annual rate of 39.8% over the next five years.
The Descartes Systems Group Inc (DSG.TO, DSGX)
From Internet Wealth Builder
Descartes provides on-demand, software-as-a-service solutions focused on improving the productivity, performance, and security of logistics intensive businesses. Customers use its solutions to route, schedule, track, and measure delivery resources; plan, allocate, and execute shipments; rate, audit, and pay transportation invoices; access global trade data; file customs and security documents for imports and exports; and complete numerous other logistics processes.
The company’s headquarters are in Waterloo, Ontario and Descartes has offices and partners around the world.
For Descartes’ second-quarter results for fiscal 2022, revenue was up 25% to $104.6 million for the three months to July 31, in the same period last year. For the first half of the 2022 fiscal year, revenues were $203.4 million, up 21% from a year ago. Note that Descartes reports in US dollars. The revenue increase translated into a big gain on the bottom line. Net income for the quarter was $23.2 million ($0.27 a share) compared to $10.5 million ($0.12 a share) last year. Net income for the first six months was $41.6 million ($0.48 a share), up from $21.6 million ($0.25 a share) in the first half of fiscal 2021.
“We continue to focus on helping our customers thrive in the face of an increasingly dynamic, complex global trade landscape, and in turn our customers continue to trust us with more of their business” said CEO Edward J. Ryan. “The challenges and opportunities faced by our customers can vary for shippers, carriers, logistics service providers and customs authorities, but all parties need to connect and collaborate in real-time. Our Global Logistics Network does just that, helping our customers seamlessly exchange information and leverage data with a growing number of tailored, value-added applications for each participant to manage the lifecycle of shipments.”
The company continues to grow by acquisition. On May 7, Descartes bought Portrix Logistics Software GmbH, a provider of multimodal rate management solutions for logistics services providers. The purchase price was approximately $25.2 million. On July 8, the company acquired GreenMile, LLC, a provider of cloud based mobile route execution solutions for food, beverage, and broader distribution verticals. The purchase price was approximately $29.2 million, net of cash acquired, which was funded from cash on hand, plus potential performance-based consideration of up to $10 million, based on GreenMile achieving revenue-based targets over the first two years post-acquisition.
Descartes does not pay a dividend, preferring to use the money for expansion.
Descartes is a company in the right place at the right time as the economic impact of the pandemic has played havoc with international trade and transportation, increasing demand for its services. The stock recently hit an all-time high of $111 before retreating to the current level.
Gordon Pape, Internet Wealth Builder, buildingwealth.ca, 1-888-287-8229, October 4, 2021