Hummingbird Conference Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Scott Penner - TD Newcrest - Analyst : Great. Thanks. Just, you mentioned in the press release, Fred, about some large deals being postponed. Were these basically deals that Hummingbird had won, but just couldn't get the sign-off in time?

Question: Scott Penner - TD Newcrest - Analyst : Okay. But you wouldn't say that these were deals that were postponed for competitive reasons.

Question: Scott Penner - TD Newcrest - Analyst : And the large deals, are we talking about deals over a million dollars?

Question: Scott Penner - TD Newcrest - Analyst : Were there any deals in the quarter that you know of that were over a million dollars?

Question: Scott Penner - TD Newcrest - Analyst : Okay. And the ¡ were these deals regionally based? North America and European? I'm talking about the deals that postponed. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Scott Penner - TD Newcrest - Analyst : Okay. And just on the acquisitions ¡ do you have any idea what the revenue impact of the various deals that closed during the quarter was?

Question: Scott Penner - TD Newcrest - Analyst : Just looking at some of the acquisitions that were made during the quarter, was there any material revenue contribution from them?

Question: Scott Penner - TD Newcrest - Analyst : Okay. Great. I'll pass it over. Thanks.

Question: Paul Steep - Orion Securities - Analyst : Good morning. Fred, in your ¡ maybe you can help us just was reconciling. You gave a good explanation around some of the EPS impact here. But I'm just trying to reconcile. There's about a $0.10 delta between consensus and where you're sort of seeing things show up. Can you break down for us how much of that was revenue impact, how much was cost, or if there were other elements in there?

Question: Paul Steep - Orion Securities - Analyst : Okay. And just so I understand, obviously some of it was related to the acquisition. I'm trying to figure out is this sort of a one time deal. Will we see the same type of things in Q4 with Kramer Lee and with Valid?

Question: Paul Steep - Orion Securities - Analyst : So KLA and Valid don't need the similar investments you've made?

Question: Paul Steep - Orion Securities - Analyst : Okay. And then the final one, just are there any special charges built in, beyond these investments? It sounds like you've done some staff realignment during the quarter. Are there any restructuring charges, other items that would just be embedded in there, that we should know about?

Question: Paul Steep - Orion Securities - Analyst : Okay. Thank you.

Question: David Beck - RBC Dominion Securities - Analyst : Good morning gentlemen. That works. But it's David Beck. Just ¡ you may not have this level of detail. But do you have a rough idea what the connectivity revenue contribution was in the quarter? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: David Beck - RBC Dominion Securities - Analyst : Okay. And just to circle back to the previous comment, previous question, the one-time charges related to staff realignment, this is just really hundreds of thousands of dollars Fred? That's all that is?

Question: David Beck - RBC Dominion Securities - Analyst : Okay. My other questions have been answered. Thanks.

Question: David Shore - Desjardin Securities - Analyst : Yeah thanks. Besides the slipped deals, can you give us any comment on the ¡ geographically, how business has been going?

Question: David Shore - Desjardin Securities - Analyst : Okay. Do you think you're going to need to make any cuts going forward to bring the EPS back up, bring the margins back up?

Question: David Shore - Desjardin Securities - Analyst : Okay thanks. My other question has been answered.

Question: Peter Misek - Scotia Capital - Analyst : Good morning. Just a competitive question outside of the legal vertical Fred. Have you seen the pricing environment improve, or the competitive pressures alleviate outside of the legal vertical and non-connectivity revenues?

Question: Peter Misek - Scotia Capital - Analyst : No difference at all? Documentum, [Salmet] [ph], all the peers are - ?

Question: Peter Misek - Scotia Capital - Analyst : Great. My other question has been answered. Thank you.

Question: Howard Lis - Griffiths McBurney - Analyst : Hello. Good morning. Thank you. I just wanted to get a little more detail, just to understand again where you made these incremental investments to accelerate the growth of the acquisitions. You mentioned 700,000 ¡ part of that was to train Hummingbird, I guess, salespeople on those ¡ on the Legal Key and Key Automation products. What other investments were made? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Howard Lis - Griffiths McBurney - Analyst : Okay. And so the total amount was $700,000?

Question: Howard Lis - Griffiths McBurney - Analyst : Okay. So basically ¡ and I guess I'm still trying to understand here -- and I know a number of questions in this regard have been asked. But your revenues are roughly going to be around what you did in Q2, maybe a little bit more. Yet the earnings are $0.09 less, $0.08 to $0.09 less.

Question: Howard Lis - Griffiths McBurney - Analyst : Yeah. Well, sorry, the companies contributed about $2m in revenue, and $2m in costs?

Question: Howard Lis - Griffiths McBurney - Analyst : Yeah. Right. Just ¡ the acquisitions contributed around $2m in revenue, and had $2m in cost in the quarter. Is that correct?

Question: Howard Lis - Griffiths McBurney - Analyst : Okay. So that essentially was a wash. Yet you still - ? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Howard Lis - Griffiths McBurney - Analyst : Okay. Let's talk about Q4. You said that a number of these deals that slipped had already signed in Q4.

Question: Howard Lis - Griffiths McBurney - Analyst : Right. What is causing a delay by a quarter or more, in your view, in some of these European accounts?

Question: Howard Lis - Griffiths McBurney - Analyst : Okay. Thank you very much.

Question: Blair Abernethy - Paradigm Capital - Analyst : Thank you. Most of my questions have been answered. I just have two small things. One, can you just go over for us again, on the four acquisitions since March, are they all going to be operated for the first year or so as separate subsidiaries? Or are any of the four going to be integrated?

Question: Blair Abernethy - Paradigm Capital - Analyst : Okay. Then that leads to my next question, which is your operating margins ¡ sorry, you're operating margins last quarter were sort of 7% - 7.8%. What do you think your operating margins are going to be on a run rate basis going forward? Company Representative - Hummingbird Hi. As Fred mentioned earlier, that we had to incur some extra expenses, when you acquire the companies, although they're running independently. But obviously as a parent company, we need to incur some expenses. And that's what happened in Q3. All our expectations are ¡ and we will give you more details on the 21st ¡ that our operating margins are going to go back to we were before we started Q3.

Question: Blair Abernethy - Paradigm Capital - Analyst : Well if you're operating these relatively very small companies on an independent basis, their expenses are relatively higher than the Hummingbird business as a whole. So what I'm trying to figure out is where your operating margins are.

Question: Blair Abernethy - Paradigm Capital - Analyst : Yeah. Okay great. Thank you.

Question: David Wright - BMO Nesbitt Burns - Analyst : Thank you very much. Good morning. Were the missed deals on both sides of your business? Or was it more connectivity or more the document management side? Company Representative - Hummingbird It was really on the document management side in the U.S. David Wright. Okay. And what revenue contribution might you expect in Q4 from your four acquisitions?

Question: David Wright - BMO Nesbitt Burns - Analyst : Okay.

Question: David Wright - BMO Nesbitt Burns - Analyst : Yeah. Okay. That's fine. My other questions have been answered. Thank you very much.

Question: Paul Bradley - Dundee Securities - Analyst : Hi. Yeah, good morning. Most of my questions have been answered. I'm just wondering what the cash flow impact during the quarter was, of this sort of variance from your original expectations. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. Company Representative - Hummingbird Well we mentioned in the press release that our cash is the same as last quarter. After paying for Kramer Lee it was about $6m.

Question: Paul Bradley - Dundee Securities - Analyst : If you don't account for acquisitions. Okay. And in terms of the balance sheet, is there anything there that is a little different than you might have expected as a result of the acquisitions? Company Representative - Hummingbird We don't expect any material difference. But we will give you more details on the 21st.

Question: Richard Tse - Merrill Lynch - Analyst : Yeah, just one final question here. With respect to foreign exchange this quarter, what was the impact here on earnings? Company Representative - Hummingbird Well Richard, I think we have mentioned earlier as well openly that there is an impact always on the ongoing when there is a foreign exchange component involved. But there is not a material impact on that yet. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies.

Question: Richard Tse - Merrill Lynch - Analyst : Despite the fact that the million dollars has risen so substantially, and your operating costs are largely in Canada? Company Representative - Hummingbird Yes. In spite of that, because we are taking some steps internally to not exactly hedge, but to safeguard the foreign exchange impact. But there's always some impact, because we are operating in multi - [inaudible] currency areas, all worldwide.