Net Revenue of $116.3 Million
Diluted Earnings per Share up 58% to $0.30 Per Share
SCOTTSDALE, Ariz., Aug. 3 /PRNewswire-FirstCall/ -- eFunds Corporation
(NYSE: EFD), a leading provider of electronic payments, risk management, and
related outsourcing solutions, today reported second quarter 2005 net revenue
of $116.3 million. This amount represents a 10% improvement over net revenues
of $106.1 million reported by the Company's three remaining operating segments
during the second quarter of 2004. Overall, revenues declined 17% from the
$140.7 million reported for the second quarter of 2004 as a result of the sale
of the Company's ATM deployment business in November 2004.
Operating income during the quarter increased to $20.3 million, or 18% of
net revenue, as compared to operating income of $12.9 million, or 9% of net
revenue, reported in the second quarter of 2004. Second quarter 2005 net
income was $14.1 million, or $0.30 per diluted share, compared to net income
of $9.4 million, or $0.19 per diluted share, reported for the same quarter in
2004. Results for the second quarter ended June 30, 2005 include a business
and occupancy state tax refund of $1.8 million.
For the six months ended June 30, 2005, eFunds reported net income of
$27.3 million, or $0.56 per diluted share, compared with net income of $18.8
million, or $0.38 per diluted share, reported in the first six months of 2004.
Reported operating income for the first half of 2005 was $37.1 million, or 16%
of net revenue, as compared to $26.9 million, or 10% of net revenue, for the
same period in the prior year. Net revenue from the Company's core operating
segments increased 9% to $230.5 million, as compared to $211.9 million
reported in the first six months of 2004. Overall, revenues declined 18% from
the $281.6 million in revenue recorded in the first half of 2004, as a result
of the sale of the ATM deployment business.
"We are pleased with our accomplishments so far in 2005. All of our
businesses continue to show strong financial results and we have made notable
progress against our strategic plan," said Paul F. Walsh, Chairman and Chief
Executive Officer. "During the second quarter, new customer wins included
Societe Generale and we acquired India Switch Company and National Check
Protection Services and signed the agreement to purchase WildCard Systems.
These transactions have enabled the Company to establish a framework for the
expansion of our processing business to Europe, gain entry into the emerging
payments market in India, and expand the breadth of our payments offerings in
the U.S. We are excited about the opportunities ahead for eFunds for the
balance of 2005 and beyond as we integrate WildCard Systems and our other
recent acquisitions, and execute against our customer initiatives in the U.S.
and Europe," stated Walsh.
Forward-looking statements
The Company reconfirmed it previous outlook that full year net revenue for
2005 is expected to increase approximately 18 to 22 percent on a combined
organic and acquisitive basis over the $431 million baseline revenue achieved
across the Company's three remaining segments following the sale of its ATM
portfolio in November 2004. The Company has raised its 2005 net income
estimate from a range of 15 to 19 percent over the net income of $40.8 million
reported in 2004 to 25 to 35 percent over its 2004 net income due to its
anticipated recognition of a $4 to $6 million tax benefit in the third
quarter.
The foregoing expectations reflect the following assumptions:
* The net revenues of WildCard increase approximately 30 percent over
the revenues of $56.5 million recorded last year, with a slight
majority of this revenue being recognized in the latter half of 2005;
because the business of WildCard is notably more seasonal than eFunds,
nearly all of the expected $.03 - $.05 earnings dilution resulting
from the transaction in 2005 will be seen in the third quarter;
* An effective tax rate between 33 and 35 percent for the balance of
2005 excluding the effects of the anticipated recognition of the $4 to
$6 million tax benefit in the third quarter;
* Cash outlays for capital expenditures and product development
activities of approximately $35 to $40 million.
The Company also updated its outlook for 2006. Full year 2006 revenues
are expected to increase 15 to 22 percent over currently projected full year
2005 revenues. Diluted earnings per share are expected to range between $1.15
and $1.25 for 2006.
The foregoing guidance does not include the effects of the adoption of
SFAS 123R, which requires the expensing of stock options beginning January 1,
2006.
Conference call:
eFunds will hold a one-hour conference call today at 10:00 AM EDT to
discuss the Company's first quarter financial performance. To listen to the
conference call, dial 800-399-5351. (International callers dial
706-643-1939.) The call will also be broadcast on the company's Web site at
http://www.efunds.com under the "Investor Relations" tab. Interested parties are
encouraged to click on the web cast link 10 to 15 minutes prior to the start
of the conference call.
Replay Information:
A replay of the conference call will be available beginning two hours
after the call's completion and will play through 11:59 p.m. EDT on August 17,
2005. You may access the replay by dialing 800-642-1687 (international
callers dial 706-645-9291) and entering the Conference ID number 8037564.
Additionally, a replay of the conference call will be available via the eFunds
Web site at http://www.efunds.com.
About eFunds
eFunds Corporation is an industry leader with nearly 30 years of
experience and expertise in electronic payments and risk management. eFunds
offers electronic funds transfer software and processing, risk management and
related outsourcing solutions to financial institutions, electronic funds
transfer networks, retailers, telecommunications providers, and government
agencies around the world. Committed to providing excellent customer service
and award-winning products, eFunds enables its clients to reduce transaction
and infrastructure costs, detect potential fraud and enhance relationships
with their customers. http://www.efunds.com.
Statements made in this release concerning the Company's or management's
intentions, expectations, or predictions about future results or events are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are necessarily subject to
risks and uncertainties that could cause actual results to vary from stated
expectations, and such variations could be material and adverse. Factors that
could result in such a variation include, but are not limited to, the inherent
unreliability of earnings and revenue growth predictions due to numerous
factors, including many beyond the Company's control, potential difficulties,
delays and unanticipated expenses inherent in the development and marketing of
new products and services, competitive factors, the unpredictability of merger
and acquisition activity, and the numerous risks and potential additional
costs, disruptions and delays associated with the establishment of new
business initiatives. Additional information concerning these and other
factors that could cause actual results to differ materially from the
Company's current expectations is contained in the Company's Quarterly Report
on Form 10-Q for the period ending March 31, 2005.
EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended June 30,
2005 2004
(in thousands,
except per share
amounts)
Net revenue $116,294 100.0% $140,712 100.0%
Operating expenses
Processing,
communication and
service costs 27,612 23.8% 56,661 40.3%
Employee costs 48,034 41.3% 47,787 33.9%
Depreciation and
amortization 8,077 6.9% 9,027 6.4%
Other operating
costs 12,229 10.5% 13,108 9.3%
Restructuring
and provision
for contract
loss charges -- 0.0% 1,253 0.9%
Total
operating
expenses 95,952 82.5% 127,836 90.8%
Income from
operations 20,342 17.5% 12,876 9.2%
Other income --
net 1,086 0.9% 585 0.4%
Income before
income taxes 21,428 18.4% 13,461 9.6%
Provision
for income
taxes (7,286) -6.2% (4,038) -2.9%
Net income $14,142 12.2% $9,423 6.7%
Shares outstanding
Basic 45,649 47,886
Diluted 47,095 49,268
Earnings per share
Basic $ 0.31 $ 0.20
Diluted $ 0.30 $ 0.19
EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Six Months Ended June 30,
2005 2004
(in thousands,
except per
share amounts)
Net revenue $230,532 100.0% $281,598 100.0%
Operating expenses
Processing,
communication
and service
costs 56,515 24.6% 115,331 40.9%
Employee costs 97,278 42.2% 96,729 34.4%
Depreciation
and amortization 16,224 7.0% 17,956 6.4%
Other operating
costs 23,382 10.1% 23,431 8.3%
Restructuring
and provision
for contract
loss charges -- 0.0% 1,253 0.4%
Total operating
expenses 193,399 83.9% 254,700 90.4%
Income from
operations 37,133 16.1% 26,898 9.6%
Other income
(expense) -- net 2,561 1.1% (39) -0.1%
Income before
income taxes 39,694 17.2% 26,859 9.5%
Provision for
income taxes (12,388) -5.4% (8,057) -2.8%
Net income $27,306 11.8% $18,802 6.7%
Shares outstanding
Basic 47,417 47,786
Diluted 48,924 49,192
Earnings per share
Basic $0.58 $ 0.39
Diluted $0.56 $ 0.38
EFUNDS CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2005 2004
(in thousands) (Unaudited)
Current assets:
Cash and cash equivalents $205,976 $274,477
Short-term investments -- 88,140
Restricted cash 3,877 2,392
Accounts receivable -- net 75,628 73,505
Other current assets 25,603 30,050
Total current assets 311,084 468,564
Property and equipment -- net 54,354 50,320
Intangibles - net 155,732 103,672
Other non-current assets 24,175 20,405
Total assets $545,345 $642,961
Current liabilities:
Accounts payable $20,665 $21,984
Accrued liabilities 51,471 85,021
Deferred revenue and gains 22,447 16,445
Long-term debt due within one year 2,315 1,955
Total current liabilities 96,898 125,405
Long-term deferred gains 32,676 37,539
Long-term debt 3,052 3,569
Other long-term liabilities 1,894 2,244
Total liabilities 134,520 168,757
Stockholders' equity:
Common stock 500 493
Additional paid-in capital 456,500 446,825
Treasury stock at cost (100,000) --
Retained earnings 50,537 23,231
Accumulated other comprehensive income 3,288 3,655
Stockholders' equity 410,825 474,204
Total liabilities and
stockholders' equity $545,345 $ 642,961
EFUNDS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
2005 2004
(in thousands)
Cash flows from operating activities:
Net income $27,306 $18,802
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation 6,947 6,488
Amortization 9,277 11,468
Deferred income taxes 3,594 303
Other -- net (191) 837
Changes in assets and liabilities
Restricted cash 6,715 872
Accounts receivable (187) (6,834)
Accounts payable (5,344) (977)
Income taxes receivable/payable (25,629) 2,097
Other assets and liabilities (16,578) (2,250)
Net cash provided by
operating activities 5,910 30,806
Cash flows from investing activities:
Capital expenditures (11,790) (11,423)
Acquisitions (57,095) (6,079)
Purchases of short-term investments (98,925) (57,035)
Proceeds from sale of short-term
investments 187,065 46,985
Other -- net (761) (508)
Net cash provided by (used in)
investing activities 18,494 (28,060)
Cash flows from financing activities:
Purchase of common stock (100,000) --
Issuance of common stock 8,079 8,225
Payments on long-term debt (984) (4,185)
Net cash (used in) provided
by financing activities (92,905) 4,040
Net (decrease) increase in
cash and cash equivalents (68,501) 6,786
Cash and cash equivalents at
beginning of period 274,477 104,456
Cash and cash equivalents at end
of period(1) $ 205,976 $111,242
(1) Cash and cash equivalents at June 30, 2004 included $63.7 million
that has been reclassified to short-term investments to conform to
2005 presentation.
EFUNDS CORPORATION
SEGMENT SUMMARY DATA
(Unaudited)
Three Months Ended
June 30, Change
2005 2004 $ %
(in thousands)
Net revenue:
Electronic payments $52,377 $51,719 658 1%
Risk management 40,255 35,033 5,222 15%
Global outsourcing 23,662 19,387 4,275 22%
ATM management(1) -- 34,573 (34,573) *
Total net
revenue 116,294 140,712 (24,418) -17%
Operating expenses:
Processing,
employee and
other costs --
Electronic
payments 44,044 42,027 2,017 5%
Risk
management 23,686 20,845 2,841 14%
Global
outsourcing 16,459 15,158 1,301 9%
ATM
management(1) -- 32,435 (32,435) *
Total
processing,
employee
and other
costs 84,189 110,465 (26,276) -24%
Allocated overhead --
Electronic
payments 3,224 2,569 655 25%
Risk management 2,010 2,203 (193) -9%
Global
outsourcing 2,216 1,602 614 38%
ATM management(1) -- 2,098 (2,098) *
Corporate 4,313 7,646 (3,333) -44%
Total allocated
overhead 11,763 16,118 (4,355) -27%
Restructuring and
provision for
contract loss
charges --
Electronic payments -- 1,178 (1,178) *
Risk management -- (8) 8 *
Global outsourcing -- 41 (41) *
ATM management(1) -- 9 (9) *
Corporate -- 33 (33) *
Total restructuring
and provision
for contract
loss charges -- 1,253 (1,253) *
Income (loss) from
operations:
Electronic payments 5,109 5,945 (836) -14%
Risk management 14,559 11,993 2,566 21%
Global outsourcing 4,987 2,586 2,401 93%
ATM management(1) -- 31 (31) *
Corporate (4,313) (7,679) 3,366 44%
Total income
from operations $20,342 $12,876 7,466 58%
(1) Includes operations through November 18, 2004.
* Represents an increase or decrease greater than 100%.
EFUNDS CORPORATION
SEGMENT SUMMARY DATA
(Unaudited)
Six Months Ended
June 30, Change
2005 2004 $ %
(in thousands)
Net revenue:
Electronic
payments $103,148 $101,402 1,746 2%
Risk management 77,861 70,157 7,704 11%
Global
outsourcing 49,523 40,306 9,217 23%
ATM management(1) -- 69,733 (69,733) *
Total net
revenue 230,532 281,598 (51,066) -18%
Operating expenses:
Processing,
employee and
other costs --
Electronic
payments 88,336 82,181 6,155 7%
Risk management 45,892 42,325 3,567 8%
Global
outsourcing 34,062 31,222 2,840 9%
ATM
management(1) -- 65,624 (65,624) *
Total
processing,
employee
and
other
costs 168,290 221,352 (53,062) -24%
Allocated overhead --
Electronic
payments 6,791 5,379 1,412 26%
Risk
management 4,518 4,514 4 0%
Global
outsourcing 4,581 3,287 1,294 39%
ATM management(1) -- 4,261 (4,261) *
Corporate 9,219 14,654 (5,435) -37%
Total allocated
overhead 25,109 32,095 (6,986) -22%
Restructuring and
provision for
contract loss
charges --
Electronic
payments -- 1,178 (1,178) *
Risk management -- (8) 8 *
Global outsourcing -- 41 (41) *
ATM management(1) -- 9 (9) *
Corporate -- 33 (33) *
Total restructuring
and provision for
contract loss
charges -- 1,253 (1,253) *
Income (loss) from
operations:
Electronic
payments 8,021 12,664 (4,643) -37%
Risk management 27,451 23,326 4,125 18%
Global
outsourcing 10,880 5,756 5,124 89%
ATM management(1) -- (161) 161 *
Corporate (9,219) (14,687) 5,468 37%
Total income
from
operations $37,133 $26,898 10,235 38%
(1) Includes operations through November 18, 2004.
* Represents an increase or decrease greater than 100%.
EFUNDS CORPORATION
SUPPLEMENTAL REVENUE DATA
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2005 2004 % Change 2005 2004 % Change
(in millions)
Electronic
Payments
EFT
processing $30.7 $28.6 7% $59.8 $ 54.2 10%
Government
services (EBT) 13.2 14.1 -6% 26.4 28.7 -8%
Software
sales 8.5 9.0 -6% 16.9 18.5 -9%
$52.4 $51.7 1% $103.1 $101.4 2%
Risk Management
Financial
Institution
products $34.5 $30.3 14% $67.2 $ 60.9 10%
Retail
products 5.8 4.7 23% 10.7 9.3 15%
$40.3 $35.0 15% $77.9 $ 70.2 11%
Global
Outsourcing
BPO $14.2 $12.9 10% $30.8 $ 26.0 18%
IT services 9.5 6.5 46% 18.7 14.3 31%
$23.7 $19.4 22% $49.5 $ 40.3 23%
ATM Management(1) $-- $34.6 * $-- $ 69.7 *
(1) Includes operations through November 18, 2004.
* Represents an increase or decrease greater than 100%.
SOURCE eFunds Corporation
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Related links:
http://www.efunds.com
CONTACT:
Helen Johnson, Director, Investor Relations,
+1-480-629-7607, or George Gresham, Chief Financial Officer,
+1-480-629-7662, both of eFunds Corporation
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