Exhibit 99.1
CCC Information Services Group Inc. Reports $0.38 EPS for the Fourth Quarter of 2004
CHICAGO, February 16, 2005 - CCC Information Services Group Inc. (Nasdaq: CCCG) reported net income of $6.5 million, or $0.38 per share, for the fourth quarter ending December 31, 2004, compared to net income of $8.2 million, or $0.30 per share, for the same quarter in 2003. Included in the fourth quarter 2003 results is a $1.4 million, or $0.05 per share, tax related benefit associated with the completion of a tax audit. Fourth quarter 2004 results reflect the full impact of the company’s self-tender transaction.
Revenue for the fourth quarter increased 3.2 percent to $50.5 million, compared to $48.9 million for the same quarter in 2003. Operating income for the quarter was $12.8 million compared to operating income of $11.1 million for the fourth quarter of 2003. Operating margin for the quarter was 25.3 percent compared to 22.6 percent for the same quarter in 2003.
“We finished 2004 on a positive note,” Githesh Ramamurthy, Chairman and Chief Executive Officer said. “Key customer wins in the quarter will generate momentum and drive revenue growth in 2005. We expect the majority of this new customer revenue to materialize in the second half of the year.”
Fourth Quarter Revenue & Expense Highlights
The product portfolio revenues for the fourth quarter, including a comparison to the fourth quarter of 2003, are shown in the table below:
TABLE 1
($ in 000’s)
Portfolio | Q1 2004 | Q2 2004 | Q3 2004 | Q4 2004 | Q4 2003 | % Change vs. Prior Year | |||||||||||||
CCC Pathways | $ | 31,174 | $ | 31,255 | $ | 30,937 | $ | 31,360 | $ | 30,172 | 3.9 | % | |||||||
CCC Valuescope | 10,139 | 10,161 | 10,301 | 11,041 | 10,532 | 4.8 | % | ||||||||||||
Workflow | 6,258 | 6,541 | 6,391 | 6,683 | 6,462 | 3.4 | % | ||||||||||||
Information Services | 502 | 504 | 511 | 499 | 468 | 6.6 | % | ||||||||||||
Other | 1,530 | 1,012 | 952 | 902 | 1,268 | (28.9 | %) | ||||||||||||
Total | $ | 49,603 | $ | 49,473 | $ | 49,092 | $ | 50,485 | $ | 48,902 | 3.2 | % | |||||||
% Change vs. Prior Year | 3.9 | % | 2.9 | % | 1.0 | % | 3.2 | % |
Key revenue highlights for the quarter are as follows:
· | The CCC PathwaysÒ portfolio increased 3.9 percent from prior year. Key drivers continued to be the growth of the company’s estimating solutions in the repair facility and insurance channels as well as growth from CCC’s recycled parts solution. |
· | The CCC ValuescopeÒ portfolio grew 4.8 percent compared to prior year. Growth came from new customers and higher transaction volume from current customers. |
· | The Workflow portfolio increased 3.4 percent compared to prior year as revenue expansion in CCC Autoverse® drove growth through a combination of existing customers expanding their use geographically, as well as new customer adoption. |
Revenue, operating expenses and operating income for the fourth quarter, compared to the fourth quarter of 2003, are included in the table below:
TABLE 2
($ in 000’s)
Q1 2004 | Q2 2004 | Q3 2004 | Q4 2004 | Q4 2003 | % Change vs. Prior Year | ||||||||||||||
Revenue | $ | 49,603 | $ | 49,473 | $ | 49,092 | $ | 50,485 | $ | 48,902 | 3.2 | % | |||||||
Operating Expenses | |||||||||||||||||||
Production and Customer Support | 8,349 | 7,807 | 7,976 | 8,183 | 8,489 | (3.6 | )% | ||||||||||||
Commissions, Royalties and Licenses | 3,174 | 3,145 | 3,166 | 3,056 | 3,099 | (1.4 | )% | ||||||||||||
Selling, General and Administrative | 17,930 | 19,105 | 17,086 | 17,774 | 15,674 | 13.4 | % | ||||||||||||
Depreciation and Amortization | 2,103 | 1,805 | 1,719 | 1,838 | 2,035 | (9.7 | )% | ||||||||||||
Product Development and Programming | 8,037 | 8,089 | 7,175 | 6,863 | 8,544 | (19.7 | )% | ||||||||||||
Stock Compensation Expense Non-Cash | - | - | 13,139 | - | - | n/a | |||||||||||||
Litigation Settlement | - | - | (2,586 | ) | - | - | n/a | ||||||||||||
Restructuring Charge | - | 886 | - | - | - | n/a | |||||||||||||
Total Operating Expenses | 39,593 | 40,837 | 47,675 | 37,714 | 37,841 | (0.3 | )% | ||||||||||||
Operating Income | $ | 10,010 | $ | 8,636 | $ | 1,417 | $ | 12,771 | 11,061 | 15.5 | % | ||||||||
Operating Margin | 20.2 | % | 17.5 | % | 2.9 | % | 25.3 | % | 22.6 | % |
Key operating expense highlights for the quarter are as follows:
· | Production and customer support expenses declined from prior year as a result of efficiencies related to the new customer support model. |
· | Selling, general and administrative expenses increased from prior year due to increased incentive compensation costs tied to business performance. |
· | Product development and programming expenses decreased from prior year because of the organizational realignment of the company that took place in the second quarter. The sequential decrease for the quarter is due to the completion of development work on several new products. |
Full Year Financial Highlights
Full year net income totaled $18.6 million, or $0.77 per share, for 2004, compared to net income of $26.0 million, or $0.94 per share, for 2003. Operating income for the year was $32.8 million compared with $40.5 million in 2003. Revenue for the full year 2004 was $198.7 million, an increase of 2.7 percent compared to $193.4 million for the full year 2003. Below is a chart, which details certain charges and benefits included in the 2004 and 2003 full year results:
TABLE 3
($ in millions) | ||||||||||
Impact of Charge / (Benefit) on Full Year | ||||||||||
2004 | Operating Income | Net Income | EPS | |||||||
Stock compensation expense non-cash (Q3) | 13.1 | 8.2 | 0.34 | |||||||
Litigation settlement (Q3) | (2.6 | ) | (1.6 | ) | (0.07 | ) | ||||
Restructuring and 401(k) charge (Q2) | 1.7 | 1.0 | 0.04 | |||||||
Total Net Charge for 2004 | 12.2 | 7.6 | 0.31 | |||||||
2003 | ||||||||||
Tax benefit (Q4) | - | (1.4 | ) | (0.05 | ) | |||||
Restructuring charge (Q3) | 1.1 | 0.7 | 0.02 | |||||||
Total Net Charge/(Benefit) for 2003 | 1.1 | (0.7 | ) | (0.03 | ) | |||||
2005 Guidance
For the full year, the company expects to report earnings per share of $1.25 - $1.35, assuming 17.5 million shares outstanding on a fully diluted basis. This is a change to prior guidance, principally due to the inclusion of a non-cash charge of $3.0 million or $0.11 per share for performance based restricted stock grants for senior managers. These grants, which are being expensed over two years, vest at the end of 2006 based on 2006 earnings performance. The company expects the annual charges from these grants to be comparable to what it has historically granted in options and disclosed in Note 1 to the financial statements. The company also expects additional charges from the adoption on FAS 123R beginning July 1, 2005. This new accounting standard will require the company to expense the value of previously granted stock options that remain unvested at July 1, 2005. As the company has not yet fully evaluated its FAS 123R adoption and valuation alternatives and related financial statement impact, the above guidance excludes the impact of FAS 123R for existing stock options.
On an operating basis, guidance includes revenue growth in the low to mid single digit range, which remains unchanged from the company’s prior guidance. Growth will occur largely in the second half of the year as the company completes the implementation of customer wins from 2004.
Full year operating income is expected to be in the range of $46 to $49 million. Again, this includes a non-cash charge of $3.0 million, spread ratably throughout the year, for the company’s restricted stock incentive plan. The major non-operating items are interest expense and taxes. The company expects interest for the full year to be around $11 million and the tax rate to approximate 38%.
For the first quarter of 2005, the company expects relatively flat revenue compared to the first quarter last year, but improved operating margins due to the benefit from the expense reduction program put in place last June. Earnings per share for the first quarter should range from $0.26 to $0.29 per share, which includes a $0.03 per share impact for non-cash stock compensation expense.
The company will be hosting its fourth quarter earnings call to discuss results at 11:00 AM EST. A live web cast will be made available atwww.cccis.com.
About CCC
CCC Information Services Group Inc. (NASDAQ: CCCG), headquartered in Chicago, is a leading supplier of advanced software, communications systems, Internet and wireless-enabled technology solutions to the automotive claims and collision repair industries. Its technology-based products and services optimize efficiency throughout the entire claims management supply chain and facilitate communication among approximately 21,000 collision repair facilities, 350 insurance companies and a range of industry participants. For more information about CCC Information Services, visit CCC’s Web site at www.cccis.com.
This release contains statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions of those sections and the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those described in the Company’s filings with the SEC, and that actual results or developments may differ materially from those in the forward-looking statements. Specific factors that might cause actual results to differ from expectations include, but are not limited to, competition in the automotive claims and collision repair industries, the ability to develop new products and services, the prolonged sales and implementation cycle of some of the company’s new products, the ability to protect trade secrets and proprietary information, the ability to generate the cash flow necessary to meet the Company’s obligations, the outcome of certain legal proceedings, and other factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis, judgment, belief or expectation only as of the date hereof. The Company has based these forward-looking statements on information currently available and disclaims any intention or obligation to update or revise any forward-looking statement.
###
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended | Year Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||
Revenues | $ | 50,485 | $ | 48,902 | $ | 198,653 | $ | 193,352 | |||||
Expenses: | |||||||||||||
Production and customer support | 8,183 | 8,489 | 32,315 | 31,866 | |||||||||
Commissions, royalties and licenses | 3,056 | 3,099 | 12,541 | 11,713 | |||||||||
Selling, general and administrative | 17,774 | 15,674 | 71,895 | 68,089 | |||||||||
Depreciation and amortization | 1,838 | 2,035 | 7,465 | 7,923 | |||||||||
Product development and programming | 6,863 | 8,544 | 30,164 | 32,234 | |||||||||
Stock compensation expense non-cash | — | — | 13,139 | — | |||||||||
Restructuring charges | — | — | 886 | 1,061 | |||||||||
Litigation Settlement | — | — | (2,586 | ) | — | ||||||||
Total operating expenses | 37,714 | 37,841 | 165,819 | 152,886 | |||||||||
Operating income | 12,771 | 11,061 | 32,834 | 40,466 | |||||||||
Interest expense | (2,515 | ) | 164 | (3,986 | ) | (392 | ) | ||||||
Other income, net | 120 | 71 | 552 | 272 | |||||||||
Equity in income (loss) of ChoiceParts investment | 149 | 123 | 513 | (21 | ) | ||||||||
Income before income taxes | 10,525 | 11,419 | 29,913 | 40,325 | |||||||||
Income tax provision | (3,985 | ) | (3,195 | ) | (11,340 | ) | (14,285 | ) | |||||
Net income | $ | 6,540 | $ | 8,224 | $ | 18,573 | $ | 26,040 | |||||
Per Share Data: | |||||||||||||
Income per common share: | |||||||||||||
Basic | $ | 0.41 | $ | 0.31 | $ | 0.81 | $ | 0.99 | |||||
Diluted | $ | 0.38 | $ | 0.30 | $ | 0.77 | $ | 0.94 | |||||
Weighted average shares outstanding: | |||||||||||||
Basic | 15,995 | 26,338 | 22,993 | 26,243 | |||||||||
Diluted | 17,171 | 27,752 | 24,258 | 27,655 |
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
December 31, | |||||||
2004 | 2003 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 19,958 | $ | 20,755 | |||
Short-term investments | — | 7,004 | |||||
Accounts receivable, net | 12,721 | 10,247 | |||||
Other current assets | 7,790 | 8,369 | |||||
Total current assets | 40,469 | 46,375 | |||||
Property and equipment, net | 12,151 | 12,776 | |||||
Intangible assets, net | 1,298 | 2,153 | |||||
Goodwill | 15,747 | 15,747 | |||||
Deferred income taxes, net | 9,420 | 9,127 | |||||
Investments | 778 | 265 | |||||
Other assets | 3,770 | 292 | |||||
Total assets | $ | 83,633 | $ | 86,735 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||
Accounts payable | $ | 7,728 | $ | 5,937 | |||
Accrued expenses | 19,085 | 16,522 | |||||
Income taxes payable | 97 | 1,602 | |||||
Current portion of long-term debt | 1,775 | — | |||||
Deferred revenues | 6,886 | 7,930 | |||||
Other current liabilities | 383 | 97 | |||||
Total current liabilities | 35,954 | 32,088 | |||||
Long-term debt | 167,838 | — | |||||
Other liabilities | 1,716 | 3,064 | |||||
Total liabilities | 205,508 | 35,152 | |||||
Common stock ($0.10 par value, 40,000,000 shares authorized, 16,125,124 and 26,376,839 shares outstanding at December 31, 2004 and 2003, respectively) | 1,614 | 3,034 | |||||
Additional paid-in capital | 7,006 | 131,590 | |||||
Other comprehensive income | 72 | — | |||||
Accumulated deficit | (78,315 | ) | (36,838 | ) | |||
Treasury stock, at cost (4,460,501 and 4,094,665 common shares in treasury at December 31, 2004 and December 31, 2003, respectively) | (52,252 | ) | (46,203 | ) | |||
Total stockholders' equity (deficit) | (121,875 | ) | 51,583 | ||||
Total liabilities and stockholders' equity (deficit) | $ | 83,633 | $ | 86,735 |
CCC INFORMATION SERVICES GROUP INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share amounts)
(Unaudited)
Year Ended December 31, | |||||||
2004 | 2003 | ||||||
Operating Activities: | |||||||
Net income | $ | 18,573 | $ | 26,040 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Equity in losses (income) of ChoiceParts | (513 | ) | 21 | ||||
Depreciation and amortization of property and equipment | 6,609 | 7,210 | |||||
Amortization of intangible assets | 856 | 713 | |||||
Deferred income tax provision (benefit) | (293 | ) | 1,327 | ||||
Restructuring charges | 886 | 1,061 | |||||
Compensation expense related to restricted stock | 41 | 16 | |||||
Compensation expense related to self-tender offer | 13,139 | — | |||||
Income tax benefit related to exercise of options | 1,250 | 533 | |||||
Other, net | 88 | 78 | |||||
Changes in: | |||||||
Accounts receivable, net | (2,474 | ) | 928 | ||||
Other current assets | 579 | 135 | |||||
Other assets | 144 | 335 | |||||
Accounts payable | 1,791 | (2,542 | ) | ||||
Accrued expenses | 1,694 | (8,891 | ) | ||||
Income taxes payable | (1,504 | ) | (966 | ) | |||
Deferred revenues | (1,044 | ) | 178 | ||||
Other current liabilities | 445 | (62 | ) | ||||
Other liabilities | (1,348 | ) | (1,102 | ) | |||
Net cash provided by operating activities | 38,919 | 25,012 | |||||
Investing Activities: | |||||||
Capital expenditures | (6,014 | ) | (7,491 | ) | |||
Acquisition of Comp-Est Inc | — | (13,205 | ) | ||||
Proceeds from sale short-term investments | 7,004 | — | |||||
Purchase of short-term investments | — | (7,004 | ) | ||||
Net cash provided by (used for) investing activities | 990 | (27,700 | ) | ||||
Financing Activities: | |||||||
Proceeds from exercise of stock options | 3,903 | 1,825 | |||||
Payment of principal and interest on notes receivable from officer | — | 1,506 | |||||
Proceeds from employee stock purchase plan | 422 | 399 | |||||
Proceeds from borrowings on long-term debt | 177,500 | — | |||||
Principal repayments on long-term debt | (7,888 | ) | — | ||||
Self-tender offer of common stock | (210,000 | ) | — | ||||
Payment of self-tender costs | (935 | ) | — | ||||
Payment of debt issuance costs | (3,550 | ) | — | ||||
Principal repayments of capital lease obligations | (158 | ) | (487 | ) | |||
Net cash provided by (used for) financing activities | (40,706 | ) | 3,243 | ||||
Net increase (decrease) in cash and cash equivalents | (797 | ) | 555 | ||||
Cash and cash equivalents: | |||||||
Beginning of year | 20,755 | 20,200 | |||||
End of year | $ | 19,958 | $ | 20,755 |