Exhibit 99.1
News Release | |
Contact: | |
Susan M. Johnson | |
Director, Investor Relations | |
| |
Telephone 913-621-9500 | |
Web Site: http://www.epiqsystems.com |
EPIQ Systems, Inc. Announces Record Second Quarter 2003 Results
Note: A telephone conference call and web cast will be held at 3:30 p.m. central time today (July 28, 2003) to further discuss this announcement. The toll-free dial-in number is 877-780-2271 (passcode: EPIQ Systems; conference leader: Sue Johnson). A replay will be available shortly thereafter through August 12, 2003 on 877-519-4471 (passcode: 4061392). A supplemental slide presentation will be available along with the web cast from our website: www.epiqsystems.com. The archived web cast of the call will also be available from the website.
Kansas City, KS, July 28, 2003 — EPIQ Systems, Inc. (NASDAQ:EPIQ) today reported record results for the second quarter ended June 30, 2003, with quarterly revenue growth of 93% versus prior year. Net income per diluted share increased 54% to $0.20 for the quarter. Net income for the quarter of $3.6 million compared with $1.9 million for the same period last year includes $593 thousand and $72 thousand, respectively, of amortization of acquisition related intangibles, net of tax. Diluted weighted average shares of 18.204 million were outstanding for the quarter and 17.987 million were outstanding for the six-month period ended June 30, 2003.
Highlights for the quarter ended June 30, 2003, compared to the same period last year, were:
• Revenues were $17.6 million, a 93% increase, compared to $9.1 million. Revenues for bankruptcy services were $17.1 million, an increase of 98%, and revenues for infrastructure software were $478 thousand, a 5% increase.
• Gross profit was $12.1 million compared to $6.1 million. The gross profit margin was 68.7% versus 67.1%.
• Operating income was $6.2 million compared to $2.9 million. The operating margin was 35.1% versus 32.2%. Operating income includes $1.0 million of intangible amortization expense compared to the second quarter of last year, which had $116 thousand of intangible amortization expense.
• Net income was $3.6 million compared to $1.9 million. Net income per diluted share was $0.20, compared to $0.13.
• Non-GAAP adjusted net income (net income plus after-tax amortization of acquisition-related intangibles and after-tax acquisition-related expenses) was $4.2 million compared to $1.9 million. A reconciliation statement is attached.
Highlights for the six-month period ended June 30, 2003, compared to the same period last year, were:
• Revenues were $32.2 million, a 78% increase, compared to $18.1 million. Revenues for bankruptcy services were $31.2 million, an increase of 82%, and revenues for infrastructure software were $1.0 million, a 10% increase.
• Gross profit was $22.2 million compared to $12.2 million. The gross profit margin was 69.0% vs. 67.3%.
• Operating income was $9.9 million compared to $5.8 million. The operating margin was 30.8% vs. 32.0%. Operating income includes $1.7 million of intangible amortization expense and $1.5 million of acquisition related expense compared to the first six months of last year, which had $233 thousand of intangible amortization expense and no acquisition-related expense.
• Net income was $5.9 million compared to $3.7 million. Net income per diluted share was $0.33, compared to $0.25.
• Non-GAAP adjusted net income (net income plus after-tax amortization of acquisition-related intangibles and after-tax acquisition-related expenses) was $7.8 million compared to $3.9 million. A reconciliation statement is attached.
Recent key events for the company include:
• EPIQ Systems was ranked #5 on the Fortune Small Business 100 Fastest-Growing Small Businesses list. This marks the Company’s third consecutive appearance on this list, advancing from #29 last year and #71 the previous year.
• The Company released TCMSÒ 8.5 Chapter 7 Software, a significant enhancement to its Chapter 7 software, to all current customers.
• EPIQ Systems was retained in seven of the top fifteen year-to-date Chapter 11 bankruptcy filings, based on total assets of the debtor.
• Total bankruptcy filings for the quarter ended March 31, 2003 reached a record of 413,000 quarterly filings. Debt in the economy remains at high levels, with mortgage and credit card delinquencies near record levels.
Tom W. Olofson, chairman and CEO, and Christopher E. Olofson, president and COO, said, “We are very pleased with the strength of our second quarter financial results. Our core bankruptcy business is strong, and we continue to increase market share in key geographic areas. Debt, both corporate and consumer, remains at record levels, which we believe can be a strong indicator of additional future bankruptcy filings.”
NOTE ON FORWARD-LOOKING STATEMENTS: This news release and the related investor call/web cast contain or will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act, included those relating to the possible or assumed future results of operations and financial condition of the Company. Because those statements are subject to a number of risks, actual results may differ materially from those expressed or implied. These risks include (1) any material changes in our total number of bankruptcy trustees and bankruptcy cases, (2) any material changes in our Chapter 7 deposits, the services required by our Chapter 11 or Chapter 13 cases, or the number of cases processed by our Chapter 13 trustee customers, (3) changes in the number of bankruptcy filings each year, (4) our reliance on our marketing arrangement and pricing arrangements with Bank of America for Chapter 7 revenue, (5) changes in bankruptcy legislation, (6) risks associated with the integration of acquisitions into our existing business operations, including the BSI acquisition, and (7) other risks detailed from time to time in our SEC filings, including our Form 10-K for 2002. In addition, there may be other factors not included in our SEC filings that may cause actual results to differ materially from any forward-looking statements. We undertake no obligations to update any forward-looking statements contained herein to reflect future events or developments.
# # #
2
EPIQ SYSTEMS, INC. and SUBSIDIARY
STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
|
| QUARTER ENDED JUNE 30, |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
OPERATING REVENUES |
|
|
|
|
| ||
Bankruptcy case management fees |
| $ | 10,235 |
| $ | 7,067 |
|
Bankruptcy professional services |
| 6,849 |
| 1,554 |
| ||
Infrastructure software and other |
| 478 |
| 455 |
| ||
|
| 17,562 |
| 9,076 |
| ||
|
|
|
|
|
| ||
COST OF SALES |
|
|
|
|
| ||
Cost of goods and services |
| 4,283 |
| 1,797 |
| ||
Depreciation and amortization |
| 1,210 |
| 1,190 |
| ||
|
| 5,493 |
| 2,987 |
| ||
|
|
|
|
|
| ||
GROSS PROFIT |
| 12,069 |
| 6,089 |
| ||
|
|
|
|
|
| ||
OPERATING EXPENSES |
|
|
|
|
| ||
General and administrative |
| 4,697 |
| 2,917 |
| ||
Depreciation |
| 202 |
| 136 |
| ||
Amortization of intangibles |
| 1,013 |
| 116 |
| ||
Acquisition-related expenses |
| — |
| — |
| ||
|
| 5,912 |
| 3,169 |
| ||
|
|
|
|
|
| ||
INCOME FROM OPERATIONS |
| 6,157 |
| 2,920 |
| ||
|
|
|
|
|
| ||
NET INTEREST INCOME |
| 3 |
| 98 |
| ||
|
|
|
|
|
| ||
INCOME BEFORE INCOME TAXES |
| $ | 6,160 |
| $ | 3,018 |
|
|
|
|
|
|
| ||
NET INCOME |
| $ | 3,608 |
| $ | 1,877 |
|
|
|
|
|
|
| ||
EARNINGS PER SHARE – DILUTED |
| $ | 0.20 |
| $ | 0.13 |
|
|
|
|
|
|
| ||
WEIGHTED AVERAGE SHARES – DILUTED |
| 18,204 |
| 14,951 |
|
3
EPIQ SYSTEMS, INC. and SUBSIDIARY
STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
|
| YEAR TO DATE JUNE 30, |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
OPERATING REVENUES |
|
|
|
|
| ||
Bankruptcy case management fees |
| $ | 20,214 |
| $ | 14,725 |
|
Bankruptcy professional services |
| 10,945 |
| 2,404 |
| ||
Infrastructure software and other |
| 1,038 |
| 943 |
| ||
|
| 32,197 |
| 18,072 |
| ||
|
|
|
|
|
| ||
COST OF SALES |
|
|
|
|
| ||
Cost of goods and services |
| 7,464 |
| 3,592 |
| ||
Depreciation and amortization |
| 2,504 |
| 2,320 |
| ||
|
| 9,968 |
| 5,912 |
| ||
|
|
|
|
|
| ||
GROSS PROFIT |
| 22,229 |
| 12,160 |
| ||
|
|
|
|
|
| ||
OPERATING EXPENSES |
|
|
|
|
| ||
General and administrative |
| 8,737 |
| 5,880 |
| ||
Depreciation |
| 371 |
| 257 |
| ||
Amortization of intangibles |
| 1,732 |
| 233 |
| ||
Acquisition-related expenses |
| 1,485 |
| — |
| ||
|
| 12,325 |
| 6,370 |
| ||
|
|
|
|
|
| ||
INCOME FROM OPERATIONS |
| 9,904 |
| 5,790 |
| ||
|
|
|
|
|
| ||
NET INTEREST INCOME |
| 73 |
| 211 |
| ||
|
|
|
|
|
| ||
INCOME BEFORE INCOME TAXES |
| $ | 9,977 |
| $ | 6,001 |
|
|
|
|
|
|
| ||
NET INCOME |
| $ | 5,920 |
| $ | 3,729 |
|
|
|
|
|
|
| ||
EARNINGS PER SHARE – DILUTED |
| $ | 0.33 |
| $ | 0.25 |
|
|
|
|
|
|
| ||
WEIGHTED AVERAGE SHARES – DILUTED |
| 17,987 |
| 14,974 |
|
4
EPIQ SYSTEMS, INC. and SUBSIDIARY
BALANCE SHEET
JUNE 30, 2003
(In thousands)
(Unaudited)
ASSETS: |
|
|
| |
CURRENT ASSETS: |
|
|
| |
CASH AND CASH EQUIVALENTS |
| $ | 20,818 |
|
ACCOUNTS RECEIVABLE |
| 10,772 |
| |
OTHER CURRENT ASSETS |
| 1,151 |
| |
TOTAL CURRENT ASSETS |
| 32,741 |
| |
|
|
|
| |
PROPERTY, PLANT & EQUIPMENT, net |
| 12,685 |
| |
|
|
|
| |
SOFTWARE, net |
| 5,003 |
| |
|
|
|
| |
GOODWILL |
| 68,014 |
| |
|
|
|
| |
INTANGIBLE ASSETS, net |
| 19,191 |
| |
|
|
|
| |
OTHER ASSETS |
| 67 |
| |
|
|
|
| |
TOTAL ASSETS |
| $ | 137,701 |
|
|
|
|
| |
LIABILITIES & SHAREHOLDERS’ EQUITY: |
|
|
| |
CURRENT LIABILITIES: |
|
|
| |
ACCOUNTS PAYABLE |
| $ | 1,753 |
|
ACCRUED EXPENSES |
| 2,396 |
| |
DEFERRED REVENUE |
| 881 |
| |
OTHER CURRENT LIABILITIES |
| 841 |
| |
TOTAL CURRENT LIABILITIES |
| 5,871 |
| |
|
|
|
| |
LONG-TERM OBLIGATIONS (less current portion) |
| 17 |
| |
|
|
|
| |
DEFERRED ACQUISITION PRICE (less current portion) |
| 3,066 |
| |
|
|
|
| |
DEFERRED REVENUE |
| 44 |
| |
|
|
|
| |
DEFERRED INCOME TAXES |
| 2,487 |
| |
|
|
|
| |
SHAREHOLDERS’ EQUITY |
| 126,216 |
| |
|
|
|
| |
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY |
| $ | 137,701 |
|
5
EPIQ SYSTEMS, INC. and SUBSIDIARY
RECONCILIATION OF NET INCOME
TO NON-GAAP ADJUSTED NET INCOME
(In thousands)
(Unaudited)
|
| QUARTER ENDED JUNE 30, |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
NET INCOME |
| $ | 3,608 |
| $ | 1,877 |
|
|
|
|
|
|
| ||
Plus (net of tax): |
|
|
|
|
| ||
Acquisition-related expenses |
| — |
| — |
| ||
Amortization of acquisition intangibles |
| 593 |
| 72 |
| ||
|
| 593 |
| 72 |
| ||
|
|
|
|
|
| ||
NON-GAAP ADJUSTED NET INCOME |
| $ | 4,201 |
| $ | 1,949 |
|
|
| YEAR TO DATE JUNE 30, |
| ||||
|
| 2003 |
| 2002 |
| ||
|
|
|
|
|
| ||
NET INCOME |
| $ | 5,920 |
| $ | 3,729 |
|
|
|
|
|
|
| ||
Plus (net of tax): |
|
|
|
|
| ||
Acquisition-related expenses |
| 881 |
| — |
| ||
Amortization of acquisition intangibles |
| 1,028 |
| 145 |
| ||
|
| 1,909 |
| 145 |
| ||
|
|
|
|
|
| ||
NON-GAAP ADJUSTED NET INCOME |
| $ | 7,829 |
| $ | 3,874 |
|
6