Exhibit 99.1
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| News Release |
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| For more information: | |
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| Mary Adams, Investor Relations | |
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| Telephone: 913-621-9500 | |
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| Website: www.epiqsystems.com |
EPIQ SYSTEMS, INC. ANNOUNCES FIRST QUARTER RESULTS
REPORTING 85% REVENUE GROWTH
Note: A telephone conference call and web cast will be held at 3:30 p.m. central time today (April 27, 2004) to further discuss this announcement. The toll-free dial in number for this call is 1-800-473-6123. This call can also be accessed on the company’s website at www.epiqsystems.com. A supplemental slide presentation is available from the website. A digital replay of the call will be available until May 31, 2004 by dialing 1-877-519-4471 (pass code: 4705758). The archived web cast will be available on the company’s website.
Kansas City, KS (April 27, 2004) – EPIQ Systems, Inc. (NASDAQ: EPIQ) today reported results of operations for the first quarter of 2004, with quarterly revenue growth of 85% versus prior year, which includes results from the acquisition of Poorman-Douglas effective January 30, 2004. Net income from continuing operations for the quarter of $2.0 million and net income from continuing operations per diluted share of $0.11 include the effect of acquisition related expenses totaling $2.7 million, net of tax or $0.15 per diluted share. Diluted weighted average shares outstanding were 18.2 million for the quarter.
Financial highlights from continuing operations for the quarter ended March 31, 2004, compared to the same period last year include:
• Revenue increased 85% to $26.0 million from $14.1 million. Operating revenue (total revenue less reimbursed expenses) increased 73% and revenue from reimbursed expenses increased 288%.
• Operating income was $4.8 million compared to $4.3 million. Operating income includes $1.7 million of acquisition intangible amortization expense compared to $0.7 million last year and $2.2 million of acquisition related expense compared to $1.5 million for the year ago quarter.
• Net income from continuing operations was $2.0 million compared to $2.7 million and net income from continuing operations per diluted share was $0.11 versus $0.15. Net income includes $1.0 million of amortization of acquisition related intangibles compared to $0.4 million last year and $1.3 million of acquisition related expense compared to $0.9 million for the year ago quarter, both net of tax.
• Non-GAAP adjusted net income (net income plus amortization of acquisition related intangibles, acquisition related expense and amortization of acquisition related capitalized loan fees, all net of tax) increased 17% to $4.7 million compared to $4.0 million last year. Non-GAAP adjusted net income per share was $0.26 versus $0.22. A reconciliation statement is attached.
• Non-GAAP adjusted earnings before interest, taxes, depreciation, amortization and acquisition related expenses (Non-GAAP Adjusted EBITDA) increased 32% to $10.1 million compared to $7.6 million for the year ago quarter. A reconciliation statement is attached.
Recent key events for the company include:
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• In January 2004 EPIQ Systems acquired Poorman-Douglas Corporation, a national leader in class action and mass tort case administration services.
• EPIQ Systems released TCMS™ 9.0, the latest version of its industry-leading Chapter 7 case management solution. TCMS™ 9.0 represents the product’s ninth consecutive, on-time annual release and further establishes EPIQ systems’ technology leadership.
• According to the Federal Reserve, consumer debt reached an all time high in the first two months of 2004. Bankruptcy filings also reached a record high in 2003, with more than 1.6 million new cases filed.
Tom W. Olofson, chairman and CEO, and Christopher E. Olofson, president and chief operating officer of EPIQ Systems, commented, “We are pleased to report strong operating performance for the quarter as well as a major strategic acquisition. The acquisition of Poorman-Douglas expands EPIQ Systems’ industry capabilities into class action and mass tort solutions, an area closely related to our current leadership presence in bankruptcy administration.”
EPIQ Systems provides an advanced offering of integrated technology-based products and services for fiduciary management and claims administration applications. Our solutions enable clients to optimize the administration of large and complex bankruptcy, class action, mass tort, and other similar legal proceedings. EPIQ Systems clients include corporations, attorneys, trustees and administrative professionals who require sophisticated case administration and document management capabilities, extensive subject matter expertise and a high service capacity. We provide clients a packaged offering of both proprietary technology and value-added services that comprehensively addresses their extensive business requirements. For more information, visit us online at www.epiqsystems.com.
Forward Looking Statement Disclaimer: This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act, including those relating to the possible or assumed future results of operations and financial condition of the Company. These forward-looking statements are based on the Company’s current expectations and may be identified by terms such as “goal” and “objective”. Because those statements are subject to a number of risks, actual results may differ materially from those expressed or implied in this presentation. These risks include (1) any material changes in our total number of bankruptcy trustees and cases, (2) any material changes in our Chapter 7 deposits, the services required by our Chapter 11, Chapter 13, class action or mass tort cases, or the number of cases processed by our Chapter 13 bankruptcy trustee customers, (3) material changes in the number of bankruptcy filings, class action filings or mass tort actions each year, (4) our reliance on and the previously-announced change in our marketing arrangement and pricing arrangements with Bank of America for Chapter 7 revenue, (5) future bankruptcy, class action, or mass tort legislation, (6) risks associated with the integration of acquisitions into our existing business operations, (7) risks associated with the significant new indebtedness we incurred to finance the Poorman-Douglas acquisition, (8) a decline in the business of Poorman-Douglas Corporation, and (9) other risks detailed from time to time in our SEC filings, including our annual report on Form 10-K. 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.
(Tables follow)
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EPIQ SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
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| Three months ended |
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| 2004 |
| 2003 |
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REVENUES: |
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Case management |
| $ | 16,926 |
| $ | 11,415 |
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Document management |
| 6,067 |
| 1,881 |
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Operating revenues |
| 22,993 |
| 13,296 |
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Reimbursed expenses |
| 3,019 |
| 779 |
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Total Revenues |
| 26,012 |
| 14,075 |
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COSTS AND EXPENSES: |
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Direct and administrative costs |
| 15,943 |
| 6,442 |
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Depreciation and software amortization |
| 1,381 |
| 1,118 |
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Amortization of identifiable intangible assets |
| 1,680 |
| 682 |
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Acquisition related |
| 2,181 |
| 1,485 |
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Total Operating Expenses |
| 21,185 |
| 9,727 |
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INCOME FROM CONTINUING OPERATIONS |
| 4,827 |
| 4,348 |
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INTEREST INCOME (EXPENSE): |
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Interest income |
| 34 |
| 113 |
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Interest expense |
| (1,522 | ) | (43 | ) | ||
Net Interest Income (Expense) |
| (1,488 | ) | 70 |
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INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
| 3,339 |
| 4,418 |
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PROVISION FOR INCOME TAXES |
| 1,338 |
| 1,741 |
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NET INCOME FROM CONTINUING OPERATIONS |
| 2,001 |
| 2,677 |
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DISCONTINUED OPERATIONS: |
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Loss from operations of discontinued infrastructure software segment |
| (436 | ) | (602 | ) | ||
Income tax benefit from operations of discontinued infrastructure software segment |
| 172 |
| 237 |
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TOTAL DISCONTINUED OPERATIONS |
| (264 | ) | (365 | ) | ||
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NET INCOME |
| $ | 1,737 |
| $ | 2,312 |
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NET INCOME PER SHARE INFORMATION: |
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Diluted income per share from continuing operations |
| $ | 0.11 |
| $ | 0.15 |
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Diluted (loss) per share from discontinued operations |
| (0.01 | ) | (0.02 | ) | ||
EARNINGS PER SHARE – DILUTED |
| $ | 0.10 |
| $ | 0.13 |
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WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – DILUTED |
| 18,237 |
| 17,782 |
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EPIQ SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 2004
(In thousands)
(Unaudited)
ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
| $ | 2,088 |
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Accounts receivable, trade, less allowance for doubtful accounts of $610 |
| 26,491 |
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Prepaid expenses and other |
| 6,515 |
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Deferred income taxes |
| 7,601 |
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Current assets held for sale |
| 1,233 |
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Total Current Assets |
| 43,928 |
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LONG-TERM ASSETS: |
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Property and equipment, net |
| 17,608 |
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Software development costs, net |
| 6,074 |
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Goodwill |
| 148,513 |
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Other intangibles, net of accumulated amortization of $4,250 |
| 30,144 |
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Other |
| 872 |
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Total Long-term Assets, net |
| 203,211 |
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Total Assets |
| $ | 247,139 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITES: |
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Accounts payable |
| $ | 4,836 |
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Customer deposits |
| 4,093 |
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Other accrued expenses |
| 1,389 |
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Current maturities of long-term obligations |
| 18,713 |
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Current liabilities held for sale |
| 997 |
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Total Current Liabilities |
| 30,028 |
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LONG-TERM LIABILITIES: |
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Deferred income taxes |
| 9,101 |
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Long-term obligations (excluding current maturities) |
| 76,668 |
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Total Long-term Liabilities |
| 85,769 |
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STOCKHOLDERS’ EQUITY |
| 131,342 |
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Total Liabilities and Stockholders’ Equity |
| $ | 247,139 |
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EPIQ SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS
TO NON-GAAP ADJUSTED NET INCOME FROM CONTINUING OPERATIONS
(In thousands)
(Unaudited)
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| THREE-MONTHS ENDED |
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| 2004 |
| 2003 |
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NET INCOME FROM CONTINUING OPERATIONS |
| $ | 2,001 |
| $ | 2,677 |
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Plus (net of tax): |
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Amortization of acquisition intangibles |
| 1,008 |
| 416 |
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Acquisition related expenses |
| 1,309 |
| 906 |
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Amortization of acquisition related capitalized loan fees |
| 369 |
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| 2,686 |
| 1,322 |
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NON-GAAP ADJUSTED NET INCOME FROM CONTINUING OPERATIONS |
| $ | 4,687 |
| $ | 3,999 |
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EPIQ SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME PER SHARE FROM CONTINUING OPERATIONS TO
NON-GAAP ADJUSTED NET INCOME PER SHARE FROM CONTINUING OPERATIONS
(In thousands)
(Unaudited)
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| THREE-MONTHS ENDED |
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| 2004 |
| 2003 |
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NET INCOME PER SHARE FROM CONTINUING OPERATIONS |
| $ | 0.11 |
| $ | 0.15 |
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Plus per share effect (net of tax): |
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Amortization of acquisition intangibles |
| 0.06 |
| 0.02 |
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Acquisition related expenses |
| 0.07 |
| 0.05 |
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Amortization of acquisition related capitalized loan fees |
| 0.02 |
| — |
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| 0.15 |
| 0.07 |
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NON-GAAP ADJUSTED NET INCOME PER SHARE FROM CONTINUING OPERATIONS |
| $ | 0.26 |
| $ | 0.22 |
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EPIQ SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS TO
NON-GAAP ADJUSTED EBITDA FROM CONTINUING OPERATIONS
(In thousands)
(Unaudited)
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| THREE-MONTHS ENDED |
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| 2004 |
| 2003 |
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NET INCOME FROM CONTINUING OPERATIONS |
| $ | 2,001 |
| $ | 2,677 |
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Acquisition related expenses |
| 2,181 |
| 1,485 |
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Depreciation and amortization |
| 3,061 |
| 1,800 |
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Net interest (income) expense |
| 1,488 |
| (70 | ) | ||
Provision for income taxes |
| 1,338 |
| 1,741 |
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| 8,068 |
| 4,956 |
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NON-GAAP ADJUSTED EBITDA FROM CONTINUING OPERATIONS |
| $ | 10,069 |
| $ | 7,633 |
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