KANSAS CITY, Kan., July 28, 2009 (GLOBE NEWSWIRE) -- Epiq Systems, Inc. (Nasdaq:EPIQ) today announced results of operations for the second quarter of 2009 with operating revenue (total revenue before operating revenue from reimbursed direct costs) of $57.1 million compared to $56.9 million for the same period last year. June 30, 2009 year-to-date operating revenue was $109.8 million, up 9% compared to $100.8 million for the prior year.
Net income for the second quarter of 2009 was $2.9 million, $0.08 per share, compared to $3.2 million, $0.08 per share, for the year ago quarter. June 30, 2009 year-to-date net income was $6.2 million, $0.16 per share, compared to $5.8 million, $0.15 per share, for the prior year.
Second quarter 2009 net cash provided by operating activities was $18.5 million, up 153% compared to $7.3 million for the year ago quarter. June 30, 2009 year-to-date net cash provided by operations was $21.0 million, up 39% compared to $15.1 million for the prior year. A condensed consolidated cash flow statement is attached.
Epiq Systems' management also evaluates the following non-GAAP financial measures: (i) non-GAAP net income (net income adjusted for amortization of acquisition intangibles, share-based compensation, realized cash gains on financial instruments, non-cash mark-to-market adjustments, acquisition expense, the effect of tax adjustments which are outside of the company's anticipated effective tax rate, and capitalized loan fee amortization, all net of tax), (ii) non-GAAP earnings per share, calculated as non-GAAP net income on a fully diluted per share basis, and (iii) non-GAAP adjusted EBITDA (net income adjusted for interest/financing, taxes, depreciation, amortization, share-based compensation, realized cash gains on financial instruments, non-cash mark-to-market adjustments, and acquisition expense). Reconciliation statements for non-GAAP financial measures are provided below.
Non-GAAP net income for the second quarter of 2009 was $6.8 million, $0.17 per share, up 15% compared to $5.9 million, $0.15 per share, for the year ago quarter. June 30, 2009 year-to-date non-GAAP net income was $13.1 million, $0.33 per share, up 16% compared to $11.3 million, $0.29 per share, for the prior year.
Second quarter 2009 non-GAAP adjusted EBITDA was $15.5 million, up 9% compared to $14.3 million for the year ago quarter. June 30, 2009 year-to-date non-GAAP adjusted EBITDA was $31.0 million, up 13% compared to $27.5 million for the prior year.
Operating revenue for the Bankruptcy segment for the second quarter of 2009 was $24.1 million, up 93% compared to $12.5 million for the year ago quarter. June 30, 2009 year-to-date operating revenue was $41.4 million, up 60% compared to $25.9 million in the prior year. Non-GAAP adjusted EBITDA was $12.5 million for the second quarter of 2009, up 104% compared to $6.1 million for the year ago quarter. June 30, 2009 year-to-date non-GAAP adjusted EBITDA was $20.9 million, up 24% compared to $16.9 million in the prior year, which included a $3.5 million cash gain on interest rate floor options. Excluding the prior year one-time cash gain on interest rate floor options, year-to-date 2009 non-GAAP adjusted EBITDA increased 56% compared to the prior year. The strong financial results for the segment relate to an increase in Chapter 11 filings and retentions, which have generated a 142% increase in Chapter 11 corporate restructuring operating revenue compared to the prior year.
Operating revenue for the Electronic Discovery segment for the second quarter of 2009 was $14.3 million compared to $14.0 million in the first quarter of 2009 and $16.3 million for the year ago quarter. June 30, 2009 year-to-date operating revenue was $28.4 million compared to $29.5 million in the prior year. Second quarter 2009 non-GAAP adjusted EBITDA was $4.4 million compared to $8.1 million for the year ago quarter. June 30, 2009 year-to-date non-GAAP adjusted EBITDA was $9.3 million compared to $14.5 million in the prior year. The quarter and year-to-date segment results include the effects of organic investment of new service offerings, geographic expansion into new markets and the impacts of the current economic conditions and pricing pressures in the industry.
Operating revenue for the Settlement Administration segment for the second quarter of 2009 was $18.7 million compared to $28.2 million in the year ago quarter. June 30, 2009 year-to-date operating revenue was $40.0 million compared to $45.5 million in the prior year. Non-GAAP adjusted EBITDA was $5.2 million for the second quarter of 2009 compared to $6.1 million for the year ago quarter. June 30, 2009 year-to-date non-GAAP adjusted EBITDA was $12.0 million, compared to $6.8 million in the prior year. The segment continued to benefit in the first half of 2009 from a major contract that was launched in the fourth quarter of 2007.
Tom W. Olofson, chairman and CEO, and Christopher E. Olofson, president and COO of Epiq Systems, stated, "We are pleased to report strong aggregate results for the quarter, highlighted by unparalleled performance in the bankruptcy segment. The second quarter set an all-time record for bankruptcy revenue led by the significant growth of our Chapter 11 corporate restructuring business. New corporate restructuring engagements for the first half of the year increased materially compared to the prior year and we are actively working on matters with virtually every major bankruptcy law firm. The long-term, multi-year nature of these new complex bankruptcy assignments provides the company with a back log of inventory to draw from in future periods which provides for increased future financial visibility. We also have visibility to a strong pipeline of future corporate restructuring retention opportunities that have not yet filed. The Chapter 7 trustee services component of the bankruptcy segment continues to reflect a consistent increase in aggregate deposit balances, which are up 19% year-to-date versus the prior year."
Recent key events include:
- Chapter 11 corporate restructuring bankruptcy retentions were up 88% during the first six months of 2009 compared to the same period last year, including clients such as Chrysler LLC, Thornburg Mortgage, Inc., Crabtree & Evelyn, Ltd., Filene's Basement, Inc., CCS Medical, Inc. and Energy Partners Limited.
- New release of the company's leading internet-based case management system TCMSWeb(r) 4.1, providing Chapter 7 Bankruptcy Trustees with new features to enhance reporting, productivity and efficiency in the daily management of their caseloads.
- As reported by the Administrative Office of the U.S. Courts, bankruptcy filings totaled 1,202,503 for the 12 month period ended March 31, 2009, up 33% versus the same period in 2008. During this period, Chapter 7 filings were up 46%, Chapter 11 filings were up 69%, and Chapter 13 filings were up 11%.
- The Federal Reserve reported that corporate debt increased compared to the prior year, reaching $7.2 trillion as of March 31, 2009, while consumer credit dropped slightly to just under $2.6 trillion for the same period.
Conference Call
The company will host a conference call today at 3:30 p.m. central time to discuss these results. The internet broadcast of the call can be accessed at www.epiqsystems.com. To listen by phone, please call (800) 967-7141 before 3:30 p.m. central time. An archive of the internet broadcast will be available on the company's website until the next earnings update. A recording of the call will also be available through August 28, 2009 beginning approximately two hours after the call ends. To access the recording, please call (888) 203-1112 and enter passcode 1579484.
Company Description
Epiq Systems is a leading global provider of integrated technology solutions for the legal profession. Our solutions streamline the administration of bankruptcy, litigation, financial transactions and regulatory compliance matters. We offer innovative technology solutions for electronic discovery, document review, legal notification, claims administration and controlled disbursement of funds. Our clients include leading law firms, corporate legal departments, bankruptcy trustees and other professional advisors who require innovative technology, responsive service and deep subject-matter expertise.
The Epiq Systems, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5250
Forward-looking and Cautionary Statements
This press release contains 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 our operations and financial condition. These forward-looking statements are based on our current expectations and may be identified by terms such as "believe," "expect," "anticipate," "should," "planned," "may," "estimated," "goal," "objective" and "potential." Because forward-looking statements involve future risks and uncertainties, listed below are a variety of factors that could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. These factors include (1) any material changes in our total number of client engagements and the volume associated with each engagement, (2) any material changes in our client's deposit portfolio or the services required or selected by our clients in engagements, (3) material changes in the number of bankruptcy filings, class action filings or mass tort actions each year, (4) risks associated with handling of confidential data and compliance with information privacy laws, (5) changes in or the effects of pricing structures and arrangements, (6) risks associated with the integration of acquisitions into our existing business operations, (7) risks associated with our indebtedness, (8) risks associated with foreign currency fluctuations, (9) risks associated with developing and providing software and internet-based technology solutions to our clients, and (10) 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 publicly or revise any forward-looking statements contained herein to reflect future events or developments.
(Tables follow)
EPIQ SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
-------------------- -------------------
2009 2008 2009 2008
--------- --------- --------- ---------
REVENUE:
Case management
services $ 35,812 $ 35,928 $ 70,346 $ 64,724
Case management
bundled products
and services 3,476 4,463 6,803 9,754
Document management
services 17,851 16,546 32,603 26,360
--------- --------- --------- ---------
Operating revenue
before reimbursed
direct costs 57,139 56,937 109,752 100,838
Operating revenue
from reimbursed
direct costs 9,051 7,905 17,266 13,014
--------- --------- --------- ---------
Total Revenue 66,190 64,842 127,018 113,852
--------- --------- --------- ---------
OPERATING EXPENSES:
Direct cost of
services (exclusive
of depreciation
and amortization
shown separately
below) 19,723 24,438 39,393 43,264
Direct cost of bundled
products and services
(exclusive of
depreciation and
amortization shown
separately below) 855 908 1,710 1,855
Reimbursed direct
costs 9,035 7,880 17,082 13,002
General and
administrative 23,844 18,221 42,151 33,300
Depreciation and
software and
leasehold
amortization 4,552 3,853 9,066 7,563
Amortization of
identifiable
intangible assets 1,818 2,325 3,754 4,603
Other operating
expense (income) 13 859 484 (1,512)
--------- --------- --------- ---------
Total Operating
Expenses 59,840 58,484 113,640 102,075
--------- --------- --------- ---------
INCOME FROM OPERATIONS 6,350 6,358 13,378 11,777
--------- --------- --------- ---------
INTEREST EXPENSE
(INCOME):
Interest expense 365 441 738 932
Interest income (16) (36) (51) (180)
--------- --------- --------- ---------
Net Interest
Expense 349 405 687 752
--------- --------- --------- ---------
INCOME BEFORE INCOME
TAXES 6,001 5,953 12,691 11,025
PROVISION FOR INCOME
TAXES 3,115 2,799 6,527 5,214
--------- --------- --------- ---------
NET INCOME $ 2,886 $ 3,154 $ 6,164 $ 5,811
========= ========= ========= =========
NET INCOME PER
SHARE INFORMATION:
Net income per
share - Diluted $ 0.08 $ 0.08 $ 0.16 $ 0.15
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING - DILUTED 41,854 41,634 41,895 41,510
EPIQ SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, Dec. 31,
2009 2008
----------- --------
(Unaudited)
ASSETS
ASSETS:
Cash and cash equivalents $ 28,215 $ 19,006
Trade accounts receivable, net 54,445 48,540
Property and equipment, net 39,419 39,951
Goodwill 264,405 263,871
Other intangibles, net 23,200 26,851
Other 21,916 20,727
-------- --------
TOTAL ASSETS $431,600 $418,946
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accounts payable $ 14,378 $ 12,781
Indebtedness 57,281 61,222
Other liabilities 45,887 44,448
STOCKHOLDERS' EQUITY 314,054 300,495
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $431,600 $418,946
======== ========
EPIQ SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
----------------- ------------------
2009 2008 2009 2008
-------- -------- -------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 2,886 $ 3,154 $ 6,164 $ 5,811
Non-cash adjustments
to net income:
Depreciation and
amortization 6,370 6,178 12,820 12,166
Other, net 3,392 252 4,994 1,477
Changes in operating
assets and
liabilities, net 5,842 (2,269) (2,988) (4,321)
-------- -------- -------- --------
Net cash provided
by operating
activities 18,490 7,315 20,990 15,133
-------- -------- -------- --------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Cash paid for business
combinations, net -- (4,712) -- (4,712)
Property and equipment,
software and other (3,342) (4,110) (10,293) (11,441)
-------- -------- -------- --------
Net cash used in
investing activities (3,342) (8,822) (10,293) (16,153)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net payments on
indebtedness (2,409) (2,016) (3,319) (2,622)
Other 1,201 968 1,865 1,456
-------- -------- -------- --------
Net cash used in
financing activities (1,208) (1,048) (1,454) (1,166)
-------- -------- -------- --------
Effect of exchange
rate changes on cash (23) -- (34) --
-------- -------- -------- --------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS $ 13,917 $ (2,555) $ 9,209 $ (2,186)
======== ======== ======== ========
EPIQ SYSTEMS, INC.
RECONCILIATION OF NET INCOME TO
NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ -----------------
2009 2008 2009 2008
------- ------- ------- -------
NET INCOME $ 2,886 $ 3,154 $ 6,164 $ 5,811
Plus:
Depreciation and amortization 6,370 6,178 12,820 12,166
Share-based compensation 2,784 872 4,256 1,396
Acquisition expense 18 859 507 859
Expenses related to financing,
net 349 405 687 752
Realized gain on interest
rate floors -- -- -- 1,273
Provision for income taxes 3,115 2,799 6,527 5,214
------- ------- ------- -------
12,636 11,113 24,797 21,660
------- ------- ------- -------
NON-GAAP ADJUSTED EBITDA $15,522 $14,267 $30,961 $27,471
======= ======= ======= =======
EPIQ SYSTEMS, INC.
BANKRUPTCY SEGMENT
RECONCILIATION OF SEGMENT PERFORMANCE MEASURE TO
NON-GAAP ADJUSTED EBITDA
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
SEGMENT PERFORMANCE MEASURE $12,501 $ 6,141 $20,922 $13,439
Realized gain on interest rate
floors -- -- -- 3,465
------- ------- ------- -------
NON-GAAP ADJUSTED EBITDA $12,501 $ 6,141 $20,922 $16,904
======= ======= ======= =======
EPIQ SYSTEMS, INC.
RECONCILIATION OF NET INCOME TO
NON-GAAP NET INCOME
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------ -------------------
2009 2008 2009 2008
-------- -------- -------- --------
NET INCOME $ 2,886 $ 3,154 $ 6,164 $ 5,811
Plus (net of tax):
Amortization of acquisition
intangibles 1,100 1,407 2,271 2,785
Share-based compensation 2,246 546 3,300 891
Acquisition expense 10 520 306 520
Effective tax rate 715 418 1,451 804
Loan fee amortization 52 80 104 160
Mark-to-market adjustments (243) (244) (487) (487)
Realized gain on interest
rate floors -- -- -- 770
-------- -------- -------- --------
3,880 2,727 6,945 5,443
-------- -------- -------- --------
NON-GAAP NET INCOME $ 6,766 $ 5,881 $ 13,109 $ 11,254
======== ======== ======== ========
EPIQ SYSTEMS, INC.
RECONCILIATION OF EPS TO
NON-GAAP EPS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
------------------- -------------------
2009 2008 2009 2008
--------- --------- --------- ---------
EPS (on a diluted basis) $ 0.08 $ 0.08 $ 0.16 $ 0.15
Plus (net of tax):
Amortization of acquisition
intangibles 0.03 0.04 0.05 0.08
Share-based compensation 0.05 0.02 0.08 0.02
Acquisition expense -- 0.01 0.01 0.01
Effective tax rate 0.02 0.01 0.04 0.02
Loan fee amortization -- -- -- --
Mark-to-market adjustments (0.01) (0.01) (0.01) (0.01)
Realized gain on interest
rate floors -- -- -- 0.02
--------- --------- --------- ---------
0.09 0.07 0.17 0.14
--------- --------- --------- ---------
NON-GAAP EPS (on a diluted
basis) $ 0.17 $ 0.15 $ 0.33 $ 0.29
========= ========= ========= =========
EPIQ SYSTEMS, INC.
EPS CALCULATION
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
-------------------- --------------------
2009 2008 2009 2008
-------- -------- -------- --------
NET INCOME $ 2,886 $ 3,154 $ 6,164 $ 5,811
Interest expense
adjustment for
convertible debt 301 301 599 603
Net income re-allocated
to nonvested shares (23) -- (33) --
-------- -------- -------- --------
NET INCOME ADJUSTED FOR
DILUTED CALCULATION $ 3,164 $ 3,455 $ 6,730 $ 6,414
======== ======== ======== ========
NON-GAAP NET INCOME $ 6,766 $ 5,881 $ 13,109 $ 11,254
Interest expense
adjustment for
convertible debt 301 301 599 603
Net income re-allocated
to nonvested shares (23) -- (33) --
-------- -------- -------- --------
NON- GAAP NET INCOME
ADJUSTED FOR DILUTED
CALCULATION $ 7,044 $ 6,182 $ 13,675 $ 11,857
======== ======== ======== ========
BASIC WEIGHTED AVERAGE
SHARES 35,776 35,424 35,731 35,357
Adjustment to reflect
share-based awards 1,792 1,924 1,878 1,867
Adjustment to reflect
convertible debt
shares 4,286 4,286 4,286 4,286
-------- -------- -------- --------
DILUTED WEIGHTED AVERAGE
SHARES 41,854 41,634 41,895 41,510
======== ======== ======== ========
NET INCOME PER SHARE
- DILUTED $ 0.08 $ 0.08 $ 0.16 $ 0.15
======== ======== ======== ========
NON-GAAP NET INCOME PER
SHARE - DILUTED $ 0.17 $ 0.15 $ 0.33 $ 0.29
======== ======== ======== ========