LML Reports Profitable Third Quarter and Nine Month Results for Fiscal 2012


Profitability Achieved Across All Business Units

VANCOUVER, British Columbia, Feb. 10. 2012 (GLOBE NEWSWIRE) -- LML PAYMENT SYSTEMS INC. ("LML") (Nasdaq:LMLP), a leading payments technology provider of financial payment processing solutions for e-commerce and traditional businesses, reports results for the third quarter and nine month period ended December 31, 2011.

Revenue for the third quarter ended December 31, 2011 was $5,251,000, compared to revenue of $11,060,000 for the third quarter ended December 31, 2010. Gross profit for the quarter was $2,236,000 or 42.6%. Net income for the quarter was $265,000, or $0.01 per share.

Revenue for the nine month period ended December 31, 2011 was $24,233,000 compared to $22,010,000 for the nine month period ended December 31, 2010. Gross profit was $12,286,000 or 50.7%. Net income was $4,435,000, or $0.16 per share, compared to net income of $2,762,000 or $0.10 per share, for the same period last year, an improvement of $1,673,000 or $0.05 per share. 

"We received profitable contributions from all three business segments led by our transaction payment processing (TPP) segment which continued its impressive growth rate of 22% for the quarter, year to year, 13% sequentially quarter to quarter and 28% for the nine month period, easily eclipsing the average industry rate of 15%. Additionally, we received profitable contributions for both the quarter and the nine month period from our check processing (CP) segment and our intellectual property licensing (IPL) segment despite the absence of non-recurring settlement transactions associated with fully paid-up licenses during the quarter. It's a very exciting time in our industry. Each day more payments are conducted electronically as opposed to cash or paper. More and more of these payments are made or received online and more and more transactions are being made safely and securely with small handheld devices to or from a world-wide market, all of which we expect, for us, will continue to drive more and more opportunity, innovation, customer satisfaction and growth", said Patrick H. Gaines, Chief Executive Officer. 

Q3 Highlights

  • Transaction Payment Processing (TPP) segment revenue increases 22% year over year and 13% sequentially quarter over quarter
  • All three business segments achieve profitability
  • 873 new customers added bringing the total customer base to just over 12,000.

9 Months Highlights

  • Overall revenue, including non-recurring IPL revenue, increases 10% year over year
  • TPP segment revenue increases 28% year over year
  • Settled litigation with four defendants in Eastern District of Texas cases driving IPL revenue of $10.8 million. 
  • All three business segments (TPP, CP and IPL) achieve profitability
  • Net income of $4,435,000 compared to $2,762,000 last year

Conference Call

Management will host a conference call on February 10, 2012 at 1:30pm Pacific Time (4:30pm Eastern Time) to discuss these results. To participate in the conference call, please dial in 5-10 minutes before the start of the call and follow the operator's instruction. If you are calling from the United States or Canada, please dial 800-699-1085. International callers please dial 303-223-2680. 

If you are unable to join the call, an audio recording of the call will be available on our website at www.lmlpayment.com.

About LML Payment Systems Inc. (www.lmlpayment.com)

LML Payment Systems Inc., through its Canadian subsidiary Beanstream Internet Commerce Inc., and its U.S. subsidiaries Beanstream Internet Commerce Corp. and LML Payment Systems Corp., is a leading provider of financial payment processing solutions for e-commerce and traditional businesses. We provide credit card processing, online debit, electronic funds transfer, automated clearinghouse payment processing and authentication services, along with routing of selected transactions to third party processors and banks for authorization and settlement. Our intellectual property estate, owned by subsidiary LML Patent Corp., includes U.S. Patent No. RE40,220, No. 6,354,491, No. 6,283,366, No. 6,164,528, and No. 5,484,988 all of which relate to electronic check processing methods and systems.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as "aims," "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects" or "targets" or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking statements are based on the opinions and estimates of the management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect LML's actual results include, among others, the impact, if any, of share-based payment charges, the potential failure to establish and maintain strategic relationships, inability to integrate recent and future acquisitions, inability to develop new products or product enhancements on a timely basis, inability to protect our proprietary rights or to operate without infringing the patents and proprietary rights of others, and quarterly and seasonal fluctuations in operating results. More information about factors that potentially could affect LML's financial results is included in LML's quarterly reports on Form 10-Q and our most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, LML undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.

 
LML PAYMENT SYSTEMS INC.
         
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(In U.S. Dollars)
(Unaudited)
         
  Three Months Ended  Nine Months Ended 
  December 31 December 31
  2011 2010 2011 2010
         
         
REVENUE $5,250,562 $11,060,030 $24,233,363 $22,010,201
COST OF REVENUE  3,014,951 5,045,891 11,947,653 10,818,240
GROSS PROFIT  2,235,611 6,014,139 12,285,710 11,191,961
         
OPERATING EXPENSES        
General and administrative  1,291,243 1,218,740 3,119,623 3,463,598
Sales and marketing  175,843 221,849 503,505 582,644
Product development and enhancement  294,622 152,482 763,833 459,366
Amortization of intangible assets  165,643 165,644 496,933 496,932
INCOME BEFORE OTHER INCOME AND INCOME TAXES 308,260 4,255,424 7,401,816 6,189,421
         
Foreign exchange gain (loss)  41,251 (102,369) 38,507 (101,298)
Other expense -- (626) -- (5,464)
Interest income 55,755 16,873 84,640 29,170
 INCOME BEFORE INCOME TAXES 405,266 4,169,302 7,524,963 6,111,829
         
 Income tax expense (recovery)         
Current 181,756 1,281,285 2,633,989 983,532
Deferred (41,893) 850,875 456,106 2,366,354
  139,863 2,132,160 3,090,095 3,349,886
         
NET INCOME 265,403 2,037,142 4,434,868 2,761,943
         
OTHER COMPREHENSIVE INCOME (LOSS)         
 Unrealized foreign exchange gain (loss) on translation of foreign operations 153,357 126,872 (230,434) 140,698
         
TOTAL COMPREHENSIVE INCOME $418,760 $2,164,014 $4,204,434 $2,902,641
         
EARNINGS PER SHARE, basic $0.01 $0.07 $0.16 $0.10
EARNINGS PER SHARE, diluted $0.01 $0.07 $0.15 $0.10
         
WEIGHTED AVERAGE SHARES OUTSTANDING        
Basic  28,233,434 27,253,886 28,205,734 27,252,620
Diluted  28,708,934 28,285,669 28,921,938 27,707,532
 
 LML PAYMENT SYSTEMS INC.
     
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In U.S. Dollars, except as noted below)
(Unaudited)
     
  As at December 31, As at March 31,
  2011 2011
ASSETS    
     
Current assets    
Cash and cash equivalents  $23,928,642 $26,917,491
Funds held for merchants  9,873,042 7,164,420
Short-term investments 3,211,665 --
Restricted cash 175,000 175,000
Accounts receivable, less allowance of $26,894 and $28,152, respectively  1,921,733 1,103,529
Corporate taxes receivable 342,168 101,162
Prepaid expenses  279,214 266,066
Total current assets 39,731,464 35,727,668
     
Property and equipment, net  120,451 163,222
Patents  162,312 287,877
Restricted cash  255,064 262,644
Deferred tax assets  733,641 1,189,747
Goodwill  17,874,202 17,874,202
Other intangible assets  3,843,825 4,215,187
Other assets  20,633 21,041
     
Total assets $62,741,592 $59,741,588
     
LIABILITIES    
Current liabilities    
Accounts payable  $771,085 $702,820
Accrued liabilities 1,130,530 1,390,847
Corporate taxes payable 699,089 4,796,157
Funds due to merchants  9,873,042 7,164,420
Current portion of obligations under finance lease  2,460 2,460
Current portion of deferred revenue  1,528,691 1,420,228
Total current liabilities 14,004,897 15,476,932
     
Obligations under finance lease  5,400 7,380
     
Deferred revenue 58,862 935,979
     
Total liabilities 14,069,159 16,420,291
     
COMMITMENTS AND CONTINGENCIES     
     
SHAREHOLDERS' EQUITY    
Capital stock    
Class A, preferred stock, $1.00 CDN par value, 150,000,000 shares authorized, issuable in series, none issued or outstanding -- --
Class B, preferred stock, $1.00 CDN par value, 150,000,000 shares authorized, issuable in series, none issued or outstanding -- --
Common shares, no par value, 100,000,000 shares authorized, 28,233,434 and 28,127,184 issued and outstanding, respectively  53,557,276
  53,883,659  
     
Contributed surplus  9,639,325 8,819,006
Warrants  113,662 113,662
Deficit (15,128,333) (19,563,201)
Accumulated other comprehensive income  164,120 394,554
Total shareholders' equity 48,672,433 43,321,297
     
Total liabilities and shareholders' equity $62,741,592 $59,741,588
 
 LML PAYMENT SYSTEMS INC.
         
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In U.S. Dollars)
(Unaudited)
         
  Three Months Ended  Nine Months Ended 
  December 31 December 31
  2011 2010 2011 2010
         
Operating Activities:        
Net income $265,403 $2,037,142 $4,434,868 $2,761,943
Adjustments to reconcile net income to net cash (used in) provided by
operating activities
     
Amortization of property and equipment 23,119 30,514 82,397 97,847
Amortization of intangible assets 165,643 165,644 496,933 496,932
Share-based payments 652,233 368,113 941,327 1,152,924
Deferred income taxes (41,893) 826,550 456,106 2,342,029
Foreign exchange (gain) loss (110,251) (730) 81,747 (2,226)
         
Changes in non-cash operating working capital        
Funds held in trust -- 361,684 -- --
Accounts receivable (746,381) (196,246) (885,175) (319,316)
Corporate taxes receivable (80,244) (69,898) (245,721) (496,025)
Prepaid expenses (51,279) 152,522 (18,954) 142,697
Accounts payable and accrued liabilities 310,178 9,061 (137,812) 252,771
Corporate taxes payable (1,402,144) 1,076,558 (4,084,980) 1,076,558
Deferred revenue (116,481) (341,216) (755,081) (893,994)
Net cash (used in) provided by operating activities (1,132,097) 4,419,698 365,655 6,612,140
         
Investing Activities:        
Acquisition of short term investments -- -- (3,294,525) --
Acquisition of property and equipment (1,573) (14,717) (43,149) (44,998)
Net cash used in investing activities (1,573) (14,717) (3,337,674) (44,998)
         
Financing Activities:        
Principal payments on finance leases  (660) -- (1,981) (9,202)
Proceeds from exercise of stock options -- 68,040 205,375 68,040
Net cash (used in) provided by financing activities (660) 68,040 203,394 58,838
         
Effects of foreign exchange rate changes on cash and cash equivalents 142,688 84,236 (220,224) 83,546
         
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (991,642) 4,557,257 (2,988,849) 6,709,526
         
Cash and cash equivalents, beginning of period 24,920,284 7,222,032 26,917,491 5,069,763
         
Cash and cash equivalents, end of period $23,928,642 $11,779,289 $23,928,642 $11,779,289
         
Supplemental disclosure of cash flow information         
Interest paid $-- $-- $-- $--
Taxes paid $1,661,000 $137,000 $6,957,921 $137,000

            

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