SLM Software Inc - 9mo earnings 47 cents per share
SLM Software Inc
ESP
Shares issued 11,515,773
1998-11-25 close $6.5
Wednesday Nov 25 1998
Ms. Nancy Chan-Palmateer reports
For the three months ended Sept. 30, 1998, the company
posted a 136 per cent increase in revenues to $9.7-million
over $4.1-million in the comparable prior year period. Net
income rose 45 per cent to $2.5-million or 23 cents per share
in 1998 over $1.8-million or 19 cents per share in 1997. The
company's long-standing relationships with customers
rewarded SLM with considerable repeat business for other
SLM product offerings in this quarter.
For the nine months ended Sept. 30, 1998, the company's total
revenues rose by 146 per cent to $22.9-million over
$9.3-million from the prior year. Net income jumped to
$5.3-million or 49 cents per share in 1998 from $3.0-million
or 33 cents per share over the prior year. Net margins
continued to be solid, with net income amounting to 23 per
cent of revenues for the nine month 1998 period. SLM's core
business continued to generate the highest percentage of total
sales year-to-date, about 84 per cent. Acquired companies,
being investments for the future, are expected to be greater
sources of revenues in 1999 and beyond.
SLM's expenses were reflective of the growing sales and
marketing activities of a much larger organization in 1998,
with a more comprehensive suite of products. To that end, its
selling, marketing and installation expenses have risen to
$9.6-million in the nine months ended Sept. 30, 1998
compared to $3.7-million in the same 1997 period. Similarly,
general and administrative costs increased to $4.7-million in
1998 over $1.4-million in the 1997 nine month period.
Notably, SLM continued to manage expenses, showing a
decrease in its general and administrative costs to 18 per cent
of revenues in the 1998 third quarter from 21 per cent in the
1998 second quarter.
The company's balance sheet remained strong in the third
quarter with over $10.5-million in cash and approximately
$1.1-million of unused bank facility.
The integration of Milkyway Networks Corp. advanced on
schedule, with its burn rate declining significantly to under
$100,000 per month. SLM has begun to capitalize on the
synergies presented by Milkyway's security technology as part
of SLM's product family. Subsequent to the quarter end, SLM
took up the small remaining balance of the Milkyway shares
outstanding for 100 per cent ownership.
The assets of Rescom Ventures acquired last quarter have also
been fully integrated into SLM. It has had a negligible effect
on SLM's third quarter earnings. SLM has started to execute
its product enhancement plan to ensure longevity of the
Rescom product line, customer support and market leadership.
In particular, the Rescom products have been made Year 2000
compliant, and are being shipped to customers.
This progress was on track with SLM's two quarter integration
model for acquired companies, with breakeven results for
these operations expected for the end of 1998 and positive
contributions in fiscal 1999. The technologies of these two
entities have rounded out SLM's product portfolio and
accelerated time-to-market.
In the 1998 third quarter, SLM remained focused on its
buy-build-partner strategy to extend its solution offerings for
the broadest electronic transaction management suite.
During the quarter, SLM gained a 54.4 per cent controlling
interest in Infocorp Computer Solutions, a Winnipeg-based
market leader in retail and government
point-of-sale/point-of-service systems. As its largest and
controlling shareholder, SLM elected a new board to Infocorp
and appointed Mal Anderson, SLM's CEO of western
operations, as Infocorp's new president and CEO. SLM plans
to take advantage of the synergies between the two
organizations, particularly their complementary POS
technology. As a result, SLM will extend its product portfolio
to offer a complete retail transaction solution, and add an
advanced point-of-service product for the government sector,
another emerging transaction-intensive industry turning to
innovations for cost-effective e-commerce solutions. Given
SLM's interest in the company, Infocorp's balance sheet has
been consolidated with SLM, which has increased SLM's
receivables.
SLM signed a letter of intent with National Informatics Corp.
(the technology arm of the Central Bank of Iran), to jointly
develop the world's first-of-a-kind electronic Islamic retail
banking solution, using SLM's ESP-Link/RBS as the building
platform. The new system will be marketable to financial
institutions around the world, with potential sales of
$30-million (U.S.) over the next five years. This multi-million
joint venture represents the second SLM-NIC initiative, and is
indicative of an enriching customer relationship.
In addition to accelerated R&D through acquisitions and
partnerships, SLM invested over $4-million in internal R&D
for the 1998 nine month period.
In the 1998 third quarter, SLM followed through on its U.S.
market entry strategy. The company announced a $20-million
(U.S.) cash and stock transaction for the acquisition of
Bankline Holding, Inc., a privately-held, leading supplier of
client server core banking services and imaging technology for
community banks and credit unions in the U.S. This
distribution acquisition has propelled the combined
SLM-Bankline entity into one of the top single source
providers of in-house and outsourced electronic financial
service solutions for the mid-tier U.S. market. SLM has gained
strong U.S. brand equity and channels with customers eager
for a greater array of electronic commerce offerings. Bankline
is on track to generate about $20-million (U.S.) in profitable
sales for this year, with a strong recurring revenue base. This
combined with SLM's similar size and revenue growth is
expected to more than double the financial performance and
critical mass of the combined entity as well as increase SLM's
North American sales to over 60 per cent.
John French and Randy Fluitt, CEO and president of Bankline,
respectively, added strong management bandwidth to SLM's
executive team, with the expertise and shared vision to
oversee SLM's expanded U.S. operations. As major SLM
shareholders with long-term employment contracts and
performance-based warrants, they are fully committed to the
expanded entity.
SLM also welcomed Mal Anderson as executive
vice-president and CEO of SLM's western operations. Mal
brought over 34 years of business acumen, particularly in the
financial services sector. He was most recently CEO of Credit
Union Central of Manitoba. Mal is focused on directing the
integration and consolidation of SLM's recent acquisitions in
Manitoba, as well as playing a key role in new business
development and expansion of the company's Canadian market
position.
SLM is introducing its first quarterly analyst event as an
opportunity to provide a fuller presentation on the company,
include the broader management team, and speak to its future
outlook. Invitations will be forwarded shortly. This event will
replace the company's traditional analyst conference call.
SLM believes this forum will give greater perspective on the
company's strategic plans and performance.
WARNING: The company relies on litigation protection for
"forward-looking" statements.
STATEMENT OF EARNINGS
Three months ended Sept. 30
1998 1997
Revenues $ 9,714,667 $ 4,112,892
----------- -----------
Expenses
Selling,
marketing and
installation 3,829,286 1,765,581
General and
admin 1,749,117 494,704
Amortization 1,345,661 401,328
----------- -----------
6,924,064 2,661,613
----------- -----------
Income - before
income taxes and
non-controlling
interest 2,790,603 1,451,279
Non-controlling
interest 16,805 -
----------- -----------
Income - before
income taxes 2,807,408 1,451,279
Provision for
income taxes 263,473 (299,954)
----------- -----------
Net earnings $ 2,543,935 $ 1,751,233
=========== ===========
Earnings per
share 23 cents 19 cents
STATEMENT OF EARNINGS
Nine months ended Sept. 30
1998 1997
Revenues $22,929,500 $ 9,336,813
----------- -----------
Expenses
Selling,
marketing and
installation 9,647,613 3,773,334
General and
admin 4,707,587 1,385,806
Amortization 2,705,839 976,745
----------- -----------
17,061,039 6,135,885
----------- -----------
Income - before
income taxes and
non-controlling
interest 5,868,461 3,200,928
Non-controlling
interest 80,768 -
----------- -----------
Income - before
income taxes 5,949,229 3,200,928
Provision for
income taxes 649,952 241,918
----------- -----------
Net earnings $ 5,299,277 $ 2,959,010
=========== ===========
Earnings per
share 47 cents 33 cents
(c) Copyright 1998 Canjex Publishing Ltd.
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