TSAI ($11) P/E 200 Beats by 3 cents, raises guidance.
Transaction Systems Architects Reports Fiscal 2001 Third Quarter Financial Results
Business Wire - Tuesday, July 31, 2001
OMAHA, Neb.--(BUSINESS WIRE)--July 31, 2001--
Third Quarter Highlights:
-- Revenues and pro forma diluted EPS for the quarter in line
with revised company guidance.
-- Operating cash flow of $15 million, cash balance increased to
$28 million.
-- Seven new Consumer e-Payment customers added during the
quarter.
-- Operational restructuring plan and cost reduction initiatives
substantially completed during the quarter.
-- Forecasting $72 to $75 million in revenues for the fourth
quarter fiscal 2001, and pro forma diluted EPS of $.03 to
$.08.
Transaction Systems Architects, Inc. (Nasdaq:TSAI), a leading global provider of enterprise e-payments and e-commerce software, announced today that revenue for the third quarter of fiscal 2001 was $73.7 million, in line with revised company guidance of $72 to $74 million. Pro forma earnings per diluted share were $.04, at the high end of the company's revised earnings guidance range. Operating cash flow was $15 million, the best cash flow results since the quarter ending September 1999.
"This was clearly a transition quarter for the company," said Larry Fendley, interim CEO. "We experienced softness around the world for our enterprise-level e-payments software, consistent with the views expressed by others in the technology sector; consequently our revenue was down seven percent over the year-earlier quarter. We made significant changes in senior management, and announced a major corporate restructuring of the company. We remain confident in the company's market leadership position, but felt that these moves were important if we expect to continue to enjoy that position.
"We will have reduced our cost structure significantly by the end of this fiscal year, and protected our strategic R&D initiatives," added Fendley. "With our costs under better control, we believe that we are in a much better position to win market share and grow once the overall technology spending environment improves. Market feedback has been positive for several of our strategic initiatives, including our PRISM fraud and money laundering detection product, our new secure document delivery technology and our advanced e-payment authorization platform. We expect to benefit from those investments in the quarters ahead."
"We generated over $15 million in operating cash flow, our best cash performance in the past two fiscal years, and our cash balance is now $28 million," said Dwight Hanson, CFO. "Current billed receivables are down 19 percent compared to the third quarter of fiscal 2000, and down 20 percent sequentially from the second quarter of fiscal 2001. In addition, we had favorable improvement in our DSO and DBO levels, with our DBO levels at their lowest point in over two years, and well below our goal of 60 days. We began to see some benefit from our restructuring efforts in Q3, with pro forma expenses down two percent year-over-year. This should improve more in Q4 and into next year."
Pro forma results are computed by excluding acquisition-related charges (amortization of goodwill and software) and non-recurring items. The pro forma results of operations are computed using an effective tax rate of 39 percent. Pro forma results for the quarter exclude $6.7 million of software and goodwill amortization from the acquisitions of SDM International, Inc., Insession Inc., Hospital Health Plan Corporation, WorkPoint Systems, Inc. and MessagingDirect, Ltd., and one-time non-recurring charges of $22 million for the previously announced corporate restructuring.
The Company completed the third quarter of fiscal 2001 with $186 million in backlog, consisting of $49 million in non-recurring backlog and $137 million in recurring backlog. This compares to the backlog of $187 million at the end of the second quarter of fiscal 2001. Non-recurring backlog is composed of fees specified in software and services contracts that the company expects to recognize in the next 12 months. Recurring backlog includes all monthly license fees, maintenance fees and facilities management fees that the company expects to recognize over the next 12 months. "While our overall backlog was flat, our recurring backlog was up $3 million sequentially," said Hanson. "This is an indication of our strong customer retention rate."
The Company also announced that it expects to commence an offer to its eligible employees and directors to tender their outstanding options granted under three of the company's stock plans in a voluntary stock option exchange program. "Our employees and directors comprise the most important asset of our company," said Fendley. "They enable us to serve our customers and achieve our long-term goals, which enhances shareholder value. The offer is essential so we may continue to attract, retain and reward our employees and directors." The Company expects to commence the offer during the fourth quarter of fiscal 2001.
Following commencement of the offer, the Company will send to eligible employees and directors a copy of the written "Offer to Exchange." They will be urged to read the Offer to Exchange when it becomes available, because it will contain important information. Eligible employees and directors will be able to obtain a free copy of the Schedule Tender Offer ("TO") which, when filed with the SEC, will contain the Offer to Exchange and other important information, as well as other filings containing information about us, at the SEC's Web site (http://www.sec.gov). Following commencement of the offer, eligible employees and directors will also be able to obtain, without charge, copies of the Schedule TO and the Company's SEC filings incorporated by reference in the Offer to Exchange directly from the company.
Looking forward to the next quarter, TSA is expecting $72 to 75 million in revenue, with pro forma diluted EPS of $.03 to $.08. "While we remain confident regarding our leadership position in our core markets, we remain cautious with our near term projections," said Hanson. "We have improved our cash position and reduced our expense rate, which positions us to weather continued softness in the market should that occur."
"We continue to win market share, adding seven new consumer e-payment customers in the quarter," said Fendley. "Included were our first three customers for our new secure document and delivery products, and a new top-100 U.S. retailer. We win the majority of competitive situations in our core markets and continue to see good transaction volume growth in areas like debit, e-commerce and mobile commerce. We have a solid pipeline of significant e-payment deals building, both in the consumer e-payment and corporate e-payment markets, and expect to make new product announcements in the coming quarter regarding new initiatives which should help diversify that pipeline in terms of geographic regions, solutions areas and hardware platforms."
About Transaction Systems Architects, Inc.
Transaction Systems Architects' software facilitates electronic payments by providing consumers and companies access to their money. Its products are used to process transactions involving credit cards, debit cards, secure electronic commerce, mobile commerce, smart cards, secure electronic document delivery and payment, checks, high-value money transfers, bulk payment clearing and settlement, and enterprise e-infrastructure. Transaction Systems Architects' solutions are used on more than 3,700 product systems in 79 countries on six continents.
TSA will hold a teleconference at 5:00 p.m. EST, July 31, 2001, to discuss third-quarter financial results. TSA will open the conference call to the general public by broadcasting the call live over the Internet. Interested persons may access a real-time audio broadcast of the teleconference at: www.tsainc.com/ir/ir.asp.
To access the web cast, enter the conference name (Transaction Systems Architects, Inc.), viewer pass code (1409654) and the date (07/31/2001) along with your registration information. The Web cast will be archived for seven days after the teleconference at the same Web address listed above. |
