CEFT ($25-$29) P/E 78...earnings in line, rev's light.
: Reports Q4 earnings of $0.17 per share, in line with the Multex consensus. Rev rose 18.0% to $473.6 mln vs the $482.5 mln consensus.
Tuesday February 12, 7:00 am Eastern Time
Press Release
SOURCE: Concord EFS Inc.
Concord EFS 4th Quarter Net Income Up 36%
MEMPHIS, Tenn.--(BUSINESS WIRE)--Feb. 12, 2002--Concord EFS, Inc. (Nasdaq:CEFT - news), a leading electronic commerce provider, today reported strong bottom line growth and solid revenue growth in the fourth quarter. Revenue for the fourth quarter of 2001 was up 18% over fourth quarter 2000, while net income and diluted earnings per share were up 36% and 30%, respectively. Year over year, revenue was up 21% and, excluding acquisition expenses and restructuring charges in all periods, net income grew 39% and diluted earnings per share was up 33%. Including these one-time charges, net income rose 3% and diluted earnings per share was flat year over year.
``Concord's continued strong bottom line growth during the recent economic slowdown shows that our focus on operating income per transaction is the right approach,'' said Dan M. Palmer, Concord chairman and CEO. ``As expected, revenue growth was slower in the fourth quarter due to lower average ticket size, but impact on profits was minimal because the vast majority of our transactions are priced on a fee basis rather than a percentage of ticket amount. In addition, selling, general and administrative expenses continued to decline on an absolute and relative basis, and our company-wide consolidation activities produced cost efficiencies across a growing transaction base. The result was sustained profitability growth during a difficult period for the economy, and an impressive 19% growth in operating income per transaction, excluding charges, in 2001 over 2000.''
Financial Highlights
Revenue for the fourth quarter of 2001 was $473.6 million, up 18% compared to $401.5 million in the fourth quarter of 2000. For the full year 2001, company revenue was $1,707.0 million compared to $1,407.1 million in 2000, a 21% increase.
Net income was $89.8 million in the fourth quarter of 2001, or $0.17 diluted earnings per share, compared to $65.9 million, or $0.13 diluted earnings per share, in the fourth quarter of 2000. Earnings per share are restated to reflect a 2-for-1 stock split completed September 28, 2001.
Excluding acquisition expenses and restructuring charges for all periods, net income for the full year 2001 was $302.8 million, or $0.59 diluted earnings per share, compared to $218.1 million, or $0.44 diluted earnings per share, in 2000.
A one-time charge of $86.4 million, net of taxes, was incurred in the first quarter of 2001 in conjunction with a company-wide consolidation plan to expedite the integration of recent acquisitions. In 2000, an acquisition-related charge of $0.7 million, net of taxes, was incurred in the first quarter in the acquisition of Card Payment Systems, Inc., and in the third quarter an acquisition-related charge of $7.5 million, net of taxes, was incurred in the acquisition of Cash Station, Inc. Including the charges and adjusting for the stock split, diluted earnings per share was $0.42 in 2001 and $0.42 in 2000.
Business Highlights
Transactions. Total transaction volume grew to 9.1 billion in 2001 from 8.0 billion in 2000, an increase of 14%. Network Services transaction volume grew 11% in 2001, while Payment Services transactions were up 19% for the year.
Acquisitions. In January 2002, Concord acquired H & F Services, Inc., an independent sales organization, which added approximately 240 experienced sales people to Concord's sales force. The acquisition, which is not expected to have a material impact on operating income, is expected to reduce the average cost of acquiring small merchant accounts and reduce the cost of operations, with an offsetting increase in selling, general and administrative expenses. In December 2001, Concord announced that it had reached an agreement to acquire The Logix Companies, LLC, an electronic transaction processor based in Longmont, Colorado. A private limited liability company, Logix provides financial institutions, retailers, and independent sales organizations with ATM processing, electronic check conversion, identification and authentication services, data base development and reporting, and merchant processing services. The acquisition is expected to be completed in the first quarter of 2002. Also during 2001, Concord completed its acquisition of Star Systems, Inc., the nation's leading PIN-secured debit network, and expanded its interest in Primary Payment Systems, Inc., a risk management firm.
New Products. Concord launched its new Internet gateway, EFSnet(sm), in June 2001. Built using international Web Services standards, EFSnet makes connecting to Concord's payment processing platform faster and easier by eliminating the need for extensive programming and certification. Currently available for Web-based payments, EFSnet can also be used by brick-and-mortar merchants to use the Internet in place of dial-up connections for their point of sale terminals.
New Business. In its Network Services division, Concord signed 275 new financial institution contracts for STAR network access in 2001, and cross-sold processing services to 412 STAR participants. In its Payment Services segment, Concord added 102,600 new merchant locations.
Operational Improvements. Concord completed moves into two new state-of-the-art data centers in Atlanta, Georgia and Maitland, Florida in 2001. As outlined in a corporate-wide consolidation plan, Concord also closed two facilities, consolidated two data centers, and reached an agreement with eFunds to bring the outsourced Milwaukee switch in-house. Together these actions are expected to reduce facilities costs by approximately 20% in 2002.
``Concord is beginning 2002 stronger than ever, with an excellent sales force, state-of-the-art data centers, an efficient infrastructure, an expanding network, and emerging products on the horizon that we expect will expand and enhance Concord's services,'' said Edward A. Labry III, Concord president. ``I am enthusiastic about the future, and Concord's opportunities for continued growth.''
Selected Consolidated Financial Data
The following table presents selected consolidated financial data (in thousands, except earnings per share) for the fourth quarter of 2001 and 2000. Earnings per share and number of shares have been restated to reflect the stock split.
Quarter Ended:
Dec. 31, 2001 Dec. 31, 2000
------------- -------------
Revenue $ 473,604 $ 401,467
Cost of Operations 329,514 287,353
Selling, General and
Administrative Expenses 21,655 22,480
Acquisition Expenses and
Restructuring Charges -- --
Operating Income 122,435 91,634
Interest Income 20,244 14,316
Interest Expense (3,184) (3,008)
Income Taxes 49,520 36,924
Minority Interest in Subsidiary 215 132
Net Income 89,760 65,886
Basic Earnings Per Share $ 0.18 $ 0.14
Diluted Earnings Per Share $ 0.17 $ 0.13
Shares Used For:
Basic Earnings Per Share 505,680 480,378
Diluted Earnings Per Share 528,676 503,878
The following table presents selected consolidated financial data (in thousands, except earnings per share) for the full year 2001 and 2000. Earnings per share and number of shares have been restated to reflect the stock split.
(1)Excluding Charges
----------------------
Year Ended: Year Ended:
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2001 2000 2001 2000
---------- ---------- ---------- ----------
Revenue $1,707,002 $1,407,140 $1,707,002 $1,407,140
Cost of Operations 1,203,815 1,009,954 1,203,815 1,009,954
Selling, General and
Administrative
Expenses 90,529 91,995 90,529 91,995
Acquisition Expenses
and Restructuring
Charges(1) 125,362 11,691 -- --
Operating Income 287,296 293,500 412,658 305,191
Interest Income 70,668 48,182 70,668 48,182
Interest Expense (13,074) (10,939) (13,074) (10,939)
Income Taxes 127,958 120,220 166,940 123,699
Minority Interest in
Subsidiary 526 597 526 597
Net Income 216,406 209,926 302,786 218,138
Basic Earnings
Per Share $ 0.44 $ 0.44 $ 0.61 $ 0.46
Diluted Earnings
Per Share $ 0.42 $ 0.42 $ 0.59 $ 0.44
Shares Used For:
Basic Earnings
Per Share 494,747 478,358 494,747 478,358
Diluted Earnings
Per Share 516,958 495,993 516,958 495,993
Conference Call Information
A conference call to discuss the results will be held at 10:00 a.m. CST (11:00 a.m. EST) on Tuesday, February 12, 2002 with Dan M. Palmer, chairman and chief executive officer, Edward A. Labry III, president, and Edward T. Haslam, chief financial officer. Access to the call will be available via phone (audio-only) and the Internet (audio with a user-controlled slide presentation). The listen-only conference call number for the United States is 877/261-8990, ID No. 5299648. The international call-in number is 847/619-6441, ID No. 5299648. A replay of the call's audio will be available through February 18, 2002 by calling 888/843-8996, ID No. 5299648 (U.S.), or 630/652-3044, ID No. 5299648 (international).
To participate via the Internet, go to www.ceft.com and click on the link ``webcast'' up to 15 minutes in advance of the call. A replay of the webcast will be available through February 26, 2002 at www.ceft.com by clicking the link ``webcast replay.''
Concord is a leading, vertically-integrated electronic transaction processor, providing transaction authorization, data capture, settlement and funds transfer services to financial institutions, supermarkets, petroleum retailers, convenience stores, and other independent retailers. Concord's primary activities include Network Services, providing ATM driving, online and signature debit card processing, and STAR(sm) network access to the financial services industry; and Payment Services, providing credit, debit, check authorization, and electronic benefits transfer processing services to selected retail segments. Concord news releases, links to SEC filings, and other information are available on its corporate web site at www.concordefs.com. |
