eFunds Corporation Reports First Quarter 2005 Results
Net Revenue of $114.2 Million
Net Income up 40% to $13.2 Million
Company Announces the Completion of $100 Million Stock Repurchase Plan
SCOTTSDALE, Ariz., May 4 -- eFunds Corporation (NYSE: EFD), a leading provider of risk management, electronic payments and related outsourcing solutions, today reported first quarter net revenue of $114.2 million. This amount represents an 8% improvement over the net revenues of $105.7 million reported by the Company`s core operating segments during the first quarter of 2004. Overall, revenues declined by 19% from the $140.9 million reported for the first quarter of 2004 as a result of the sale of the Company`s ATM deployment business in November 2004.
Operating income increased to $16.8 million, or 15% of net revenue, as compared to operating income of $14.0 million, or 10% of net revenue, reported in the first quarter of 2004. First quarter net income was $13.2 million, or $0.26 per diluted share, compared to net income of $9.4 million, or $0.19 per diluted share, reported for the same quarter in 2004.
"During the quarter, we saw revenue growth in our EFT processing and business process outsourcing businesses and steady improvement in the performance of our risk management operations. Overall, we feel that our first quarter results reflect solid progress towards meeting our full year financial and operational objectives," said Paul F. Walsh, Chairman and Chief Executive Officer.
"We also executed against our stated strategy to deploy capital towards complementary acquisitions and our share repurchase program," stated Walsh. "We acquired ClearCommerce Corporation, a provider of fraud prevention and payment processing solutions having particular application to card-not-present and online transactions. We executed an agreement to acquire India Switch Company, an India based provider of ATM management and processing services. This transaction, which is expected to close in the second quarter, will provide eFunds with a strong foothold into the emerging electronic payments market in India. Yesterday, we executed an agreement to acquire substantially all of the assets of National Check Protection Services, a provider of new account verification and employment screening services for financial services companies."
The Company also announced that it has completed its $100 million share repurchase program. The Company bought back approximately 4.6 million shares pursuant to this initiative.
Change to Reporting Segments
The Company`s segment reporting was revised during the first quarter to reflect the modifications in the Company`s cost allocation structure. Operating expenses have been reclassified based on an assessment of the Company`s technology and overhead costs and the realignment of these costs with the segments that receive the primary benefit from the use of the related resources. Prior year segment data has been reclassified to reflect this new presentation, which is detailed in the accompanying schedules.
Forward-looking statements
The Company expects full year net revenue for 2005 to increase approximately 8 to 12 percent on a combined organic and acquisitive basis over the $431 million baseline revenue achieved across the Company`s three remaining segments following the sale of its ATM portfolio in November 2004. The Company expects net income to increase 17 to 22 percent in 2005 over net income of $40.8 million reported in 2004 and to generate operating cash flow in 2005 consistent with the level achieved in 2004, excluding the one-time payment of the tax liabilities associated with the ATM Portfolio sale.
The foregoing expectations reflect the following assumptions:
• An effective annualized tax rate of approximately 33 percent; and
• Cash outlays for capital expenditures and product development of approximately $40 million.
Conference call
eFunds will hold a one-hour conference call today at 10:00 AM EDT to discuss the Company`s first quarter financial performance. To listen to the conference call, dial 800-399-5351. (International callers dial 706-643-1939.) The call will also be broadcast on the company`s Web site at www.efunds.com under the "Investor Relations" tab. Interested parties are encouraged to click on the web cast link 10 to 15 minutes prior to the start of the conference call.
Replay Information
A replay of the conference call will be available beginning two hours after the call`s completion and will play through 11:59 p.m. EDT on May 18, 2005. You may access the replay by dialing 800-642-1687 (international callers dial 706-645-9291) and entering the Conference ID number 5539427. Additionally, a replay of the conference call will be available via the eFunds Web site at www.efunds.com.
About eFunds
eFunds Corporation is an industry leader with nearly 30 years of experience and expertise in electronic payments and risk management. eFunds offers electronic funds transfer software and processing, risk management and related outsourcing solutions to financial institutions, electronic funds transfer networks, retailers, telecommunications providers, and government agencies around the world. Committed to providing excellent customer service and award-winning products, eFunds enables its clients to reduce transaction and infrastructure costs, detect potential fraud and enhance relationships with their customers. www.efunds.com
Statements made in this release concerning the Company`s or management`s intentions, expectations, or predictions about future results or events are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are necessarily subject to risks and uncertainties that could cause actual results to vary from stated expectations, and such variations could be material and adverse. Factors that could result in such a variation include, but are not limited to, the inherent unreliability of earnings and revenue growth predictions due to numerous factors, including many beyond the Company`s control, potential difficulties, delays and unanticipated expenses inherent in the development and marketing of new products and services, competitive factors, the unpredictability of merger and acquisition activity and the numerous risks and potential additional costs, disruptions and delays associated with the establishment of new business initiatives. Additional information concerning these and other factors that could cause actual results to differ materially from the Company`s current expectations is contained in the Company`s Annual Report on Form 10-K for the period ending December 31, 2004.
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