CheckFree Corporation (Nasdaq: CKFR) today announced fourth quarter revenue of $203.0 million, representing 27 percent growth over the same period last year.
The Company's GAAP (Generally Accepted Accounting Principles) net income for the quarter was $11.9 million, or $0.13 per share, and underlying net income was $36.5 million, or $0.39 per share. CheckFree reported consolidated revenue of $757.8 million for fiscal 2005, representing 25 percent growth over fiscal 2004. For the year, the Company's GAAP net income was $46.8 million, or $0.50 per share, and underlying net income was $133.0 million, or $1.43 per share. Free cash flow was $37.4 million for the fourth quarter, and $172.0 million for the year as outlined in Attachment A.
GAAP Results: Net income for the fourth quarter was $11.9 million, compared to net income of $11.4 million for the same quarter last year. Earnings per share were $0.13 for the fourth quarter of fiscal 2005, compared to earnings per share of $0.12 for the fourth quarter of last year. For fiscal 2005, net income was $46.8 million, or $0.50 per share, compared to net income of $10.5 million, or $0.11 per share, for fiscal 2004. Net cash provided by operating activities was $47.0 million for the fourth quarter of fiscal 2005, compared to $53.9 million for the same period last year. Net cash provided by operating activities was $206.1 million for fiscal 2005, compared to $171.1 million for fiscal 2004.
Underlying Results: Underlying net income for the fourth quarter was $36.5 million, compared to $27.3 million for the same quarter of last year. Underlying earnings per share were $0.39 for the fourth quarter of fiscal 2005, compared to $0.30 for the fourth quarter of last year. For fiscal 2005, underlying net income was $133.0 million, or $1.43 per share, compared to underlying net income of $96.5 million, or $1.05 per share, for fiscal 2004. Underlying net income and earnings per share for the fourth quarter of fiscal 2005 exclude the amortization of acquisition-related intangible assets, a reorganization charge, an intangible asset impairment charge, and related tax benefits. Underlying net income and earnings per share for the fourth quarter of fiscal 2004 exclude the amortization of acquisition-related intangible assets and related tax benefits. A reconciliation of CheckFree's quarterly and annual underlying results to its GAAP results is included on pages 2 and 3 of Attachment A.
"CheckFree's businesses delivered solid results for the quarter. Electronic billing and payment transactions showed steady growth, portfolios under management continued to increase and the Software division performed well in an expanding global market," said Pete Kight, Chairman and Chief Executive Officer of CheckFree Corporation. "As a result, CheckFree enters the next fiscal year from a position of strength in our core businesses."
Fourth Quarter and Fiscal Year 2005 Highlights
For the fourth quarter of fiscal 2005, the Company reported that its Electronic Commerce division processed 244.9 million transactions for the quarter, a 4 percent sequential increase over the third quarter of fiscal 2005, and delivered 41.0 million electronic bills, a sequential increase of 11 percent over the previous quarter. For fiscal 2005, CheckFree processed 905 million transactions compared to 583 million transactions in the previous fiscal year, representing 55 percent annual growth, which includes a full year of walk-in-payment transactions. CheckFree Investment Services now has 1.9 million portfolios under management compared to about 1.6 million portfolios under management at the end of fiscal 2004, representing 20 percent annual growth, and the Software business delivered another solid year of performance, with revenue growth of 20 percent over fiscal 2004.
Refer to Attachment B for details on the financial performance of CheckFree's divisions in the fourth quarter of fiscal 2005, and Attachment C for electronic billing and payment metrics.
Financial Outlook for Fiscal 2006 and the First Quarter of Fiscal 2006
"For fiscal 2006, we expect earnings per share of $1.11 to $1.16 on a GAAP basis and $1.50 to $1.54 on an underlying basis," said CheckFree Chief Financial Officer, David Mangum. "These expectations take into account the expiration of TransPoint guaranteed revenue minimums during the year."
"We expect free cash flow of about $170 million for fiscal 2006, essentially flat over fiscal 2005, due to our status as a full-year cash-basis taxpayer without the benefit of the tax credits we utilized in fiscal 2005," he continued.
"For the first quarter of the year, we estimate revenue between $204 and $209 million with GAAP earnings per share in the range of $0.19 to $0.22," said Mangum. "This equates to underlying earnings per share in the range of $0.37 to $0.39."
"We estimate that sequential transaction growth in the first quarter of 2006 will be in the range of 5 to 8 percent, an increase from our traditional quarterly growth expectations primarily due to the migration of former FleetBank Financial electronic billing and payment subscribers to our platform," he continued. "We expect performance to remain steady in the Investment Services business, while our Software division is expected to experience a normal, seasonally light first quarter for license sales," Mangum concluded.
The difference between GAAP and underlying earnings expectations for fiscal 2006 and the first quarter of fiscal 2006 is due to expected acquisition-related intangible amortization expense, expenses related to stock options issued prior to July 1, 2004, and related tax benefits.
The Company also announced that in the fourth quarter it repurchased $33.5 million of its common stock under a $40 million stock repurchase program previously authorized by its Board of Directors, which expires August 31, 2005. The Company's Board of Directors recently approved a new, separate stock repurchase program under which CheckFree may repurchase up to $60 million of its common stock through July 31, 2006.Download the document now 45.7 kb (Adobe Acrobat Document)