EFunds Corporation (NYSE: EFD), a leading provider of electronic payments, risk management and related outsourcing solutions, today reported third quarter 2005 net revenue of $133.2 million, an increase of approximately 25% over the $106.4 million of net revenues reported by the Company's current operating segments during the comparable quarter in 2004.
Excluding the impact of the Company's acquisition of WildCard Systems in July, the revenues from the Company's current operating segments increased approximately 7% over the third quarter of 2004. Overall, revenues declined 5% from the $140.1 million reported for the third quarter of 2004 due to the impact from the sale of the Company's ATM deployment business in November 2004.
Operating income during the quarter increased 18% to $17.9 million, or 13% of net revenue, as compared to operating income of $15.2 million, or 11% of net revenue, reported in the third quarter of 2004. Included in the Company's third quarter operating results was a $2.1 million operating loss attributable to WildCard.
Third quarter 2005 net income increased 48% to $15.8 million, or $0.34 per diluted share, compared to net income of $10.7 million, or $0.22 per diluted share, reported for the same quarter in 2004. Results for the quarter ended September 30, 2005 include a non-recurring $4.7 million benefit from the adjustment of certain tax reserves.
For the nine months ended September 30, 2005, eFunds reported net income of $43.1 million, or $0.90 per diluted share, compared with net income of $29.5 million, or $0.60 per diluted share, reported in the first nine months of 2004. Reported operating income for the nine months ended September 30, 2005 was $55.0 million, or 15% of net revenue, as compared to $42.1 million, or 10% of net revenue, for the same period in the prior year. Net revenue from the Company's continuing operating segments increased 14% to $363.7 million from the $318.3 million reported in the first nine months of 2004. Overall, revenues declined 14% from the $421.7 million recorded in the first nine months of 2004 as a result of the Company's sale of its ATM deployment business last fall.
"Our results confirm we are building a very successful business. Our electronic payments segment continues to perform well, and we are seeing continued strong growth and margin improvement in our core EFT processing business. WildCard's performance is exceeding our original expectations and we believe this acquisition will help us further accelerate the performance profile of this segment," stated Paul Walsh, Chairman and Chief Executive Officer.
"Our risk management business exhibited good revenue growth due to both organic improvement and our acquisition activity. Operating income for this segment was also up significantly over the comparable prior year period. As anticipated, we saw some softness in our global outsourcing business due to the loss of a customer that was acquired and the completion of a customer in-sourcing migration project last summer. We are continuing our efforts to build the pipeline and momentum of this business and we believe the prospects for accomplishing this goal are good," stated Walsh.
The Company also completed a $100 million private placement of senior notes due 2012 during the quarter, the proceeds from which were used to repay the $100 million term loan incurred in connection with the acquisition of WildCard Systems.
The Company also reported that it now expects full year net revenue for 2005 to increase approximately 18 percent on a combined organic and acquisitive basis over the $431 million baseline revenue achieved across the Company's three current operating segments following the sale of its ATM portfolio in November 2004. The Company is now anticipating that its 2005 net income will approximate the high end of its previously published range of 25 - 35 percent over its 2004 net income of $40.8 million. The Company has also raised its 2005 revenue projections for WildCard and now expects that the fourth quarter net revenues from this business should be between $24 and $27 million. This projection reflects an improvement of approximately 35 - 40 percent over the revenues of $56.5 million WildCard recorded last year. The earnings dilution resulting from the WildCard acquisition during 2005 should be slightly less than the $.03 to $.05 previously anticipated by the Company, with this acquisition being accretive during the fourth quarter.
The foregoing expectations reflect the following assumptions:
- An effective tax rate between 33 and 35 percent for the balance of 2005;
- Cash outlays for capital expenditures and product development activities will be at or below the low end of the $35 to $40 million estimate included in the Company's prior guidance.
Although the Company has not yet completed its annual operating plan for 2006, full year 2006 revenues are currently expected to increase 15 to 22 percent over currently projected full year 2005 revenues and the Company now anticipates that 2006 diluted earnings per share will exceed the $1.15 and $1.25 range referenced in the Company's prior guidance.
The foregoing guidance does not include the effects of the adoption of SFAS 123R, which requires the expensing of stock options beginning January 1, 2006.» Download the document now 43.4 kb (Adobe Acrobat Document)