Online Resources Posts First Quarter 2006 Results; Core Earnings at High End of Guidance.CHANTILLY Chan·til·ly A village of northern France north of Paris. It was long noted for its fine porcelain and delicate lace. Population: 10,065. , Va. -- Online Resources Corporation (Nasdaq:ORCC ORCC Ohio Regional Campus Conference ORCC Outwardly Rectifying Chloride Channel ORCC Ottawa Regional Cancer Center ORCC Old Roman Catholic Church ORCC Online Resources & Communications Corporation (now named Online Resources Corporation) ), a leading provider of Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , today reported financial and operating results for the three months ended March 31, 2006. The following results reflect the introduction in 2006 of equity compensation and tax expensing, which were not included in first quarter 2005 results. First quarter 2005 also benefited from three large clients who were acquired and departed from the Company's platform. --Revenue for the first quarter of 2006 was $16.7 million, up 11 percent from $15.1 million in first quarter 2005. After adjusting the 2005 period for the acquired clients, revenue would have increased 23 percent. --Earnings before interest, taxes, depreciation and amortization (Ebitda), a non-GAAP measure, was $3.1 million, an 11 percent decline from $3.5 million in the prior year. After adjusting the 2005 period for the acquired clients, Ebitda would have increased an estimated 30 percent. --Net income was $0.8 million, down 66 percent versus $2.2 million in the prior year. Net income per share was $0.03, down 70 percent versus $0.10 per share in 2005. After adjusting the 2005 period for the acquired clients and accounting changes, net income per share was up $0.02 per share over an estimated $0.01 per share in the prior year. --Core net income, a non-GAAP measure, was $1.5 million, a 34 percent decrease versus $2.3 million in 2005. Core net income per share was $0.06 versus $0.11 in the prior year. After adjusting the 2005 period for the acquired clients and accounting changes, core net income per share was up $0.02 per share over an estimated $0.04 per share in 2005. "Operating results were strong in the quarter, as we achieved the high end of our guidance for core earnings and exceeded First Call consensus," stated Matthew Matthew one of the twelve disciples. [N.T.: Matthew] See : Evangelism P. Lawlor, chairman and chief executive officer of the Company. "The Company got out of the blocks quickly this year with a record sequential One after the other in some consecutive order such as by name or number. increase in users of our banking and payment services. We took a big stride toward meeting our 2005 goal of doubling consumer billpay adoption by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2007." Lawlor continued, "We also proceeded with a planned expansion in development spending. These initiatives are beginning to pay-off, as reflected in the signing of a number of major clients. For the remainder of 2006, we look forward to a return to healthy sequential growth in revenue and earnings." 2006 Business Outlook The Company provided guidance for the second quarter and reiterated guidance for full year 2006. Guidance includes equity compensation and tax expensing in 2006, but not in 2005. Guidance also does not anticipate the release of any additional valuation allowance in 2006, though the Company may do so. This guidance is in millions, except for per share data. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , and actual results may differ materially.
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Second Quarter Full Year
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2005 2006 % 2005 2006 %
Actual Guidance Change Actual Guidance Change
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Revenue $14.3 $17.4-17.9 23% $60.5 $72.0-75.0 21%
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Ebitda (a)(b) $2.9 $3.7-4.1 34% $13.9 $17.9-18.9 32%
----------------------------------------------------------------------
Per share $0.11 $0.13-0.15 27% $0.54 $0.64-0.68 22%
----------------------------------------------------------------------
Net Income
(e)(f) $1.6 $1.0-1.3 nc $22.7 $6.1-6.7 nc
----------------------------------------------------------------------
Per share $0.06 $0.04-0.05 nc $0.88 $0.22-0.24 nc
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Core Net
Income
(a)(c)(d)(f) $1.6 $1.7-2.0 nc $9.4 $8.7-9.1 nc
----------------------------------------------------------------------
Per share $0.06 $0.06-0.07 nc $0.36 $0.31-0.33 nc
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Fully Diluted
Shares 26.5 27.6 4% 25.9 27.7 7%
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nc = not comparable
(a) The Company uses non-GAAP (Generally Accepted Accounting
Principles) financial measures, including Ebitda and core net
income, to evaluate performance and establish goals. It believes
that these measures are valuable to investors in assessing the
Company's operating results when viewed in conjunction with GAAP
results.
(b) Ebitda is a pro forma measure defined as earnings before interest,
taxes, depreciation, amortization and equity compensation expense.
(c) Core net income is a pro forma measure defined as net income
before the amortization of acquisition-related intangible assets,
equity compensation expense, merger-related charges,
restructuring-related charges, impairment charges, cumulative
effect of change in accounting methods, income tax benefit from
the release of valuation allowance and non-recurring tax charges.
Some or all of these items may not be applicable in any given
reporting period. Core net income for the 2005 periods does not
reflect a full tax rate.
(d) Excludes amortization of acquisition-related intangible assets of
approximately $0.1 million for the first quarters of 2006 and
2005, and $0.5 and $0.4 million for the years 2006 and 2005,
respectively. Excludes equity compensation expense of
approximately $0.6 million for the first quarter 2006 and $2.4
million for the year 2006.
(e) Net income and net income per share for full year 2005 include a
$13.7 million benefit from the release of valuation allowance
against the Company's deferred tax asset.
(f) Year over year comparisons for net income, core net income and
their associated per share amounts are not comparable because of
one or more of the following: 1) differences in tax rates, 2) tax
benefit from the release of valuation allowance in full year 2005,
or 3) equity compensation expense in the 2006 periods.
The Company's management will host a conference call to discuss the results today at 5:00 p.m. ET. The conference call dial-in number is (800) 938-1087 for domestic participants and (706) 679-7266 for international participants. Alternatively, a live web cast of the call will be available through the "Investors" section of Online Resources' web site at www.orcc.com. The call and web cast will be recorded and available for playback Playback could mean:
About Online Resources Online Resources powers web-based financial services for over 800 firms nationwide. The Company provides a suite of proprietary banking and payment services that are branded to its client banks, credit unions, card issuers and billers. The Company serves over 4 million consumer end-users and processes $15 billion in payments annually. Founded in 1989, Online Resources (Nasdaq:ORCC, Website: www.orcc.com) is a recognized leader in financial technology services. This news release contains statements about future events and expectations, which are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ." Any statement in this release that is not a statement of historical fact may be deemed to be a forward-looking statement. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. Specifically factors that might cause such a difference include, but are not limited to: the company's history of losses and anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of future losses; the company's dependence on the marketing efforts of third parties; the potential fluctuations in the company's operating results; the company's potential need for additional capital; the company's potential inability to expand the company's services and related products in the event of substantial increases in demand for these services and related products; the company's competition; the company's ability to attract and retain skilled personnel; the company's reliance on the company's patents and other intellectual property; the early stage of market adoption of the services it offers; consolidation of the banking and financial services industry; and those risks and uncertainties discussed in filings made by the company with the Securities and Exchange Commission, including those risks and uncertainties contained under the heading "Risk Factors" in the company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. , latest 10-Q, and S-3 as filed with the Securities and Exchange Commission. These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements.
Online Resources Corporation
Quarterly Operating Data
(Unaudited)
Total % Change
----------------------------------- -----------
1Q05(1) 2Q05 3Q05 4Q05 1Q06 1Q06 1Q06
vs. vs.
4Q05 1Q05
BANKING SERVICES
Revenue (#M) $12.5 $12.4 $13.5 $13.9 $14.7 6% 18%
Users (#K) 1,195 1,243 1,346 1,475 1,631 11% 36%
Account Presentation
(#K) 501 511 577 638 716 12% 43%
Bill Payment (#K) 828 858 907 984 1,072 9% 29%
Adoption Rate (%)
Account
Presentation(2) 27.6% 28.1% 26.9% 29.0% 31.9% 10% 16%
Bill Payment(3) 9.0% 9.5% 9.1% 9.6% 10.3% 7% 14%
Other Metrics
Bill Payment
Transactions (#M) 10.9 11.3 11.6 12.4 13.9 12% 28%
Clients 740 740 799 820 840 2% 14%
CARD & CREDIT SERVICES
Revenue (#M) $2.6 $1.9 $1.8 $1.8 $2.0 11% -23%
Users (#K) 2,213 2,405 2,587 2,811 2,946 5% 33%
Adoption Rate (%)(4) 15.7% 16.0% 16.4% 17.3% 17.9% 3% 14%
Clients 6 6 7 8 9 13% 50%
TOTAL COMPANY
Users 3,408 3,648 3,933 4,286 4,577 7% 34%
Clients 746 746 806 828 849 3% 14%
Notes:
(1) Client and user counts do not include Sears, a Card Services
client whose portfolio had been acquired prior to our acquisition
of Incurrent and came off our platform in 2Q05.
(2) The number of end-users divided by the 2.2 million total launched
checking and other eligible accounts held with our Banking
Services clients. The numbers of checking accounts are as reported
to us by our clients.
(3) The number of end-users divided by the 10.4 million total
payments-eligible launched checking accounts held with our Banking
Services clients. The number of checking account are as reported
to us by our clients.
(4) The number of users divided by the 16.5 million active card
accounts held with our Card Services clients. Based on industry
averages, we have defined active card accounts to be 50% of total
card accounts, and like the industry, are reporting adoption rates
against the active card account base.
Online Resources Corporation
Consolidated Statement of Operations
(In thousands, except per share data)
THREE MONTHS ENDED
MARCH 31,
-----------------------
2006 2005
----------- -----------
(Unaudited) (Unaudited)
Revenues:
Account presentation services $ 1,928 $ 2,827
Payment services 10,395 8,443
Relationship management services 2,097 2,045
Professional services and other 2,297 1,797
----------- -----------
Total revenues 16,717 15,112
Expenses:
Cost of revenues 7,661 6,235
----------- -----------
Gross profit 9,056 8,877
General and administrative 4,425 3,364
Selling and marketing 2,708 2,145
Systems and development 1,143 1,125
----------- -----------
Total expenses 8,276 6,634
----------- -----------
Income from operations 780 2,243
Other income (expense)
Interest income 599 29
Interest expense (2) (4)
----------- -----------
Total other income 597 25
----------- -----------
Income before taxes 1,377 2,268
Income tax provision (benefit) 620 60
----------- -----------
Net income $ 757 $ 2,208
=========== ===========
Net income per share
Basic $ 0.03 $ 0.11
Diluted $ 0.03 $ 0.10
Shares used in calculation of net income per
share:
Basic 25,303 19,358
Diluted 27,447 21,606
Reconciliation of net income to Ebitda (See
Note 1):
Net income $ 757 $ 2,208
Depreciation and amortization 1,746 1,283
Equity compensation expense 617 -
Other income (597) (25)
Income tax provision 620 60
----------- -----------
Ebitda (See Note 1) $ 3,143 $ 3,526
=========== ===========
Reconciliation of net income to core net
income (See Note 2):
Net income $ 757 $ 2,208
Equity compensation expense 617 -
Amortization of intangible assets 138 78
----------- -----------
Core net income (see Note 2) $ 1,512 $ 2,286
=========== ===========
Notes:
1. Ebitda represents earnings before interest, taxes, depreciation
and amortization, and equity compensation expense.
2. Core net income represents net income before the amortization of
acquisition-related intangible assets, equity compensation
expense, merger-related charges, restructuring-related charges,
impairment charges, cumulative effect of change in accounting
methods, income tax benefit from the release of valuation
allowance and non-recurring tax charges. Some or all of these
items may not be applicable in any given reporting period.
Online Resources Corporation
Condensed Consolidated Balance Sheets
(In thousands)
MARCH 31, DECEMBER 31,
2006 2005
------------ ------------
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $ 56,043 $ 55,864
Restricted cash 1,617 2,220
Accounts receivable, net 8,002 7,262
Deferred implementation costs 695 609
Deferred tax asset, current portion 1,413 2,030
Prepaid expenses and other current assets 1,064 1,034
------------ ------------
Total current assets 68,834 69,019
Property and equipment, net 16,617 15,242
Deferred tax asset, less current portion 11,635 11,635
Goodwill 16,322 16,322
Intangible assets 2,191 2,330
Deferred implementation costs, less current
portion 546 521
Other assets 608 527
------------ ------------
Total assets $ 116,753 $ 115,596
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued expenses and
other current liabilities $ 3,410 $ 4,524
Deferred revenues 2,793 2,638
Deferred rent obligation 172 161
Capital lease obligation 1 8
------------ ------------
Total current liabilities 6,376 7,331
Deferred revenues, less current portion 1,121 1,213
Deferred rent obligation, less current
portion 1,829 1,796
Other long-term liabilities 1,595 2,220
------------ ------------
Total liabilities 10,921 12,560
Stockholders' equity 105,832 103,036
------------ ------------
Total liabilities and stockholders'
equity $ 116,753 $ 115,596
============ ============
Online Resources Corporation
Condensed Consolidated Statement of Cash Flows
(In thousands)
THREE MONTHS ENDED
MARCH 31,
-----------------------
2006 2005
----------- -----------
(Unaudited) (Unaudited)
Operating activities:
Net income $ 757 $ 2,208
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,746 1,283
Provision for losses on accounts
receivable - 2
Amortization of discount premium - (1)
Equity compensation expense 617 -
Deferred tax expense 617 -
Changes in assets and liabilities (1,990) 10
----------- -----------
Net cash provided by operating
activities 1,747 3,502
Investing activities:
Purchases of property and equipment (2,983) (1,496)
Net purchases of available-for-sale
securities - (1,000)
----------- -----------
Net cash used by operating activities (2,983) (2,496)
Financing activities:
Proceeds from the issuance of common stock 1,422 848
Repayment of capital lease obligations (7) (4)
----------- -----------
Net cash provided by financing activities 1,415 844
----------- -----------
Net increase in cash and cash equivalents 179 1,850
Cash and cash equivalents at beginning of
period 55,864 3,342
----------- -----------
Cash and cash equivalents at end of period $ 56,043 $ 5,192
=========== ===========
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