This excerpt taken from the EPIQ 8-K filed Apr 23, 2008.
Epiq Systems, Inc. Announces First Quarter 2008 Results – Reporting 25% Operating Revenue Growth
KANSAS CITY, Kan.--(BUSINESS WIRE)--Epiq Systems, Inc. (NASDAQ: EPIQ) today announced results of operations for the first quarter of 2008. Operating revenue (total revenue before operating revenue from reimbursed direct costs) of $43.9 million increased 25% compared to $35.1 million for the same period last year. An expanded discussion of operating revenue is provided below.
Net income for the first quarter of 2008 was $2.7 million or $0.07 per share compared to net income of $0.2 million or $0.00 per share for the year ago quarter.
First quarter 2008 net cash provided by operating activities was $7.8 million compared to $8.9 million for the year ago quarter. A condensed consolidated cash flow statement is attached.
Epiq Systems’ management also evaluates the following non-GAAP financial measures: (i) non-GAAP adjusted EBITDA (net income before interest/financing, taxes, depreciation, amortization, share-based compensation, non-cash mark-to-market adjustments, and acquisition-related expenses, and (ii) non-GAAP net income (net income before amortization of acquisition-related intangibles, share-based compensation, realized cash gains on financial instruments, non-cash mark-to-market adjustments, acquisition-related expenses, the effect of tax adjustments which are outside of our anticipated effective tax rate, and capitalized loan fee amortization, all net of tax). Reconciliation statements for non-GAAP financial measures are provided below.
First quarter 2008 non-GAAP adjusted EBITDA of $13.2 million increased 17% compared to $11.3 million for the year ago quarter.
Non-GAAP net income for the first quarter of 2008 increased 54% to $5.4 million or $0.14 per share compared to $3.5 million or $0.11 per share for the year ago quarter.
Our operating segments effective the first quarter of 2008 are Electronic Discovery, Bankruptcy, and Settlement Administration. The Electronic Discovery segment remains consistent with prior reporting periods. The new Bankruptcy segment includes the bankruptcy trustee (Chapter 7 & 13) and corporate restructuring (Chapter 11) businesses. The new Settlement Administration segment includes activities related to class action and related business.
Operating revenue for Electronic Discovery for the first quarter of 2008 increased 31% to $13.2 million compared to $10.1 million for the year ago quarter. New client engagements combined with increased work for existing clients and expansion of the international business contributed to the increase in operating revenue compared to the same period last year. Non-GAAP adjusted EBITDA for Electronic Discovery was $6.4 million, a 23% increase compared to $5.2 million for the year ago quarter.
Bankruptcy operating revenue for the first quarter of 2008 was $13.4 million, compared to $15.0 million for the year ago quarter. Changes in revenue between the quarters are related to ordinary quarterly fluctuations in Chapter 7 bankruptcy deposits and caseloads across all clients and Chapter 7 pricing tied to short-term interest rates. Retention of existing clients remains extremely high and we closed a variety of new client engagements during the first quarter. Non-GAAP adjusted EBITDA for the Bankruptcy business for the first quarter of 2008 was $10.8 million, which includes a cash gain on interest rate floor options of $3.5 million, compared to $9.1 million for the year ago quarter. We purchased interest rate floor options during 2007 in anticipation of short-term interest rates declining during 2008. We locked in on a cash gain on the options during the first quarter of 2008.
Settlement Administration operating revenue for the first quarter of 2008 was $17.3 million compared to $9.9 million in the year ago quarter. Non-GAAP adjusted EBITDA for the Settlement Administration business was $0.7 million for the first quarter of 2008 compared to $1.6 million for the year ago quarter. A major contract was launched in the first quarter of 2008. The contract had significant start-up costs in the first quarter, minimizing profit during the quarter, however, the contract is on track with achieving targeted profit and margin levels, which are projected to increase during future quarters.
Tom W. Olofson, chairman and CEO, and Christopher E. Olofson, president and COO of Epiq Systems, stated, “We are pleased to report strong financial and strategic results for the quarter, particularly in our growing electronic discovery business which grew 31% compared to the prior year. We are continuing to expand our domestic and international e-discovery business. So far in 2008, we have introduced the international version of DocuMatrix that supports 60+ foreign languages, added a new production facility in the United Kingdom, and acquired London-based Pinpoint Global Ltd., an innovative technology startup with complementary technology and clients. We now have active relationships with all but 1 of the Magic Circle law firms in London. Our bankruptcy business is also witnessing increased activity, most recently in the airline sector, which contributed several new recent engagements. Year to date, Epiq has been retained on more than 20 new corporate restructuring engagements compared with less than 10 new engagements for the same period last year. Industry reports suggest increased bankruptcy filings will continue going forward.”
Recent key events include: