Attached files
file | filename |
---|---|
8-K - 8-K - EPIQ SYSTEMS INC | d75217d8k.htm |
EX-99.1 - EX-99.1 - EPIQ SYSTEMS INC | d75217dex991.htm |
Second
Quarter 2015 Earnings Conference Call
August 3, 2015 NASDAQ: EPIQ www.epiqsystems.com Exhibit 99.2 |
2 Forward Looking Statements & Use of Non-GAAP Measures This presentation includes forward-looking statements. These forward-looking statements include, but are not limited to any projection or
expectation of earnings, revenue or other financial items; the plans,
strategies and objectives of management for future operations; factors that may affect our operating results; new products or services; the demand for our products and services; our ability to consummate acquisitions, successfully integrate them into our operations and achieve expected synergies;
future capital expenditures; effects of current or future economic
conditions or performance; industry trends and other matters that do not relate strictly to historical facts or statements of assumptions underlying any of the foregoing. These forward-looking statements are based on our current expectations. In this press release, we make statements that
plan for or anticipate the future. Forward-looking statements
may be identified by words or phrases such as believe, expect, anticipate, should, planned, may, estimated, goal, objective,
seeks, and potential and variations of these
words and similar expressions or negatives of these words. Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, provide a safe harbor for forward-looking statements. Because forward-looking statements involve
future risks and uncertainties, listed below are a variety of factors
that could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in our forward-looking statements. These factors
include (1) failure to keep pace with technological changes and significant changes in
the competitive environment, (2) risks associated with cyber-attacks, interruptions or delays in services at data centers, (3) risks of errors or failures of software or services, (4) interruptions or delays in service at data centers we
utilize for delivery of our services, (5) undetected errors in, and
failure of operation of, software products releases, (6) our reliance on third-party hardware and software, (7) failure of our financial, operating and information systems to operate as intended, (8) our inability to attract, develop and retain executives and other qualified employees, (9) risks associated with the
integration of acquisitions into our existing business operations, (10)
risks associated with our international operations, (11) lack of protection of our intellectual property through patents and formal copyright registration, (12) risk of litigation against us for infringement of proprietary rights, (13) material changes in the number of bankruptcy filings, class action filings
or mass tort actions each year, or changes in government legislation or
court rules affecting these filings, (14) any material non-cash write-downs based on impairment of our goodwill, (15) fluctuations in our quarterly results that could cause fluctuations in the market price of our common stock, (16) our inability to maintain compliance with debt covenant ratios, (17) risks
associated with indebtedness and interest rate fluctuations, (18) risks
associated with provisions of our articles of incorporation that prevent a takeover of Epiq, (19) overall strength and stability of general economic conditions, both in the United States and in the global markets, (20) the impact of our current review process of strategic alternatives, and
(21) other risks detailed from time to time in our filings with the
Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. In addition, there may be other factors not included in our Securities and Exchange Commission filings that may cause actual results to differ materially from
any forward-looking statements. We undertake no obligation to update
publicly or revise any forward-looking statements contained herein to reflect future events or developments, except as required by law. This presentation includes the following non-GAAP financial measures: (i) adjusted net income (net loss adjusted for amortization of
acquisition intangibles, share-based compensation, intangible asset
impairment expense, acquisition and related expense, one-time technology expense, loan fee amortization, litigation expense, timing of recognition of expense, reorganization expense, loss on disposition of assets, strategic review expense and the effect of tax adjustments that are outside of Epiq
Systems anticipated effective tax rate, all net of tax), (ii)
adjusted earnings per share, calculated as adjusted net income on a fully diluted per share basis, and (iii) adjusted EBITDA (net loss adjusted for depreciation and amortization, share-based compensation, intangible asset impairment expense, acquisition and related expense, one-time technology
expense, net expense related to financing, litigation expense, timing of
recognition of expense, reorganization expense, loss on disposition of assets, strategic review expense and provision for (benefit from) income taxes). Income taxes typically represent a complex element of a companys income statement and effective tax rates can vary widely between different
periods. Epiq Systems uses an approximate statutory tax rate of 40%
to reflect income tax effects in the presentation of its adjusted net income and adjusted net income per share. Utilization of an approximate statutory tax rate for presentation of the non-GAAP measures is done to allow a consistent basis for investors to understand financial
performance of the company across historical periods. Although Epiq Systems reports its results using GAAP, Epiq Systems
also uses non-GAAP financial measures when management believes those measures provide useful information for its shareholders. These non-GAAP financial measures are intended to supplement the GAAP financial information by providing
additional insight regarding results of operations and to allow a
comparison with other companies, many of whom use similar non-GAAP financial measures to supplement their GAAP results. Certain items are excluded from these non- GAAP financial measures to provide additional comparability measures from period to period. These non-GAAP financial measures will not
be defined in the same manner by all companies and may not be comparable
to other companies. These non-GAAP financial measures are reconciled in the accompanying tables to the most directly comparable measures as reported in accordance with GAAP, and should be viewed in addition to, and not in lieu of, such comparable financial measures. |
Q2 2015
Earnings Conference Call 3
(1) A non-GAAP measure, refer to page 8 for reconciliation to most directly
comparable GAAP measure. (2) A non-GAAP measure, refer to page
9 for reconciliation to most directly comparable GAAP measure. (3)
A non-GAAP measure, refer to page 10 for calculation. Second Quarter
2015 Financial Results (In millions, except share count and
per share data) (Unaudited) Three months ended June 30, 2015 Three months ended June 30, 2014 Technology Segment Operating Revenue $93.2 $78.5 Bankruptcy & Settlement Administration Segment Operating Revenue $37.4 $36.9 Total Operating Revenue $130.6 $115.4 Net Loss ($3.2) ($3.4) Net Loss Per Diluted Share ($0.09) ($0.10) Adjusted EBITDA (1) $24.7 $24.7 Adjusted Net Income (2) $6.7 $7.4 Adjusted Earnings Per Share (EPS) (Diluted) (3) $0.18 $0.21 Adjusted Diluted Shares (in thousands) 37,119 35,765 Net Cash from Operating Activities $24.1 $19.6 |
Q2 2015
Earnings Conference Call 4
(In thousands) (Unaudited)
June 30, 2015 Dec 31, 2014 Cash and Cash Equivalents $18,916 $54,226 Trade Accounts Receivable, Net 148,158 117,854 Property and Equipment, Net 78,910 70,579 Goodwill 478,970 404,187 Other Intangibles, Net 55,795 29,605 Indebtedness 410,652 313,481 Equity 322,840 324,937 Selected Balance Sheet Data |
Q2 2015
Earnings Conference Call 5
(In thousands) (Unaudited)
Six months ended June 30, 2015 Six months ended June 30, 2014 Net Loss ($1,508) ($5,717) Non-cash Adjustments to Net Loss Depreciation and Amortization 25,758 24,241 Other, Net 11,731 5,615 Changes in Operating Assets and Liabilities, Net Trade Accounts Receivable (14,958) 6,907 Other, Net 6,908 (12,276) Net Cash Provided by Operating Activities 27,931 18,770 Cash from Operating Activities |
Q2 2015
Earnings Conference Call 6
Segment Operating Results
Technology Operating
Revenue
(In millions)
Technology Bankruptcy and Settlement Administration Operating Revenue Adjusted EBITDA Operating Revenue Adjusted EBITDA Q2 2015 $93.2 $24.0 $37.4 $9.5 Q2 2014 $78.5 $20.5 $36.9 $13.9 Bankruptcy & Settlement Administration Operating Revenue |
2015
Financial Guidance
Current guidance estimates for fiscal year 2015, which include the acquisition of Iris
Data Services, have not changed from the first quarter.
Guidance estimates may be updated in future periods as conditions permit (1) . 2015E Operating Revenue $500 - $520 million Adjusted EBITDA $109 - $115 million Adjusted EPS $0.90 - $0.96 (1) This guidance includes a number of assumptions based on current facts and expectations, which are subject to change.
Q2 2015 Earnings Conference Call
7 |
Q2 2015
Earnings Conference Call 8
(In thousands) (Unaudited)
Q2 2015 Q2 2014 Net Loss ($3,241) ($3,419) Plus: Depreciation and Amortization Expense 14,308 12,421 Share-based Compensation Expense 5,305 737 Intangible Asset Impairment Expense 1,162 - Acquisition and Related Expense (1) 1,710 211 One-time Technology Expense (2) - 1,532 Expense Related to Financing, Net (3) 5,383 3,767 Litigation Expense, Net (4) 17 1,457 Reorganization Expense (5) 790 9,267 (Gain) Loss on Disposition of Assets (31) 351 Strategic Review Expense 632 - Benefit from Income Taxes (1,322) (1,626) Adjusted EBITDA 24,713 24,698 (1) Acquisition and related expense includes one-time costs associated with acquisitions and fair value adjustments to
contingent consideration.
(2) One-time technology related costs associated with security and consolidation of data centers from acquisitions.
(3) Expense related to financing is net of interest income. (4) Litigation expense related to significant one-time matters. (5) Expenses primarily related to one-time charges for post-employment benefits.
Adjusted EBITDA Reconciliation |
Q2 2015
Earnings Conference Call
9 (In thousands, except per share data) (Unaudited) Q2 2015 Q2 2014 Net Income (Loss) ($3,241) ($3,419) Plus (net of tax (1) ): Amortization of Acquisition Intangibles 2,886 1,900 Intangible Asset Impairment Expense 697 - Share-based Compensation Expense 3,183 442 Acquisition and Related Expense (2) 1,029 163 One-time Technology Expense (3) - 919 Loan Fee Amortization and Write-off 631 219 Litigation Expense, Net (4) 147 1,016 Reorganization Expense (5) 474 5,560 (Gain) Loss on Disposition of Assets (19) 210 Strategic Review Expense 379 - Effective Tax Rate Adjustment (6) 503 392 Adjusted Net Income $6,669 $7,402 Adjusted Earnings Per Share Diluted $0.18 $0.21 (1) Individual adjustments are calculated using a tax rate of 40%. (2) Acquisition and related expense includes one-time costs associated with acquisitions and fair value adjustments to
contingent consideration.
(3) One-time technology related costs associated with security and consolidation of data centers from acquisitions.
(4) Litigation expense related to significant one-time matters. (5) Expenses primarily related to one-time charges for post-employment benefits.
(6) The effective tax rate adjustment reflects a non-GAAP provision for income taxes at a tax rate of 40%.
Adjusted Net Income Reconciliation |
Q2
2015 Earnings Conference Call 10
(In thousands, except per share data) (Unaudited)
Q2 2015 Q2 2014 Net Loss ($3,241) ($3,419) Basic Weighted Average Shares 36,536 35,365 Adjustment to reflect share-based awards - - Diluted Weighted Average Shares (1) 36,536 35,365 Net Loss Per Share Diluted ($0.09) ($0.10) Adjusted Net Income $6,669 $7,402 $0.18 $0.21 (1) Diluted weighted average shares outstanding for the three months ended June 30, 2015 and 2014 exclude the dilutive
impact of options outstanding due to the GAAP net loss reported for the respective
periods. Diluted Adjusted Earnings Per Share Calculation
Adjusted Earnings Per Share Diluted |
Investor Contacts Kelly Bailey Epiq Systems (913) 621-9500 IR@epiqsystems.com Chris Eddy Catalyst Global (212) 924-9800 epiq@catalyst-ir.com NASDAQ: EPIQ www.epiqsystems.com |