STRATEGIC PARTNERS
April 26, 2001
SCOTTSDALE, Ariz. -- eFunds Corporation (Nasdaq:EFDS), a provider of electronic payment, risk management and information technology services, announced that revenues for the first quarter ended March 31, 2001 reached $124.5 million, a 24.2 percent increase over the $100.3 million reported for the first quarter of 2000.
Excluding special charges, operating income increased to $9.2 million for the first quarter of 2001 compared to operating income of $2.7 million for the comparable period in 2000. Net income, excluding special charges, was $6.1 million, or 13 cents per share, for the first quarter of 2001, compared to net income of $1.2 million, or 3 cents per share in 2000.
Including special charges of $3.2 million related to the company's closure of its operations in Bothell, Wash., operating income was $6 million and net income was $4.1 million, or 9 cents per share.
Excluding the special charges related to the Bothell closure, EBITDA (earnings before interest, taxes, depreciation and amortization) reached $18.9 million compared to $9.3 million for the first quarter of 2000. Including special charges, EBITDA was $15.7 million for the first quarter of 2001.
Gus Blanchard, chairman and CEO, noted that eFunds is seeing growth in its transaction processing business and relative stability in its customer base. "For example, earlier this month, we announced a five-year contract extension to provide processing services for Primary Payment Systems, a subsidiary of STAR Systems, Inc., and we are working on a proposal regarding a broader, mutually beneficial operating relationship that we expect to make to Concord EFS in the near future," he said.
Blanchard said the decision to close the Bothell, Wash. facility should result in between $4 to $5 million in annual savings for the company, beginning in 2002. The company incurred a $3.2 million pretax charge in the first quarter associated with this effort.
Payment systems and services net revenue increased $25.3 million, or 28.6 percent, to $113.8 million for the first quarter from $88.5 million for the first quarter of 2000. Gross margins as a percent of net revenue, decreased to 36 percent from 42.9 percent for the comparable period in 2000.
The decrease in gross margin was due to incremental costs associated with the ATM deployment and management agreement the company entered into in late 2000. Operating margins in this segment increased sharply over the previous year to over $6 million before special charges, reflecting the combined effect of cost improvements and the leveraging of existing infrastructure.
Government Services revenues decreased $1.1 million to $10.7 million during the first quarter from $11.8 million for the first quarter of 2000. The decrease was primarily due to the expiration of an EBT switching contract in the second quarter of 2000.
Although the company anticipates that revenues in this segment may decline as contracts expire, it is pursuing the extension or renewal of those contracts that can be renegotiated on a profitable basis. An example is the five-year renewal contract that was signed with the state of Minnesota in January of 2001. Operating income in the Government Services segment increased almost 50 percent as a result of cost containment efforts.
Transaction processing revenues, which were approximately 44 percent of total first quarter revenues, increased 29.8 percent over the first quarter of 2000. The company's ATM management and deployment agreement primarily drove this growth.
In addition, transaction volumes increased an average of approximately 25 percent over the previous year in all categories of ATM, POS, ACH and EBT processing. The volume increase was, however, somewhat offset by the effect of pricing structures agreed to as part of the renewal of long-term agreements in prior periods.
