NOVA Corporation announced a revised revenue projection of $406 million for the second quarter ended June 30, 2000, which falls short of analyst consensus expectations as reported by First Call/Thomson Financial.
“The difference in revenues relative to analyst projections is attributable to several factors,” said Edward Grzedzinski, NOVA Chairman and CEO. “First, the year over year performance in two large acquired portfolios has been disappointing,” Grzedzinski said. “Second, our base portfolio has not experienced typical seasonal volume growth, which may suggest lower levels of consumer spending, and finally, the average processing volume of merchant accounts added so far this year has been significantly less than our original forecast.” Grzedzinski added, “Despite the fact that we are disappointed in revenue performance for the quarter, it still represents a record quarter for the Company.”
NOVA Corporation also announced today that the Company has not completed its planned re-capitalization of its majority-owned subsidiary, Econex, LLC. Although the Company is continuing to pursue re-capitalization of Econex, generally accepted accounting principles require NOVA to record 100% of the losses experienced by Econex during 2000. The Company estimates that after-tax losses for Econex, including amounts attributable to the first quarter of 2000, will be in the range of $10 to $14 million for the full year. Grzedzinski said, “NOVA anticipated recording only the percentage of losses reflective of its ownership interest in Econex. The fact that Econex currently has a negative equity position requires us to reflect 100% of the losses for the year, which will persist until and unless Econex is re-capitalized. We anticipate that the combination of the revenue shortfall and the required Econex accounting treatment will put pressure on the Company’s financial performance for the quarter and, potentially, for the remainder of 2000.”
He concluded by saying, “When we finalize and formally announce NOVA’s results on August 9, 2000, we will be in a position to provide additional insight for the quarter and for the full year. We are confident that our strong market position, coupled with NOVA’s technology, sales and distribution strengths, will continue to enhance our position of leadership in both the domestic and international payment processing markets.”
About NOVA Corporation
NOVA Corporation (NYSE:NIS), headquartered in Atlanta, Ga., manages and transports payment and other business information on behalf of retailers, community banks and regional financial institutions. NOVA specializes in providing integrated credit and debit card payment processing services, related software application products and value-added services to more than 500,000 merchants in the U.S. NOVA merchant customers typically include small- to medium-sized merchants requiring a full spectrum of processing services. For more information on the company, visit [www.novacorp.net].