PMT Services, Inc. announced record financial results for the third quarter and first nine months of fiscal 1998 yesterday. For the third quarter, which ended April 30, 1998, revenues increased 35.2% to a record $102,559,000 from $75,866,000 for the third quarter of fiscal 1997. Fully taxed net income before nonrecurring expenses also increased to a record of $6,686,000, up 42.9% from $4,678,000. Fully taxed earnings per diluted share before nonrecurring expenses for the latest quarter increased 27.3% to $0.14 from $0.11 for the third quarter of fiscal 1997. These results excluded nonrecurring merger-related expenses and included a normalized tax rate of 38% to reflect fully taxed results of merged entities as if they had historically been C Corporations instead of Sub-Chapter S Corporations.
Revenues for the first nine months of fiscal 1998 were $295,884,000, an increase of 28.5% from $230,266,000 for the same period in fiscal 1997. Fully taxed net income before nonrecurring expenses rose 36.5% to $19,178,000, or $0.40 per diluted share, from $14,052,000, or $0.32 per diluted share. These results reflect the same adjustments discussed above.
Commenting on the announcement, Mr. Roberts said, “As is clearly evident in the third quarter’s results, PMT has continued to benefit from the successful implementation of its growth strategies. These strategies are based on the ongoing expansion of our merchant portfolio, both through internal merchant account generation, as well as the purchase of merchant portfolios or the acquisition of existing businesses. As a result of our efforts to expand PMT’s field sales force during the past two years, the Company now generates approximately 4,000 new merchant accounts each month. In addition, during the third quarter, we completed three portfolio purchases and the acquisition of an existing independent service organization.
“The expansion of the merchant portfolio was primarily accountable for the growth in quarterly revenues to above $100 million for the first time in PMT’s history. The economies of scale produced by this growth, combined with revenue enhancement programs and better vendor pricing, produced a substantial increase in the Company’s gross profit margin for the quarter to 29.3% as compared to 28.2% for the third quarter of fiscal 1997.
“Given the highly fragmented nature of PMT’s small merchant market place and the Company’s position as one of the leading providers among its peers, we are confident of our prospects for further revenue growth and margin expansion. Since the end of the third quarter, we have completed two additional transactions – a merchant portfolio purchase and the acquisition of MBN National which increased our aggregate transactions for fiscal 1998 to date to nine. Together, these nine purchases or acquisitions have added annualized charge volume of approximately $4.4 billion to the Company’s base of approximately $12 billion in annualized charge volume at the end of fiscal 1997.”
PMT Services, Inc. is an independent service organization which markets and services electronic credit card authorization and payment systems to small retail and professional businesses located throughout the United States. PMT’s account portfolio has grown through the internal development of accounts using telemarketing and a field sales force as well as through the purchase of account portfolios. PMT is one of the largest independent service organizations in the country.
Investors are cautioned that this release contains forward- looking statements, such as those relating to PMT’s ability to produce continued profitable growth and the continued consolidation of the electronic transaction processing industry, that are based upon current expectations and involve a number of risks and uncertainties. Actual operations and results may differ materially from those expressed in the forward-looking statements made by the Company. The factors that could cause actual results to vary include PMT’s ability to retain and expand its field sales force; the ongoing performance of the field sales and telemarketing personnel; the actual production of new accounts by alliance partners; the Company’s ability to integrate acquisitions successfully with its processing systems and products and to account for acquisitions as poolings of interests; the availability of attractive acquisition targets; the availability of capital, attrition of merchants from acquired portfolios; and other trends or uncertainties as noted in PMT’s periodic filings with the SEC.
PMT SERVICES, INC.
Unaudited Financial Highlights
(in thousands, except per share data)
Three Months Ended Nine Months Ended
April 30, April 30,
1998 1997 1998 1997
Revenues $ 102,559 $ 75,866 $295,884 $ 230,266
Net income(1) $ 6,509 $ 4,543 $ 18,554 $ 12,743
Earnings per share:(1)
Basic $ 0.14 $ 0.10 $ 0.40 $ 0.29
Diluted $ 0.13 $ 0.10 $ 0.39 $ 0.29
Weighted average shares
Basic 47,694 43,471 46,881 43,236
Diluted 48,998 44,492 47,985 44,437
(1) Includes nonrecurring expenses related to merger transactions and excludes adjustments necessary to reflect the fully taxed results of acquisitions as if they had historically been C Corporations instead of Sub-Chapter S Corporations. Pro forma results excluding nonrecurring expenses and reflecting a full tax rate (38%) are shown below:
Three Months Ended Nine Months Ended
April 30, April 30,
Pro Forma Results: 1998 1997 1998 1997
Net income $ 6,686 $ 4,678 $ 19,178 $ 14,052
Diluted earnings per
share $ 0.14 $ 0.11 $ 0.40 $ 0.32