Revenue Increases 20%
Income from Operations Increases 92%
VANCOUVER, British Columbia, June 23, 2010 (GLOBE NEWSWIRE) -- LML Payment Systems Inc. (Nasdaq:LMLP), a leading payments technology provider of financial payment solutions for e-commerce and traditional businesses, reports results for its fiscal year ended March 31, 2010.
Revenue for the year ended March 31, 2010 was approximately $14.8 million compared to $12.3 million for the previous year - an increase of approximately 20%. Gross profit was $7.2 million or 48%. Income from operations was $1.2 million compared to $600,000 last year, an improvement of $551,000 or 92%. Income before taxes was $1,161,000 compared to $1,034,000 last year, an improvement of $127,000 or 12.3%. Net loss was ($126,000) or ($0.00) per share, compared to net income of $5,455,000 or $0.20 per share, last year.
Non-GAAP
Non-GAAP net income for fiscal year 2010 was approximately $3.7 million or $0.14 per share compared to approximately $1.9 million or $0.07 per share for fiscal 2009. Non-GAAP net income excludes stock-based compensation, depreciation and amortization, and other non-cash and non-recurring items.
"Overall, we are pleased with these results. All three of our business units produced positive cash flow. We were able to retire the remaining portion of our long-term debt of $2.3 million and produced $1,135,000 in cash from operations. Revenue in our TPP segment continued to grow at a 20% rate and we met some of the challenges confronting our check segment by continuing to maintain efficiencies. During the year, we entered into settlement discussions with many defendants, while entering into a license with one, regarding our patent litigation. Our tax planning strategy resulted in a non-cash future tax charge of $2.1 million for the year that had an impact on net earnings, but, importantly, we expect to be in a position this year to recover approximately $1.5 million in tax amounts paid and to shelter future taxable income as a result," said Patrick H. Gaines, Chief Executive Officer of LML.
Fiscal Year Highlights
- Revenue: $14.8 million - up 20%
- Income from operations: $1,147,000 - up 92% from last year
- Pre-tax net income $1,161,000, up 12.3%
- Retired last $2,321,000 of debt associated with Beanstream acquisition
- Cash provided from operations $1,135,000, an increase of $1,438,000 from last year
- New customers: 466
- New Channel Sales Partners: 112
- First defendant signed license and settled patent litigation in Eastern District of Texas
Conference Call
Management will host a conference call today at 1:30pm Pacific Time (4:30pm Eastern Time) to discuss these results. To participate in the conference call, please dial in 5-10 minutes before the start of the call and follow the operator's instruction. If you are calling from the United States or Canada, please dial 1-800-931-6361. International callers please dial 212-231-2915.
If you are unable to join the call, an audio recording of the call will be available on our website at www.lmlpayment.com.
About LML Payment Systems Inc. (www.lmlpayment.com)
LML Payment Systems Inc., through its subsidiaries Beanstream Internet Commerce Inc. in Canada and LML Payment Systems Corp. in the U.S., is a leading provider of financial payment processing solutions for e-commerce and traditional businesses. We provide credit card processing, online debit, electronic funds transfer, automated clearinghouse payment processing and authentication services, along with routing of selected transactions to third party processors and banks for authorization and settlement. Our intellectual property estate, owned by subsidiary LML Patent Corp., includes U.S. Patent No. RE40220, No. 6,354,491, No. 6,283,366, No. 6,164,528, and No. 5,484,988 all of which relate to electronic check processing methods and systems.
GAAP versus Non-GAAP Financial Information
In addition to GAAP financial measures, the Corporation has provided supplemental non-GAAP financial measures of net income and earnings per share, which exclude certain non-cash and non-recurring items. For purposes of this news release, non-GAAP net income and earnings per share exclude stock-based compensation expense under CICA 3870 and the FASB authoritative guidance regarding share-based payment, depreciation and amortization expense, and certain non-cash items. A reconciliation of adjustments of non-GAAP to GAAP results for the fourth quarter and fiscal year periods and prior periods is included in the enclosed table. The Corporation believes that non-GAAP financial measures are useful in assessing operating performance as they provide an additional basis to evaluate our ability to incur and service debt and to fund capital expenditures. The Corporation believes the non-GAAP financial measures provide investors with similar measurement tools as its management uses to evaluate performance. Specifically, the Corporation's management utilizes and relies upon certain financial reports which consist of an operating performance indicator without certain non-cash items such as amortization and depreciation and stock-based compensation to evaluate the Corporation's operational performance as it pertains to generating cash, measuring budget expectations and achieving performance milestones. Non-GAAP financial measures are not meant to be considered in isolation and should not be considered as alternatives to financial information prepared in accordance with GAAP. Furthermore, our method of calculating the non-GAAP financial measures presented in this news release may differ from methods used by other companies, and as a result, the non-GAAP financial measures disclosed herein may not be comparable to other similarly titled measures used by other companies.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing verbs such as "aims," "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects" or "targets" or nouns corresponding to such verbs. Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking statements are based on the opinions and estimates of the management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect LML's actual results include, among others, the impact, if any, of stock-based compensation charges, the potential failure to establish and maintain strategic relationships, inability to integrate recent and future acquisitions, inability to develop new products or product enhancements on a timely basis, inability to protect our proprietary rights or to operate without infringing the patents and proprietary rights of others, and quarterly and seasonal fluctuations in operating results. More information about factors that potentially could affect LML's financial results is included in LML's quarterly reports on Form 10-Q and our most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, LML undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.
| LML PAYMENT SYSTEMS INC. | |||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||
| (In U.S. Dollars, except share data) | |||
| (Unaudited) | |||
| Years ended March 31, | |||
| 2010 | 2009 | 2008 | |
| REVENUE | $14,825,667 | $12,378,848 | $ 11,327,878 |
| COSTS OF REVENUE (includes stock-based compensation expense of $148,228 (2009 -- $149,716; 2008 -- $42,449)) | 7,655,551 | 6,057,817 | 4,807,946 |
| GROSS PROFIT (excludes amortization and depreciation expense) | 7,170,116 | 6,321,031 | 6,519,932 |
| OPERATING EXPENSES | |||
| General and administrative (includes stock-based compensation expense of $1,038,447 (2009 -- $1,139,589; 2008 -- $1,217,984)) | 4,337,914 | 4,341,159 | 5,659,694 |
| Sales and marketing (includes stock-based compensation expense of $3,025 (2009 -- $3,033; 2008 -- $2,975)) | 416,617 | 323,103 | 227,935 |
| Product development and enhancement (includes stock-based compensation expense of $48,401 (2009 -- $48,534; 2008 -- $23,802)) | 467,686 | 272,499 | 177,704 |
| Amortization of property and equipment | 138,271 | 124,441 | 367,809 |
| Amortization of intangible assets | 662,576 | 660,893 | 537,679 |
| Gain (Loss) on disposal/abandonment of property and equipment | 3,830 | 864 | (726,325) |
| INCOME (LOSS) BEFORE OTHER INCOME (EXPENSES) AND INCOME TAXES | 1,150,882 | 599,800 | (1,177,214) |
| Foreign exchange gain (loss) | 89,455 | 444,050 | (229,661) |
| Other income (expense), net | (57,044) | 10,898 | (246,918) |
| Interest income | 25,036 | 226,472 | 406,063 |
| Interest expense | (47,771) | (247,536) | (358,756) |
| INCOME (LOSS) BEFORE INCOME TAXES | 1,160,558 | 1,033,684 | (1,606,486) |
| Income tax expense (recovery) | |||
| Current | (826,246) | 846,671 | 614,342 |
| Future | 2,112,630 | (5,268,153) | -- |
| 1,286,384 | (4,421,482) | 614,342 | |
| NET (LOSS) INCOME | $(125,826) | $5,455,166 | $(2,220,828) |
| (LOSS) EARNINGS PER SHARE, basic and diluted | $-- | $0.20 | $(0.10) |
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, | |||
| Basic | 27,116,408 | 26,834,165 | 21,869,404 |
| Diluted | 27,240,676 | 26,834,165 | 21,869,404 |
| LML PAYMENT SYSTEMS INC. | ||||
| Reconciliation of GAAP to Non-GAAP Financial Measures | ||||
| (In U.S. Dollars) | ||||
| (Unaudited) | ||||
| Three months ended March 31 | Years Ended March 31, | |||
| 2010 | 2009 | 2010 | 2009 | |
| GAAP Net (Loss) Income | $(185,214) | $5,155,038 | $(125,826) | $5,455,166 |
| Add stock-based compensation | 306,425 | 317,699 | 1,238,101 | 1,340,872 |
| Add amortization of property and equipment | 38,273 | 30,036 | 138,271 | 124,441 |
| Add amortization of intangible assets | 165,644 | 165,644 | 662,576 | 660,893 |
| Less foreign exchange gain | (22,219) | (71,801) | (353,935) | (370,692) |
| Less gain on disposal/abandonment of property and equipment | -- | -- | (3,830) | (864) |
| Add future tax expense (recovery) | 547,044 | (5,268,153) | 2,112,630 | (5,268,153) |
| Non-GAAP Net Income | $849,953 | $328,463 | $3,667,987 | $1,941,663 |
| GAAP Net (Loss) Earnings Per Share, basic | $(0.01) | $0.19 | $0.00 | $0.20 |
| Add stock-based compensation | 0.01 | 0.01 | 0.05 | 0.05 |
| Add amortization of property and equipment | 0.00 | 0.00 | 0.00 | 0.00 |
| Add amortization of intangible assets | 0.01 | 0.01 | 0.02 | 0.03 |
| Less foreign exchange gain | (0.00) | (0.00) | (0.01) | (0.01) |
| Less gain on disposal/abandonment of property and equipment | -- | -- | (0.00) | (0.00) |
| Add future tax expense (recovery) | 0.02 | (0.20) | 0.08 | (0.20) |
| Non-GAAP Net Earnings Per Share, basic | $0.03 | $0.01 | $0.14 | $0.07 |
| GAAP Net (Loss) Earnings Per Share, diluted | $(0.01) | $0.19 | $0.00 | $0.20 |
| Add stock-based compensation | 0.01 | 0.01 | 0.05 | 0.05 |
| Add amortization of property and equipment | 0.00 | 0.00 | 0.00 | 0.00 |
| Add amortization of intangible assets | 0.01 | 0.01 | 0.02 | 0.03 |
| Less foreign exchange gain | (0.00) | (0.00) | (0.01) | (0.01) |
| Less gain on disposal/abandonment of property and equipment | -- | -- | (0.00) | (0.00) |
| Add future tax expense (recovery) | 0.02 | (0.20) | 0.08 | (0.20) |
| Non-GAAP Net Earnings Per Share, diluted | $0.03 | $0.01 | $0.14 | $0.07 |
| LML PAYMENT SYSTEMS INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (In U.S. Dollars) | ||
| (Unaudited) | ||
| March 31, | ||
| 2010 | 2009 | |
| ASSETS | ||
| CURRENT ASSETS | ||
| Cash and cash equivalents | $5,069,763 | $6,138,530 |
| Funds held for merchants | 5,804,752 | 10,746,731 |
| Restricted cash | 175,000 | 175,000 |
| Accounts receivable, less allowance of $31,463 (2009: $31,785) | 799,584 | 801,087 |
| Corporate taxes receivable | 1,072,930 | -- |
| Prepaid expenses | 416,507 | 295,702 |
| Current portion of future income tax assets | 1,280,860 | 838,575 |
| Total current assets | 14,619,396 | 18,995,625 |
| PROPERTY AND EQUIPMENT, net | 219,580 | 227,324 |
| PATENTS | 455,304 | 622,730 |
| RESTRICTED CASH | 255,247 | 125,030 |
| FUTURE INCOME TAX ASSETS | 2,406,473 | 4,429,578 |
| GOODWILL | 17,874,202 | 17,874,202 |
| INTANGIBLE ASSETS | 4,710,337 | 5,205,487 |
| OTHER ASSETS | 20,641 | 19,020 |
| Total assets | $40,561,180 | $47,498,996 |
| LIABILITIES | ||
| CURRENT LIABILITIES | ||
| Accounts payable | $836,274 | $756,845 |
| Accrued liabilities | 1,040,443 | 814,094 |
| Corporate taxes payable | -- | 283,794 |
| Funds due to merchants | 5,804,752 | 10,746,731 |
| Current portion of obligations under capital lease | 11,195 | 170,243 |
| Current portion of promissory notes | -- | 2,100,920 |
| Current portion of deferred revenue | 1,325,983 | 1,361,046 |
| Total current liabilities | 9,018,647 | 16,233,673 |
| OBLIGATIONS UNDER CAPITAL LEASE | 9,840 | -- |
| DEFERRED REVENUE | 2,155,162 | 3,330,630 |
| Total liabilities | 11,183,649 | 19,564,303 |
| SHAREHOLDERS' EQUITY | ||
| CAPITAL STOCK | ||
| Class A, preferred stock, $1.00 CDN par value, 150,000,000 shares authorized, issuable in series, none issued or outstanding | -- | -- |
| Class B, preferred stock, $1.00 CDN par value, 150,000,000 shares authorized, issuable in series, none issued or outstanding | -- | -- |
| Common shares, no par value, 100,000,000 shares authorized, 27,241,408 issued and outstanding (2009: 27,116,408) | 50,152,385 | 50,039,568 |
| CONTRIBUTED SURPLUS | 7,952,343 | 6,732,059 |
| DEFICIT | (28,877,282) | (28,751,456) |
| ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 150,085 | (85,478) |
| Total shareholders' equity | 29,377,531 | 27,934,693 |
| Total liabilities and shareholders' equity | $40,561,180 | $47,498,996 |
| LML PAYMENT SYSTEMS INC. | |||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
| (In U.S. Dollars) | |||
|
(Unaudited) |
|||
| Years ended March 31, | |||
| 2010 | 2009 | 2008 | |
| OPERATING ACTIVITIES: | |||
| Net (loss) income | $(125,826) | $5,455,166 | $(2,220,828) |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | |||
| Provisions for losses on accounts receivable | 5,705 | 17,461 | 10,942 |
| Amortization of property and equipment | 138,271 | 124,441 | 367,809 |
| Amortization of intangible assets | 662,576 | 660,893 | 537,679 |
| (Gain) loss on disposal/abandonment of property and equipment | (3,830) | (864) | 726,325 |
| Stock-based compensation | 1,238,101 | 1,340,872 | 1,287,210 |
| Stock-based compensation – future income taxes | -- | -- | 11,185 |
| Future income taxes | 2,112,630 | (5,268,153) | -- |
| Foreign exchange (gain) loss | (353,935) | (370,692) | 177,847 |
| Changes in non-cash operating working capital | |||
| Restricted cash | (100,000) | 75,000 | -- |
| Accounts receivable | 50,004 | (214,903) | (130,694) |
| Corporate taxes receivable | (1,072,930) | -- | -- |
| Prepaid expenses | (110,661) | (28,405) | 214,414 |
| Other assets | -- | -- | (8,360) |
| Accounts payable and accrued liabilities | 255,012 | (536,940) | 323,496 |
| Corporate taxes payable | (334,296) | (204,471) | 582,538 |
| Deferred revenue | (1,225,382) | (1,352,311) | (1,339,390) |
| Net cash provided by (used in) operating activities | 1,135,439 | (302,906) | 540,173 |
| INVESTING ACTIVITIES: | |||
| Other assets | -- | 2,785 | -- |
| Acquisition of Beanstream, net of cash acquired | -- | -- | (7,286,834) |
| Proceeds from disposal of property and equipment | 3,830 | 5,500 | 107,900 |
| Acquisition of property and equipment | (80,223) | (126,076) | (144,241) |
| Development of patents | -- | (1,652) | (10,804) |
| Net cash used in investing activities | (76,393) | (119,443) | (7,333,979) |
| FINANCING ACTIVITIES: | |||
| Payments on capital leases | (178,423) | (190,746) | (575,234) |
| Payment of promissory note | (2,321,460) | (2,843,974) | -- |
| Proceeds from exercise of stock options | 95,000 | -- | 77,438 |
| Proceeds from private placement of common shares | -- | -- | 7,200,000 |
| Share capital financing costs | -- | (3,537) | (509,666) |
| Net cash (used in) provided by financing activities | (2,404,883) | (3,038,257) | 6,192,538 |
| Effects of foreign exchange rate changes on cash and cash equivalents | 277,070 | (150,632) | 188,028 |
| (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,068,767) | (3,611,238) | (413,240) |
| Cash and cash equivalents, beginning of year | 6,138,530 | 9,749,768 | 10,163,008 |
| Cash and cash equivalents, end of year | $5,069,763 | $6,138,530 | $9,749,768 |
| Cash and cash equivalents consist of: | |||
| Cash | $2,655,681 | $558,571 | $8,348,906 |
| Money market fund | 109,787 | 109,524 | 107,233 |
| Commercial paper | 2,304,295 | 5,470,435 | 1,293,629 |
| $5,069,763 | $6,138,530 | $9,749,768 | |
| Supplemental disclosure of cash flow information: | |||
| Interest paid | $48,034 | $414,603 | $61,640 |
| Taxes paid | $435,138 | $1,240,310 | $44,120 |
| Non-cash investing and financing transactions not included in cash flows: | |||
| Property and equipment acquired through capital leases | $28,574 | $-- | $-- |