Online Resources Corporation reported financial and operating results for the three and nine months ended September 30, 2006. The following third quarter results include the impact of the acquisition of Princeton eCom on July 3, 2006, and reflect the introduction in 2006 of equity compensation and tax expensing, which were not included in 2005.
– Revenue for the third quarter of 2006 was $28.3 million, up 85 percent from $15.3 million in third quarter 2005.
– Earnings before interest, taxes, depreciation and amortization (Ebitda), a non-GAAP measure, was $5.9 million, a 68 percent increase from $3.5 million in the prior year. Ebitda per share was $0.19 versus $0.13 per share in 2005.
– Net loss available to common stockholders was $2.8 million, or $0.11 loss per share. This compares to net income of $2.4 million, or $0.09 per fully diluted share, in 2005.
– Core net income, a non-GAAP measure, was $1.7 million, down 31 percent from $2.5 million in 2005. Core net income per share was $0.05, compared to $0.09 per share in 2005.
“Revenue growth was strong and at the high end of our guidance, fueled by high user growth and the acquisition of Princeton eCom,” stated Matthew P. Lawlor, chairman and chief executive officer of the Company. “The year-over-year decline in earnings was expected, due to acquisition-related expenses and the change in equity compensation and tax accounting treatment.”
Lawlor continued, “We were very pleased with strong billpay user and transaction growth for the quarter, and with the integration of Princeton eCom. Core earnings exceeded guidance, driven by billpay growth and an extra boost from a one-time tax benefit. We stepped-up some infrastructure spending, which mitigates third and fourth quarter profitability but positions us well for 2007.”
The Company reiterated plans to refinance $85 million in acquisition-related debt. “We have several proposals to refinance our debt on favorable terms,” commented Catherine A. Graham, executive vice president and chief financial officer. “The Company also filed a shelf registration with the SEC covering shares issued this past summer as part of the Princeton acquisition. At the same time, we registered additional shares giving us the option, at a time of our choosing, to raise equity on accretive terms and accelerate take-down of our debt.”
Shelf Registration Filing The Company today filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (“SEC”). If and when the shelf registration statement is declared effective, it will permit the Company or selling stockholders, from time to time, to offer and sell up to 13 million of shares of common stock, which currently represents approximately $150 million in total value. This shelf registration fulfills the Company’s obligation to register 4.6 million common shares underlying the privately placed convertible preferred stock previously issued to affiliates of Tennenbaum Capital Partners (“Tennenbaum”) as a part of the Company’s acquisition of Princeton eCom. It also provides the Company with the ability to sell up to 8.4 million shares to take advantage of financing opportunities, including, but not limited to, accelerating repayment of its existing debt. The terms of any new equity to be offered under the registration statement, whether by Tennenbaum or the Company, will be established at the time of the offering and will be described in a prospectus supplement filed with the SEC at the time of the offering. 2006 Business Outlook The Company provided guidance for the fourth quarter and updated its full year 2006 guidance.
Guidance includes equity compensation and tax expensing in 2006, but not in 2005. Guidance also does not anticipate the release of any additional valuation allowance in 2006. These statements are forward-looking, and actual results may differ materially.
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