WellPoint Systems reports record revenue, EBITDA and net income for the
quarter and nine months ended September 30, 2009
Third Quarter and Nine Month Financial Highlights
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Three Months Ended $ Change Six Months Ended $ Change
September 30 September 30
In thousands
(CDN$) 2009 2008 2008-2009 2009 2008 2008-2009
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Revenue 9,921 7,826 2,095 29,038 27,615 1,423
Gross Profit 7,373 3,953 3,420 20,619 15,399 5,220
Adjusted EBITDA 2,947 (2,289) 5,236 7,562 (3,338) 10,900
Net Income 2,660 (8,955) 11,615 3,690 (13,652) 17,342
Adjusted EBITDA
per share 0.06 (0.05) 0.11 0.16 (0.07) 0.23
Net Income
per share 0.05 (0.19) 0.24 0.08 (0.30) 0.38
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"Our third quarter results are further evidence that WellPoint's products are continuing to gain traction in key markets," said
Third Quarter Business Highlights
- Increased net income for the third quarter of 2009 by $11.6 million
($0.23 per share) to $2.7 million ($0.05 per share), compared with a
net loss of ($9.0) million ($0.19 per share) in the third quarter of
2008;
- Net income for the nine months ended September 30, 2009 increased by
$17.3 million ($0.38 per share) to $3.7 million ($0.08 per share),
compared with a net loss of ($17.5) million ($0.30 share) for the same
period in 2008;
- Increased Adjusted EBITDA for the third quarter of 2009 by
$5.2 million to $2.9 million, compared with an Adjusted EBITDA loss of
($2.3) million in the third quarter of 2008;
- Received a US$3.3 million (CDN$3.6 million) indemnity payment from
Export Development Canada ("EDC");
- Redeemed $1.3 million (net) of convertible debentures that came due;
- Grew customer base by 12 companies, including five sales of
WellPoint's Dynamics AX EAM and EFM products;
- Sold additional licenses to 13 current customers;
- Released WellPoint Integrated Suite (WIS) 5.2 which included
enhancements to Energy Broker and Energy Financial Management such as
data integration; improved budgetary processing enhanced reporting,
enhanced tariff functionality and revised production forecasting. This
release series also blends the Enterprise Asset Management product
line with the WIS products such that a customer can purchase a
fully-integrated system on the AX 2009 platform;
- Released BOLO 9.3 which included enhancements to BOLO's Multicurrency,
Asset Tracking, Revenue, Land, and Production Accounting features. As
a part of WellPoint's continuing support of this product line, there
were more than 250 small enhancements across the full suite of
capabilities; and
- Ranked 28th among the Deloitte Technology Fast 50(TM), a ranking of
the 50 fastest growing technology companies in Canada.
Third Quarter Financial Review
Overall revenues for the third quarter of 2009 increased by
Revenues from international operations increased to 43% in the third quarter of 2009 from 19% in the third quarter of 2008. The increase in international operational revenue is attributed to the EDC insurance indemnity payment received in the third quarter of 2009.
Gross profit was
SG&A decreased to
Facilities expenses decreased to
In the third quarter of 2009, the Company incurred research and development expenses of
WellPoint Systems is committed to enhancing its position as a leading provider of software and related solutions within the energy and natural resources industries. The Company continues to increase its investment in the development of new and innovative products utilizing the Microsoft AX Dynamics architecture. This investment in R&D is a fundamental requirement as WellPoint Systems continues to build products that meet the evolving needs of its customers.
Depreciation and amortization expenses decreased to
Interest expenses include the cash and interest accretion on the Company's interest-bearing obligations. In addition, interest costs include the interest payable on convertible debentures. Interest accretion is a result of the allocation of proceeds received from the issuance of convertible debt to their component parts, measured at their respective fair values at the time of issue or renegotiation. The debt component has been calculated as the present value of the required interest and principal payments, discounted at a rate approximating the interest rate that would have been applicable to non-convertible debt at the time the debenture was issued or reduced, when the fair value of the conversion option increases following a change in the conversion price or conversion period. Interest expense is determined on the debt component. The difference between the debt component and the face value of the debenture is classified as shareholders' equity-convertible debentures, net of issue costs, and adjusted for income taxes. The debentures are accreted to their face value over their term with a charge to operations included in interest expense.
Interest expenses increased to
Most of the Company's businesses are organized geographically so that many expenses are incurred in the same currency as the revenue generated, which mitigates some exposure to currency fluctuations. Following the acquisition of BOLO in 2007, the Company significantly increased its net liabilities denominated in
For the third quarter of 2009 the tax recovery was (
Due to the factors discussed above, the net income for the third quarter of 2009 was
Adjusted EBITDA was
First Nine Months of 2009 Financial Review
Revenues increased by 5% to
License revenue increased to
Gross profit was
SG&A expenses decreased by
Facilities expenses decreased to
In the first nine months of 2009, the Company incurred research and development expenses of
Depreciation and amortization expenses decreased to
Interest expenses increased to
Most of the Company's businesses are organized geographically so that many expenses are incurred in the same currency as the revenue generated, which mitigates some exposure to currency fluctuations. Following the acquisition of BOLO in 2007, the Company significantly increased its net liabilities denominated in
For the nine months ended
The net income for the nine months ended
Adjusted EBITDA increased by
Outlook
During 2008, the Company invested significant capital and management resources to integrate the BOLO and iSoft acquisitions into WellPoint Systems. In 2009, with the acquisitions now in place, the Company has and will continue to focus on increasing its net income and Adjusted EBITDA and expects to advance on many fronts, through the following initiatives:
- Establishing deeper partnerships across the globe, including expanded
and new agent relationships in international markets. In 2010, the
Company particularly intends to focus its activities on increasing
market share and driving revenue from opportunities primarily in the
North American, Middle Eastern and other international markets;
- Increasing sales and marketing of WellPoint Energy Broker in the
North American market and WellPoint EAM and WellPoint EFM solutions
worldwide;
- Continuing development and marketing of BOLO and IDEAS in their
target markets to increase market share;
- Continuing development and marketing of the WellPoint Energy Suite
solutions to expand functionality and better conform with best
practices in the computer software industry; and
- Increasing sales and marketing of the WellPoint EAM solution to
broad-based manufacturers through partner channels.
In the first nine months of 2009, the Company recorded US$2.0 million in revenue from the agreement the Company signed on
Commodity prices appeared to have stabilized with oil trading in the US$70 - US$80 per barrel range and natural gas in the US$4.0 - US$5.0 per MMBtu range. Management believes that this stability in commodity prices will increase demand for the Company's products due to higher levels of mergers and acquisitions activity and increased capital spending by customers. However, there is continued instability in the general economy and credit markets have still not returned to normal. Given these conflicting economic indicators, the Company's visibility into 2010 is limited at this point. However, the Company is seeing robust sales pipeline for its products. As such, management is optimistic about the future growth of all products, especially the Dynamics AX product line and as such is anticipating growth in 2010 revenues as compared with 2009. The Company also anticipates that it will need to expand its infrastructure, especially in the sales and marketing areas to support the Company's international expansion plans. As such, the Company expects SG&A costs to increase in 2010.
The information contained in this news release is in summary form and should be read in conjunction with the Company's audited consolidated financial statements and Management's Discussion and Analysis for the year ended
Notes
(1) "EBITDA" is a financial measure that does not have any standardized
meaning prescribed by Canadian generally accepted accounting principles
("GAAP") and may not be comparable to similar measures presented by other
companies. EBITDA is a measure of the Company's operating profitability.
EBITDA provides an indication of the results generated by the Company's
principal business activities prior to how these activities are financed,
assets are amortized or how results are taxed in various jurisdictions.
Adjusted EBITDA is Standardized EBITDA(1), excluding foreign exchange
gains primarily related to the US dollar denominated debt of the Company
and can vary significantly depending on exchange rate fluctuations,
which are beyond the control of the Company, and write downs of deferred
development and intangible costs, goodwill impairment, financing costs,
stock based compensation, fees and expenses on settlement of debt and
losses on extinguishment of debt and after deducting the annual amount
invested in respect of deferred development costs, which, with the
implementation of International Financial Reporting Standards in the year
ended December 31, 2011, will generally be required to be expensed on an
annual basis.
(2) "Gross Profit" is a financial measure that does not have any
standardized meaning prescribed by GAAP and may not be comparable to
similar measures presented by other companies. Gross profit is provided
to assist investors in determining WellPoint's ability to generate
earnings from the sales of its products and services. Gross profit is
calculated by subtracting direct expenses from revenue.
The Company announces that
WellPoint also announced that effective
About WellPoint Systems Inc.
WellPoint provides premier software and related services for managing critical operations within the energy industry. As a Microsoft Gold Certified Partner since 2005, WellPoint is the only Independent Software Vendor (ISV) and Microsoft Dynamics partner dedicated to the energy sector. It is breaking new ground with the creation of a more comprehensive, integrated energy software suite based on existing Microsoft ERP technology that utilizes state-of-the-art Dynamics AX(R) and .NET architectures. WellPoint also provides software and services under the BOLO, IDEAS International and iSoft brands.
Founded in 1997, Calgary-based WellPoint Systems also has major operations in
This document contains forward-looking statements. Some forward looking statements may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. The statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. The Company's actual results could differ materially from those currently anticipated due to a number of factors, including, but not limited to, successful integration of structural changes, including restructuring plans, acquisitions, technical or manufacturing or distribution issues, the competitive environment for the Company's products, the degree of market penetration of the Company's products, and other factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
WELLPOINT SYSTEMS INC.
Consolidated Balance Sheets (Unaudited)
(in thousands of dollars)
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September 30 December 31
2009 2008
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Assets
Current assets:
Cash $ 1,228 $ 406
Accounts receivable 3,002 3,532
Prepaid expenses 597 746
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4,827 4,684
Property and equipment 949 1,106
Deferred development costs 1,540 2,119
Intangible assets 11,764 15,384
Goodwill 21,487 24,442
Future income taxes 1,194 132
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$ 41,761 $ 47,867
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Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities ` $ 4,668 $ 5,718
Current income tax liability 92 106
Deferred revenue 2,361 4,876
Other deferred credits 55 55
Notes payable 225 -
Current portion of long term notes payable 5,347 99
Current portion of capital lease obligations 57 46
Convertible debentures 1,519 1,358
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14,324 12,258
Long term notes payable - 6,005
Capital lease obligations 51 58
Other deferred credits 36 77
Convertible debentures 24,598 26,476
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39,009 44,874
Shareholders' equity:
Share capital 14,620 14,497
Contributed surplus 1,733 1,624
Convertible debentures 8,996 8,996
Accumulated other comprehensive income (418) 3,744
Deficit (22,179) (25,868)
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(22,597) (22,124)
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Total shareholders' equity 2,752 2,993
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$ 41,761 $ 47,867
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WELLPOINT SYSTEMS INC.
Consolidated Statements of Operations and Retained Earnings (deficit)
(unaudited)
(in thousands of dollars, except per share amounts)
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Three months ended Six months ended
September 30 September 30
2009 2008 2009 2008
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Revenue
License $ 4,771 $ 1,411 $ 11,330 $ 7,384
Maintenance 2,570 2,459 8,351 7,157
Professional services 2,580 3,955 9,357 13,074
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9,921 7,825 29,038 27,615
Direct costs 2,548 3,873 8,419 12,216
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Gross profit 7,373 3,952 20,619 15,399
Expenses:
Sales, general and
administrative 2,794 3,935 7,867 11,394
Interest 1,580 959 4,498 2,821
Research and development 1,324 1,674 4,181 3,780
Depreciation and
amortization 805 1,121 2,549 3,416
Facilities 354 429 1,118 1,327
Financing and
amortization of debt and
note payable issue costs 59 137 203 390
Foreign exchange loss
(gain) (1,689) 739 (2,517) 1,039
Fees and expenses on
settlement of long term
note payable - - - 615
Writedown of deferred
development costs - 4,227 - 4,227
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5,227 13,221 17,899 29,009
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Net income (loss) before
income taxes 2,146 (9,269) 2,720 (13,610)
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Income taxes
Current expense 92 166 92 299
Future expense
(reduction) (606) (479) (1,062) (257)
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(514) (313) (970) 42
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Net income (loss) 2,660 (8,956) 3,690 (13,652)
Deficit, beginning of
period (24,839) (8,562) (25,869) (3,866)
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Deficit, end of period $ (22,179) $ (17,518) $ (22,179) $ (17,518)
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Net income (loss) per
share
Basic and diluted $ 0.05 $ (0.19) $ 0.08 $ (0.30)
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For further information: Richard Slack, President and Chief Executive Officer, (303) 987-2238, [email protected]; Bharat Mahajan, CA, Chief Financial Officer, (403) 444-3916, [email protected]
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