Tier Reports Fiscal 2009 Fourth Quarter and Year End Results

November 9, 2009 5:15 PM EST

RESTON, Va.--(BUSINESS WIRE)-- Tier Technologies, Inc. (Nasdaq: TIER) today announced results for the quarter and year ended September 30, 2009 and provided updates on continuing strategic growth initiatives.

Results of Operations

Fourth Quarter Fiscal 2009 Results

For the quarter ended September 30, 2009, Tier reported revenues from Continuing Operations of $25.7 million, a 12.9% increase over the same quarter last year. Net loss from Continuing Operations was ($1.3) million, or ($0.06) per fully diluted share.

Continuing Operations include Electronic Payment Solutions, or EPS, and certain wind-down businesses. On a standalone basis, our core EPS business reported quarterly revenues of $24.8 million, or a 17.3% increase over the same quarter last year. Our general, administrative, selling and marketing expenses, which support our Continuing Operations, were $6.4 million, down $3.2 million over the same quarter last year.

Fiscal Year 2009 Results

For the year ended September 30, 2009, Tier reported revenues from Continuing Operations of $128.2 million, a 4.6% increase over the last year. Net loss from Continuing Operations was ($5.5) million, or ($0.28) per fully diluted share.

Continuing Operations include Electronic Payment Solutions, or EPS, and certain wind-down businesses. On a standalone basis, our core EPS business reported annual revenues of $123.2 million, or a 5.7% increase over last year. Our general, administrative, selling and marketing expenses, which support our Continuing Operations, were $32.2 million, down $4.5 million over the last year. We expect to see a continued decrease in these types of expenses as we streamline our operations in the future.

Management's Comments

Ronald L. Rossetti, Chairman and Chief Executive Officer of Tier Technologies stated, "I am pleased to report adjusted EBITDA from Continuing Operations for FY2009, of $3.0 million as compared with an adjusted EBITDA loss of ($7.0) million in FY2008, and for the quarter ended September 30, 2009, adjusted EBITDA from Continuing Operations of $1.1 million compared to an adjusted EBITDA loss of ($3.4) million for the quarter ended September 30, 2008."

"Our concentration today in our core "biller direct" business is to continue increasing Net Revenue growth over a fixed cost platform," said Rossetti. "Even in these difficult economic conditions, where over 60% of our EPS revenue is directly tied to tax collections which have experienced steep revenue declines, we believe that our strategy is beginning to prove itself, as we were able to generate significant increases in both Net Revenue and adjusted EBITDA. This improvement is the result of increasing our profitability per transaction and driving substantial transaction growth while reducing overhead and holding platform costs relatively flat, thereby creating margin expansion in both Net Revenue and adjusted EBITDA. For the year ended September 30, 2009 our EPS transactions grew by 44.5% and our EPS gross margin (gross sales less direct and other costs) by 245 basis points, and for the fourth quarter by 70.4% and 176 basis points, respectively."

Tier defines Net Revenue as revenue after discount fees, processing and interchange costs. Tier defines adjusted EBITDA as net income from Continuing Operations before interest expense net of interest income, taxes, depreciation and amortization and stock-based compensation expense, both cash and non-cash.

The following table shows a reconciliation of Gross Revenue to Net Revenue for the three and twelve months ended September 30, 2009 and 2008 (in thousands):

                  Three months ended             Twelve months ended

                  September 30,                  September 30,

                  2009      2008      Change     2009       2008       Change

Revenue           $ 25,685  $ 22,759  $ 2,926    $ 128,246  $ 122,571  $ 5,675

Less Wind-down      902       1,623     (721  )    5,013      5,930      (917  )
Revenue

EPS Gross           24,783    21,136    3,647      123,233    116,641    6,592
Revenue

Discount Fees,
Interchange &       17,367    15,213    2,154      88,657     87,082     1,575
Processing Costs

EPS Net Revenue   $ 7,416   $ 5,923   $ 1,493    $ 34,576   $ 29,559   $ 5,017

Net Revenue
Percentage                              25.2  %                          17.0  %
Increase

The following table shows a reconciliation of net income from Continuing Operations to adjusted EBITDA for the three and twelve months ended September 30, 2009 and 2008 (in thousands):

                           Three months ended                 Twelve months ended

                           September 30,                      September 30,

                           2009        2008        Change     2009        2008         Change

Net Income from            $ (1,265 )  $ (4,914 )  $ 3,649    $ (5,471 )  $ (12,045 )  $ 6,574
Continuing Operations

Add back:

Depreciation/Amortization    1,630       1,383       247        6,642       5,418        1,224

Stock Based Equity           356         531         (175  )    1,483       2,236        (753   )
Compensation

Taxes                        38          35          3          40          87           (47    )

Less:

Interest Income, Net         115         437         (322  )    723         2,731        2,008

EBITDA                       644         (3,402 )    4,046      1,971       (7,035  )    9,006

Add back:

Cash Based Equity            450         --          450        1,032       --           1,032
Compensation

Adjusted EBITDA            $ 1,094     $ (3,402 )  $ 4,496    $ 3,003     $ (7,035  )  $ 10,038

Adjusted EBITDA and Net Revenues are non-GAAP financial measures. Tier's management believes these measures are useful for evaluating performance against peer companies within its industry, and provide investors with additional transparency with respect to financial measures used by management in its financial and operational decision-making. Non-GAAP financial measures should not be considered a substitute for the reported results prepared in accordance with US GAAP. Tier's definition used to calculate non-GAAP financial measures may differ from those used by other companies.

Liquidity

As of September 30, 2009, Tier had $57.6 million in cash and marketable securities, and $7.4 million in restricted investments. Tier currently holds $31.2 million in auction rate securities as long-term investments. These investments are revenue bonds and asset-backed notes issued by state agencies. The investments are AAA-rated and collateralized with student loans and guaranteed under the Federal Family Education Loan Program. Tier has no short-term or long-term debt.

Conference Call

Tier will host a conference call Thursday, November 10, 2009 at 5:00 p.m. Eastern Time to discuss these results. To access the conference call, please dial (888)335-3240 and provide conference ID # 39918898. The conference call is also available live via the Internet at www.tier.com. A replay will be available at 8:00 p.m. Eastern Time at www.tier.com or by calling (800) 642-1687 and entering conference ID # 39918898. The replay will be available until 11:59 p.m. Eastern Time on November 24, 2009.

About Tier Technologies, Inc.

Tier Technologies, Inc. is a leading provider of electronic payment solutions in the biller direct market. Headquartered in Reston, Virginia, the company provides over 3,900 electronic payment clients in all 50 states and the District of Columbia with enhanced payment services that include multiple payment choices, payment channels, and bill payment products and services. Tier serves clients in multiple markets including federal, state, and local governments, educational institutions, utilities and commercial clients through its subsidiary, Official Payments Corporation. For more information, see www.tier.com and www.officialpayments.com.

Statements made in this press release that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to future events or Tier's future financial and/or operating performance and generally can be identified as such because the context of the statement includes words such as "may," "will," "intends," "plans," "believes," "anticipates," "expects," "estimates," "shows," "predicts," "potential," "continue," or "opportunity," the negative of these words or words of similar import. Tier undertakes no obligation to update any such forward-looking statements. Each of these statements is made as of the date hereof based only on current information and expectations that are inherently subject to change and involve a number of risks and uncertainties. Actual events or results may differ materially from those projected in any of such statements due to various factors, including, but not limited to: the potential loss of funding by clients, including due to government budget shortfalls or revisions to mandated statutes; the timing, initiation, completion, renewal, extension or early termination of client projects; the Company's ability to realize revenues from its business development opportunities; the impact of governmental investigations or litigations; and unanticipated claims as a result of project performance, including due to the failure of software providers or subcontractors to satisfactorily complete engagements. For a discussion of these and other factors which may cause our actual events or results to differ from those projected, please refer to the Company's annual report on Form 10-K for the fiscal year ended September 30, 2009 filed with the SEC.

TIER TECHNOLOGIES, INC.

Consolidated Balance Sheets

                                                   September 30,  September 30,
(in thousands)
                                                   2009           2008

ASSETS:

Current assets:

Cash and cash equivalents                          $ 21,969       $ 47,735

Investments in marketable securities                 4,499          2,415

Restricted investments                               1,361          --

Accounts receivable, net                             4,790          4,209

Settlements receivable, net                          6,272          --

Unbilled receivables                                 --             532

Prepaid expenses and other current assets            2,239          1,331

Current assets--held-for-sale                        --             11,704

Total current assets                                 41,130         67,926

Property, equipment and software, net                7,990          4,479

Goodwill                                             17,329         14,526

Other intangible assets, net                         12,038         13,455

Investments in marketable securities                 31,169         28,821

Restricted investments                               6,000          7,861

Other assets                                         571            283

Total assets                                       $ 116,227      $ 137,351

LIABILITIES AND SHAREHOLDERS' EQUITY:

Current liabilities:

Accounts payable                                   $ 84           $ 918

Settlements payable                                  9,591          --

Accrued compensation liabilities                     3,213          4,289

Accrued discount fees                                5,343          5,243

Other accrued liabilities                            3,425          4,667

Deferred income                                      861            1,790

Current liabilities--held-for-sale                   --             9,061

Total current liabilities                            22,517         25,968

Other liabilities                                    1,121          136

Total liabilities                                    23,638         26,104

Commitments and contingencies

Shareholders' equity:

Preferred stock, no par value; authorized shares:    --             --
4,579; no shares issued and outstanding

Common stock and paid-in capital; shares
authorized: 44,260; shares issued: 20,687 and        192,030        190,099
20,619; shares outstanding: 18,238 and 19,735

Treasury stock--at cost, 2,449 and 884 shares        (20,271 )      (8,684  )

Accumulated other comprehensive loss                 --             (2,504  )

Accumulated deficit                                  (79,170 )      (67,664 )

Total shareholders' equity                           92,589         111,247

Total liabilities and shareholders' equity         $ 116,227      $ 137,351

TIER TECHNOLOGIES, INC.

Consolidated Statements of Operations

                                          Year ended September 30,

(in thousands, except per share data)     2009         2008         2007

Revenues                                  $ 128,246    $ 122,571    $ 108,306

Costs and expenses:

Direct costs                                95,594       95,234       82,668

General and administrative                  25,529       28,020       26,372

Selling and marketing                       6,708        8,677        7,950

Depreciation and amortization               6,569        5,328        4,573

Write-down of goodwill and intangible       --           --           9,161
assets

Total costs and expenses                    134,400      137,259      130,724

Loss from continuing operations before      (6,154  )    (14,688 )    (22,418 )
other income and income taxes

Other income:

Income from investments:

Equity in net income of unconsolidated      --           --           475
affiliate

Realized foreign currency gain              --           --           239

Gain on sale of unconsolidated affiliate    --           --           80

Interest income, net                        754          2,731        3,300

Loss on investment                          (31     )    --           --

Total other income                          723          2,731        4,094

Loss from continuing operations before      (5,431  )    (11,957 )    (18,324 )
income taxes

Income tax provision                        40           87           76

Loss from continuing operations             (5,471  )    (12,044 )    (18,400 )

(Loss) income from discontinued             (6,035  )    (15,401 )    15,366
operations, net

Net loss                                  $ (11,506 )  $ (27,445 )  $ (3,034  )

(Loss) earnings per share--Basic and
diluted:

From continuing operations                $ (0.28   )  $ (0.61   )  $ (0.94   )

From discontinued operations              $ (0.31   )  $ (0.79   )  $ 0.78

Loss per share--Basic and diluted         $ (0.59   )  $ (1.40   )  $ (0.16   )

Weighted average common shares used in
computing:

Basic and diluted loss per share            19,438       19,616       19,512

TIER TECHNOLOGIES, INC.

Consolidated Statements of Cash Flows

                                           Year ended September 30,

(In thousands)                             2009         2008         2007

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                   $ (11,506 )  $ (27,445 )  $ (3,034  )

Less: (Loss) income from discontinued        (6,035  )    (15,401 )    15,366
operations, net

Loss from continuing operations, net         (5,471  )    (12,044 )    (18,400 )

Non-cash items included in net loss from
continuing operations:

Depreciation and amortization                6,642        5,497        4,744

Provision for doubtful accounts              417          239          (42     )

Accrued forward loss on contracts            (28     )    (12     )    25

Equity in net income of unconsolidated       --           --           (475    )
affiliate

Gain on sale of unconsolidated affiliate     --           --           (80     )

Foreign currency translation gain
realized on sale of unconsolidated           --           --           (239    )
affiliate

Settlement of pension contract               --           --           1,254

Share-based compensation                     2,522        2,224        1,514

Write-down of goodwill and intangible        --           --           9,192
assets

Loss on trading investments                  31           --           --

Other                                        9            465          8

Net effect of changes in assets and
liabilities:

Accounts receivable and unbilled             (6,510  )    473          (1,413  )
receivables

Prepaid expenses and other assets            (89     )    261          3,050

Accounts payable and accrued liabilities     5,399        311          (142    )

Income taxes receivable                      1            19           3

Deferred income                              (929    )    (859    )    129

Cash provided by (used in) operating         1,994        (3,426  )    (872    )
activities from continuing operations

Cash (used in) provided by operating         (5,187  )    3,955        14,645
activities from discontinued operations

Cash (used in) provided by operating         (3,193  )    529          13,773
activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of available-for-sale              (38,455 )    (7,325  )    (21,012 )
securities

Sales and maturities of                      36,371       33,815       3,550
available-for-sale securities

Sales of trading securities                  125          --           --

Purchases of restricted investments          --           --           (22,611 )

Sales and maturities of restricted           500          1,250        20,098
investments

Purchase of equipment and software           (3,889  )    (1,951  )    (931    )

Repayment of notes and accrued interest      --           --           4,401
from related parties

ChoicePay asset purchase net of cash         (6,927  )    --           --
acquired

Proceeds from sale of discontinued           1,255        8,735        4,784
operations and equity investment

Collection of note receivable                71           --           --

Other investing activities                   --           --           (164    )

Cash (used in) provided by investing         (10,949 )    34,524       (11,885 )
activities for continuing operations

Cash used in investing activities for        (437    )    (5,057  )    (4,010  )
discontinued operations

Cash (used in) provided by investing         (11,386 )    29,467       (15,895 )
activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from issuance of common         421          1,283        213
stock

Purchase of company stock                    (11,587 )    --           --

Capital lease obligations and other          (21     )    (56     )    (26     )
financing arrangements

Cash (used in) provided by financing         (11,187 )    1,227        187
activities from continuing operations

Cash used in financing activities for        --           (4      )    (6      )
discontinued operations

Cash (used in) provided by financing         (11,187 )    1,223        181
activities

Effect of exchange rate changes on cash      --           --           (11     )

Net (decrease) increase in cash and cash     (25,766 )    31,219       (1,952  )
equivalents

Cash and cash equivalents at beginning of    47,735       16,516       18,468
period

Cash and cash equivalents at end of        $ 21,969     $ 47,735     $ 16,516
period

TIER TECHNOLOGIES, INC.

Consolidated Statement of Operations--Continuing Operations

                                                       Wind-
(in thousands)                            EPS                     Total
                                                       down

Fiscal year ended September 30, 2009:

Revenues                                  $ 123,233    $ 5,013    $ 128,246

Costs and expenses:

Direct costs                                93,434       2,160      95,594

General and administrative                  24,509       1,020      25,529

Selling and marketing                       6,697        11         6,708

Depreciation and amortization               4,885        1,684      6,569

Total costs and expenses                    129,525      4,875      134,400

(Loss) income from continuing operations    (6,292  )    138        (6,154  )
before other income and income taxes

Other income (expense):

Interest income (expense)                   754          --         754

Loss on investment                          (31     )    --         (31     )

Total other income                          723          --         723

(Loss) income from continuing operations    (5,569  )    138        (5,431  )
before taxes

Income tax provision                        40           --         40

(Loss) income from continuing operations  $ (5,609  )  $ 138      $ (5,471  )

Fiscal year ended September 30, 2008:

Revenues                                  $ 116,641    $ 5,930    $ 122,571

Costs and expenses:

Direct costs                                91,290       3,944      95,234

General and administrative                  26,932       1,088      28,020

Selling and marketing                       8,486        191        8,677

Depreciation and amortization               3,900        1,428      5,328

Total costs and expenses                    130,608      6,651      137,259

Loss from continuing operations before      (13,967 )    (721  )    (14,688 )
other income and income taxes

Other income (expense):

Interest income (expense)                   2,733        (2    )    2,731

Total other income (expense)                2,733        (2    )    2,731

Loss from continuing operations before      (11,234 )    (723  )    (11,957 )
taxes

Income tax provision                        87           --         87

Loss from continuing operations           $ (11,321 )  $ (723  )  $ (12,044 )

                                                     Wind-
(in thousands)                          EPS                       Total
                                                     down

Fiscal year ended September 30, 2007:

Revenues                                $ 99,048     $ 9,258      $ 108,306

Costs and expenses:

Direct costs                              76,388       6,280        82,668

General and administrative                23,088       3,284        26,372

Selling and marketing                     6,859        1,091        7,950

Depreciation and amortization             3,810        763          4,573

Write down of goodwill and intangible     --           9,161        9,161
assets

Total costs and expenses                  110,145      20,579       130,724

Loss from continuing operations before    (11,097 )    (11,321 )    (22,418 )
other income and income taxes

Other income:

Interest income                           3,300        --           3,300

Income from equity investments            794          --           794

Other income                              4,094        --           4,094

Loss from continuing operations before    (7,003  )    (11,321 )    (18,324 )
taxes

Income tax provision                      76           --           76

Loss from continuing operations         $ (7,079  )  $ (11,321 )  $ (18,400 )

    Source: Tier Technologies, Inc.

Related Categories

Press Releases

Stocks Mentioned

Add Your Comment

Name

Subject

Body

Verification can't see the text?
click here to refresh the image.
what's this?