DUBLIN, Ireland and DALLAS, Aug. 24, 2005 (PRIMEZONE) -- Trintech Group Plc (Nasdaq:TTPA), a leading provider of transaction reconciliation and payment infrastructure solutions, today announced second quarter revenues of $12.6 million and a net loss for the quarter of $3.7 million, after a $3.9 million exceptional warranty charge relating to the extension of warranty periods for certain hardware products deployed in Europe. Excluding this once-off exceptional charge, Trintech generated net income for the second quarter of $225,000.
Highlights
-- Revenue amounted to $12.6 million compared to $13.2 million in
quarter 2 last year as a result of a slowdown in demand for
Chip and PIN (EMV) solutions in Europe and delays in the adoption
of EMV payment solutions.
-- Trintech maintained trading profitability in quarter 2 with net
income, before the warranty charge of $3.9 million, of $225,000
and an Adjusted EBITDA net income of $466,000. Adjusted EBITDA
net income for quarter 2 excludes interest, tax, depreciation,
amortization of purchased intangible assets and the warranty
charge.
-- Gross margin, after the warranty charge of $3.9 million, amounted
to $4.4 million in quarter 2, representing 35% of revenue. Gross
margin, before the warranty charge, amounted to $8.3 million,
representing 66% of revenue.
-- Basic and diluted net loss, including the warranty charge, per
equivalent ADS for the quarter ended July 31, 2005 was ($0.24),
compared with basic and diluted net income per equivalent ADS of
$0.02 for the corresponding quarter ended July 31, 2004.
Cyril McGuire, Chairman and Chief Executive Officer commenting on the results said: "Trintech's business remains solid despite a challenging quarter 2 performance. We remain focused on our strategy of concentrating on key products and market opportunities that can deliver profitable growth. To achieve this goal, we are committed to migrating the Trintech business model towards a software and transaction services business mix. This was further helped in quarter 2 by a strong performance in our FMS software division which provides transaction reconciliation software and services solutions. In addition, we are evaluating a number of strategic acquisitions within this area with a view to driving shareholder value."
Recent highlights include:
Trintech announced that Midas, Inc. (NYSE:MDS), selected ReconNET for use in their Company Operated Shops to automate the verification and reconciliation of cash, credit card transactions and purchase cards, which are used by stores to buy parts from third party suppliers. The installation of ReconNET is enabling the company to improve daily productivity, reduce write-offs and increase daily visibility of cash balances.
Trintech announced that Broker Network Holdings PLC selected ReconNET to automate the verification and reconciliation of its central depository account and insurance premium payments between its independent insurance brokers and insurance providers. In addition to streamlining internal operations, ReconNET can also strengthen Broker Network's financial controls.
Trintech announced that the Clarks Companies, North America (CCNA) selected Trintech's ReconNET to automate the verification and reconciliation of its bank deposits, and the DataFlow Transaction Network to collect, format and deliver its daily banking data. CCNA expects to further improve operational control and reduce exposure to risk, while decreasing costs and improving productivity.
Trintech announced that Watford Electronics, a company renowned for service excellence and its IT components and computer peripherals, selected and implemented Trintech's PayWare Merchant MPI, a powerful 3-D Secure(tm) ecommerce authentication solution for merchants, providing secure internet card payment transactions between the cardholder and card issuer.
Trintech announced the release of ReconNET ES, the latest version of its flagship reconciliation and account balancing application. ReconNET ES incorporates major advances in technology that are designed to benefit large multi-national enterprises, including high-volume processing power, significantly strengthened security controls and support for multiple languages through internationalization. ReconNET ES also includes transaction archival capabilities and improved reporting functionalities, which further reinforce its regulatory compliance capabilities.
Trintech announced SmartPIN Xpress, a cost-effective, pre-certified solution that is designed to allow small and mid-tier retailers to effortlessly migrate to Chip and PIN. SmartPIN Xpress processes card payment transactions in seconds. It also lowers the costs and certification timescales usually associated with complex point of sale integration.
Trintech held its 6th Annual General Meeting (AGM) as a public company in Dublin, Ireland on July 22, 2005. At the AGM, Cyril McGuire, Co-founder, Chairman and CEO, welcomed the approval by shareholders of all the ordinary and special resolutions including the approval of the share buy-back agreement with Deutsche Bank AG.
Trintech announced the appointment of Maurice Hickey as Chief Financial Officer. Maurice will assume responsibility for financial management and reporting functions as well as investor relations activities. He will report to Paul Byrne, former Chief Financial Officer, who will continue as President of the Company.
Results Overview:
Revenue for the quarter ended July 31, 2005 was $12.6 million compared with $13.2 million for the corresponding quarter last year.
Product revenue for the quarter ended July 31, 2005 decreased 35 percent to $2.8 million compared to $4.3 million for the corresponding quarter last year.
License revenue for the quarter ended July 31, 2005 increased 8 percent to $5.9 million from $5.5 million for quarter 2 last year.
Service revenue for the quarter ended July 31, 2005 increased 13 percent to $3.9 million from $3.4 million for the corresponding quarter last year.
Total gross margin, before the warranty charge, for the quarter ended July 31, 2005 was $8.3 million, an increase of 9 percent from $7.6 million in the corresponding period last year.
Operating expenses in quarter 2 increased to $8.2 million compared to $7.4 million in the corresponding quarter last year. Adjusted EBITDA operating expenses for quarter 2 this year were $7.7 million compared to Adjusted EBITDA operating expenses for quarter 2 last year of $6.9 million.
Trintech's balance sheet remains strong with cash and cash equivalent balances of $39.2 million as of July 31, 2005. Net cash generated for the six months ended July 31, 2005 was $36,000. Acquisition related payments of $1.2 million were made in quarter 1 in respect of acquisitions made in prior periods. Capital expenditure during the six month period amounted to $254,000 and primarily related to computer and tooling equipment. Cash outflows from investing activities were largely offset by strong cash generation from operating and financing activities of $1.7 million.
During the quarter, Trintech repurchased 80,600 ordinary shares (equivalent to 40,300 ADS) under its stock repurchase program at a cost of $164,000. As of July 31, 2005, $3.8 million remained available for future repurchases under this program.
"Trintech's second quarter results were impacted negatively by the once-off provision relating to the extension of warranty periods for certain hardware products deployed in Europe. Trintech will work closely with its customers and incur repair and rework costs with a view to resolving certain technical difficulties currently being experienced with these products. The underperformance of the payments division in quarter 2 was largely offset in trading terms by the strong performance of the FMS division which provides transaction reconciliation software and services solutions. This performance, combined with tight fiscal management of the Company's cost base, compensated for the reduction in hardware product revenues.
"We remain focused on addressing the current technical difficulties within the Payments business. We continue to seek expansion opportunities in software and services to grow Trintech's market share and profitability," said Paul Byrne, President.
Trintech will host a conference call to discuss its financial results and business outlook beginning at 15:30hrs (U.K. Time) today, August 24th, 2005. Please see advisory for information on the call.
A web simulcast of Trintech's conference call reviewing our performance for Q2 fiscal year 2006 and our business outlook for Q3 fiscal year 2006 will be broadcast live today, Wednesday August 24th, 2005 at 3:30 PM (U.K. Time), 10:30 AM (NY Time) and 07:30 AM (CA Time) and thereafter for 1 year at www.trintech.com. An instant telephone replay will also be available for 10 days by dialing +44 1452 550 000 and entering the following access number (8 5 1 4 7 9 8#).
About Trintech
Trintech is a leading provider of transaction reconciliation and payment infrastructure solutions to retailers, financial institutions, payment processors and network operators globally. Built on 18 years of experience, Trintech's solutions manage each area of the payment transaction cycle from authentication, authorization, settlement, dispute resolution and reconciliation -- enabling its customers to reduce transaction costs, eliminate fraud, minimize risk, maximize cashflow and increase profitability. Trintech can be contacted in Ireland at Trintech Building, South County Business Park, Leopardstown, Dublin 18 (Tel: +353 1 2074000), in the U.S. at 15851 Dallas Parkway, Suite 855, Addison, TX 75001 (Tel: +1 972 701 9802), and in the U.K. at Beaconsfield Close, Hatfield, Hertfordshire, AL 10 8YZ (Tel: +44 (0) 1707 632 900). www.trintech.com.
This news release contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any "forward looking statements" in this press release are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. "Forward looking statements" in this press release include statements, among others, relating to the migration of Trintech's business model towards a software and transaction services business mix, the ability of ReconNET to strengthen Broker Network's financial controls, the ability of ReconNET to improve CCNA's operational control and reduce risk exposure, and Trintech's ability to work with customers and incur repair and rework costs with a view to resolving technical difficulties associated with certain hardware. Factors that could cause or contribute to such differences include Trintech's ability to accurately predict future sales, its ability to accurately predict customer needs and to successfully position itself in the market, Trintech's ability to ensure the performance of its products and services, its abiility to identify and resolve technical issues associated with its hardware and the long term health of Trintech's business and ability to improve performance of the organization. Actual performance may also be affected by other factors more fully discussed in Trintech's Form 20-F for the fiscal year ended January 31, 2005, filed with the U.S. Securities and Exchange Commission (www.sec.gov). Lastly, Trintech assumes no obligation to update these forward-looking statements.
TRINTECH GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except share and per share data)
July 31, January 31,
2005 2005
ASSETS
Current assets:
Cash and cash equivalents $ 39,216 $ 39,180
Accounts receivable, net
of allowance for doubtful
accounts of
$504 and $787 at July 8,141 9,479
31, 2005 and January 31,
2005, respectively
Inventories 1,732 1,184
Value added taxes 315 531
Prepaid expenses and other 2,007 2,105
assets
Amounts prepaid to related - 451
parties
Total current 51,411 52,930
assets
Restricted cash 651 672
Property and equipment, 810 824
net
Other non-current assets, 2,724 3,147
net
Goodwill, net of
accumulated amortization
and impairment of $84,471
at July 31, 2005 and 8,613 8,613
January 31, 2005,
respectively
Total assets $ 64,209 $ 66,186
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Bank overdraft $ 1,005 $ 568
Accounts payable 5,362 4,806
Accrued payroll and 1,547 1,884
related expenses
Deferred consideration 1,250 2,398
Other accrued liabilities 2,976 3,413
Value added taxes 582 630
Warranty reserve 3,778 395
Deferred revenues 7,793 8,946
Total current 24,293 23,040
liabilities
Series B preference
shares, $0.0027 par value
10,000,000 authorized at
July 31, 2005 and January 31,
2005, respectively
None issued and - -
outstanding
Shareholders' equity:
Ordinary Shares,
$0.0027 par value:
100,000,000 shares
authorized;
31,266,443 and
31,160,091 shares issued
and 30,966,805
and 30,908,635 shares
outstanding at July 31,
2005 and
January 31, 2005, 84 84
respectively.
Additional paid-in capital 246,396 246,283
Treasury shares (at cost,
299,638 and 251,456 at
July 31, 2005 and
January 31, 2005, (527) (416)
respectively)
Accumulated deficit (203,419) (200,154)
Accumulated other (2,618) (2,651)
comprehensive loss
Total 39,916 43,146
shareholders' equity
Total $ 64,209 $ 66,186
liabilities and
shareholders' equity
TRINTECH GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share data)
Three months Six months
ended July 31, ended July 31,
2005 2004 2005 2004
Revenue:
Product $ 2,830 $ 4,332 $ 6,032 $ 7,932
License 5,903 5,475 12,602 10,896
Service 3,855 3,403 7,092 6,749
12,588 13,210 25,726 25,577
Total Revenue
Cost of
revenue:
Product 5,948 3,216 8,480 5,451
License 959 946 1,853 1,883
Service 1,277 1,467 2,599 2,890
8,184 5,629 12,932 10,224
Total Cost of
Revenue
Gross Margin 4,404 7,581 12,794 15,353
Operating
expenses:
Research & 2,251 2,153 4,491 4,331
development
Sales & 2,509 2,268 4,991 4,505
marketing
General & 3,072 2,682 6,286 5,650
administrative
133 45 133 351
Restructuring
charge
Amortization 212 212 423 423
of purchased
intangible
assets
Adjustment of (249)
acquisition - - -
liabilities
Stock
compensation - - - 101
Total 8,177 7,360 16,324 15,112
operating
expenses
(Loss) income (3,773) 221 (3,530) 241
from operations
Interest 274 74 474 156
income, net
Exchange (107) 132 (64) 114
(loss) gain,
net
(Loss) income
before provision
for income (3,606) 427 (3,120) 511
taxes
Provision (51) (76) (145) (76)
for income
taxes
Net (loss) $ (3,657) $ 351 $ (3,265) $ 435
income
Basic net (loss) $ (0.12) $ 0.01 $ (0.11) $ 0.01
income per
Ordinary Share
Shares used in
computing basic
net
(loss) income 30,990,197 30,791,850 30,982,097 30,734,700
per Ordinary
Share
Diluted net $ (0.12) $ 0.01 $ (0.11) $ 0.01
(loss) income
per Ordinary
Share
Shares used in
computing
diluted net
(loss)
income per 30,990,197 32,296,608 30,982,097 32,285,188
Ordinary Share
Basic net (loss) $ (0.24) $ 0.02 $ (0.21) $ 0.03
income per
equivalent ADS
Diluted net $ (0.24) $ 0.02 $ (0.21) $ 0.03
(loss) income
per equivalent
ADS
TRINTECH GROUP PLC
RECONCILIATION OF NET (LOSS) INCOME TO ADJUSTED EBITDA NET INCOME
(U.S. dollars in thousands)
Three months Six months
ended July 31, ended July 31,
2005 2004 2005 2004
Net (loss) income $ (3,657) $ 351 $ (3,265) $ 435
Adjustments:
Depreciation 119 193 225 416
Amortization 212 212 423 423
of purchased
intangible assets
Adjustment
of acquisition - - - (249)
liabilities
Stock
compensation - - - 101
133 45 133 351
Restructuring
charge
Interest (274) (74) (474) (156)
income, net
Income taxes 51 76 145 76
Warranty 3,882 - 3,882 -
charge
Adjusted Earnings Before $ 466 $ 803 $ 1,069 $ 1,397
Interest, Taxation,
Depreciation, Amortization
and Warranty Charge
(EBITDA) net income
Note: Management believes Adjusted EBITDA net (loss) income is an
important measure of Company performance without consideration of
the non-operating expense adjusted above as it presents a clearer
view of operational performance changes between the comparative
periods.
TRINTECH GROUP PLC
RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED EBITDA
OPERATING EXPENSES
(U.S. dollars in thousands)
Three months Six months
ended July 31, ended July 31,
2005 2004 2005 2004
Total operating $ 8,177 $ 7,360 $ 16,324 $ 15,112
expense
Adjustments:
(133) (45) (133) (351)
Restructuring
charge
Depreciation (104) (176) (194) (384)
Amortization (212) (212) (423) (423)
of purchased
intangible assets
Adjustment
of acquisition - - - 249
liabilities
Stock
compensation - - - (101)
Adjusted EBITDA $ 7,728 $ 6,927 $15,574 $ 14,102
operating
expenses
Note: Management believes Adjusted EBITDA operating expenses
is an important measure of Company performance without consideration
of the non-operating expense adjusted above as it presents a clearer
view of operational performance changes between the comparative
periods.
TRINTECH GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
Six months
ended July 31,
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (3,265) $ 435
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation 225 416
Amortization 423 423
Stock compensation 101
-
Effect of changes in foreign currency exchange (79) (158)
rates
Changes in operating assets and liabilities:
Inventories (672) 324
Accounts receivable 1,386 1,012
Prepaid expenses and other assets (72) (364)
Value added tax receivable 192 154
Accounts payable 915 (1,258)
Accrued payroll and related expenses (244) (199)
Deferred revenues (903) (49)
Value added tax payable 2 58
Warranty reserve 3,510
107
Other accrued liabilities (125) 266
Net cash provided by operating activities 1,293 1,268
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (254) (235)
Payments relating to acquisitions (1,194) (485)
Net cash used in investing activities (1,448) (720)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (65) (191)
Issuance of ordinary shares 166 199
Purchases of treasury shares (164)
-
Expense of share issue (10)
-
Proceeds under bank overdraft facility 437
-
Decrease in restricted cash deposits 21 656
Net cash provided by financing activities 395 654
Net increase in cash and cash equivalents 240 1,202
Effect of exchange rate changes on cash and cash (204) (25)
equivalents
Cash and cash equivalents at beginning of period 39,180 36,864
Cash and cash equivalents at end of period $ 39,216 $ 38,041
Supplemental disclosure of cash flow information
Interest paid $ 11 $ 17
Taxes (received)/paid $ (301) $ 256
Supplemental disclosure of non-cash flow information
Acquisition of property and equipment
under capital leases $ - $ -
The full press release including tables can be downloaded from the following link: http://hugin.info/130706/R/1008148/155713.pdf