Fundtech Reports Financial Results for the Fourth Quarter and Full Year 2010
4th Quarter revenue another record high of $37.8 million and year-over-year growth of 15% * 4th Quarter GAAP EPS 37 Cents /4th Quarter Non GAAP EPS 29 Cents * 2010 revenues of $141.9 million represent year over year growth of 20% * Board approves 10 Cents quarterly dividend in 2011 subject to court approval
Fundtech Ltd. (NASDAQ: FNDT), a market leader in global transaction banking solutions, today announced financial results for the fourth quarter and full year ended December 31, 2010. Fundtech posted quarterly revenues of $37.8 million, a 15% increase year-over-year, compared to fourth quarter revenues of $32.8 million in 2009, and a 5% increase compared to third quarter 2010 revenues of $36.0 million.
On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported net income of $5.8 million, or $0.37 per diluted share, for the fourth quarter of 2010 compared with net income of $3.4 million, or $0.21 per diluted share, in the fourth quarter of 2009, and net income of $2.9 million, or $0.19 per diluted share, in the third quarter of 2010.
Excluding stock-based compensation, amortization of intangibles, and deferred taxes Fundtechs adjusted (non-GAAP) net income for the fourth quarter of 2010 was $4.6 million, or $0.29 per diluted share, compared with $3.3 million, or $0.21 per diluted share, in the fourth quarter of 2009 and $4.1 million, or $0.26 per diluted share, in the third quarter of 2010. (See Schedule A attached to this news release -- Reconciliation to GAAP).
For the year ended December 31, 2010, revenues increased 20% to $141.9 million from $117.8 million in 2009. GAAP net income in 2010 was $12.5 million, or $0.79 per diluted share, compared with net income of $4.7 million or $0.30 per diluted share, in 2009. Excluding stock-based compensation, amortization of intangibles, and deferred taxes Fundtechs adjusted non- GAAP net income for 2010 was $14.8 million, or $0.93 per diluted share, compared to $8.3 million, or $0.53 per diluted share, in 2009. (See Schedule A Attached to this Press Release -- Reconciliation to GAAP).
Commenting on the results, Fundtech Chairman of the Board, Avi Fischer said: "In 2010 we exceeded our expectations in terms of growth, profits and cash flows. During the year we completed a successful restructuring of our organization to emphasize our global product capabilities and activities. We are now poised to expand our activities in new geographies like Latin America and China. I believe that we are well positioned to continue on the path of strong and steady growth in 2011 and beyond."
The fourth quarter was another record revenue quarter for us and I am very pleased by our overall performance in the fourth quarter and the year as a whole. said Fundtech CEO Reuven BenMenachem. "For 2010 our organic revenue growth was 20%, operating income grew by 229% and Adjusted EBITDA grew year over-year 55% from $15.3 million to $23.7 million. We posted good growth across our segments with Cash Management growing 14% year over year, Messaging growing by 21% and Payments growing by 24% year over year. Coming out of this strong year and looking towards 2011, I expect organic growth to moderate but remain strong compared to the industry norms. I believe that our investments in next generation SOA- based products across our product line will allow us to maintain our competitive advantage in the years to come.
- During the fourth quarter of 2010 Fundtech closed 128 new deals and added 12 new bank customers.
- During the fourth quarter of 2010 Fundtech closed 15 new system sales with banks, including 7 US Payments and 8 for BBPs products.
- During 2010 Fundtech implemented SEPA direct debit systems in 24 European banks including one of the worlds largest banks.
- During the fourth quarter of 2010 a European regional bank moved to production with GPP-SP.
- During the fourth quarter of 2010 we recorded a deferred tax benefit of $2.3 million.
- During the fourth quarter of 2010 Fundtech acquired 153,000 ordinary shares in consideration for $2.4 million as part of its share repurchase program.
- For the year 2010 Fundtech acquired 658,000 ordinary shares in consideration for $9.0 million.
Fundtech also announced today that its board of directors approved the distribution of quarterly dividend of $0.10 per share in 2011. Under Israeli law Fundtech currently lacks sufficient retained earnings to distribute dividends and must obtain approval from the Israeli courts to permit any dividend distribution.
Fundtech is planning to shortly file a petition with the Israeli courts to permit the dividend distribution [for the annual period subsequent to the approval. Fundtech believes that once the sum approved is fully exhausted, any further future dividend distributions will require additional approvals from the Israeli courts.
Our steady cash flows from operations, as well as free cash flows make a dividend distribution a good vehicle to return cash to our shareholders, in addition to the share repurchase program. said CFO Yoram Bibring, We hope to obtain the necessary court approvals and make our first quarterly dividend during the second quarter of 2011.
The financial guidance provided is current as of today only and Fundtech undertakes no obligation to update its estimates.
For the year 2011 Fundtech is providing its guidance as follows:
- Fundtech estimates that revenues for 2011 will be between $154 million and $159; that GAAP net income per diluted share will be between $0.73 and $0.83; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses and deferred taxes, will be between $1.00 and $1.10.
- Fundtech estimates that financial income for the year 2011 will be zero and that tax expenses, excluding deferred taxes, will be approximately $2.5 million.
- Fundtech estimates that annual amortization expenses for the year 2011 will be approximately $1.4 million and that stock-based compensation expenses will be approximately $3.0 million.
- Fundtech estimates that the number of shares used for the calculation of the annual net income per share will be 16 million shares.
For the first quarter of 2011 Fundtech is providing the following guidance:
- Fundtech estimates that first quarter revenues will be between $36 million and $37 million; that GAAP net income per diluted share will be between $0.10 and $0.14; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses, and deferred taxes, will be between $0.17 and $0.21.
- Fundtech estimates that financial income for the first quarter will be zero and that tax expenses, excluding deferred taxes, will be approximately $0.6 million.
- Fundtech estimates that quarterly amortization expenses for the first quarter of 2011 will be approximately $350,000 and that stock-based compensation expenses will be approximately $750,000.
- Fundtech estimates that the number of shares used for the calculation of quarterly net income per share will be 15.8 million shares.
Fundtechs guidance does not include the impact of deferred taxes and also does not include the impact of any future impairment of intangible assets, as these assets are periodically being evaluated by Fundtechs management under evolving accounting standards which are incapable of assessment in advance.
Reconciliation of GAAP Results to Non-GAAP Results
Fundtech provides non-GAAP operating results as a supplement to its GAAP financial results. The presentation of this information should not be considered in isolation to, or as a substitute for the financial results presented in accordance with GAAP. Management believes that non-GAAP financial measures are useful to investors because they allow for an evaluation of Fundtech with a focus on the performance of its core operations.
Fundtechs executive management team uses these same non-GAAP measures internally to assess the ongoing performance of the company. Since this information is not a GAAP measurement of financial performance, there are material limitations to its usefulness on a stand-alone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies.
We are presenting Fundtechs non-GAAP net income as well as Adjusted EBITDA. We define non-GAAP net income as net income plus stock-based compensation, amortization of intangibles, impairment of goodwill and other intangible assets, impairment of marketable securities, and deferred taxes. We define Adjusted EBITDA as net income plus stock-based compensation, depreciation and amortization expenses, impairment of marketable securities, deferred and current taxes, and interest expense (income).
A detailed reconciliation of GAAP net income to non-GAAP net income and Adjusted EBITDA is included in the attached Schedule A.
Fundtech to Host Conference Call
The senior management of Fundtech will host a conference call at 8:30 AM (ET), Wednesday, February 16, to discuss Fundtechs fourth quarter and annual 2010 results and to answer questions from the investment community
To participate, please call 1-877-303-7023 or +1-224-357-2223 and ask for the Fundtech call. Participants from Israel may dial toll free 1809-245917 and ask for the Fundtech call.
A replay of the conference call will be available from 11:30 AM (ET) February 16, until 11:59 PM (ET) February 23. The replay may be accessed by dialing 1-800-642-1687 or 1+706-645-9291, conference ID: 39135679.
This call will also be web cast live on: http://www.fundtech.com. An online replay will be available until March 31, 2011.
Fundtech (NASDAQ: FNDT), was founded in 1993, and is a leading provider of software and services to banks of all sizes around the world. Payments systems include wire transfers, ACH origination, cross-border payments and remittance. Cash management systems are designed for large corporate through small business clients. Fundtech operates the worlds largest SWIFT service bureau. We offer an extensive line of financial supply chain applications including electronic invoice presentment and supply chain financing. And we are the leading provider of CLS systems to the worlds largest banks. More than 1,000 clients throughout the world rely on Fundtech solutions to improve operational efficiency and provide greater competitiveness through innovative business-to-business services. For more information, visit www.fundtech.com.
Forward Looking Statements:
This news release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, projections of revenues, income or loss, capital expenditures, plans for growth and future operations, competition and regulation. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. When used in this Release, the words, "estimates," "expects," "anticipates," "believes," "plans," "intends," and variations of such words and similar expressions are intended to identify forward-looking statements that involve risks and uncertainties. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. The factors that could cause actual results to differ materially from those discussed or identified from time to time in Fundtech's public filings, including its Annual Report on Form 20-F for the year ended December 31, 2009, including general economic and market conditions, changes in regulations and taxes and changes in competition in pricing environment. Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. Fundtech undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release or to reflect the occurrence of unanticipated events.