Trintech Group PLC F1Q11 (Qtr End 04/30/2010) Earnings Call Transcript

Trintech Group PLC F1Q11 (Qtr End 04/30/2010) Earnings Call Transcript
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Trintech Group PLC (TTPA)

F1Q11 (Qtr End 04/30/2010) Earnings Call

May 26, 2010 10:30 a.m. ET


Joe Seery - VP, Finance

Cyril McGuire - Chairman and CEO

Paul Byrne - President


Dan Cavanagh - Goodbody Stockbrokers



Welcome to the Trintech's first quarter fiscal 2011 earnings conference call. (Operator Instructions)

I would now like to hand the conference over to your first speaker today, Mr. Joe Seery.

Joe Seery

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Thank you. Good afternoon, ladies and gentlemen. I would like to welcome you all to Trintech's first quarter fiscal year 2011 earnings conference call. My name is Joe Seery, VP of Finance Group. And joining me on today's call are Cyril McGuire, CEO of Trintech; and Paul Byrne, President.

We will begin the call with prepared remarks which will be followed by a question-and-answer session. A replay of this conference call will be available later this evening on the Investor Relations section of Trintech's website or by dialing 44 for the U.K., then 1452-55-00-00. The passcode is 82714337#.

I would like to remind you that this conference call will contain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 as amended and Section 21E of the U.S. Securities Exchange Act of 1934 as amended.

In particular, forward-looking statements will include amongst other things: statements related to the Trintech's revenue, including license and service revenue, gross margins, expenses and charges, interest income, U.S. GAAP operating results, adjusted EBITDA net income, cash flows, cash balance, DSO days, business momentum in our continuing operations, our business outlook and our position for revenue and earnings growth, the expansion of the Financial GRC market, the needs of corporate organizations to improve financial transparency and efficiency, and the impact of the evolution of and growth in corporate and financial regulation and demand for greater visibility of risk and compliance by company boards on demand for our Financial GRC platform and overall financial performance expectations for Q2 FY '11.

All forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Factors that could cause or contribute to such differences include Trintech's ability to accurately predict future sales, its ability to accurately predict and meet customer needs and to successfully position itself in the market, its ability to ensure the performance of its products and services and its ability to improve the performance of its organization and ensure the long-term health of its business.

Actual performance may also be affected by other factors more fully discussed in our Form-20F for the fiscal year 2010 and subsequent filings with the SEC which are available on the SEC's Edgar database and in the final paragraph of our earnings press release issued earlier today, which is available on our website

We will also comment on adjusted EBITDA results, which have been included together with a reconciliation to U.S. GAAP results in the earnings release. The release is also available on our website and can be downloaded in PDF format.

Due to the sale of our healthcare division to the Advisory Board Company, Trintech is required to present its financial results on a continuing and discontinued basis. This requirement has resulted in the presentation of financial results showing first fiscal quarter for the continuing business, the financial governance, risk and compliance or GRC business. Unless otherwise stated in our presentation, all financial results discussed will be on a continuing operations basis.

Lastly, ladies and gentlemen, please understand that company undertakes no obligation to update information presented in this conference call or our ensuing Q&A.

And with that, I would now like to hand over to Cyril McGuire to focus on our Q1 financial results.

Cyril McGuire

Thank you, Joe, and welcome everyone to our Q1 FY '11 earnings conference call. Paul Byrne, Joe Seery and I will provide you with a brief summary of our Q1 financial performance, an update on strategy, and lastly an update on our outlook and management guidance for Q2.

As we announced earlier today in our press release, Trintech's performance in Q1 was strong in our core Financial GRC business, with revenues of $8.5 million and underlying adjusted EBITDA net income of $1 million being achieved in the quarter, representing 9% growth in revenues and over 30% growth in adjusted EBITDA profitability compared to the corresponding periods last year.

Net income for the continuing and discontinued business of $22.4 million was achieved in the quarter following the successful sale of our healthcare business, which represented basic and diluted net income per equivalent ADS of $1.35 and $1.30 respectively for the first quarter FY '11. This quarter also represented our 10th consecutive quarter with EBITDA profitability for Trintech.

As you know, during the quarter, we successfully completed the sale of our healthcare business, Concuity, to The Advisory Board Company for $34.5 million in an all-cash transaction. On April 1, we received net proceeds of almost $27 million in cash with an escrow amount of $6 million held back.

Although our healthcare business was successful in growing, our market position was still sub-scale and we decided following the approach to capitalize on a very strong enterprise valuation as the industry sector of revenue cycle management continued to consolidate.

In our Q1 results today, we have booked a significant initial profit on the sale of $21.8 million, which if we ultimately recovered the $6 million held in escrow will be further boosted. The compelling valuation was an opportunity to realize substantial shareholder value and strengthen our balance sheet to grow our core Financial GRC business globally.

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