ATLANTA, Nov. 2 /PRNewswire-FirstCall/ -- TRX, Inc. , a leading, independent provider of transaction processing and data integration services to the global travel industry, today reported financial results for the quarter ended 30 September 2006.
Total revenues excluding client reimbursements for the third quarter of 2006 were $26.8 million compared with $29.3 million in the third quarter of 2005. Net income for the current quarter was $1.3 million compared with a net loss of ($3.3) million in the third quarter of 2005. Net income per diluted share was $0.07 compared to a net loss of ($0.27) per diluted share for the third quarter of 2005.
Revenues from transaction processing services decreased 4% to $17.6 million. Revenues from data integration services increased 16% to $4.5 million. Revenues from customer care activities decreased 35% to $4.7 million. Core transaction processing and data integration revenues increased to 83% of revenues compared to 76% in the third quarter of 2005. Customer care revenues declined to 17% of revenues, compared to 24% in the third quarter of 2005 as the Company continued to execute on its previously announced strategy of transitioning away from customer care activities.
Adjusted EBITDA was $3.7 million for the quarter, a $0.2 million increase from the third quarter of 2005.
For the nine months ended 30 September 2006, revenues excluding client reimbursements decreased to $87.4 million from $89.3 million in 2005. Net income was $6.0 million, compared with a net loss of ($7.0) million for the first nine months of 2005, and Adjusted EBITDA was $14.9 million, compared with $8.6 million for the first nine months of 2005. Net income per diluted share was $0.34 for the nine months ended 30 September 2006 and includes non- cash stock compensation of $1.0 million, or $0.06 per share and restructuring expense of $0.7 million, or $0.04 per share.
"TRX remains focused on growth opportunities in both transaction processing and data integration," said TRX President & CEO Trip Davis. "While leisure volumes remain soft, we are seeing increased activity with the agencies responsible for corporate transaction processing, as they automate and reduce costs."
"On the data front, the increasing complexity of the travel environment is motivating corporate accounts, suppliers, agencies, and payment providers to expand their use of travel data reporting software and analytics," said Davis. "TRX is a global leader in travel data reporting, positioning us to grow our revenues and broaden our client base through new sales, acquisitions, and product innovation."
TRX also reiterated its guidance for fiscal 2006:
- 2006 revenues excluding client reimbursements of $108 to $113 million,
which includes core transaction processing and data integration revenues
of $88 to $91 million and customer care revenues of $20 to $22 million.
- 2006 Adjusted EBITDA of $17.5 to $19.0 million.
- Diluted earnings per share excluding the effects of non-cash stock
compensation and previously announced restructuring expenses are
expected to be $0.44 to $0.53 for the year.
Use of Non-GAAP Financial Measures
TRX provides financial measures and terms not calculated in accordance with accounting principles generally accepted in the United States (GAAP). Presentation of non-GAAP measures such as EBITDA and Adjusted EBITDA provide investors with an alternative method for assessing our operating results in a manner that enables investors to more thoroughly evaluate our performance. These non-GAAP measures provide investors with a better baseline for assessing the company's future earnings expectations. TRX management uses these non-GAAP measures for the same purpose. The non-GAAP measures included in this release are provided to give investors access to the types of measures that we use in analyzing our results.
EBITDA consists of GAAP net income (loss) adjusted for the items included in the accompanying reconciliation. EBITDA provides useful information to investors about the Company's performance because it eliminates the effects of period to period changes in the cost associated with capital investments and interest expense. Adjusted EBITDA consists of EBITDA adjusted for the items included in the accompanying reconciliation. EBITDA and Adjusted EBITDA do not give effect to the cash the Company must use to service its debt or pay its income taxes and thus do not reflect the funds generated from operations or actually available for capital expenditures.
TRX's calculation of EBITDA and Adjusted EBITDA is not necessarily comparable to similarly titled measures reported by other companies. These non-GAAP measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. Schedules that reconcile EBITDA and Adjusted EBITDA to GAAP net income (loss) are included with this release.
Certain statements in this press release may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), or in releases made by the Securities and Exchange Commission, all as may be amended from time to time. Statements contained in this press release that are not historical facts may be forward-looking statements within the meaning of the PSLRA. Any such forward-looking statements reflect our beliefs and assumptions and are based on information currently available to us and are subject to risks and uncertainties that could cause actual results to differ materially, including but not limited to, the loss of key clients, volatility in the number of transactions we service, failure or interruptions of our software, hardware and other systems, industry declines, competitive pressures and other risks.
Forward-looking statements are predictions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the "safe harbor" provisions of such laws. TRX, Inc. cautions investors that any forward-looking statements we make are not guarantees or indicative of future performance.
Conference Call Information
The Company will hold a Webcast of its conference call to discuss these results on Thursday, 02 November at 9:00 a.m. Eastern Time from http://www.trx.com/. To register for the event, please go to the Investor Center on the TRX.com Website at least fifteen minutes early to register, download, and install any necessary audio software.
For those who cannot listen to the live broadcast, the TRX.com site will host an archived Webcast shortly after the conclusion of the call, which will remain available on the TRX Website at http://www.trx.com/ for 90 days.
About TRX
TRX is a leading, independent provider of transaction processing and data integration services to the global travel industry. TRX provides five hosted technology and service offerings: RESX (Online Booking), SELEX (Agent Technology), CORREX (Automated Processing), TRANXACT (Settlement & Exceptions), and DATATRAX (Data Integration). TRX provides each of these solutions independently or as a comprehensive, integrated end-to-end processing suite for travel agencies, travel suppliers, large corporations, credit card issuers, and expense management companies. TRX is headquartered in Atlanta, Georgia with operations and associates in North America, Europe, and Asia.
TRX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
(Unaudited) (Unaudited)
REVENUES:
Transaction Processing $17,580 $18,285 $56,991 $55,726
Data Integration 4,520 3,903 12,700 11,858
Customer Care 4,674 7,155 17,702 21,697
Transaction and other
revenues 26,774 29,343 87,393 89,281
Client reimbursements 366 307 1,522 2,331
Total revenues 27,140 29,650 88,915 91,612
EXPENSES:
Operating 15,913 18,501 51,162 57,158
Selling, general and
administrative 4,701 5,076 14,315 15,303
Technology development 2,759 2,800 8,037 8,865
Client reimbursements 366 307 1,522 2,331
Restructuring (148) 11 691 2,319
Depreciation and
amortization 2,453 2,519 7,698 7,329
Total expenses 26,044 29,214 83,425 93,305
OPERATING INCOME (LOSS) 1,096 436 5,490 (1,693)
INTEREST INCOME (EXPENSE) 157 (882) 495 (2,375)
DEBT CONVERSION EXPENSE - (2,898) - (2,898)
NET INCOME (LOSS) $1,253 $(3,344) $5,985 $(6,966)
Net Income (Loss) per Share
Basic and diluted $0.07 $(0.27) $0.34 $(0.56)
Weighted Average Shares
Outstanding
Basic 17,735 12,519 17,692 12,481
Diluted 17,736 12,519 17,693 12,481
Other Data:
Adjusted EBITDA $3,740 $3,530 $14,915 $8,561
Capital expenditures $1,386 $3,369 $6,514 $6,690
Transaction processing
volumes 20,092 20,574 65,009 62,889
As of As of
September 30, December 31,
2006 2005
Consolidated Balance Sheet Data:
Cash and cash equivalents $26,636 $28,633
Convertible notes 1,360 1,360
Total shareholders' equity 40,020 32,601
TRX, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP FINANCIAL MEASURES
TO NON-GAAP FINANCIAL MEASURES
(In thousands)
Reconciliation of Net Income to Adjusted EBITDA
Three Months Nine Months
Ended Ended
September 30, September 30,
2006 2005 2006 2005
Net income (loss) $1,253 $(3,344) $5,985 $(6,966)
Depreciation and amortization 2,453 2,519 7,698 7,329
Interest (income) expense, net (157) 882 (495) 2,375
Debt conversion expense (1) - 2,898 - 2,898
EBITDA 3,549 2,955 13,188 5,636
Stock compensation expense 339 14 1,036 56
Restructuring expenses (2) (148) 11 691 2,319
IPO related bonuses (3) - 550 - 550
Adjusted EBITDA $3,740 $3,530 $14,915 $8,561
(1) In connection with the IPO, we made payments totaling $2.9 million
to affect the conversion of convertible notes with a conversion
price of $11.03.
(2) Expenses for severance, lease, transition costs and accelerated
depreciation associated with the closure of certain customer care
operations.
(3) In connection with the completion of the IPO, we paid one-time
management bonuses totaling $550,000.
TRX, Inc.
CONTACT: Investors, Lindsey Sykes, Chief Financial Officer of TRX, Inc., +1-404-929-6154; or Media, Kira Perdue, Trevelino-Keller Communications Group, +1-404-214-0722, extension 101, for TRX
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