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TNS Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 4, 2011 04:36PM
TNS Inc. (TNS) filed Quarterly Report for the period ended 2011-06-30. Tns Inc. has a market cap of $454.1 million; its shares were traded at around $17.83 with a P/E ratio of 10 and P/S ratio of 0.8. Tns Inc. had an annual average earning growth of 17.3% over the past 5 years.
Highlight of Business Operations:
Total revenues increased $15.2 million, or 5.8%, to $276.0 million for the six months ended June 30, 2011, from $260.8 million for the six months ended June 30, 2010. Foreign exchange translation increased revenues by $5.7 million. Excluding the positive effect of foreign exchange rates, total revenues increased $9.5 million, or 3.6%, to $270.3 million for the six months ended June 30, 2011.
Revenues from the telecommunication services division increased $10.2 million, or 7.9%, to $139.9 million for the six months ended June 30, 2011, from $129.7 million for the six months ended June 30, 2010. Revenue growth in this division was primarily driven by the contribution of revenues from the acquisition of Cequint, Inc., a transaction which we closed on October 1, 2010 (see Note 1 to the condensed consolidated financial statements included elsewhere in this Quarterly Report). Excluding Cequints contribution, growth was driven by our roaming and clearing services due primarily to market share gains for CDMA operations and network services as we have seen increased volumes primarily from mobile operations. These increase were partially offset by declines in our registry services from the expiry in April 2011 of a transition services agreement entered into as part of the acquisition of CSG.
Revenues from the payments division increased $4.5 million, or 4.5%, to $102.4 million for the six months ended June 30, 2011, from $98.0 million for the six months ended June 30, 2010. The positive effect of foreign exchange translation on a year-over-year basis was $5.3 million. Excluding the positive effect of foreign exchange rates, payments revenue decreased $0.9 million against the year ago period. We continued to see growth in our European markets driven primarily by growth in our IP-based network services in the UK and market share gains for our network services, primarily dial-up connectivity, in Italy, Spain, France and Romania. In Asia Pacific, our card-not-present gateway services were ahead approximately 25% from the year ago period as we expanded an agreement with a key distributor in the region and are seeing increased demand from new and existing customers. Our network services revenue in the region is flat compared to the year ago period, as we have seen growth in our IP based network services offset by the loss of dial-up transaction volumes as our telecommunications partner lost one of its wholesale customers in the second quarter of 2010. This growth was offset by declines in our North American business. In North America, as we have previously disclosed, we continue to see declines in our dial-up network service as a result of increased competition and transaction volume declines. In addition, during the second quarter of 2010 one of our ATM processing customers elected to in-source their processing platform which resulted in the sale of their dedicated processing platform in that period. These declines were partially offset by growth in our IP-based network services and card-not present payment gateway, which we introduced in this region in the second half of 2010. As part of our strategy to accelerate growth in this division, we have made selected investments in our IP-based network services as well as our payment gateway offerings and plan to introduce these product sets across all of our key markets over time. For example, in the second half of 2010 we introduced our card-not-present payment gateway into the North American market and plan to introduce this offering in Europe in the second half of 2011.
Revenues from the financial services division increased $0.5 million, or 1.7%, to $33.6 million for the six months ended June 30, 2011, from $33.1 million for the six months ended June 30, 2010. Foreign exchange translation increased revenues by $0.3 million for the six months ended June 30, 2011. Excluding the positive effect of foreign exchange rates, financial services division revenue increased $0.2 million or 0.1%. Throughout 2010 we faced challenges in our financial services business following
the economic downturn in the financial services industry in 2009 which resulted in consolidation among our existing customer base as well as a reduction in the number of market participants (e.g., hedge funds) that utilize our secure trading extranet. In addition, due to changes in the competitive environment for providing low-latency market data exchange services, we have experienced significant declines for this service offering. These factors resulted in year-over-year revenue declines of $3.4 million in North America and $0.7 million in the UK during the first half of 2011. Excluding these declines, revenues increased $2.4 million in North America, $0.7 million in Europe and $1.0 million in Asia Pacific. Revenue increased in North America primarily through growth in endpoints and bandwidth based services to participants in the foreign exchange markets. Revenue growth in Europe was primarily driven by market share gains and the introduction of our bandwidth based services. Revenue growth in Asia Pacific was primarily driven by our expansion efforts to capture the growth opportunities in this region for electronic trading.
Net income decreased $5.7 million to $1.9 million for the six months ended June 30, 2011 from $7.6 million for the same period in 2010. Diluted net income per common share was $0.07 for the six months ended June 30, 2011 compared to $0.28 for the same period in 2010. Adjusted net income (a non-GAAP measure) decreased $6.6 million to $23.9 million for the six months ended June 30, 2011 compared to $30.5 million for the same period in 2010. Adjusted net income per common share (a non-GAAP measure) was $0.93 per share for the six months ended June 30, 2011 compared to $1.14 per share for the same period in 2010. Included in other income (expense), net in our consolidated statements of operations are a pre-tax loss of $1.5 million for the three and six months ended June 30, 2011 compared to a pre-tax gain of $5.4 million for the same period in 2010 related to the revaluation of certain foreign currency denominated assets and liabilities. EBITDA before stock compensation expense (a non-GAAP measure) decreased $1.0 million to $65.9 million for the six months ended June 30, 2011 from $66.9 million for the same period in 2010.
Stocks Discussed: TNS,