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Dolan Media Company Reports Operating Results (10-Q)

May 08, 2012 | About:
10qk

10qk

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Dolan Media Company (DM) filed Quarterly Report for the period ended 2012-03-31.

Dolan Media Co has a market cap of $240.6 million; its shares were traded at around $7.07 with a P/E ratio of 15.7 and P/S ratio of 0.8.

Highlight of Business Operations:

Our total revenues decreased $5.0 million, or 7.0%, from $71.8 million for the three months ended March 31, 2011, to $66.7 million for the three months ended March 31, 2012, primarily as a result of an $8.4 million decrease in our mortgage default processing services revenues and a $1.0 million decrease in our Business Information Division revenues, partially offset by a $4.3 million increase in our litigation support services revenues largely as a result of DiscoverReadys acquisition of ACT Litigation Services (ACT) in July 2011. The decrease in mortgage default processing services revenues was driven primarily by a decrease in the number of foreclosure files received for processing, as discussed below. Income from continuing operations changed from $3.9 million for the three months ended March 31, 2011, to break-even for the current quarter.

On July 25, 2011, we, through DiscoverReady, completed the acquisition of substantially all of the assets of ACT for (i) an upfront payment of approximately $60.0 million in cash that was paid in full at closing, plus (ii) up to $5.0 million in potential additional purchase price that will be held back for a period of 20 months (subject to partial early release) to secure certain obligations of ACT and its shareholders, plus (iii) an earnout payment based primarily upon the extent to which an agreed-upon multiple of ACTs pro forma EBITDA for the year ended December 31, 2011, exceeds the base purchase price of $65.0 million, plus (iv) two additional earnout payments of up to a maximum of $15.0 million in the aggregate that are contingent upon reaching certain revenue milestones for the years ended December 31, 2012, and 2013. All of the earnout payments are subject to certain set-off rights under the purchase agreement. Management has estimated the fair value of the earnouts to be paid, in the aggregate, to be $26.7 million as of March 31, 2012, of which $14.7 million was paid in April 2012. Additionally, the majority of the balance due on the earnouts will be converted in the second quarter of 2012 to a note payable, which will be due in March 2013, and is subject to further adjustment based on certain revenue targets for 2012.

We derived 71.8% and 72.4% of our total revenues from our Professional Services Division and 28.2% and 27.6% of our total revenues from our Business Information Division for the three months ended March 31, 2012 and 2011, respectively. In our Professional Services Division, revenues from our mortgage default processing services segment accounted for 44.2% and 52.8% of our total revenues for the three months ended March 31, 2012 and 2011, respectively. Revenues from our litigation support services segment (also part of our Professional Services Division) accounted for 27.6% and 19.7% of our total revenues for the three months ended March 31, 2012 and 2011, respectively. We continue to expect litigation support services to be a larger percentage of total revenues as a result of the ACT acquisition in July 2011.

Selling, General and Administrative Expenses. The change in our selling, general and administrative expenses consisted primarily of a $2.2 million increase in our Professional Services Division, partially offset by a $1.2 million decrease in our Business Information Division. Additionally, costs from our corporate operations decreased by $0.3 million. You should refer to the more detailed discussions in Professional Services Division Results and Business Information Division Results below for more information regarding the causes of changes in our selling, general and administrative expenses. Selling, general and administrative expense as a percentage of revenue increased to 41.4% for the three months ended March 31, 2012, from 37.4% for the same period in 2011.

The Barrett law firm, Albertelli law firm and Trott & Trott each accounted for more than 10%, and together accounted for approximately 83% of our mortgage default processing services segment and 51% of our Professional Services Division revenues during the three months ended March 31, 2012. In the three months ended March 31, 2011, The Barrett law firm, Albertelli law firm and Trott & Trott each accounted for more than 10%, and together accounted for approximately 83% of our mortgage default processing services segment and 60% of our Professional Services Division revenues.

Read the The complete Report

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